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S H Kelkar & Company Ltd.

BSE: 539450 Sector: Industrials
NSE: SHK ISIN Code: INE500L01026
BSE 16:01 | 06 Jul 66.50 -1.15






NSE 16:02 | 06 Jul 66.45 -1.25






OPEN 67.50
VOLUME 46771
52-Week high 147.95
52-Week low 47.60
P/E 33.25
Mkt Cap.(Rs cr) 940
Buy Price 66.20
Buy Qty 260.00
Sell Price 66.50
Sell Qty 410.00
OPEN 67.50
CLOSE 67.65
VOLUME 46771
52-Week high 147.95
52-Week low 47.60
P/E 33.25
Mkt Cap.(Rs cr) 940
Buy Price 66.20
Buy Qty 260.00
Sell Price 66.50
Sell Qty 410.00

S H Kelkar & Company Ltd. (SHK) - Director Report

Company director report

Dear Shareholders

Your Directors take pleasure in presenting their 62nd Annual Report on the business andoperations of S H Kelkar And Company Limited (SHK / the Company) and audited financialstatements for the financial year ended March 31 2018.


( ` in Crores)
Standalone Consolidated
Particulars 2017-18 2016-17 Growth % 2017-18 2016-17 Growth %
Revenue from operations (excl excise duty/GST) 680.79 614.46 10.80 1019.27 975.04 4.53
Other operating income 1.40 0.89 57.30 5.84 5.47 6.76
EBITDA before royalty expense and exceptional items 136.01 130.41 4.29 183.82 177.38 3.63
Royalty Expense 19.16 18.02 6.26 - - -
Finance Costs 3.16 2.40 31.67 3.97 5.16 (23.06)
Depreciation 10.53 6.81 54.63 23.84 19.44 22.63
Profit before Tax (PBT) before exceptional items 103.16 103.18 (0.02) 156.01 152.78 2.11
Profit before Tax (PBT) after exceptional items 103.16 103.18 (0.02) 143.16 152.78 (6.30)
Taxation 34.20 28.87 18.46 50.58 47.97 5.46
Profit after Tax (PAT) 68.96 74.31 (7.20) 92.58 104.82 (11.68)
Share of profit of equity investment in JV - - - 1.61 - 100.00
Total Profit after Tax (PAT) 68.96 74.31 (7.20) 94.19 104.82 (10.14)

Business Review:

We unveil the tastes and scents that suit you best and that you love most. We bringthem to you every day everywhere in every way. Stirring emotions awakening memoriesenhancing your senses expanding your taste and scent experiences enriching your worldwe bring you a myriad of solutions to enjoy the essence and express yourself. We are Keva(consolidated SHK) - a leading creator of _avours and fragrances that are used in thefood beverage personal care or household product industries. Keva's _avour and fragrancecompounds combine a number of ingredients to produce proprietary formulae created by its_avorists and perfumers. Utilizing capabilities in consumer insight research and productdevelopment and creative expertise Keva partners with its customers to provide innovativeand differentiated product offerings that drive consumer preference. Keva believes thatthis collaborative approach will generate market share gains for its customers.

Keva is committed to winning in emerging markets and believes that significant futuregrowth potential for the _avours and fragrances industry and for its business exists inthe emerging markets.

The year 2017-18 ended on a healthy note backed by strong performance in the secondhalf of the year. Despite the high level of raw material supply disruptions across theglobe your Company reached a major milestone in its journey by crossing ` 1000 crore ofrevenues in 2017-18. The Company's inventory management strategy enabled it to sustainmargins and maintain market share across customers.

On consolidated basis the overall revenue of Keva recorded a growth of 4.5% vis a vislast year. Operating EBITDA after adjusting one-o_ expenses stood at ` 188.8 crore in2017-18 as against ` 177.4 crore in 2016-17 up 3.6%. The total domestic business recordeda growth of 7.3% while the international business had a subdued performance with a declineof 1.02%. The segmentation of fragrances business to _avours business altered from 87% in2017 to 89% in 2018. The domestic and international business ratio stood at 68:32 asagainst 67:33 in 2016-17.

Fragrance Division reported a robust performance during the FY 2017-18 with anoperating profit of ` 140 crore - higher by 13% over previous year. With a healthy growthin its existing markets the Fragrance Division reported year on year growth of 8% in thedomestic markets while overseas market grew by 3%.

Flavours Division reported a subdued performance in FY 2017-18. While domestic revenueswere lower by 1% overseas segment was lower by 18%. Volatile raw material prices andpricing pressure impacted the performance in the domestic market. In additiongeo-political and economic scenario especially in the Middle East resulted in subduedoverseas performance. Operating profit of Flavours Division was at `21 crore with marginsat 18.7%.

The Company incurred a one-o_ expense of `12.9 crore during the year on account ofoperational reorganization of PFW Aroma Ingredients BV in the Netherlands. EBITDA marginand Net Profit margin excluding this one-o_ expense stood at 18% and 10% respectivelydespite investments made for future growth of about `5 Crore as well as sharp increase inraw material prices. The consolidated ROCE was 20%.

On a standalone basis the Company achieved a topline growth of 11% due to growth indomestic fragrance business despite the headwinds faced by the business due to GSTimplementation. On standalone basis the Company has achieved Net Profit of `69 Crore.


A detailed analysis of your Company's performance is discussed in the ManagementDiscussion and Analysis Report which forms part of this Annual Report.


The Company believes that profitability must go hand in hand with a sense ofresponsibility towards all stakeholders. The Company endeavours towards creating long-termvalue for all its stakeholders while focusing on the core principles of accountabilitytransparency integrity social responsibility and regulatory compliances. A strongfoundation in terms of an eminent accomplished and a diverse Board providing mentorshipand oversight an effective leadership team setting the tone at the top competentprofessionals across the organisation to implement and execute the governance goals bestsystems well defined process and modern technology have made good governance a way oflife.

A Report on Corporate Governance along with a Certificate from the Statutory Auditorsof the Company confirming of corporate governance requirements as stipulated under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as "Listing Regulations") form an integral part of this Annual Report.


A detailed information on the initiatives of the Company as enunciated in the‘National Voluntary Guidelines on Social Environmental and Economic Responsibilitiesof Business 2011 is provided in the Business Responsibility Report a copy of which willbe available on the Company`s website For Business Responsibility Reportas stipulated under Regulation 34 of the Listing Regulations kindly refer to BusinessResponsibility Report section which forms part of this Annual Report.


Your Directors are pleased to recommend a final dividend of `1.75 per equity share offace value of `10/- each to be appropriated from the profits of the Company for thefinancial year 2017-18 subject to the approval of the shareholders at the ensuing AnnualGeneral Meeting ("AGM").

The list of unpaid dividend declared upto the financial year 2016-17 is available onCompany`s website Shareholders are requested to check the said list and ifany dividend due to them remains unpaid in the said list can approach the Company forrelease of their unpaid dividend.


As on March 31 2018 the Company had subsidiaries in India United KingdomNetherlands Singapore Italy and Indonesia as mentioned hereunder: Keva Fragrances Pvt.Ltd.

Keva Flavours Pvt. Ltd. Saiba Industries Pvt. Ltd.

Rasiklal Hemani Agencies Pvt. Ltd. Keva Chemicals Pvt. Ltd.

Creative Flavours & Fragrances S.p.A. Italy Keva UK Ltd. United Kingdom KevaFragrance Industries Pte. Ltd. Singapore

V N Creative Chemicals Pvt. Ltd. (step-down subsidiary) Tanishka FragranceEncapsulation Technologies LLP (step-down subsidiary) PFW Aroma Ingredients B.V.Netherlands (step-down subsidiary) PT SHKKEVA Indonesia (Indonesia) (step-down subsidiary)

A statement containing the salient features of the financial statement of oursubsidiaries in the prescribed format AOC-1 is appended as Annexure A to this Report.

Financial and operational performance of the subsidiaries is given hereunder:

Keva Fragrances Private Limited:

Keva Fragrances Private Limited (formerly K V Arochem Private Limited) is involved inthe business of manufacture and exports of fragrances _avours and aroma ingredients. Thecompany registered a total revenue of ` 316.11 Crores in financial year 2017-18 as against` 291.05 Crores in financial year 2016-17 and loss of ` 14.98 Crores in financial year2017-18 as against loss of ` 18.40 Crores in financial year 2016-17.

Keva Flavours Private Limited:

Keva Flavours Private Limited develops _avours that underpin food and beverage brandsin India. The company registered a total revenue of ` 65.17 crores in financial year2017-18 as against ` 75.13 crores and a loss of ` 1.43 crores as against a profit of `6.06 crores in financial year 2016-17.

Saiba Industries Private Limited:

Natural Essential oils & Natural Extracts have become a USP via Aromatherapeuticadditive. Saiba Industries Private Limited is involved in the business of manufacture andsale of plant extracts. During the year under review the company registered an operatingrevenue of ` 5.07 Crores in the financial year 2017-18 as against ` 4.99 Crores infinancial year 2016-17 and profit after tax of ` 1.57 Crores in the financial year 2017-18as against ` 0.97 Crores in financial year 2016-17.

Rasiklal Hemani Agencies Pvt. Ltd.:

Rasiklal Hemani Agencies Pvt. Ltd. was acquired by the Company on April 02 2016 tostrengthen our base in the northern region and reach closer to the customers. During theyear under review the company registered an operating revenue of ` 5.14 Crores in thefinancial year 2017-18 as against ` 7.21 Crores in financial year 2016-17 and profit aftertax of ` 4.23 Crores in the financial year 2017-18 as against ` 5.34 Crores in financialyear 2016-17.

PFW Aroma Ingredients B.V.:

PFW Aroma Ingredients B.V. is involved in the business of manufacture and sale of aromaingredients. During the year under review the company registered an operating revenue of` 174.50 Crores as against ` 151.17 Crores during the previous year and loss of ` 13.20Crores as against loss of ` 0.45 Crores during the previous year.

Keva UK Limited:

Keva UK Limited is authorised by its constitutional documents to manage the investmentof our Company in the Netherlands - PFW Aroma Ingredients B.V. The company did not carryany business during the year. During the year under review the company registered norevenue as against ` 0.58 Crores during the previous year and loss after tax of ` 0.27Crores as against profit after tax of ` 0.50 Crores during the previous year.

Keva Fragrance Industries Pte. Ltd.:

Keva Fragrance Industries Pte. Ltd. is involved in the business of providing sales andmarketing assistance to us in South East Asia. In order to spearhead our market access andgrowth plans of South East Asia we have formed this Company through which our operatingsubsidiary has been created in Indonesia. During the year under review the companyregistered a revenue of ` 36.05 Crores as against ` 3.45 Crores during the previous yearand a profit of

` 1.04 Crores as against a loss of ` 0.52 Crores during the previous year.

PT SHKKeva Indonesia:

PT SHKKeva Indonesia is involved in the business of trading and distribution ofperfumery compounds. During the year under review the company registered an operatingrevenue of ` 6.47 Crores as against ` 11.44 Crores during the previous year and profit of` 0.22 Crores as against loss of ` 0.45 Crores during the previous year.

Keva Chemicals Private Limited:

Keva Chemicals Private Limited is involved in the business of aroma ingredients etc.During the year under review the company has not earned any income from operations as nobusiness activity was undertaken by the Company. The Net Loss incurred by the companyduring the financial year ended March 31 2018 amounted to ` 0.42 crores.

VN Creative Chemicals Private Limited:

VN Creative Chemicals Private Limited was acquired for setting up of India Tonalidmanufacturing facility at Mahad. During the year under review the company has not earnedany income from operations as no business activity was undertaken by the company. The netloss incurred by the company during the financial year ended March 31 2018 amounted to `0.58 crores.

Tanishka Fragrance Encapsulation Technologies LLP:

Company acquired Tanishka Fragrance Encapsulation Technologies LLP on April 24 2017.During the year under review no business activity was undertaken by the LLP.


The consolidated financial statements of your Company for the financial year 2017-18are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and as prescribed by Securities and Exchange Board of India (SEBI)under Listing Regulations. The consolidated financial statements have been prepared on thebasis of audited financial statements of the Company and its subsidiary companies asapproved by their respective Board of Directors. The Financial Statements as stated aboveare also available on the website of the Company at www.


Over the years your Company has developed extensive and successful experienceperforming acquisitions and is working towards integrating the acquisitions and exploitingthe many commercial and operational synergies they provide in order to achieve maximumbenefit of continued improvement to profit margins and competitive capabilities.

Fragrance delivery via encapsulation is a win-win platform because it provides a greatopportunity across all categories. Accordingly on April 24 2017 the Company throughKeva Chemicals Pvt. Ltd. ("KCPL") step-down subsidiary of the Company hasacquired Fragrance Encapsulation Technology from Tanishka Fragrance EncapsulationTechnologies LLP ("TFET LLP"). As a part of the transaction KCPL has alsocontributed to the capital of TFET LLP on the said date and thus has become a majoritycapital contributing partner in TFET LLP. The unique technology has enhanced Keva'stechnological infrastructure and would enable the Company to offer differentiatedfragrance products especially in fabric care which is a fast-growing area in which Keva'sunique capabilities would give it a solid competitive edge.

The Company through its subsidiary Keva Fragrances Pvt. Ltd. has acquired VN CreativeChemicals Pvt. Ltd. ("VNCC") on September 29 2017. VNCC is into the business ofaromatic chemicals and owns a manufacturing facility in Mahad Maharashtra. The investmentwould enable the Company to consolidate/ combine production activities for attainingmaximal operational efficiency and thus would contribute to building up Keva'scompetitiveness and improve its profits and margins.

The Company has entered into an agreement to acquire Creative Flavours and FragrancesS.p.A. ("CFF") alongwith its subsidiaries on January 15 2018. Incorporated inyear 2000 CFF has presence throughout Europe and enjoys a leading position in the Italianmarket. It has a state-of-the-art manufacturing facility and R&D lab in Milan. Theacquisition coupled with the recent launch of _ne fragrances studio in Amsterdam is inline with Keva's growth strategy to strengthen its product portfolio and build a businesswith truly international profile. It is an important milestone in Keva's global growthjourney.

The Company through its subsidiary Keva Fragrance Industries Pte. Ltd. has enteredinto an agreement to acquire 90% stake in Anhui Ruibang Aroma Co. Ltd. on May 252018. Headquartered in Fuyang Anhui is a leading aroma ingredient Company inChina. The acquisition will give Keva access to alternate tonalid manufacturing facilitythereby ensuring no supply disruptions to customers. It will also enable Keva consolidateits market position for tonalid.

The acquisitions are expected to provide better opportunities to leverage in thefuture.


There has been no change in the capital structure during the year under review.The Company has not issued shares with differential voting rights nor granted stockoptions nor sweat equity.


Your Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 read with Companies (Acceptance of Deposits) Rules 2014 during theyear.


Particulars of loans given investments made guarantees given and securities providedas covered under the provisions of Section 186 of the Companies Act 2013 are given in thenotes to the Financial Statements.


Particulars of contracts or arrangements with related parties referred to in Section188(1) of the Companies Act 2013 in the prescribed Form AOC-2 is appended as Annexure Bto this Report.


In the forthcoming AGM Mrs. Prabha Vaze will retire by rotation and will be consideredfor re-appointment because of her eligibility. Mr. Nitin Potdar and Mr. Amit Dixit steppeddown as Independent Director and Non-Executive Director respectively with effect fromFebruary 28 2018 and May 25 2018. Mr. Deepak Raj Bindra and Mr. Shrikant Oka wereappointed as Additional Non-Executive Director and Additional Independent Directorrespectively at the Board Meeting held on May 25 2018 with effect from May 25 2018. Asper the provisions of Section 160 of the Companies Act 2013 your Company has received anotice from a member specifying their intention to propose the appointment of Mr. DeepakRaj Bindra and Mr. Shrikant Oka as Directors in the forthcoming AGM.

Appropriate resolutions for the appointment of the Directors are being placed for yourapproval at the ensuing AGM. Your Directors recommend the appointment of the aforesaidDirectors by the Members at the ensuing AGM.

Neither the Managing Director nor the Whole-time Director of the Company receives anyremuneration or commission from any of its subsidiaries. None of the Directors of theCompany has been disqualified to be a Director of the Company on account of non-compliancewith any of the provisions of the Companies Act 2013. The Independent Directors have beenfamiliarised with the Company their roles rights and responsibilities in the Companyetc. The details of the Familiarization Programme are available on the website of theCompany All the Independent Directors have given their declaration ofindependence as required under Section 149(6) of the Companies Act 2013. This has beennoted by the Board of Directors.


During the year 7 (seven) Board Meetings were convened and held on 12.05.201710.08.2017 12.09.2017 13.11.2017 07.12.2017

(adjourned to 13.12.2017) 16.01.2018 and 28.02.2018. The particulars of attendance ofthe Directors at the said meetings are detailed in the Corporate Governance Report of theCompany which forms a part of this Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013 and Listing Regulations.


The Independent Directors of the Company meet without the presence of the ManagingDirector or Executive Director or other Non-Independent Directors. These meetings areconducted in an informal and flexible manner to enable the Independent Directors todiscuss matters pertaining to inter alia review of performance of Non-IndependentDirectors and the Board as a whole assess the quality quantity and timeliness of flow ofinformation between the Company Management and the Board that is necessary for the Boardto effectively and reasonably perform its duties. One such meeting was held during theyear on February 28 2018.


The Company has constituted various Board level committees in accordance with therequirements of Companies Act 2013. The Board has the following committees as under:

Audit Committee

Nomination & Remuneration Committee Corporate Social Responsibility CommitteeStakeholders' Relationship Committee

Details of the above Committees alongwith composition and meetings held during the yearunder review are provided in the Corporate Governance Report forming part of this Report.


Pursuant to the provisions of the Companies Act 2013 read with Rules issued thereunderand the Corporate Governance requirements as prescribed by Listing Regulations the Boardhas carried out an annual evaluation of its own performance and that of its Committees andindividual Directors.

TheperformanceoftheBoardandindividualDirectorswasevaluated by the Board seeking inputsfrom all the Directors. The performance of the Committees was evaluated by the Boardseeking inputs from the Committee Members. The Nomination and Remuneration Committeereviewed the performance of the individual Directors. A separate meeting of IndependentDirectors was held to review the performance of Non-Independent Directors performance ofthe Board as a whole and performance of the Executive Directors of the Company. This wasfollowed by a Board Meeting that discussed the performance of the Board its Committeesand individual Directors.

The criteria for performance evaluation of the Board included aspects like Boardcomposition and structure effectiveness of Board processes information and functioningetc. The criteria for performance evaluation of Committees of the Board included aspectslike composition of Committees effectiveness of Committee meetings etc. The criteria forperformance evaluation of the individual Directors included aspects on contribution to theBoard and Committee meetings like preparedness on the issues to be discussed meaningfuland constructive contribution and inputs in meetings etc.


The broad objectives of the Nomination and Remuneration policy are i) to guide theBoard in relation to appointment and removal of Directors Key Managerial Personnel andSenior Management; ii) to evaluate the performance of the members of the Board and providenecessary report to the Board for further evaluation of the Board; c) to recommend to theBoard on Remuneration payable to the Directors Key Managerial Personnel and SeniorManagement.

The guiding principles of the policy are to ensure that:

The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;

Relationship of remuneration to performance is clear and meets appropriate performancebenchmarks and

Remuneration to Directors Key Managerial Personnel and Senior Management involves abalance between fixed and incentive pay reflecting short and long term performanceobjectives appropriate to the working of the Company and its goals.

In accordance with the Nomination and Remuneration Policy the Nomination andRemuneration Committee formulates the criteria for appointment as a Director KeyManagerial Personnel and Senior Management identifies persons who are qualified to beDirectors and nominates candidates for Directorships subject to the approval of Boardevaluates the performance of the individual directors recommends to the Boardremuneration to Managing Director

/ Whole-time Directors ensures that the remuneration to Key Managerial PersonnelSenior Management and other employees is based on Company's overall philosophy andguidelines and is based on industry standards linked to performance of the self and theCompany and is a balance of fixed pay and variable pay and recommends to the Boardsitting fees/commission to the Non-Executive Directors.

It is hereby afirmed that the remuneration paid is as per the Nomination andRemuneration Policy of the Company.


During the year under review Mr. Tapas Majumdar ceased to be Executive Vice Presidentand CFO of the Company. He was relieved from his role on May 31 2017. Mr. Ratul Bhaduriwas appointed as Executive Vice President and CFO with effect from November 15 2017. TheKey Managerial Personnel in the Company as per Section 2(51) and 203 of the Companies Act2013 as on March 31 2018 are as follows: Mr. Ramesh Vaze - Managing Director Mr. KedarVaze - Whole Time Director and Chief Executive Officer and Mr. Ratul Bhaduri - ExecutiveVice President and Chief Financial Officer Mrs. Deepti Chandratre - Company Secretary& DGM – Legal


In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that: a) In the preparation of the annual accounts the applicable accountingstandards have been followed alongwith proper explanation relating the material departures(if any); b) The directors have selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit or loss of the Company for the year under review; c) Thedirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities; d) The directorshave prepared the annual accounts on a going concern basis; e) The directors have laiddown internal financial controls to be followed by the company and that such internalfinancial controls are adequate and are operating effectively; and f) The directors havedevised proper system to ensure compliance with the provisions of all applicable laws andthat such systems are adequate and operating effectively.


Your Company's Auditors B S R & Co. LLP [holding Registration No. 101248W/W-100022with the Institute of Chartered Accountants of India (ICAI)] were appointed as theStatutory Auditors at the AGM of the Company held on September 18 2014 for a term of fiveconsecutive years. The Statutory Auditors have confirmed their eligibility to the effectthat their appointment is within the prescribed limits under the Companies Act 2013 andthat they are not disqualified for appointment.

The Auditors' Report on the Annual Accounts of the Company forms part of the AnnualReport and when read with notes on financial statements is self- explanatory and hencedoes not call for any further comments under Section 134 of the Companies Act 2013. TheAuditors' Report does not contain any qualification reservation or adverse remark.


In terms of Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Amendment Rules 2014 M/s. Kishore Bhatia & Associates CostAccountants have been appointed as the Cost Auditors of the company for financial year2018-19.


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 hadappointed M/s. Mehta & Mehta Practising Company Secretaries as its SecretarialAuditor to undertake the secretarial audit for the financial year 2017-18. The SecretarialAudit Report for the financial year ended March 31 2018 is annexed herewith as Annexure Cto this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.


Your Company believes that internal control is a prerequisite of the principle ofgovernance. The Company has a well-established internal control framework which isdesigned to continuously assess the adequacy effectiveness and efficiency of financialand operational controls. The management is committed to ensure an effective internalcontrol environment commensurate with the size and complexity of the business whichprovides an assurance on compliance with internal policies applicable laws regulationsand protection of resources and assets. Robust and continuous internal monitoringmechanisms ensure timely identification of risks and issues. The management Statutory andInternal Auditors undertake rigorous testing of the control environment of the Company toidentify areas where business process controls are ine_ective or may need enhancement.

A summary of the Internal Audit Reports containing significant findings by the InternalAuditor alongwith follow-up actions thereafter is placed before the Audit Committeeperiodically for review. The Audit Committee reviews the comprehensiveness andeffectiveness of the report and provides valuable suggestions and observations from timeto time.


The Company has developed an integrated Enterprise Risk Management Framework toidentify monitor mitigate and report key risks that impact its ability to meet thestrategic objectives. There is an overarching Risk Management Policy in place that wasreviewed and approved by the Board. The Board is responsible for the overall process ofrisk management in the organisation.

Your Company continues to monitor legal and compliance functions through workflow basedcompliance software tool ‘LRMS'. LRMS helps to assist in creating an internal legalrisk management monitoring system to assess monitor mitigate and manage legal risks andis equipped with a tracking system alongwith timely reminders for compliances. This toolenables compliances to be made and tracked by factories and offices of your Company acrossthe country.


The Company believes in the conduct of the affairs of its constituents in a fair andtransparent manner by adopting highest standards of professionalism honesty integrityand ethical behaviour. Accordingly your Company has implemented Vigil Mechanism asenvisaged in the Companies Act 2013 the Rules prescribed thereunder and the ListingRegulations through the Whistle Blower Policy and Fraud Risk Management Policy. Thepolicies provides for adequate safeguards against victimisation of persons who use suchmechanism and make provision for direct access to the Chairman of the Audit Committee.

The policies may be accessed on the website of the Company at Duringthe year under review no protected disclosure from any Whistle Blower was received by thedesignated officer.


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


At Keva we are committed to provide a healthy work environment that is free ofdiscrimination and unlawful harassment and that enables employees to work without fear ofprejudice gender bias and sexual harassment. The Company has always endeavoured forproviding a better and safe environment free of sexual harassment at all its work places.Keeping with this commitment the Company has adopted a policy on Prevention of SexualHarassment at Workplace and constituted Internal Complaints Committee in line with theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the rules thereunder for prevention and redressal of complaintsof sexual harassment at workplace. The Policy is gender neutral. All employees (permanentcontractual temporary trainees) are covered under this Policy.

During the year no complaints with allegations of sexual harassment were reported.


The Members on November 01 2017 through Postal Ballot exercise (results of whichwere declared on November 03 2017) had approved the SH Kelkar Stock Appreciation RightsScheme 2017 (‘STAR') for the welfare of its employees and those of itssubsidiaries. Each STAR is represented by one equity share of the Company. The eligibleemployees are entitled to receive in cash the excess of the maturity price over the grantprice in respect of such STARs subject to fulfillment of certain conditions andapplicability of income tax. The STAR Scheme involves secondary market acquisition of theequity shares of your Company by an Independent Trust set up by the Company for theimplementation of the STAR Scheme. Your Company lends monies to the Trust for makingsecondary acquisition of equity shares subject to statutory ceilings. The Trust haspurchased 1026403 equity shares of the Company as on March 31 2018 representing 0.71%of paid up capital of the Company however no STARs were allotted during the year2017-18.

The disclosures in compliance with SEBI (Share Based Employee Benefits) Regulations2014 and Section 62 1(b) read with Rule 12(9) of the Companies (Share Capital &Debentures) Rules 2014 are set out in Annexure D.


Your Company believes in inclusive growth to facilitate creation of a value-based andempowered society through continuous and purposeful engagement with society around.

Towards this end your Company adopted a comprehensive CSR Policy that defines theframework for your Company's CSR Programme. The CSR Policy may be accessed on theCompany's website at the link:

The Company has focuses on areas like environmental sustainability conservation ofenergy child education and empowerment equipping and upgradation of educationalinfrastructure set up with an aim to provide improved and advanced education systemsupport visually challenged people through perfumery trainings and employability and ruraldevelopment. It also partners in relief operations in rural areas in case of naturalcalamity or disaster.

The Company also undertakes other need based initiatives in compliance with ScheduleVII to the Companies Act 2013. During the year the Company has spent ` 1.79 Crore on CSRactivities.

The Annual Report on CSR activities is annexed herewith marked as Annexure E.


The Company continued its efforts to improve energy usage efficiency and increasecontributions from renewable sources of energy. Some of the measures adopted across theCompany for energy conservation are as under:

Commissioned solar power generation units at Mulund and Vashivali Units.

Replacement of conventional Gang Operated Device with Indoor Circuit Breaker atVashivali Unit which has helped in minimizing power failures in rainy season therebyreducing usage of diesel generators.

Installation of automatic power factor controller panel at Mulund Unit

Successful commissioning of ‘PNG fuel' in canteens instead of LPG.

Extension of condensate and _ush recovery system to MPP Plant in Vapi Unit which hasresulted in saving of 51.8 KL of fuel achieved resulting in cost savings of ` 16 lacs forthe year.

Replacement of high capacity motors in e_uent treatment plant at Vapi Unit with lowerrating motors which has resulted in reduction in power consumption annually by 30000 kWequivalent to cost saving of ` 2.2 lacs for the year.

Replacement of high cost heat transfer media (Thermic _uid) with low cost heating media(Steam) for Plant#8 at Vapi Unit which has potential of saving upto ` 14 lacs per annum.

Consolidation of equipments under two sheds as per the optimized process flow andminimum internal logistics requirement which has resulted in improved process efficienciesand minimum material movement.

Installation of Energy Efficient LED lights in place of conventional lights

Introduction of auto on-o_ system of exhaust fan in lift rooms.

The capital expenditure on energy conservation during the year under review was notsubstantial.


The Company is strongly devoted not only to environmental conservation programmes butalso maintains balance between economic concerns environmental and social issues faced bybusiness. A business must not grow at the expense of mankind but must serve humankind atlarge. Your Directors are pleased to inform that your Company has become first zero liquiddischarge company in Patalganga Rasayani Industrial Area in Raigad.

The Company is equally committed to provide a safe and healthy working environment forits employees and associates to ensure a high degree of safety norms. The Companycontinuously strives to perform beyond compliance. There is an increased focus on areaslike training and awareness safety observations audits etc. to drive a positive safetyculture. The Company places emphasis on safety processes behavioural safety and strive tocreate a positive safety culture towards achieving the ultimate goal of ‘zeroinjury'.

EHS initiatives taken by Keva are as under:

Installation of Reverse Osmosis Plant and Multi Effect Evaporator

Installation of foodie machines at Mulund and Vashivali Units which convert waste foodinto manure. This machine has a capacity to process 75 kgs of waste per day and convert toa feed of 7.5 kgs as manure.

Participation of employees in Environment Health & Safety trainings organised byNSC viz. Statutory Requirements Fire Prevention & Protection Safety at ‘Workingat Height' Electrical Safety Behaviour based Safety Disaster Management etc.

Participation in "Safety Officers' Meet" jointly organised by Directorate ofIndustrial Safety & Heath and NSC.

Participation in On site and O_ site mock drills organized by Directorate of IndustrialSafety & Heath and Mutual Aids Response Group

Organization of Mock safety drills within the Company

Implementation of online incident reporting system at Mulund Unit

Celebration of National Safety Week Fire Service Week World Environment Day

Imparting training in first aid road safety fire safety ergonomics use of PPEssafe handling of chemicals contract labour safety SCBA training etc


When it comes to winning future business it is imperative to stay on customers' corelists. We are achieving this by investing in our R&D capabilities developing consumerinsights and expanding our understanding of regulatory requirements. Keva fostersexcellence through innovation supported by strong R&D capabilities. To keep pace withthe changing market demand the Creative Centres of your Company are proactively engagedin development of innovative products and technologies. In line with this prelude yourCompany's Creative Centres at Amsterdam Jakarta Milan and Mumbai are continuouslystriving for innovative creations through research activities. Your Company continued toinvest in creating additional lab infrastructure advanced analytical instruments andrecruitment of high calibre perfumers and _avourists to boost in-house research and buildnew capability platforms. Additionally your Company has a strong Intellectual PropertyRights support team which enables it to patent its innovations globally and in developingunique products.

You will be glad to know that during the year your Company has established world-classCreative Centre in Amsterdam equipped with the state-of-the-art infrastructure requiredfor research and new product development. Expenditure on R & D and creativedevelopment during the year under review was ` 29.56 Crores on standalone basis and `40.45 Crores on consolidated basis.

Leveraging innovation and our talented workforce to advantage we continuously striveto surpass the expectations of consumers as we journey towards our goal of being one ofthe most admired world class F&F companies.


Talent and culture are the key focus areas for Keva to achieve its businessaspirations. The HR function's strategy is focused on creating a future-ready workplacestrengthening the organization culture building people and business capability bynurturing careers to its people.

Keva recognizes the challenge in attracting and retaining talent from a niche industrylike ours. Identifying right talent that brings in entrepreneurial zest and have theability to continuously challenge the status quo with a differentiating attitude is whatKeva looks for as the organization gears up to execute its 5 year Strategic plan.

In its second year LeAP (Leadership Advancement Program) – Keva's Global TalentManagement Program aims to develop its internal talent pool through a focused customizedand guided intervention. Mentoring by Senior Leadership Team for employees hired throughLateral Hiring program from ISB enables them to understand the culture and the industryfor better familiarization with the organization. Keva's People Capability DevelopmentPlan (PCDP) designed for each function and created with people managers aims at providingcustomized learning intervention for holistic development. LEAD (Leveraging E-learning forAccelerated Development) - our e- learning platform - provides world class learningsolution in all locations across the globe.

Keva Star - Keva's Global Employee Recognition Program applauds the stellarperformances that have made a direct impact on the organization. Half yearly Town Hallsprovide an open and transparent channel of communication with the CEO and the business andstrategy of the organization.

We also recognize that certain personal issues or concerns may sometime interfere withemployee health and wellbeing for which they may need counselling services fromprofessional counsellors. ‘Ear2Hear' is an Employee Assistance Program (EAP) whichextends consultation on personal issues - professionally and confidentially. Professionalcounsellors assist the employees in developing the necessary coping skills that ensuresthat they maintain an emotional balance. This helps them to take important decisionstackle problems and explore new avenues for change and growth.

Disclosures with respect to the remuneration of Directors Key Managerial Personnel andemployees as required under section 197 of the Companies Act 2013 read with Rule 5 (1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenin Annexure F to this Report. Details of employee remuneration as required underprovisions of section 197 of the Companies Act 2013 read with Rule 5(2) & 5(3) ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 also formspart of this Report. However as per the provisions of Section 136 of the Companies Act2013 the report and accounts are being sent to the Members and others entitled theretoexcluding the said information which is available for inspection by the Members at theRegistered Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any Member is interested inobtaining a copy thereof such Member may write to the Company Secretary in this regard.


Proactive and employee centric practices focus on transparent communication and a firmbelief that employees are the most valuable assets of the Company are the conrnerstone ofyour Company's employee relations approach. On industrial relations Keva continued toshare a cordial relationship with the Labour Unions in all the plant locations. The Boardacknowledges the contribution of the workers and the employees towards meeting theobjectives of the Company.


Your Company has developed a framework to harness the opportunities presented byprevalence of new-age digital technologies and transform to become a digitally savvycompany.

Keva has implemented ISO 27001 Security Management Systems (ISMS) standard for ITInfrastructure Services certified by NAQ_a reputed UK based body. This provides anindependent third party validation of an organization's Security Management Systems.

The existing infrastructure of the Company includes a robust centralised ERP systembased on SAP capable of covering business functions across finance inventory managementprocurement and logistics. The Company has also deployed Qlikview which provides a widearray of data analysis facilities.

CUPID - a homegrown ERP application for a Customer Project Integrated DevelopmentProcess - provides a state of the art solution for project management. CUPID provides asingle platform for managing customer projects right from the moment sales person entersthe customer's project until the time samples are delivered to the sales person forcustomer submission. Governance Risk & Compliance (GRC) tool and BMango–Briefmanagement tool for _avours were implemented during the year. BMango is a customer projectmanagement application for _avours and is an acronym for Brief MANagement on the Go whichsignifies ease of managing customer projects with this application.

Success Factors - cloud based online system – is single HR platform through whichemployees across the globe have an easy access to HR related information - policiesnewsletters news _ash team information Performance Development Process Learning andDevelopment and other HR processes on real time basis.

The IT infrastructure has enabled the Company to streamline operations resulting incentralized processing of data and timely information sharing.


The details forming part of the extract of the Annual Return in Form MGT- 9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as Annexure G to thisReport.


During the year under review the Company won multiple awards and recognitions bothinternational and national. Some of the significant awards include:

Your Company has been ranked 26th ‘Dream Company to Work For' by the World HRDCongress in February 2017. Your Company's unit at Vahivali has successfully implementedEnvironment Management System programme and has been certified with ISO 14001:2015 by NQA(certification body). Keva's cross functional employees from Vashivali Plant have beencertified as internal auditors for EMS ISO 14001:2015 by NQA.

Your Company's subsidiary Keva Fragrances Pvt. Ltd. was granted HALAL certification inIndonesia.

Your Company's subsidiary Keva Fragrances Pvt. Ltd. was adjudged second in the categoryfor outstanding export performance for financial year 2016-17 by CHEMEXCIL (BasicChemicals Cosmetics & Dyes Export Promotion Council) – a body set up by theMinistry of Commerce & Industry to promote exports from India.

Vapi Unit is now a member of SEDEX- Supplier Ethical Data Exchange. SMETA- SEDEX MemberEthical Trade Audits is a standard used for Ethical Trade Audits to help businessesimprove ethical performance of their supply chain.

Mr. Kedar Vaze – Director & CEO was one of the 16 Inspiring Entrepreneursfelicitated at the EY Entrepreneur of the Year 2017 held on February 15 2018. A leaderwith disruptive ideas incredible innovation resilient leadership and sustained focus ongrowth of business /organisation along with community development Mr. Kedar Vaze hassuccessfully created a path breaking transformation for Keva.


Statements in the Annual Report including those which relate to Management Discussionand Analysis describing the Company's objectives projections estimates andexpectations may constitute ‘forward looking statements' within the meaning ofapplicable laws and regulations. Although the expectations are based on reasonableassumptions the actual results might differ.


Your Directors would like to express their sincere appreciation of the positiveco-operation received from the Government Authorities Financial Institutions and theBankers. The Directors also wish to place on record their deep sense of appreciation forthe commitment displayed by all executives officers workers and staff of the Companyresulting in the successful performance of the Company during the year. The Board alsotakes this opportunity to express its deep gratitude for the continued co-operation andsupport received from its valued shareholders.

For and on behalf of the Board of Directors of
CIN: L74999MH1955PLC009593
Ramesh Vaze
Managing Director
DIN: 00509751
Kedar Vaze
Director & Chief Executive Officer
DIN: 00511325
May 25 2018