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S H Kelkar & Company Ltd.

BSE: 539450 Sector: Industrials
NSE: SHK ISIN Code: INE500L01026
BSE 16:01 | 20 Jul 202.20 -1.40






NSE 15:56 | 20 Jul 202.00 -1.75






OPEN 203.30
52-Week high 313.50
52-Week low 202.00
P/E 42.39
Mkt Cap.(Rs cr) 2,924
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 203.30
CLOSE 203.60
52-Week high 313.50
52-Week low 202.00
P/E 42.39
Mkt Cap.(Rs cr) 2,924
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

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

Company director report

Your Directors take pleasure in presenting their 61st Annual Report on thebusiness and operations of S H Kelkar And Company Limited (SHK / the Company) and auditedfinancial statements for the financial year ended 31 March 2017.


Financial Highlights: (Bin Cr)
Standalone Consolidated
Particulars 2016-17 2015-16 Growth % 2016-17 2015-16 Growth %
Revenue from operations 687.26 624.04 10.13 1059.82 993.59 6.67
EBITDA before royalty expense 130.41 116.79 11.66 177.38 160.22 10.71
Royalty Expense 18.02 - 100.00 - - -
Finance Costs 2.40 14.07 (82.94) 5.16 20.22 (74.48)
Depreciation 6.81 13.40 (49.18) 19.44 29.70 (35.55)
Profit before Tax (PBT) 103.18 89.31 15.53 152.78 110.30 38.51
Taxation 28.87 23.65 22.07 47.96 37.24 28.79
Profit after Tax (PAT) 74.31 65.66 13.17 104.82 73.06 43.47

Business Review:

Keva (consolidated SHK) impacts the lives of millions of consumers around the worldwith the fragrances and flavours it creates from prestige perfumes to fabric care andfrom a favourite drink to a preferred snack.

This year Keva forayed into Fine Fragrances. For Fine Fragrances we intend toincrease growth by focusing on fast growing end-market customers.

Keva is committed to winning in emerging markets. Keva believes that significant futuregrowth potential for the flavours and fragrances industry and for Keva's business existsin the emerging markets.

Fragrances are a way of expressing personal style and individuality thereby making ita consumer-driven industry. The fragrances market is also dictated by fickle andever-changing fashion trends. This means that manufacturers in the industry are on aconstant lookout for exciting unique and new fragrances to attract different consumersegments worldwide. Keva's fragrances have several application used as raw materials inthe fabric care skin and hair care fine fragrance and household product verticals.

Flavours are the key building blocks that impart taste experiences in food and beverageproducts and play a significant role in determining consumer preference of the endproducts in which they are used. Keva helps its customers deliver on the promise ofdelicious foods and drinks that appeal to consumers. In flavours our customers are inbeverages savoury snacks confectionery and dairy products.

On consolidated basis the overall revenue of Keva recorded a growth of 6.67% vis a vislast year. The total domestic business recorded a growth of 13% while the internationalbusiness had a subdued performance with a decline of 5%. The segmentation of fragrancesbusiness to flavours business has altered from 94% in 2016 to 87% in 2017. The domesticand international business ratio stands at 67:33 as against 63:37 in 2015-16. Thecomposition has changed due to strong domestic performance and subdued internationalperformance.

A deep dive into the segmental business reflects the following:

The domestic formulations business which represents 59% of the total SHK pie vis a vis55% last year recorded a healthy growth of 13% compared to previous year. This happeneddespite the impact of demonitisation which affected the revenue growth from November 2016to January 2017. The growth came not only from existing products but also throughintroduction of new products in the market. The international formulations businesshowever recorded a decline of 6%. This was because of the impact of currency devaluationin South East Asia and Africa and subdued demand in the Middle East due to softening ofthe oil prices.

The flavours business recorded an impressive growth of 155 %. The organic growth offlavours was 58%. Both the domestic segment as well as the international segment recordeda healthy growth of 30% and 80% respectively. The flavours business was also favourablyimpacted due to incremental sales generated from two business acquisitions from High TechTechnologies and Gujarat Flavours Private Limited which recorded a revenue of B32 Crores.

The ingredients business recorded a decline of 30% mainly on account of softening ofEuro subdued demand coupled with intense Chinese competition. As part of the Company'slong term strategy all the technologies and IP of the group will reside in the Company.Accordingly during 2016-17 SHK has acquired part of the ingredients technology from PFWAroma Ingredients BV.

The profit after tax however reflected a robust growth of 43.5%. This has mainly beenachieved due to a revenue increase of around B67 Crores improved product mix coupled withinterest savings of B15 Crores and reduced depreciation by B10 Crores mainly due to changein depreciation policy from WDV method to SLM method. Due to change in R&D policy theCompany has capitalized a part of the R&D costs as intangible costs the impact ofwhich is around B5 Crores for the current year. The operating cash flow of the Company hasalso shown a healthy growth. Due to the above performance the EPS of the Company hasimproved by 35% from B5.36 in 2015-16 to B7.25 in 2016-17.

On a standalone basis the Company achieved a topline of B687.26 Crores due to robustgrowth in domestic fragrance business despite the headwinds faced by the business due todemonitisation. The demonitisation impacted the domestic fragrance revenues.

The tradename "Keva" which is used by the Company is registered in the nameof Keva Fragrances Private Limited ("KFG") a wholly owned subsidiary of theCompany. The Company has entered into an agreement with KFG for use of brand name"Keva". As per the agreement the Company has accrued for a total royalty chargeof B18.02 crores (incl VAT) for the financial year 2016-17 calculated @ 3% of its netexternal sales.

The profit before tax excluding royalty has grown by 36% from B89.3 Crores in 2015-16to B121.2 Crores in 2016-17.

Operating cash flow of the Company has shown a growth from B45.33 Crore in FY 2015-16to B66.68 Crores in 2016-17.


Pursuant to the notification issued by the Ministry of Corporate Affairs dated 16February 2015 relating to the Companies (Indian Accounting Standard) Rules 2015 theCompany and its subsidiaries have adopted "IND AS" with effect from 01 April2016 with the comparatives for the periods ending 31 March 2016. The implementation ofIND AS was a major change process for which the Company had established a project team andhad dedicated considerable resources. The impact of the change on adoption of IND AS wasduly assessed.


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


Corporate Governance is all about ethical conduct openness integrity andaccountability of an enterprise. Good Corporate Governance involves a commitment of theCompany to run the business in a legal ethical and transparent manner and runs from thetop and permeates throughout the organization. The guiding principle of the CorporateGovernance at Keva is ‘harmony' i.e. balancing the need for transparency with theneed to protect the interest of the Company and balancing the need for empowerment at alllevels with the need for accountability. Credibility offered by Corporate Governance helpsin improving the confidence of the investors – both domestic and foreign andestablishing productive and lasting business relationship with all stakeholders.

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 ("SEBI ListingRegulations") forms an integral part of this Annual Report.


At Keva fulfillment of environmental social and governance responsibility is anintegral part of the way the Company conducts its business. A detailed information on theinitiatives of the Company as enunciated in the ‘National Voluntary Guidelines onSocial Environmental and Economic Responsibilities of Business 2011`is provided in theBusiness Responsibility Report a copy of which will be available on the Company`s

For Business Responsibility Report as stipulated under Regulation 34 of the SEBIListing Regulations kindly refer to Business Responsibility Report section which formspart of this Annual Report.


Your Directors are pleased to recommend a final dividend of B1.75 per equity share offace value of B10/- each to be appropriated from the profits of the Company for thefinancial year 2016-17 subject to the approval of the shareholders at the ensuing AnnualGeneral Meeting.

The list of unpaid dividend declared upto the financial year 2015-16 and updated uptothe date of 60th Annual General Meeting held on 09 August 2016 is available onCompany`s website www.keva. Shareholders are requested to check the said list andif any dividend due to them remains unpaid in the said list can approach the Company forrelease of their unpaid dividend.


As on 31 March 2017 the Company had subsidiaries in India United KingdomNetherlands Singapore and Indonesia as mentioned hereunder:

- Keva Fragrances Pvt. Ltd.

- Keva Flavours Pvt. Ltd.

- Saiba Industries Pvt. Ltd.

- Rasiklal Hemani Agencies Pvt. Ltd.

- Keva UK Ltd. United Kingdom

- Keva Fragrance Industries Pte. Ltd. Singapore

- PFW Aroma Ingredients B.V. Netherlands (step-down subsidiary)

- PT SHKKEVA Indonesia (Indonesia) (step-down subsidiary)

- Keva Chemicals Pvt. Ltd. (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 flavours and aroma ingredients. Thecompany registered a total revenue of B291.05 Crores in financial year 2016-17 as againstB268.83 Crores in financial year 2015-16 and loss of B18.40 Crores in financial year2016-17 as against loss of B30.08 Crores in financial year 2015-16.

Keva Flavours Private Limited:

Keva Flavours Private Limited develops flavours that underpin food and beverage brandsin India. During the year under review the company acquired flavours business undertakingof High Tech Technologies as well as Gujarat Flavours Pvt. Ltd. The acquisitions havehelped the company garner handsome revenue of B75.13 Crores from operations – up by145.68% over last year's sales of 30.58 Crores and profit after tax of B6.06 Crores asagainst B2.42 Crores during previous year representing a robust growth of 150.41%.

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 B4.99 Crores in the financial year 2016-17 as against B4.30 Crores in financialyear 2015-16 and profit after tax of B0.97 Crores in the financial year 2016-17 as againstB0.76 Crores in financial year 2015-16.

Rasiklal Hemani Agencies Pvt. Ltd.:

Rasiklal Hemani Agencies Pvt. Ltd. was acquired by the Company on 02 April 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 B7.21 Crores in thefinancial year 2016-17 as against B7.28 Crores in financial year 2015-16 and profit aftertax of B5.34 Crores in the financial year 2016-17 as against B4.57 Crores in financialyear 2015-16.

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 ofB151.71 Crores as against B189.62 Crores during the previous year and loss of B0.45 Croresas against loss of B2.18 Crores during the previous year. The decline in revenue is mainlyon account of softening of the Euro and subdued demand coupled with intense Chinesecompetition.

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 notcarry any business during the year. During the year under review the company registered arevenue of B0.58 Crores as against B1.10 Crores during the previous year and profit aftertax of B0.50 Crores as against B0.71 Crores during the previous year.

Keva Fragrance Industries Pte. Ltd.:

Keva Fragrance Industries Pte. Ltd. Singapore is involved in the business ofproviding sales and marketing assistance to us in South East Asia. In order to spearheadour market access and growth plans of South East Asia we have formed this Company throughwhich our operating subsidiary has been created in Indonesia. During the year underreview the company registered a revenue of B3.45 Crores as against B3.15 Crores duringthe previous years and a loss of B0.52 Crores as against B0.46 Crores during the previousyear.

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 B11.44 Crores as against B6.24 Crores during the previous year and loss ofB0.45 Crores as against loss of B4.51 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 of the Company during thefinancial year ended 31 March 2017 amounted to B0.15 lacs.


The consolidated financial statements of your Company for the financial year 2016-17are prepared in compliance with applicable provisions of the Companies Act 2013Accounting Standards and as prescribed by Securities and Exchange Board of India (SEBI)under SEBI Listing Regulations. The consolidated financial statements have been preparedon the basis of audited financial statements of the Company and its subsidiary companiesas approved by their respective Board of Directors. The Financial Statements as statedabove are also available on the website of the Company at www.


To achieve inorganic growth in operations your Company is aggressively working foracquisitions of brands businesses etc. which have synergy with the business operationsof the Company. During the year under review your Company has acquired Rasiklal HemaniAgencies Pvt. Ltd. (RHAPL). RHAPL have been the indenting agents in Northern region forCompany's fragrances for 50 years. Through deep industry knowledge and wide network oftrade contacts of its promoters RHAPL has over the years built a strong portfolio ofcustomers for the Company's fragrances. The acquisition will aid in expansion of themarketing and field activities in Northern region in coming years.

During the year under review your Company has also acquired the Business Undertakingof High-Tech Technologies comprising of Flavours Division through its subsidiary KevaFlavours Pvt. Ltd. The acquisition helped Keva power its flavours portfolio throughout theregions in which it operates and thus expand of Keva's presence in the Flavours business.

Fragrance delivery via encapsulation is a win-win platform because it provides a greatopportunity across all categories. Accordingly on 24 April 2017 the Company throughKeva Chemicals Pvt. Ltd. ("KCPL") step-down subsidiary of the Company hasacquired Fragrance Encapsulation Technology (FET) from Tanishka Fragrance EncapsulationTechnologies LLP ("TFET LLP"). As a part of the transaction KCPL has alsocontributed B2 Crore to the capital of TFET LLP on the said date and thus has become amajority capital contributing partner in TFET LLP. Acquisition of FET would enable theCompany to offer differentiated fragrance products.

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


During the year under review Keva Fragrances Pvt. Ltd. ("TransferorCompany") a wholly-owned subsidiary of the Company got amalgamated with K V ArochemPrivate Limited ("Transferee Company") a wholly-owned subsidiary of the Companypursuant to the Scheme of Amalgamation (the "Scheme") sanctioned by theHonorable High Court of Bombay vide its order dated 22 September 2016. The Scheme cameinto effect on 15 November 2016 upon filing of the court order with the Registrar ofCompanies Mumbai by the respective companies and pursuant thereto the entire businessand all the assets and liabilities duties taxes and obligations of the TransferorCompany have been transferred to and vested in the Transferee Company from the AppointedDate i.e. 01 May 2015.

Thereafter the name of the Transferee Company was changed to ‘Keva FragrancesPvt. Ltd.' with effect from 14 December 2016.

The objective of merger was to enable optimal utilisation of existing resources throughconsolidation of operations into a single legal entity provide an opportunity to leverageand pool skilled and experienced manpower of the respective companies and deriveoperational and financial synergies through prudent financial management and costreduction.


There has been no change in the capital structure during the year under review. TheCompany has not issued shares with differential voting rights nor granted stock optionsnor 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.


Mr. Amit Dixit Non-Executive Director is liable to retire by rotation at the ensuingAGM pursuant to the provisions of Section 152 of the Companies Act 2013 read with theCompanies (Appointment and Qualification of Directors) Rules 2014 and being eligible hasoffered himself for re-appointment. Your Directors recommend his re-appointment asNon-Executive Director of your Company.

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 1956 or Companies Act 2013 asapplicable. The Independent Directors have been familiarised with the Company theirroles rights responsibilities in the Company etc. The details of the FamiliarizationProgramme are available on the website of the Company www. The Company hasreceived declarations from all the Independent Directors of the Company confirming thatthey meet the criteria of independence as prescribed under the Companies Act 2013.


During the year 7 (seven) Board Meetings were convened and held on 27.05.201609.08.2016 29.08.2016 14.11.2016 30.11.2016 14.02.2017 and 27.03.2017. The interveninggap between the meetings was within the period prescribed under the Companies Act 2013.


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 27 March 2017.


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 Committee

- Stakeholders' 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 SEBI Listing Regulations theBoard has carried out an annual evaluation of its own performance and that of itsCommittees and individual Directors.

The performance of the Board and individual Directors was evaluated by the Boardseeking inputs from all the Directors. The performance of the Committees was evaluated bythe Board seeking inputs from the Committee Members. The Nomination and RemunerationCommittee reviewed the performance of the individual Directors. A separate meeting ofIndependent Directors was held to review the performance of Non-Independent Directorsperformance of the Board as a whole and performance of the Executive Directors of theCompany. This was followed by a Board Meeting that discussed the performance of the Boardits Committees and 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 andprovide necessary report to the Board for further evaluation of the Board; c) to recommendto the Board 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 appropriateperformance benchmarks 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 toKey Managerial Personnel Senior Management and other employees is based on Company'soverall philosophy and guidelines and is based on industry standards linked toperformance of the self and the Company and is a balance of fixed pay and variable pay andrecommends to the Board sitting fees/commission to the Non-Executive Directors.

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


The Key Managerial Personnel in the Company as per Section 2(51) and 203 of theCompanies Act 2013 as on 31 March 2017 are as follows:

• Mr. Ramesh Vaze: Managing Director

• Mr. Kedar Vaze: Whole Time Director and Group Chief Executive Officer and

• Mr. Tapas Majumdar: Executive VP 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 accounting standards havebeen followed;

b) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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 profit or loss of the Company for the year under review;

c) The directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this 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 to be followed by thecompany and that such internal financial controls are adequate and are operatingeffectively; and

f ) The directors have devised proper system to ensure compliance with the provisionsof all applicable laws and that 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 Annual General Meeting of the Company held on 18 September 2014for a term of five consecutive years. As per the provisions of Section 139 of theCompanies Act 2013 their appointment is to be ratified by the shareholders under Section139 of the Companies Act 2013 at the ensuing Annual General Meeting. The StatutoryAuditors have confirmed their eligibility to the effect that their appointment ifratified would be within the prescribed limits under the Companies Act 2013 and thatthey 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. Inrelation to para 2(a) in the Auditors' Report directors wish to state that there wasdelay in recording certain cash amounts received in the normal course of business inCompany's retail outlet in Mumbai. These were subsequently recorded and have been properlyreflected in the financial statements.


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 2016-17. The SecretarialAudit Report for the financial year ended 31 March 2017 is annexed herewith as Annexure Cto this Report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.


The Company has a well-placed proper and adequate Internal Financial Control systemwhich ensures that all assets are safeguarded and protected and that the transactions areauthorised recorded and reported correctly. The Company has laid down standard operatingprocedures and policies to guide the operations of the business. Robust and continuousinternal monitoring mechanisms ensure timely identification of risks and issues. Themanagement Statutory and Internal Auditors undertake rigorous testing of the controlenvironment of the Company.

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 Board of Directors of your Company has formulated and approved a Risk ManagementPolicy in terms of the requirement of the Companies Act 2013 and the SEBI ListingRegulations. The Policy has been drafted to identify the risks to the Company and tocontrol and manage the risks and mitigate the loss from the risks. The Board isresponsible for the overall process of risk management in the organisation. ThroughEnterprise Risk Management Programme Business Units Corporate functions addressopportunities and the attendant risks through an institutionalized approach aligned to theCompany's objectives. This is facilitated by Internal Audit. The business risk is managedthrough cross functional involvement and communication across businesses. In the opinionof the Board there has been no identification of elements of risk that may threaten theexistence of the Company.

The focus of compliance activities is on quality environmental protection healthwork safety product safety risk and value management and combating corruption. YourCompany 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.


To create enduring value for all stakeholders and ensure the highest level of honestyintegrity and ethical behaviour in all its operations the Vigil Mechanism as envisaged inthe Companies Act 2013 the Rules prescribed thereunder and the SEBI Listing Regulationshas been implemented by the Company through the Whistle Blower Policy. The Policy providesfor adequate safeguards against victimisation of persons who use such mechanism and makeprovision for direct access to the Chairman of the Audit Committee.

The Whistle Blower Policy may be accessed on the website of the Company During the year under review no protected disclosure from any WhistleBlower was received by the designated officer under the Whistle Blower Policy.


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.


Your Company strongly believes in providing a safe and harassment free workplace foreach and every individual working for the Company through various interventions andpractices and has zero tolerance for sexual harassment at workplace. It is the continuousendeavor of the management of the Company to create and provide an environment to all itsemployees that is free from discrimination and harassment including sexual harassment.

The Company has adopted a policy on Prevention of Sexual Harassment at Workplace andconstituted Internal Complaints Committee in line with the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and therules thereunder for prevention and redressal of complaints of sexual harassment atworkplace. The Policy is gender neutral. All employees (permanent contractual temporarytrainees) are covered under this Policy.

During the year 1 complaint with allegations of sexual harassment was filed with theCompany and the same was investigated and resolved as per the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.


India is a nation of a billion dreams a billion aspirations and above all greatopportunities. To turn these dreams into reality especially for the vulnerable sectionsof the society the Company has taken the path of inclusive development to address theirbasic needs and is at the forefront of Corporate Social Responsibility (CSR) andsustainability initiatives and practices. While social responsibility has been ingrainedin Keva culture since our earliest days as a Company Keva is committed to inclusivesustainable development and contributing to building and sustaining economic social andenvironmental capital and to pursue CSR projects that are scalable and sustainable with asignificant multiplier impact on sustainable livelihood creation and environmentalreplenishment.

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 B1.20 Crore on CSRactivities.

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


Energy Conservation is unquestionably of great importance to all of us since we rely onenergy for everything we do every single day. Energy supplies are limited and to maintaina good quality of life we must find ways to use energy wisely. Though the Company'soperations involve low energy consumption the Company has always been conscious of theneed for conservation of energy and has been sensitive in making progress towards thisend.

The following key initiatives have been undertaken by your Company towards conservationof energy/utilising alternate sources of energy:

• Installation of Solar Panels at Mulund and Vashivali Units.

• Successful commissioning of ‘PNG fuel' in canteen instead of LPG.

• Installation of Energy Efficient LED lights in place of conventional lights.

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

• Introduction of compressed air backup system for CDL machine for blendingfunction.

• Replacement of existing steam ejectors used in vaccum generation in distillationassembly at Vapi Unit with efficient steam ejectors having low steam consumption. This hasled to fuel saving of approx. 31 MT pa.

• Implementation of condensate and flush recovery project at Vapi Unit forrecovery of condensed steam generated in distillation process and reusing the hightemperature water as boiler feed. Reuse of the condensed steam i.e. high temperature wateras boiler feed has led to saving of fuel of approx. 84 MT pa. that was being used earlierfor pre-heating of water in distillation process.

• Close monitoring of lighting system by providing dedicated team to avoidunwanted lighting power.

• Implemented tertiary treatment system for Effluent treatment plant to reduce CODload in discharge at Vashivali and Mulund Units of Keva.

The capital expenditure on energy conservation during the year under review was B4.50crores on a consolidated basis.


Environment Health and Safety (EHS) is one of the primary focus areas for yourCompany. Your Company's policy is to consider compliance to statutory EHS requirements asthe minimum performance standard and is committed to go beyond and adopt stricterstandards wherever appropriate.

Your Company is sensitive about the health and safety of its employees and has beenachieving continuous improvement in safety performance through a combination of systemsand processes as well as co-operation and support of all employees.

Your Company also invests resources and efforts in training and hardware upgradation tomove the needle on safety. During the year your Company has made substantial investmentson sourcing and installation of renewable energy.

EHS initiatives taken by Keva are as under:

- Implementation of online incident reporting system at Mulund Unit.

- Implementation of contractor safety management system and behaviour based safetymanagement system at Mulund Unit.

- Organization of Mock safety drills.

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

- Formation of Emergency Response Team at Mulund Unit.

- Organization of Safety competitions.

- Commissioning of Sewage Treatment Plant of capacity 25 KL per day at Vashivali Unit.

- Commissioning of rooftop solar power plants at units at Vashivali and Mulund.

- Tree Plantation on World Environment Day.


The future belongs to those who can innovate. Innovation has become one of the mostimportant pillars of Keva. Keva has been putting innovation and technology to work to makeits growth journey more meaningful. In keeping with Keva's strategic vision Keva hasstayed invested in research and has been making brisk progress with a robust pipeline ofinnovative fragrances and flavours and novel formulations. Within Fragrances ourtechnologies are working to enhance the day-to-day experience of consumers across amultitude of product lines. Your Company continued to invest in creating additional labinfrastructure advanced analytical instruments and recruitment of high calibre perfumersand flavourists to boost in-house research and build new capability platforms.

A high innovation driven approach to products under development will help the Companyfor timely delivery of its envisaged future product portfolio. All products manufacturedtoday and those under development are the fruits of our steadfast focus on ingeniousR&D. The Company has continued its endeavour to adopt and learn new technologies forits product range; and stay ahead of the curve in view of a globally competitive market.

Your Company's Innovation and R&D functions work hand in hand for adopting bestpractices in innovation of the products and continue to focus on development of superiorproduct innovations renovation of the current portfolio for superior product experiencebuilding analytical excellence and regulatory compliance for the portfolio.

You will be glad to know that your Company has built world-class Creative Centresequipped with the state-of-the-art infrastructure required for research and new productdevelopment. The Innovation team continuously does market research as well as customersurvey to understand the needs and requirements of the consumers. Expenditure on R & Dand creative development during the year under review was B16.49 Crores on standalonebasis and B26.41 Crores on consolidated basis.

Your Company's R&D function will continue to focus on consumer insight basedunique differentiated yet relevant superior products renovation of the portfolio forbetter value and sensorial delight leading to sustainable profitable share growth for yourCompany.


At Keva we are focused on building an organization which continuously innovatesnurtures and develops talent and HR processes to deliver on the short term and long termbusiness strategy. Our strength lies within the diverse cultures backgrounds skills andexperience of our global team. At Keva employees from diverse backgrounds with 10different nationalities provide unique perspectives to all aspects of the business fromdiscovery to creation to sales. Our values – SPIRIT of Keva (where SPIRIT stands forStewardship Partnership Innovation Responsibility Integrity and Teamwork) binds ourdiverse workforce. SPIRIT of Keva awareness sessions were rolled out and cascaded amongstall levels of management and across all geographies in the year 2016.

As a growing organization while attracting talent is critical Keva places equalemphasis on honing and growing their knowledge and skills to groom them for higher rolesand more responsibilities. It has developed a blended approach for learning anddevelopment that caters not only to each stage of an employee life-cycle but is alsospecific to the requirements of a specific function business and role demand.

Novel programs such as ‘Managerial Effectiveness' ‘Building Leaders forTomorrow' ‘Executive Presence' and ‘Advanced Leadership Development Program'have helped harnessing the potential of the managers and create future leaders of Keva.Signature programs like ‘Urja' and ‘Saksham' specially designed for workers aimat developing personal and professional excellence through self-driven approach. LEAD(Leveraging E-learning for Accelerated Development) - our e- learning platform - providesworld class learning solution in all locations across the globe. For a growing andexpanding company Keva needs to build a talent pipeline and make the organizationfuture-ready. Keva launched its Global Talent Management Program – LeAP (LeadershipAdvancement Program) with an aim to identify and build talent pipeline. LeAP will helpKeva to have a focused approach towards building careers from within going forward. KevaStar - Keva's Global Recognition Program applauds the stellar performances that have madea direct impact on the organization. Half yearly Town Halls provide an open andtransparent channel of communication with the CEO and the business and strategy of theorganization. Your Company has also launched Ear2Hear - Employee Assistance Program forKeva's employees and their families where they can seek help of professional counsellorson various personal issues and concerns.

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 E 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.


The Company is proud of its work culture which emphasizes safety high productivitygood health quality of life and overall wellbeing of employees. The Company maintainedhealthy cordial and harmonious industrial relations at all levels. A peaceful Long TermSettlement was executed while maintaining zero man day loss at our manufacturing plant atVashivali.

The enthusiasm and unstinting efforts of employees have enabled the Company to remainat the dominant position in the industry. The Board acknowledges the contribution of theworkers and the employees towards meeting the objectives of the Company.


Your Company has invested in a superior IT infrastructure as a tool to improve workefficiency reduce errors/duplication enhance business relationships manage inventoriesbetter and cut down on internal administrative delays.

As a journey towards continual improvement Keva has achieved a milestone byimplementing ISO 27001 Security Management Systems (ISMS) standard for IT InfrastructureServices certified by NAQ-a reputed UK based body. This provides an independent thirdparty validation of an organization's Security Management Systems. Implementing thisstandard will enable mitigation of risk of Information Security breaches as also theimpact of Information Security breaches when they occur. This shall also aid instreamlining the IT processes across Keva and building a secure infrastructure forbusiness operations.

Embracing technology and bringing in a platform accessible to all employees anywhereand anytime HR transitioned from paper-based HR processes to a cloud based online systemwith the implementation of Success Factors. Through this single HR platform employeesacross the globe have an easy access to HR related information - policies newslettersnews flash team information Performance Development Process Learning and Developmentand other HR processes on real time basis. All employees in India South East Asia and TheNetherlands are currently connected through Success Factors.

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.

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 F to thisReport.


The World HRD Congress recognizes corporate and individuals for their contribution inemployee engagement strategic HR management talent management recruiting and staffing.Our contemporary HR practices have been recognized at external platforms. Your Company hasbeen ranked 29th ‘Dream Company to Work For' by the World HRD Congress inFebruary 2017.


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 Kedar Vaze
Mumbai Managing Director Director & Chief Executive Officer
12 May 2017 DIN: 00509751 DIN: 00511325