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S H Kelkar & Company Ltd.

BSE: 539450 Sector: Industrials
NSE: SHK ISIN Code: INE500L01026
BSE 00:00 | 23 Jul 161.85 -2.60






NSE 00:00 | 23 Jul 161.45 -3.00






OPEN 163.20
VOLUME 13751
52-Week high 189.80
52-Week low 68.20
P/E 28.60
Mkt Cap.(Rs cr) 2,287
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 163.20
CLOSE 164.45
VOLUME 13751
52-Week high 189.80
52-Week low 68.20
P/E 28.60
Mkt Cap.(Rs cr) 2,287
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

Dear Shareholders

Your Directors take pleasure in presenting their 64th 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 2020.

In compliance with the applicable provisions of Companies Act 2013 (including anystatutory modification(s) or re-enactment(s) thereof for the time being in force and theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (hereinafter referred to as “Listing Regulations”) thisreport covers the financial performance and other developments during the financial year2019-20 and upto the date of the Board Meeting held on 26 May 2020 to approve this reportin respect of standalone SHK and consolidated SHK comprising of SHK its subsidiaries andjoint ventures. Consolidated SHK has been referred to as “Keva” in this report.

Financial Highlights & Business Review

Financial Highlights:

(Currency: Rs in crores)

Standalone Consolidated
Particulars 2019-20 2018-19 Growth % 2019-20 2018-19 Growth %
Sales 712.86 692.09 3.00 1105.08 1041.15 6.14
Other operating income 5.97 1.94 207.32 9.15 6.97 31.28
EBITDA 80.31 83.90 (4.28) 129.51 159.95 (19.03)
Royalty Expense 16.47 18.50 (10.97) - - -
Finance Costs 13.82 6.51 112.29 24.70 13.95 77.06
Depreciation 27.81 15.18 83.20 51.50 31.15 65.33
Profit before Tax (PBT) before exceptional items 38.68 62.21 (37.82) 89.78 114.85 (21.83)
Profit before Tax (PBT) after exceptional items 38.68 62.21 (37.82) 53.32 114.85 (53.57)
Taxation 10.35 17.24 (39.97) 18.62 27.01 (31.06)
Profit after Tax (PAT) 28.33 44.97 (37.00) 34.70 87.84 (60.50)
Share of profit from Associates - - - 1.16 0.41 (282.93)
Total Profit after Tax (PAT) 28.33 44.97 (37.00) 35.70 88.48 (59.65)

Business Review:

Fragrances have seamlessly transformed themselves into essential day-to-day productsthat form a significant part of personal grooming. Fragrances are a way of expressingpersonal style and individuality thereby making it a consumer-driven industry. Flavoursadd essence to life. They have always been significant in adding the extra zing and tasteto what we essentially cook and eat. Flavours bring delight to our entire food experienceturning daily meals to treats.

With a strong parentage and long standing presence of 90+ years in the Fragrance &Flavour Industry Keva continues to be a leading innovator of sensorial experiencesco-creating unique products that consumers taste smell or feel infine fragrances andcosmetics detergents and household goods food and beverages. Keva's flavour andfragrance compounds combine a number of ingredients to produce proprietary formulaecreated by its flavourists and perfumers.

First half of FY 2019-20 was clouded by raw material availability crisis raging fromprevious year and the same had begun to normalize by second half of FY 2019-20. Howeverthe Company saw several operational challenges due to the COVID-19-led lockdown in Marchand April 2020. While the Company did not witness any significant impact on the existingorder backlog from customers execution of the same during the period was severelyimpacted due to temporary plant closures and logistic issues in March 2020. Keva'spriority during this challenging operating environment had been to maintain and secureits operations while also ensuring safety and well-being of its employees and businesspartners. Keva was focused on serving all its customers especially since it forms animportant part of many essential commodities and the FMCG supply chain. Fundamentally theCompany continues to be strong and stable. Liquidity and cash flow position of the Companycontinued to be strong inspite of the impact of COVID-19 pandemic.

Despite the challenging environment on a consolidated basis sales in FY 2019-20 stoodat Rs 1105.08 crore higher by 6.14%. On the profitability front EBITDA during FY2019-20 stood at ` 129.51 crore. Finance costs during the year increased to Rs 24.70 crorefrom Rs 13.95 crore in FY 2018-19.

Finance costs during the FY 2019-20 stood at Rs 24.7 crore and depreciation stoodhigher at Rs 51.5 crore. The increase was primarily on account of commissioning of the newfacility at Mahad and adoption of new accounting standards. Effective 01 April2019 the Company has adopted Ind AS 116 "Leases". Due to transition the natureof expenses in respect of operating leases has changed from "lease rent" to"depreciation cost" and "finance cost" for the right- to-use assetsand for interest accrued on lease liability respectively. The adoption of this newaccounting standard resulted in increase in finance cost and depreciation cost.

Following the scaling down of activities at the Fragrance Ingredients facility in theNetherlands last year the said facility alongwith research activity being carried out inthe Netherlands facility was closed during the year. The impairment of plants andmachineries and manufacturing facilities in the Netherlands along with other closure costsresulted in a one-time exceptional expense of Rs 36.5 crore which impacted reportedprofitability during FY 2019-20. A substantial part of this expense was a non-cashimpairment charge. PAT excluding one-time exceptional cost as aforementioned stood at Rs71.2 crore as against Rs 87.8 crore during the previous year. PAT after exceptional itemas above and including share of profit (net of depreciation on assets comprised in thepurchase price paid) in Creative Flavours & Fragrances SpA and other joint ventureswas Rs 35.9 Crore as against Rs 88.3 Crore during the previous year.

Keva reported healthy cash flows from operations during the year at Rs 205.2 croreowing to improvement in the total working capital cycle. This enabled Keva to reduce itsNet Debt as on 31 March 2020 to Rs 299 crore as compared to Rs 400 crore as on 30September 2019. This notable reduction in debt was in spite of payment of interimdividend.

On a standalone basis the Company achieved a topline growth of 3%. EBITDA stood at Rs80.31 Crore and the Company achieved a net profit of Rs 28.33 Crore.

The fragrance business reported increased sales during the year and grew by 6.8%despite a challenging macro-environment. Core domestic Fragrance business grew by 7.9% andinternational segment registered a growth of 4.7% in FY 2019-20. South Asia (includingIndia) Middle-East & Africa (SAMEA) fragrance business gained better momentum insecond half of the year with growth of 13% while overall growth for the year stood at 3%.This was despite the lockdown situation with COVID-19 towards end of March 2020 whereinalmost 10 days sale was lost with number of open orders pending. Fragrance projectpipeline remains strong and is growing consistently. SAMEA has secured revenue of Rs 52crore from new wins in FY 2019-20. Business achieved double digit growth in sales in largecorporates while managed a strong defense with zonal clients.

Flavours business reported a stable performance during FY 2019-20 with overseasflavours segment reporting an improvement of 17% YoY in FY 2019-20. The growth in theinternational flavors business was mainly due to expansion by key customers (AlFakher Goussous) into new geographies and due to business in African markets likeNigeria Congo. Disruptions owing to Covid-19 resulted in de-growth of domestic flavoursrevenues in during the year especially in the last quarter of the year. The domesticflavours segment de-grew by 17.9%.

The flavours business launched new formats like Granulz and Seasoning which are seeinggood traction. The domestic market also saw wins with key customers like Bisleri FutureGroup CCD Pffizer etc.

Management Discussion and Analysis Report

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

A Report on Corporate Governance along with a Certificate from the Statutory Auditorsof the Company confirming of corporate governance requirements as stipulated under theListing Regulations form an integral part of this Annual Report.

Business Responsibility Report

Your Company strives to create value for all stakeholders whilst growing responsiblyand sustainably. A detailed information on the initiatives of the Company as enunciated inthe ‘National Voluntary Guidelines on Social Environmental and EconomicResponsibilities of Business 2011 is provided in the Business Responsibility Report acopy of which will be available on the Company`s website For BusinessResponsibility Report as stipulated under Regulation 34 of the Listing Regulations kindlyrefer to Business Responsibility Report section which forms part of this Annual Report.


Based on the principles enunciated in the Dividend Distribution Policy of the Companyon 18 March 2020 the Board of Directors of your Company had declared an interim dividendof 9.5% i.e. 95 Paise per equity share on 141320801 fully paid-up equity shares of facevalue of Rs 10/- each for the financial year 2019-20. The dividend was paid to memberswhose names were furnished by National Securities Depository Limited and CentralDepository Services (India) Limited as beneficial owners on 27 March 2020.

The Board recommends that the said interim dividend be declared as final dividend forthe financial year 2019-20 subject to approval of the shareholders at the ensuing AnnualGeneral Meeting.

The list of unpaid dividend declared upto the financial year 2018-19 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.

Consolidated Financial Statements

The consolidated financial statements of your Company for the financial year 2019-20are 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.

Subsidiaries and Joint Ventures

As on 31 March 2020 the Company had subsidiaries and joint ventures in India UnitedKingdom the Netherlands Italy Singapore China and Indonesia as mentioned hereunder:Keva Fragrances Pvt. Ltd. Keva Flavours Pvt. Ltd. Saiba Industries Pvt. Ltd. RasiklalHemani Agencies Pvt. Ltd. Keva Chemicals Pvt. Ltd.

Creative Flavours & Fragrances S.p.A Italy Keva UK Ltd. United Kingdom KevaEurope BV the Netherlands Keva Fragrance Industries Pte. Ltd. Singapore V N CreativeChemicals Pvt. Ltd. (step-down subsidiary) Tanishka Fragrance Encapsulation TechnologiesLLP (step-down subsidiary)

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

• PT SHKKEVA Indonesia Indonesia (step-down subsidiary) Anhui Ruibang AromaCompany Ltd China (step-down subsidiary)

• Keva Italy Srl (step-down subsidiary)

• Purandar Fine Chemicals Pvt. Ltd. (Joint Venture)

A statement containing the salient features of the financial statements of thesubsidiaries in the prescribed format AOC-1 is appended as Annexure A to this Report. Thefinancial statements of the subsidiaries are uploaded on the website of the Company.

Financial and operational performance of the subsidiaries and joint ventures is givenhereunder:

Keva Fragrances Private Limited:

Keva Fragrances Private Limited is involved in the business of manufacture and exportsof fragrances flavours and aroma ingredients. Keva Fragrances Private Limited registeredtotal revenue from operations of Rs 409.25 Crores in financial year 2019-20 asagainst Rs 373.19 Crores in financial year 2018-19 and loss of Rs 11.79 Crores infinancial year 2019-20 as against loss of ` 8.30 Crores in financial year 2018-19.Increase in exports business from EOU Unit has contributed to revenue growth in currentyear. However softening of Aroma Ingredients selling prices in current year has broughtdown margins by 6% coupled with increase in provision for doubtful debts power & fuelexpenses and employee cost resulted in higher loss than previous year.

Keva Flavours Private Limited:

Keva Flavours Private Limited develops flavours that underpin food and beverage brandsin India. Keva Flavours Private Limited registered a total revenue from operations of Rs136.91 crores in financial year 2019-20 as against Rs 49.01 crores in financial year2018-19. The increase in revenue was mainly on account of sale of F&F blends whichalso resulted in improvement of bottom line from loss of Rs 4.69 crores in financial year2018-19 to a loss of ` 1.20 crores in financial year 2019-20. The core flavours segmentsaw a stable performance with flattish growth.

Saiba Industries Private Limited:

Saiba Industries Private Limited is involved in the business of manufacture and sale ofplant extracts. During the year under review Saiba Industries Private Limited registeredan operating revenue of Rs 0.15 lakhs in the financial year 2019-20 as against ` 1.73Crores in financial year 2018-19 and profit of Rs 0.14 Crores in the financial year2019-20 as against profit after tax of Rs 0.27 Crores in financial year 2018-19.

Rasiklal Hemani Agencies Pvt. Ltd.:

Rasiklal Hemani Agencies Pvt. Ltd. was acquired by the Company on 02 April 2016 tostrengthen the base in the northern region and reach closer to the customers. During theyear under review Rasiklal Hemani Agencies Pvt. Ltd. registered an operating revenue ofRs 2.28 Crores in the financial year 2019-20 as against ` 3.03 Crores in financial year2018-19 and profit after tax of ` 3.07 Crores in the financial year 2019-20 asagainst Rs 3.53 Crores in financial year 2018-19.

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 PFW Aroma Ingredients B.V.registered anoperating revenue of Rs 131.94 Crores as against Rs 146.93 Crores during the previous yearand loss of Rs 22.15 Crores as against profit of ` 17.27 Crores during the previous year.

Keva UK Limited:

Keva UK Limited is authorised by its constitutional documents to manage the investmentof your Company in the Netherlands - PFW Aroma Ingredients B.V. During the year theCompany which has been holding 84.55% of Keva UK Ltd. has acquired balance 15.45% equitystake of Keva UK Limited from Keva Fragrances Pvt. Ltd. a wholly owned subsidiaryincreasing the Company's equity stake in Keva UK Ltd. to 100%. Keva UK Limited did notcarry any business during the year. During the year under review Keva UK Limiteddid not register any revenue. Loss was Rs 0.38 lakhs as against loss of Rs 0.05Crores during the previous year.

Keva Fragrance Industries Pte. Ltd.:

Keva Fragrance Industries Pte. Ltd. was formed to spearhead Keva's market access andgrowth plans of South East Asia. It is also a sourcing hub for Keva group and houses afabric care centre of excellence of the Group. During the year under review KevaFragrance Industries Pte. Ltd. registered an operating revenue of ` 154.53 Crores asagainst Rs 124.56 Crores during the previous year and a profit of Rs 2.82 Crores asagainst a profit of` 4.38 Crores during the previous year. Third party sales increased byapprox. 27% as performance was driven by high double-digit growth of 34% in Fine Fragrancebusiness.

PT SHKKeva Indonesia:

PT SHKKeva Indonesia is involved in the business of trading and distribution ofperfumery compounds. During the year under review PT SHKKeva Indonesia registered anoperating revenue of ` 27.29 Crores as against Rs 12.02 Crores during the previous yearand a profit after tax of Rs 0.18 Crores as against a loss of Rs 4.93 Crores during theprevious year.

Keva Chemicals Private Limited:

Keva Chemicals Private Limited is involved in the business of aroma ingredients. Duringthe year under review Keva Chemicals Private Limited registered an operating revenue ofRs 0.70 crores as against Rs 0.20 crores last year. Keva Chemicals Private Limited earneda profit after tax of Rs 0.65 crores as against a loss of Rs 0.27 crores during theprevious year.

VN Creative Chemicals Private Limited:

VN Creative Chemicals Private Limited was acquired for building Tonalid manufacturingfacility at Mahad. During the year under review VN Creative Chemicals Private Limitedregistered an operating revenue of Rs 124.04 crores as against Rs 24.67 crores during theprevious year. It earned a profit after tax of Rs 8.54 crores as against a loss of Rs 1.62crores during the previous year.

Creative Flavours & Fragrances S.p.A:

Creative Flavours & Fragrances S.p.A (Italy) is a leading fragrance company inItaly serving the whole of Europe. During the year under review Creative Flavours &Fragrances S.p.A registered an operating revenue of Rs 242.55 crores (including revenuefrom contract manufacturing approx Rs 123.81 Crore) as against ` 279.22 crores during theprevious year and a profit of Rs 3.87 crores as against Rs 2.94 crores during the previousyear.

Tanishka Fragrance Encapsulation Technologies LLP:

The Company through Keva Chemicals Pvt. Ltd. step-down subsidiary of the Company hadacquired Fragrance Encapsulation Technology from Tanishka Fragrance EncapsulationTechnologies LLP (“TFET LLP”) in April 2017. During the year under review nobusiness activity was undertaken by TFET LLP.

Anhui Ruibang Aroma Company Ltd. China:

Headquartered in Fuyang Anhui is a leading aroma ingredient Company in China havingtonalid manufacturing facility. During the year Anhui registered an operating revenue ofRs 34.92 crores as against Rs 28.30 last year and a profit after tax of Rs 0.51 crores asagainst a loss of Rs 0.70 crores during the previous year.

Purandar Fine Chemicals Pvt. Ltd. :

During the year under review Purandar Fine Chemicals Pvt. Ltd. registered a totalrevenue of Rs 3.60 crores as against Rs 3.88 crores during the previous year and a profitafter tax of Rs 0.18 crores as against profit after tax of Rs 0.34 crores during theprevious year.

Keva Europe BV:

During the year under review Keva Europe BV had not commenced operations. Itregistered an income (being other income) of Rs 3.26 crores and a loss of Rs 1.40 croresduring the year.

Keva Italy Srl:

The Company has incorporated Keva Italy Srl through its wholly owned subdiary KevaEurope BV on 26 November 2019.

Scheme of Merger by Absorption

The Board of Directors of the Company at its meeting held on 25 October 2019had approved Scheme of Merger by Absorption of three of its wholly owned subsidiaries -Keva Chemicals Private Limited Saiba Industries Private Limited and Rasiklal HemaniAgencies Private Limited - with the Company and their respective shareholders andcreditors under the provisions of Section 230 to 232 of the Companies Act 2013. Theapplication for Merger by Absorption has been filed with the National Company LawTribunal Mumbai Bench on 15 November 2019.

Share Capital

During the year under review the Company has bought back 3300000 fully paid-upequity shares of Rs 10/- each of the Company at a price of Rs 180/- per equity sharerepresenting 9.96% and 7.17% of the fully paid-up equity share capital and free reservesas per the audited standalone and consolidated financial statements of the Company for thefinancial year ended 31 March 2019. The Company has not issued shares with differentialvoting rights nor granted stock options nor sweat equity during the year.

Public Deposits

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 Provided

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.

Contracts or Arrangements with Related Parties

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. Deepak Raj Bindra stepped down as Non-Executive Director on 25 October 2019 onaccount of personal exigencies. Mr. Mark Elliott was appointed as an IndependentDirector for a term of two years from 15 December 2019. Mr. Dalip Sehgal and Ms.Alpana Parida were re-appointed as Independent Directors for a second term of three andone year(s) respectively from 09 December 2019. Mr. Jairaj Purandare and Ms.Sangeeta Singh were re-appointed as Independent Directors for a second term of two andthree years respectively from 19 February 2020. The aforementionedappointment/re-appointments of Independent Directors were approved by the Members of theCompany through Special Resolutions passed on 05 December 2019 by way of Postal Ballot. Inthe forthcoming Annual General Meeting Ms. Prabha Vaze will retire by rotation and willbe considered for re-appointment because of her eligibility.

Mr. Ramesh Vaze 79 years stepped down as Managing Director of the Company with effectfrom close of working hours of 31 August 2019. He was appointed as Non-ExecutiveDirector and Chairman of the Board with effect from 01 September 2019 by the Members ofthe Company through Special Resolution passed on 12 July 2019 by way of Postal Ballot. Hecontinues to guide the Company and mentor the leadership team in his capacity asNon-Executive Director and Chairman of the Board.

The five-year tenure of Mr. Kedar Vaze as a Whole-time Director and Group ChiefExecutive officer of the Company would conclude on 31 August 2020. The Board would beconsidering his re-appointment upon his offering himself for such re-appointmentfor a further period of five years from 01 September 2020.

The Executive Director does not receive any remuneration or commission from any of itssubsidiaries. None of the Directors of the Company has been disqualified to be a Directorof the Company on account of non-compliance with any of the provisions of the CompaniesAct 2013. The Independent Directors have been familiarised with the Company their rolesrights and responsibilities in the Company etc. The details of the FamiliarizationProgramme are available on the website of the Company All the IndependentDirectors have given their declaration of independence as required under Section 149(6) ofthe Companies Act 2013. This has been noted by the Board of Directors.

Board Meetings

During the year 6 (six) Board Meetings were convened and held on 22.05.201910.06.2019 09.08.2019 25.10.2019 07.02.2020 and 18.03.2020. The particulars ofattendance of the Directors at the said meetings are detailed in the Corporate GovernanceReport of the Company which forms a part of this Report. The intervening gap between theMeetings was within the period prescribed under the Companies Act 2013 and ListingRegulations.

Meeting of Independent Directors

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 18 March 2020.

Committees of the Board

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 ResponsibilityCommittee Stakeholders' Relationship Committee Details of the above Committees along withcomposition and meetings held during the year under review are provided in the CorporateGovernance Report forming part of this Report.

Annual Evaluation of Board's Performance

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.

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.

Nomination and Remuneration Policy

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 KMP and senior management of the quality required to runthe Company successfully; Relationship of remuneration to performance is clear and meetsappropriate performance benchmarks; and Remuneration to Directors Key ManagerialPersonnel and Senior Management involves a balance between fixed and incentive payreflecting short and long term performance objectives appropriate to the working of theCompany 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.

The remuneration has been paid as per the Nomination and Remuneration Policy of theCompany. The policy may be accessed on the website of the Company at

Key Managerial Personnel

The Key Managerial Personnel in the Company as per Section 2(51) and 203 of theCompanies Act 2013 as on 31 March 2020 are as follows:

• Mr. Kedar Vaze - Whole Time Director and Group Chief Executive officer

• Mr. Shrikant Mate - Executive Vice President and Group Chief Financial officer

• Ms. Deepti Chandratre - Company Secretary & DGM – Legal

Directors' Responsibility Statement

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 along with proper explanation relating to the material departures (if any);

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 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 provisions ofall applicable laws and that such systems are adequate and operating effectively.

Statutory Auditors

Your Company's Auditors B S R & Co. LLP [holding Registration No. 101248W/W-100022with the Institute of Chartered Accountants of India (ICAI)] were re-appointed as theStatutory Auditors at the 63rd Annual General Meeting of the Company held on 09 August2019 for a term of two years until the conclusion of 65th Annual GeneralMeeting to be held in 2021.

The Auditors' Report on the financial statements of the Company forms part of theAnnual Report. The same is unqualified and when read with notes on financial statementsis self- explanatory and hence does not call for any further comments under Section 134of the Companies Act 2013.

Cost Auditors

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 year2020-21. Cost records as specified by the Central Government under sub-section (1) ofsection 148 of the Companies Act 2013 as required to be maintained by the Company hadbeen made and maintained during the year.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. Mehta & Mehta Practising Company Secretaries as its SecretarialAuditor to undertake the secretarial audit for the financial year 2020-21.

The Secretarial Audit Report for the financial year ended 31 March 2020 isannexed herewith as Annexure C to this Report. The Secretarial Audit Report contains aremark that e-Form MGT-14 had not been filed for approval of Buy-back of shares bythe Board pursuant to Section 117(3)(g) of the Companies Act 2013. The Directors wish toconfirm that the Company has initiated the process of filing the said form and seekingcondonation of delay from the Central Government in this regard.

Internal Control Systems

Keva has implemented adequate internal controls and processes that are commensuratewith the nature of business and size and complexity of its operations. Appropriateinternal control processes have been set up to provide reasonable assurance oneffectiveness and efficiency of its operations reliability of financial reporting andcompliance with applicable laws and regulations. The compliance with these processes isingrained into the management review process. Moreover the Company regularly reviews themto ensure both relevance and comprehensiveness.

The organisation continuously assesses effectiveness of its internal controls acrossmultiple functions and locations through extensive internal audit exercises that deploy anamalgam of modern and traditional audit tools. The internal audit programme is reviewed bythe Audit Committee to ensure comprehensive coverage of the areas. Corrective actions ifany are taken promptly by the respective functions.

Risk Management

As with any business Keva operates in an environment that is _lled with volatilityuncertainty complexity and ambiguity. Hence Keva maintains a robust and disciplinedfocus on operational excellence and effective risk management. This enables Keva tounderstand and manage risks which in turn leads to achieving its objectives. Keva has awell-de_ned risk management framework in place and a robust organizational structure formanaging and reporting risks. There is an overarching risk management policy in place thatwas reviewed and approved by the Board. The major risks identified by the businesses andfunctions are systematically addressed through mitigating actions on a continuing basis.

Vigil Mechanism

The Company promotes ethical behaviour in all its business activities and in line withthe best governance practices has implemented Vigil Mechanism through Whistle BlowerPolicy and Fraud Risk Management Policy. The policies provide for adequate safeguardsagainst victimisation of persons who use such mechanism and make provision for directaccess to the Chairman of the Audit Committee. The Audit Committee periodically reviewsthe status of complaints received under this policy on a quarterly basis.

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

Going Concern Status

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.

Disclosure on Sexual Harassment of Women at Workplace

The Company is committed to providing a safe and conducive work environment to all ofits employees and associates. The Company has a gender neutral policy on prevention ofsexual harassment at workplace and framework for employees to report sexual harassmentcases at workplace and its process ensures complete anonymity and confidentiality ofinformation. An Internal Complaints Committee (ICC) has been constituted in line with theprovisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the rules thereunder. On an ongoing basis Keva's employees andmanagers are oriented on creating a safe and conducive work culture. During the year nocomplaints with allegations of sexual harassment were reported.

Stock Appreciation Rights Scheme

In terms of SEBI (Share Based Employee Benefits) Regulations 2014 as amended fromtime to time the Nomination and Remuneration Committee of the Board inter aliaadministers and monitors the SH Kelkar Stock Appreciation Rights Scheme 2017 of yourCompany.

Your Company had lent Rs 75 Crore to SH Kelkar Employee Benefit Trust(“Trust”) for making secondary acquisition of equity shares subject tostatutory ceilings. Total 3373663 equity shares have been purchased by the Trust ofwhich 67234 equity shares had been tendered in buy-back. As on 31 March 2020 Trust held3306429 equity shares representing 2.3% of the paid-up share capital of the Company.

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.

Corporate Social Responsibility

Your Company has been a firm believer that each and every individual including anarti_cial person owes something to the society at large. Your Company adopted acomprehensive CSR Policy that defines the framework for your Company's CSR Programme. TheCSR Policy may be accessed on the Company's website at the link:

The Company focuses on areas like environmental sustainability conservation of energychild education and empowerment equipping and upgradation of educational infrastructureset-up with an aim to provide improved and advanced education system support visuallychallenged people through perfumery trainings and employability and rural development. Italso partners in relief operations in rural areas in case of natural calamity or disaster.

Keva has been actively partnering towards responding and combating disasters in atimely manner and engaging with the affected communities. In collaboration with NGO –Goonj Keva's employees actively volunteer to donate various relief materials to the floodhit areas in UP and Bihar.

In an unprecedented global pandemic of COVID - 19 Keva has been complimenting everystep along with the government and customers to deal effectively with the emergencysituation. On one hand the financial aid has been contributed to PM Cares Fund andChief Minister Relief Fund and on the other hand we are partnering with ourcustomers in providing healthcare solutions - Cleansing Hygiene and Sanitizers.

During the year the Company has spent Rs 1.73 Crore on CSR activities. An amount of Rs0.05 Crore was contributed after the end of FY 2019-20 but pertained to CSR budget for FY2019-20. Total amount spent in respect of CSR for FY 2019-20 is thus Rs 1.78 Crore. TheAnnual Report on CSR activities is annexed herewith marked as Annexure E.

Conservation of Energy

Your Company has always considered energy and natural resource conservation as a focusarea. Though the Company's operations involve low energy consumption the Company hasalways been conscious of the need for conservation of energy and has been sensitive inmaking progress towards this end. Energy efficiency improvement initiatives have beenimplemented across all the Units and offices by undertaking various energy and resourceconservation projects for sustainable development.

Some of the measures adopted across the Company for energy conservation are as under:Replacement of reciprocating compressor by new energy efficient noiseless screw compressorUse of PNG fuel in canteens instead of LPG

Installation of solar power generation units at Mulund and Vashivali Units Installationof Energy efficient LED lights in place of conventional lights Introduction of auto on-offsystem of exhaust fan in lift rooms Use of light sensors for street lights Motionsensor for wash room passage Installation of Solar day light reflector for betterillumination on the shop floor.

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

Environment Health and Safety

Your Company's ethos of environment protection and conservation of natural resources isbased on the belief that nature is a precious endowment to humanity. Keva's approachtowards protecting the surroundings is guided by internal policies and applicable externalstandards. To benchmark our environmental management system Keva has been progressivelyadopting environmental protocols adhering to leading certification and abiding toapplicable environmental legislations.

At Keva our people are our greatest asset and their safety health and well-being isof utmost importance to us. Your Company undertakes various programmes to promote safetymeasures at its manufacturing facilities to ensure no injury or accident. In addition toworkplace safety great emphasis is placed on the health and well-being of employees.

During the year the Company's facility at Mahad successfully passed the ISOcertifications for Environment Management System and the OHSAS (Safety) Management System.Keva has continually improved its safety preparedness by acquiring stringentcertifications like HACCP for food safety Integrated Management System for environmentand occupational safety to name a few at its various facilities. Keva's facilities atVashivali and Mulund were recently honoured by the National Safety Council for adoptingbest safety practices and for having completed 3 consecutive years without any reportableaccident at the facilities. Keva's ingredients and extraction facility at Vapi has alsobeen certified with ISO 14001 and ISO 45001.

Various EHS initiatives taken by Keva are as under:

Improvement carried out in Rain water Harvesting system at Vashivali Unit which led to50% reduction in raw water consumption Improvement carried out in boiler oil pre-heatingsystem which saved 5.5 ton FO per annum Robotic refighting systems installed at MahadImplementation of online incident reporting system at Mulund Unit. Accident IncidentManagement System (AIMS) is an integrated online application system for capturing recordsof accidents and incidents at Corporate office and Plant locations Installation of foodiemachines at Mulund and Vashivali Units which convert waste food into manure Installationof Reverse Osmosis Plant and Multi Effect Evaporator Production of recycled paper atVashivali Unit from plant wastes and use of the same within the organization Participationof employees in Environment Health & Safety trainings organised by National SafetyCouncil Celebration of Road Safety Week National Safety Week Fire Service Week WorldEnvironment Day Annual Health Check-up was organized for the employees

Various measures being taken by the Company to ensure health and safety of itsemployees in light of COVID- 19 pandemic are as under: Daily disinfection of units Thermalscreening during entry and exit Social distancing norms followed strictly at workplace andduring travel Provision of hand sanitizers at workplace Meetings arranged through audio /audio-visual modes Medical Screening by Medical officer of the organisation Tie-up withhospitals authorized to treat the COVID-19 Patients


Innovation is Keva's principal business driver. Keva competes with itself in creatingprogressively better flavours and fragrances. Keva's robust Discovery & R&D teamsfocus on the development of novel molecules technologies and sensory solutions. Keva'sCreative Centres at Amsterdam Jakarta Mumbai Singapore and Milan (CFF) are continuouslystriving for innovative creations through research activities. Keva has also established aFood Innovation Centre in Mumbai last year.

Expenditure on R & D and creative development during the year under review was Rs44.04 Crores on standalone basis and Rs 56.68 Crores on consolidated basis.

Foreign Exchange Earnings and Outgo

The foreign exchange earned in terms of actual inflows during the financial year2019-20 was Rs 21.70 Crores as against Rs 30.18 Crores in financial year 2018-19 on astandalone basis. The foreign exchange outgo in terms of actual outflows during thefinancial year 2019-20 was Rs 106.76 Crores as against Rs 217.96 Crores in financial year2018-19 on a standalone basis. The foreign exchange earned in terms of actual inflowsduring the financial year 2019-20 was Rs 534.37 Crores as against Rs 489.27 Crores infinancial year 2018-19 on a consolidated basis. The foreign exchange outgo in terms ofactual outflows during the financial year 2019-20 was Rs 505.46 Crores as against Rs631.60 Crores in financial year 2018-19 on a consolidated basis.

Human Resources

Keva has been able to galvanize its human resource to become more agile leveragechange be customer centric and win in the market. Keva's people architecture HR systemsand processes are designed to enhance employee capability engagement vitality andwell-being so as to ensure that its employees add superior value - value which will helpKeva's businesses stay ahead of competition and simultaneously work towards enabling theCompany to achieve its growth plans. Keva has been working towards engaging and motivatingemployees with introduction of a host of initiatives throughout the year.

As a part of creating a better employee experience Keva had launched ‘Pratibimb'- a company-wide employee feedback survey to give Keva an opportunity to hear from itsemployee as it designs next level people centric and progressive impactful HR policies.Sarathi – a Coaching initiative a stepping stone towards creating a coaching cultureat Keva has an internal community of certified coaches recognized by InternationalCoaching Federation and is focused towards grooming and nurturing Keva's talent.

Through LeAP (Leadership Advancement Program) – Keva's Global Talent ManagementProgram and LEAD (Leveraging Elearning for Accelerated Development) programs Keva hasbeen continuously building and developing its talent pool. Top performers and highachievers are recognized for their exemplary performance though Keva Star - Keva's GlobalEmployee Recognition Program.

PACT – Promise of Accountability Commitment and Teamwork - is an exclusiveprogram through which Keva is providing holistic and differentiated engagement plan andlearning opportunities to its high performing employees to accelerate their career 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.

Industrial Relations

In 2019-20 your Company has continued to maintain amicable industrial relationfootprint by focusing on increased worker level engagement through formal and informalcommunication and training forums. A peaceful Long Term Settlement was executed at Keva'smanufacturing unit at Vashivali in December 2019.

Information Technology

IT systems are the backbone which support timely decisions through conversion of datainto actionable information.

The Company's robust IT infrastructure includes:

• Centralised ERP system based on SAP – it is capable of covering businessfunctions across finance inventory management procurement and logistics.

• Qlikview - it provides a wide array of data analysis facilities.

• Cupid – it is a homegrown ERP application for a Customer Project IntegratedDevelopment Process which provides a state of the art solution for project management.

• BMango – it is a customer project management application for flavours.

• Success Factors – it is a cloud based online system which is a single HRplatform through which employees across the globe have an easy access to HR relatedinformation viz. policies newsletters news _ash team information PerformanceDevelopment Process Learning and Development and other HR processes on real time basis.

• Cloud CRM (Customer Relationship Management) – it is a solution to empowerthe sales team with cutting edge technology on the go to manage customer engagements.

• K4C (Keva4Customer) application – with this application the business isable to oversee sales projects on real time basis and keep track of its sales.

Extract of Annual Return

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.

Awards and Recognition

Keva Fragrances Pvt. Ltd. a wholly owned subsidiary of the Company was honoured withCertificate of Merit in competition for “Best Safety Practices” organized byNational Safety Council- Maharashtra Chapter to recognise the zero accident frequency rateduring the last three years in its facility Mulund Mumbai.


There has been no change in the nature of business of the Company during the FinancialYear 2019-20.

During the Financial Year 2019-20 there were no significant and material orders passedby the regulators or Courts or Tribunals which can adversely impact the going concernstatus of the Company and its operations in future.

There have been no instances of frauds reported by the auditors under Section143(12) of the Companies Act 2013 and the Rules framed thereunder either to the Companyor to the Central Government.

There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the period from 31 March 2020 and the date of thisBoard's Report.

The Company has complied with the applicable provisions of Secretarial Standard –1 and Secretarial Standard – 2 relating to ‘Meetings of the Board of Directors'and ‘General Meetings' respectively issued by Institute of Company Secretaries ofIndia.

Cautionary Statement

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 di_er.


Your Directors would like to thank all stakeholders namely customers shareholdersdealers suppliers bankers employees and all other business associates for thecontinuous support given by them to the Company and its Management.

For and on behalf of the Board of Directors of
S H Kelkar and Company Limited
CIN: L74999MH1955PLC009593
Ramesh Vaze Kedar Vaze
Mumbai Director & Chairman Director & Chief Executive officer
26 May 2020 DIN: 00509751 DIN: 00511325