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Sudarshan Chemical Industries Ltd.

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OPEN 326.95
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52-Week high 633.80
52-Week low 291.10
P/E 24.66
Mkt Cap.(Rs cr) 2,278
Buy Price 325.50
Buy Qty 50.00
Sell Price 330.00
Sell Qty 27.00

Sudarshan Chemical Industries Ltd. (SUDARSCHEM) - Director Report

Company director report


Your Directors are pleased to present the 67th Annual Report together withthe Audited Statement of Accounts of the Company for the year ended 31st March2018.


The Ministry of Corporate Affairs (MCA) on 16th February 2015 notifiedthat Indian Accounting Standards (Ind AS) are applicable to certain classes of companiesin a phased manner from 1st April 2017 with a transition date of 1stApril 2016. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 ofthe Companies Act 2013 ("the Act") read with Rule 7 of the Companies (Accounts)Rules 2014. Ind AS is applicable to the Company from 1st April 2017. Thereconciliations and descriptions of the effect of the transition from previous GAAP to IndAS have been set out in Note No.48 in the Notes to Accounts in the Standalone FinancialStatements and in Note No.45 in the Notes to Accounts in the Consolidated FinancialStatements.


The Company's financial performance (from continuing operations) for the year ended 31stMarch 2018 is summarised below (Refer Note No.31 of the Standalone FinancialSatatements).

Particulars 2017-18 2016-17
(Rupees in Lakhs) (Rupees in Lakhs)
Revenue from operations (Refer Note No. 44 of the Standalone Financial Statements) 129915.4 109444.1
Earnings Before Interest Tax Depreciation and 20858.7 18772.6
Amortization (EBITDA)
Less: Interest 2377.6 2302.2
Less: Depreciation 5821.1 4854.8
Less: Provision for Taxation 4076.9 3019.7
Profit After Tax 8583.0 8595.9
Add: Profit from discontinuing operations 219.7 331.5
Total Profit After Tax 8802.7 8927.4
Other Comprehensive Income (59.6) (54.0)
Total Comprehensive Income 8743.1 8873.4
Add: Surplus brought forward 18364.7 13491.0
27107.8 22364.4
Net Profit available for appropriation
1. General Reserve 1500.0 1500.0
2. Interim Dividend @ 125% 1730.7 1730.7
3. Final Dividend (pertaining to previous Financial Year) 692.3 346.1
4. Tax on Dividend 493.3 422.9
TOTAL 4416.3 3999.7
Surplus to be carried forward 22691.5 18364.7


Total Revenue from continuing operations for the year ended 31st March 2018aggregated to Rs. 135762 lakhs as against Rs.123339 lakhs achieved during the previousyear. Profit after tax from continuing operations for the year ended 31stMarch 2018 was Rs. 8583 lakhs as against Rs. 8596 lakhs earned during the previousyear.

Pigment sales increased from Rs. 110007 lakhs in the previous year to Rs. 131148lakhs in the year under review. Profits for the Pigment Division for the year under reviewamounted to Rs. 14741 lakhs as compared to Rs. 14449 lakhs of the previous year.

Agro Sales for the year ended 31st March 2018 amounted to Rs. 11634 lakhsas against Rs. 14453 lakhs achieved during the previous year. Profits for the AgroDivision for the year under review amounted to Rs. 336 lakhs as against Rs. 507 lakhs forthe previous year.

For Subsidiary Companies' performance please refer to Annexure I.

On a Consolidated basis your Company's Total Revenues for the year ended 31stMarch 2018 stood at Rs. 148907 Lakhs up by 7% as compared to Rs. 139662 Lakhs inFinancial Year 2016-17.

As on the date of adoption of accounts the Agro Chemical Trading Business and theinvestment in Wholly Owned Subsidiary Prescient Color Ltd. have been classified as"Held for Sale / Discontinued Operations". This is pursant to the requirement ofInd AS 105 - ‘Non-current assets held for sale and discontinued operaitons'. Theresults of these businesses have been presented separately.


Your Company continues to view focus on export markets. Initiatives are directedtowards engaging with overseas markets with a view to testing and demonstratinginternational competitiveness and seeking profitable opportunities for growth. TheCompany's overseas wholly owned subsidiaries set up with the objective of marketing andselling Pigments continue to record improved performance. The overseas subsidiaries haveentered a consolidation phase and will play a crucial role in positioning the Company as adominant player in the Global Pigment Industry. Revenue from pigment exports for the yearended 31st March 2018 amounted to Rs. 60603 Lakhs as against Rs. 50660 Lakhsfor the previous year.


Pursuant to the decision of the Board of Directors at its meeting held on 1stJune 2018 the Company has entered into a Share Purchase Agreement with Americhem Inc.USA to sell the entire shareholding in its Wholly Owned Subsidiary Prescient ColorLimited for an "Enterprise Value" of Rs. 11700 Lakhs. The Equity Value for saleof shares on "Closing Date" is Rs. 10228 Lakhs.


The Board of Directors in its meeting held on 27th June 2018 havein-principle approved the transfer of Agro Formulation Brand Business for a fixedconsideration of Rs. 700 Lakhs and a variable component in terms of royalty payable onsales. The modalities for this transaction are being worked out.


The Company has paid an interim dividend of 125% (Rs. 2.50 per share of Rs. 2 each) on5th March 2018. Board is pleased to recommend a final dividend of 50% (Rs.1.00per share of Rs. 2 each) for the Financial Year 2017-18. The final dividend if approvedby the members will be paid to members within the period stipulated under the CompaniesAct. The aggregate dividend for the year will amount to 175% (Rs. 3.50 per share of Rs. 2each) as against 175% (Rs. 3.50 per share of Rs. 2 each) declared last year. The totalDividend pay-out for the year would be Rs.2917.7 Lakhs (Previous Year: Rs. 2916.3Lakhs). The dividend payout ratio for the current year inclusive of corporate tax ondividend distribution is 32%.


Your Company's erstwhile Public Deposit Scheme closed in the year 2015. There was nofailure to make repayments of Fixed Deposits on maturity and the interest due thereon interms of the conditions of your Company's erstwhile Public Deposit Scheme. During May2017 your Company has made prepayment of Fixed Deposits amouting to Rs. 4034 Lakhs atthe contracted rate of interest. Your Company has during the year under review notaccepted any deposit from the public / members under Section 73 of the Companies Act 2013read with the Companies (Acceptance of Deposits) Rules 2014.


In accordance with Section 134 of the Companies Act 2013 the Directors based on therepresentation received from the management confirm that:

i. in the preparation of accounts for the Financial Year ended 31st March2018 the applicable accounting standards have been followed with no material departures;

ii. the directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of Financial Year and of theStatement of Profit and Loss of the Company for that period;

iii. the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

iv. the directors have prepared the Annual Accounts on a going concern basis;

v. the directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively;

vi. the directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.


Corporate Governance is the application of good management practices compliance oflaw adherence to ethical standards for effective management and distribution of wealthand discharge of social responsibility for the sustainable development of allstakeholders. Sudarshan beholds Corporate Governance measures as an integral part ofbusiness strategy which adds considerable internal and external values and contributes tothe business growth in ethical perspective. Besides complying with the prescribedCorporate Governance practices as per SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 good governance practices of the Company have beenrewarded in terms of improved share valuations stakeholder's confidence improved marketcapitalization improved credit ratings and bagging of various awards for environmentalprotection etc. These have propelled the Company to pay uninterrupted dividends to itsshareholders ever since it went public.

A detailed report on Corporate Governance duly certified by the Statutory Auditors ofthe Company i.e. B S R & Associates LLP Chartered Accountants Pune is givenseparately in the Annual Report.


A Management Discussion and Analysis Report covering a wide range of issues relating toindustry trends Company Performance Business and Operations is given separately in theAnnual Report.


At Sudarshan fulfilment 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 inthe Business Responsibility Report. kindly refer to Business Responsibility Report sectionwhich forms part of the Annual Report.


All related party transactions that were entered into during the Financial Year 2017-18were on arm's length basis and were in the ordinary course of the business. Apart from thePromoters interest in the continuing appointment of four Rathi Brothers Companies asselling agents of the Company which were approved by the members in terms of Regulation 23of the SEBI Listing Regulations 2015 there are no other materially significant relatedparty transactions entered into by the Company with Promoters Independent Directors KeyManagerial Personnel Senior Management and / or their relatives which may have potentialconflict with the interests of the Company at large.

All related party transactions are presented to the Audit Committee for their priorapproval. Subsequent modifications of related party transactions are also placed beforethe Audit Committee for its approval. Omnibus approval if any is obtained for thetransactions which can be foreseen and repetitive in nature. A statement of all relatedparty transactions is presented before the Audit Committee on quarterly basis specifyingthe nature value and terms and conditions of the transactions.

The related party transactions policy is uploaded on the Company' .

The particulars of contracts or arrangements made with related parties pursuant toSection 188 is covered in Notes to the Financial Statements and material contracts /arrangements made with related parties is given in Form AOC-2 which is attached asAnnexure VI to this report.


Your Company's aspiration to create effective and sustainable societal value isdemonstrated in its CSR initiatives that embrace the disadvantaged sections of societyespecially those staying in the vicinity of its manufacturing locations at Roha and Mahadthrough economic empowerment based on grassroots capacity building. All CSR activities ofthe Company are carried out under the aegis of "SUDHA" (Sudarshan's HolisticAspiration).

The Company's grand vision is "Growing together" with all its stakeholders ina manner that is spiritually fulfilling socially just and environmentally sustainable.SUDHA contributes to this vision by ensuring that all its initiatives are driven with thisperspective in mind. SUDHA's vision is ‘Aspiring wholesome sustainable growth forwomen and children of communities around the Company's plants' and Mission is ‘Reachout to communities by engaging in projects related to Livelihood Health Education &Community Development. SUDHA is envisaged as a movement to involve the Company and thecommunity in which it operates to create better living standards and safeguard theenvironment.

To achieve the aforesaid goals the Company adopted a series of CSR initiatives in2017-18 which involved programmes projects and activities to create a significantpositive impact on identified stakeholders. All these programmes fall within the purviewof Schedule VII of the provisions of Section 135 of the Companies Act 2013 and theCompanies (Corporate Social Responsibility Policy) Rules 2014.

Various projects that SUDHA is working on are Livelihood Enhancement ProjectEmployment Enhancing Vocational Skill Project Health Improvement Project Promotion ofEducation Community Development Project Environment Sustainability Project etc.Throughall these initiatives SUDHA has touched the lives of thousands of people around theCompany's facilities.

The Board is pleased to inform that during the year the Company has spent an aggregateamount of Rs.189 Lakhs which includes mandatory spend for the year under review.

In 2017 SUDHA started work on the Ideal Village Development Project. Through thisprogram SUDHA is working in villages around the Roha Mahad & Sutarwadi.

SUDHA CSR has been appreciated by :

1. ECGC Indian Exporters' Excellence Awards 2017 under the category Most SociallyResponsible Exporter Award 2017 - runner up

2. India CSR Award for CSR Community Initiative 2017-18- ‘Sustainable VillageWaste Management Environment' - A Participatory Approach at Villages

The Annual Report on CSR activities are annexed as Annexure IV to this report.


Company has put in place appropriate risk assessment and minimization procedures whichare reviewed by the Risk Management Committee Audit Committee and the Board. During theyear as per the requirements of SEBI LODR Regulations 2015 a Risk Management Committeewas constituted with responsibility of preparation of Risk Management Plan reviewing andmonitoring the same on regular basis to identify and review critical risks on regularbasis to report key changes in critical risks to the Board on an ongoing basis to reportcritical risks to Audit Committee in detail on yearly basis and such other functions asmay be prescribed by the Board. The Committee is supported by an Enterprise RiskManagement (ERM) team which provides advise on various risks and the appropriateGovernance framework and ensures that risks are identified measured and managed inaccordance with the Companies Policies and risk objectives. The Committee holds meetingson a need basis to review the critical risks identified. The risks faced by the Companyand their minimization procedures are assessed periodically. Your Company has an elaborateRisk Management procedure which is based on three pillars: Business Risk AssessmentOperational Controls Assessment and Policy Compliance processes.

According to Section 134(5)(e) of the Companies Act 2013 the term Internal FinancialControl (IFC) means the policies and procedures adopted by the company for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information. The Company has a well placed proper and adequateinternal financial control system which ensures that all assets are safeguarded andprotected and that the transactions are authorised recorded and reported correctly. TheCompany's internal financial control system also comprises due compliances with Company'spolicies and Standard Operating Procedures (SOPs) and audit and compliance checks by theStatutory Auditors and the Internal Auditors. The Internal Auditors independently evaluatethe adequacy of internal controls and concurrently audit the majority of the transactionsin value terms. Independence of the audit and compliance is ensured by direct reporting ofInternal Auditors to the Audit Committee of the Board. To further strengthen thecompliance processes the Company has an internal compliance tool for assisting statutorycompliances. This process is automated and generate alerts for proper and timelycompliance.


The Remuneration policy of the Company covering the appointment and remuneration of theDirectors Key Managerial Personnel and Senior Management of the Company includingcriteria for determining qualifications positive attributes independence of a Directorand other related matters has been provided separately as Annexure III.


The Securities and Exchange Board of India (SEBI) has mandated the need for asuccession policy pursuant to Regulation 17(4) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 Regulations"). The Company has put inplace a Succession Policy duly approved by the Board of Directors with the main objectiveto ensure the orderly identification and selection of new Directors Working Directors orSenior Management in the event of any vacancy whether such vacancy exists by reason of ananticipated retirement re-organization unanticipated departure the expansion of thesize of the Company or otherwise. For details members are requested to refer to theCompany's website www.


As a part of succession planning Mr. P. R. Rathi Chairman and Managing Director hasstepped down as Managing Director of the Company effective from 1st June 2018and is continuing as Non-Executive Chairman thereafter. Mr. P. R. Rathi has been in theemployment of the Company since 1st April 1976. The Board places on record themeritorious service rendered by Mr. P. R. Rathi as Working Director of the Company.

The Board of Directors in its meeting held on 8th February 2018 hasappointed Mr. R. B. Rathi Dy. Managing Director as the Managing Director of the Companyeffective from 1st June 2018. Mr. R. B. Rathi is B.E. Mech. Engg. from MITPune B.S. Chem. Engg from Ohio University USA and MBA from Pittsburgh University USA. ThePigment operations have demonstrated strong growth under his dynamic leadership and ispoised for greater heights. The Board recommends the appointment of Mr. R. B. Rathi asManaging Director of the Company not liable to retire by rotation.

Mr. Ashish Vij has been appointed as a Wholetime Director of the Company w.e.f. 24thMay 2018. Mr. Ashish Vij B.E.Chem. joined the Company on 8th December 2005and has with him 26 years of diverse working experience. Prior to his elevation asWholetime Director he was designated as Chief Operating Officer Pigment Division forboth Roha and Mahad plants. Based on the recommendations of the Nomination andRemuneration Committee the Board of Directors in its meeting held on 24th May2018 have approved the appointment of Mr. Ashish Vij as a Wholetime Director in full timeemployment of the Company subject to necessary approval by the Members in the ensuingAnnual General Meeting. The Board recommends the appointment of Mr. Ashish Vij as aWholetime Director in full time employment of the Company not liable to retire byrotation.

Mr. Naresh T. Raisinghani was originally appointed as a Non-Independent Director of theCompany by the shareholders in the Annual General Meeting held on 14th August2015. Mr. Naresh Raisinghani has represented that he presently meets the criteria ofindependence as prescribed both under sub-section (6) of Section 149 of the Act andRegulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") and hasrequested the Board to consider his change in status as a Director and consider appointinghim as an Independent Director.

In the opinion of the Board Mr. Naresh T Raisinghani fulfils the conditions for hisappointment as an Independent Director as specified in the Companies Act and the SEBIListing Regulations. Pursuant to the recommendation of the Nomination and RemunerationCommittee the Board of Directors in its meeting held on 24th May 2018 haveapproved the appointment of Mr. Naresh T. Raisinghani as an Independent Director of theCompany subject to necessary approval by the shareholders in the ensuing Annual GeneralMeeting. The Board recommends the appointment of Mr. Naresh T. Raisinghani as anIndependent Director of the Company not liable to retire by rotation.

Mr. N. J. Rathi Non-Independent Non-Executive Director retires at the 67thAnnual General Meeting and is eligible for re-appointment. An item in this regard isincluded in the Notice of the 67th Annual General Meeting and the same isplaced for approval of the Members. The Board recommends the re-appointment of Mr. N. J.Rathi as a Director of the Company by way of a Special Resolution.

Resolutions also have been proposed for the continuance of Mr. D. N. Damania and Mr. S.Padmanabhan as Independent Directors for their remaining tenure. This is as mandated byRegulation 17(1A) of the SEBI Listing Regulations 2015. The Board recommends the same forapproval by the Members by way of Special Resolutions.

Mr. K. L. Rathi Non-Independent Non-Executive Director has resigned as a Directorfrom the Board of Directors of the Company w.e.f. 1st June 2018. The Boardplaces on record its appreciation of significant contribution made by Mr. K. L. Rathiduring his tenure of more than 4 decades as a Director of the Company.

Key Managerial Personnel

In accordance with the provisions of Section 203 of the Companies Act 2013 thefollowing are Key Managerial Personnel of the Company for the year ended 31stMarch 2018:

a. Mr. P. R. Rathi Chairman and Managing Director

b. Mr. R. B. Rathi Dy. Managing Director

c. Mr. V. V. Thakur Acting CFO

d. Mr. P. S. Raghavan Company Secretary

Mr. P. S. Raghavan Company Secretary on reaching the age of superannuation is due toretire from the services of the Company post conclusion of the 67th AnnualGeneral Meeting. Mr. Mandar M. Velankar Company Secretary (Designate) will take over asCompany Secretary and Compliance Officer w.e.f. 10th August 2018.

Declaration by Independent Directors

Pursuant to the provisions under Section 134(3)(d) of the Companies Act 2013 withrespect to statement on declaration given by Independent Directors under Section 149(6) ofthe Act the Board hereby confirms that all the Independent Directors of the Company havegiven a declaration and have confirmed that they meet the criteria of independence asprovided in the said Section 149(6).

Annual Evaluation of Board of Directors its Committees and Individual Directors

The Board of Directors upon recommendation of Nomination and Remuneration Committee haslaid down the criteria for performance evaluation of Board of the Company its Committeesand the individual Board members including Independent Directors. In compliance with SEBILODR Regulations 2015 the performance evaluation of all the Independent Directors havebeen done by the entire Board excluding the Director being evaluated. On the basis of theperformance evaluation done by the Board it shall be determined whether to extend orcontinue their term of appointment whenever their respective term expires.

The Independent Directors of the Company met separately on 30th March 2018without the presence of Non-Independent Directors and the members of management. Themeeting was attended by all the Independent Directors. The meeting was was to enable theIndependent Directors to discuss matters pertaining to the Company's affairs and put forththeir combined views to the Board of Directors. The Independent Directors evaluated theperformance of the Chairman Non-Independent Directors and the Board as a whole. TheIndependent Directors also reviewed the adequacy and flow of information between theCompany Management and the Board.

The Directors were satisfied with the evaluation results which reflected the overallcommitment and sense of duty.

The Board has also adopted a Board Diversity Policy. The policies of Board diversityand performance evaluation of Directors of the Company can be accessed from the Company'swebsite


Members are aware that the Company had started a sustainability initiative with the aimof going green and minimizing the impact on the environment. Like the previous yearelectronic copies of the Annual Report 2017-18 and Notice of the 67th AGM arebeing sent to all Members whose email addresses are registered with the Company /Depository Participant(s). For Members who have not registered their email addressesphysical copies of the Annual Report 2017-18 and the Notice of the 67th AGM aresent in the permitted mode. Members requiring physical copies can send a request to theCompany Secretary.

The Company is providing remote e-voting facility to all Members to enable them to casttheir votes electronically on all resolutions set forth in the Notice of the AGM. This ispursuant to Section 108 of the Companies Act 2013 and Rule 20 of the Companies(Management and Administration) Rules 2015 read with Regulation 44 of the SEBI ListingRegulations 2015. The instructions for remote e-voting are provided in the Notice of theAGM.


Industrial relations continue to remain cordial at Roha and Mahad plants and at R &D Laboratory situated at Ambadvet (Sutarwadi) Dist. Pune. The Board of Directors recordits appreciation of the commitment and support of employees at all levels.


Your Company's Human Resource Management systems and processes are aimed at creating aresponsive market-focused customer-centric culture besides enhancing organisationalvitality so that business remains internationally competitive and equipped to seizeemerging market opportunities. It is your Company's firm belief that the robustness andadaptability of its Human Resource systems and processes are critical for an organisationto remain relevant and competitive in today's highly dynamic and rapidly evolving businesslandscape. The Human Resources function of your Company continues to align its strategicinterventions and processes with your Company's Vision of sustaining its position asIndia's dominant Pigment manufacturing Company besides creating value for the Company'sstakeholders. The market position the Company enjoys are the result of the combinedstrength of its people. The Company during this year took up an important project ofOrganisation Structure where it has realigned itself with the industry practices. Newbands grades and designations have been implemented from 1st April 2018onwards. This makes the Company equally attractive like any other MNC for the kind ofmanpower required for the Company's growth.

Your Company is dedicated to nurturing sustainable Employee Relations and continues toleverage the ‘Good Employee Relations' approach in ensuring responsive manufacturingflexible work systems and at the same time maintaining a cost and environment consciousecosystem. The Company during the year paid special attention to developmental activitiescomprising of sharpening of skills and abilities developing academic and professionalknowledge and cultivating appropriate behavioural skill sets such as improvinginterpersonal relations team building abilities effective communication and presentationskills.

During the year under review several human capital enhancing measures were undertaken:

1. To meet organisational challenges Company is looking at building capabilities atthe Leadership Levels 1 & 2 and has taken up an initiative of Leadership Interventionfor a period of 18 months. For both Level 1 & 2 leaders the process continued lastyear and has reached end of Phase 1. We are now planning Phase 2 of the initiative in FY2018-19.

2. Communication of Company's performance and its objectives to the employees at alllevels by the top management has become a culture at the Company with SUDA CONNECT beingcelebrated for the fifth year in succession. The event also provided an opportunity toreward exemplary performances at individual level based on meritocracy. Employees withlong services in the Company were also felicitated during this occasion. Employeesdemonstrated their talents through various cultural programmes. The meet established aperfect blend of communication team bonding and celebrations.

3. Like last year Fit Sudarshan continued to be one of the most appreciatedinitiative. This year also Roha Half Marathon (21Km) was organised. This event was enjoyedby all employees their spouses and children. Sudarshan Marathon is not just organised topromote fitness among employees and their families but also its major focus is onspreading awareness on ‘Clean Roha Healthy Roha' which is one of the focus areas ofour CSR activities. Cleanliness Drive was also organized post the run where everyoneparticipated in cleaning the nearby villages from our Roha facility.

4. Under Training & Development Company initiated Supervisory Assessment &Development program for L4 - L5 grade employees who are working on shop floor. This was ahuge success and the high- potential employees were identified to take higherresponsibilities and for appropriate grooming.

5. All the Human Resource processes and initiatives launched in the last five yearscontinue to be reinforced and strengthened by taking them to the next level. As anendorsement of these efforts the Company received certification on global platform fromGreat Place to Work Institute consecutively for the second time this year.

6. This year as well Company got several awards for CSR activities and were alsorecognised at the National level. For HR activities also in FY 2017-18 Company won theRecruitment Award at theWorld HRD Congress.

These global awards have reinforced Company's belief of realizing Company's vision ofbecoming one amongst the top three pigment producers in the World and taking the LEAPproject forward with full enthusiasm.

The Board has formulated an ESOP Scheme for the benefit of Eligible Employees. Thiswill contribute to a feeling of ownership loyalty and a more focused approach towardsachieving organisational objectives. For more details please refer to Item Nos. 13 to 16of the AGM Notice.


Company believes that a Board which is well informed / familiarised with the Companyand its affairs can contribute significantly and effectively discharge its role oftrusteeship in a manner that fulfils stakeholders' aspirations and societal expectations.In pursuit of this the Directors of the Company are updated on changes / developments inthe domestic / global corporate and industry scenario including those pertaining tostatutes / legislations & economic environment and on matters affecting the Companyto enable them to take well informed and timely decisions. Visits to Company's facilitiesare also organised for the Directors. Further details may be accessed on the Company'scorporate website


Your Company has Zero tolerance towards any action on the part of any one which mayfall under the ambit of ‘'Sexual Harassment" at workplace and is fullycommitted to uphold and maintain the dignity of every women working with the Company. ThePolicy framed by the Company in this regard provides for protection against sexualharassment of women at workplace and for redressal of such complaints within the frameworkof law. Details of the same are available on the website of the Company

No cases of sexual harassment have been reported during the year under review.


As per Section 148 of the Companies Act 2013 the Company is required to have its costrecords conducted by a Cost Accountant in practice. The Board of Directors of the Companyhas on recommendation of the Audit Committee approved the appointment of Parkhi Limaye& Co. Cost Accountants Pune as the Cost Auditor of the Company to conduct costaudits of Insecticides and Industrial Mixers and cost records maintained by the Companyfor the year ending on 31st March 2019. As required under the Companies Act2013 the remuneration payable to the cost auditor is required to be placed before theMembers in a general meeting for their ratification. Accordingly a resolution seekingratification of the Members for the remuneration payable to Parkhi Limaye & Co. CostAccountants Pune is included at Item No. 6 of the notice convening the Annual GeneralMeeting.


M/s Rajesh Karunakaran & Co. Company Secretaries Pune were appointed asSecretarial Auditors of the Company for the Financial Year 2017-18 pursuant to Section 204of the Companies Act 2013. The Secretarial Audit Report submitted in the prescribed formMR - 3 is attached as Annexure VIII and forms part of this report. There are noqualifications or observations or other remarks of the Secretarial Auditors in the Reportissued for the Financial Year 2017-18 which calls for any explanation from the Board ofDirectors.


Board takes immense pleasure in informing you that the Company has successfullycommissioned wind mills having a total capacity of 4.2 MW in Aurangabad DistrictMaharashtra for Mahad plant. This is a major step towards our commitment for Green energy& Environment friendly technologies. The generated power will be used at Mahad site.Approximate 55% of total energy requirement of Mahad site will be met through wind energy.

The Board takes this opportunity to congratulate the entire team involved in thecommissioning of this project within a record time of 3 months.


Your Company's Environment Health & Safety (EHS) strategies are directed towardsachieving the green and safe operations across all your Company's manufacturing locationsby optimising natural resource usage and providing a safe and healthy workplace. Systemicand structured efforts continue to be made towards natural resource conservation bycontinuously improving resource-use efficiencies and enhancing the positive environmentalfootprint following a life-cycle based approach. Your Company's focus on inculcating agreen and safe culture is supported through the adoption of EHS standards that incorporatebest international standards codes and practices and ensuring compliance through regularaudits.

The Company continues to maintain "Zero lost time accident at the workplace"as its long term strategic goal. There was no major accident and no occupational healthillness cases or major emergencies during the year across the Organization. Hits and NearMisses data are constantly evaluated and remedial measures taken. This has been achievedthrough highest commitment supported by all levels of workforce across the Organization.Behaviour Based Safety Safety training Process Safety Management Hazard Identificationand Rectification Near miss reporting and Contractor Safety and process safety were thekey focus areas. "EHS" systems featuring various global safety practicesincluding HAZOP Risk Assessment Layer of Protection Analysis (LOPA) Process SafetyManagement Visual management pre-start-up reviews and rigorous training to all employeesand contract workers are basic norms for the Organization. Elimination of potential Riskshave helped us in the long run to achieve these results.

The Company continued to focus on Environment management by further strengthening theeffluent treatment facility at Roha and Mahad. Modernization of ETP factored reduction ingreenhouse gases by installing AHR (anaerobic hybrid reactor). Our Waste from wealthinitiative at the design stage included new paddle dryer for both primary and secondarysludge secondary sludge used in co-gen as a fuel. Advance technology used in our tertiaryplant with auto disc filters & activated glass media filters which has resulted in ouroutlet TSS values as less than 20ppm. In addition under this initiative plastic waste isconverted as plastic noodles resulting in a useful by product.

As highlighted earlier Company's commitments towards sustainable development bycontributions in renewable energy is achieved by installing two windmills in AurangabadDistrict Maharashtra having capacity of 4.2 MWH. It reduces fuel (Coal) consumption forpower generation by 25402 MT per year and supports to reduce CO2 emission by 43546MT/Year SO2 emission by 254 MT/year and NOX emission by 160 MT/year.

Utility management and energy conservation initiatives have been given renewed focus inall manufacturing units.

All units of our Company are certified for OHSAS-18001 and ISO-14001 and awarded ratingof five stars from British Safety Council. Standards are regularly reviewed at variouslevels and systems are aligned with the Company's Process Management.

Product stewardship transportation and warehouse safety continued to be strengthenedby providing resources standardization to match benchmark practices training to driversand warehouse workers for safe transportation storage and loading / unloading andemergency plan for road accidents. As part of the same Company has become member of NICERGLOBE an ICC initiative in coordination with major chemical industries.

The Company's efforts and performance in the area of "EHS" have beenrecognized across the manufacturing units through receipt of several awards.

ROHA & Mahad unit has been able to sustain zero lost time accident free days formore than 1000 days which has been an major milestone achievement in Company's history.


The Company recognizes the need to have well equipped R&D Facilities to meetcustomer requirements and developing cutting edge products. As a natural corollary yourCompany continues to invest in a comprehensive Research & Development programmeleveraging its world-class infrastructure benchmarked processes state-of-the-arttechnology and a business-focused R&D strategy.

The Company has spent approx. Rs. 1850 Lakhs during the year under report on researchand development. Company's in house R & D facilities are recognised by the Ministry ofScience and Technology New Delhi on behalf of Government of India.


Material changes and commitments if any affecting the financial position of theCompany :

There are no adverse material changes or commitments occurring after 31stMarch 2018 which may affect the financial position of the Company or may requiredisclosure.

Annual Accounts of Subsidiary Companies:

The Annual Accounts of the Subsidiary Companies for the year ended 31stMarch 2018 will be made available to any shareholder of the Company on request and willalso be available for inspection at the Registered Office of the Company during workinghours till the date of the Annual General Meeting. The Annual Accounts of the aforesaidsubsidiary companies and the related information will also be made available to theinvestors seeking such information at any point of time. The salient features of FinancialStatements of Subsidiary Companies is given in Annexure VII of this report.

The Company as of now does not have a material subsidiary. In conformity with theprovisions of Listing Regulations 2015 the Board has formulated a policy for determining"material subsidiaries". The Policy can be accessed from the Company's website

Consolidated Financial Statements:

Your Company's Board of Directors is responsible for the preparation of theConsolidated Financial Statements of your Company & its Subsidiaries (‘theGroup') in terms of the requirements of the Companies Act 2013 and in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards specified under Section 133 of the Act. The respective Board of Directors of thecompanies included in the Group are responsible for maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets and forpreventing and detecting frauds and other irregularities the selection and application ofappropriate accounting policies making judgments and estimates that are reasonable andprudent and the design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error which have been used for the purpose of preparation of theConsolidated Financial Statements by the Directors of your Company as aforestated. TheConsolidated Financial Statements of the Company and its subsidiaries is providedseparately and forms part of the Annual Report.

Vigil Mechanism / Whistle Blower Policy:

Your Company's Whistle blower Policy encourages Directors and employees and businessassociates to bring to the Company's attention instances of unethical behaviour actualor suspected incidents of fraud or violation of the Code of Conduct that could adverselyimpact your Company's operations business performance and / or reputation. The Policyprovides that the Company investigates such incidents when reported in an impartialmanner and takes appropriate action to ensure that requisite standards of professional andethical conduct are always upheld. It is your Company's Policy to ensure that no employeeis victimised or harassed for bringing such incidents to the attention of the Company. Thepractice of the Whistle blower Policy is overseen by the Audit Committee and no employeehas been denied access to the Committee. The policy on vigil mechanism and whistle blowerpolicy can be accessed from the Company's website

Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015:

New Policies mandated under SEBI Listing Regulations 2015 have been adopted by theBoard and can be accessed from the Company's website - Some ofthe existing policies have also been revised on account of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 .

Annual Return:

The extract of the Annual Return of the Company in Form No. MGT - 9 as on 31stMarch 2018 as prescribed under Companies (Management & Administration) Rules 2014 isgiven in Annexure V to this report.

Meetings of the Board:

During the Financial Year 2017-18 six Board Meetings were held the details of whichare given under the Corporate Governance Report.

Particulars of loans guarantees or investments under Section 186:

The particulars of loans advanced guarantees given or investments made under Section186 form part of the Notes to Financial Statements provided in the Annual Report. All suchLoans guarantees or investments made during the Financial Year 2017-18 with requisiteapprovals wherever applicable were entered into in the ordinary course of business andcomply with arm's length principle.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo:

Information regarding conservation of energy technology absorption and foreignexchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act 2013and Rule 8 of the Companies (Accounts) Rules 2014 is attached to this Report videAnnexure I.

Particulars of Employees and Related Disclosures:

The requisite information pursuant to Section 197(12) and Rule 5(2)(i) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 with regard to thedetails of employees drawing remuneration of Rs. 850000 per month or Rs. 102 Lakhs perannum is attached as Annexure II to this report.

Significant and Material Orders passed by the Regulators or Courts:

There are no significant material orders passed by the regulators or courts which wouldimpact the going concern status of the Company and its future operations.


The Board of Directors is pleased to announce that the Company has received thefollowing awards during the year under review :

Dyestuffs Manufacturers' Association of India (DMAI) award for the Financial Year 2017-2018 for -

a. Excellent performance in pollution control for Large Scale Unit

b. Excellent performance in Safety & Hazards control (Second Award for Large ScaleUnit)

c. Excellent performance in exports of Pigments (Award for Large Scale Unit)

d. Outstanding performance in Pollution Control (Award for Large scale Unit)

e. Excellent performance in Energy Conservation by a Large Scale Unit (2nd Award)

These awards signify Company's commitment towards Environment Health Safety andsignificant contribution in Exports.


Your Company today is the leader in Pigment manufacturing in India. Over the last manyyears your Company has seen good growth by developing a portfolio of world-class PigmentProducts. During this period your Company's Gross Turnover and post-tax profit haverecorded good growth. Return on Capital Employed has also improved. Total ShareholderReturns measured in terms of increase in market capitalisation and dividends have grownsignificantly in past few years in terms of efficiency of servicing financial capital.

Your Company's Board and employees are inspired by the Vision of catapulting theCompany as one of the most admired and valuable Pigment manufacturing companies globallycreating enduring value for all stakeholders including the shareholders. Inspired by thisVision driven by Values and powered by internal Vitality your Directors and employeeslook forward to the future with confidence and stand committed to creating an evenbrighter future for all stakeholders.

The global economic climate continues to be volatile uncertain and prone togeo-political risks and may inhibit global growth. 2018-19 will be a key year forconsolidating the Company's leadership position in India and accelerating further growth.Despite challenging global headwinds a stable macro performance will help India to remainan attractive investment destination. While currently inflation is expected to bemoderate upside pressures on inflation or due to competitive devaluation of currencieswill pose challenges.

The Company aims to closely associate with its Customers and increase operational andtechnical excellence while pruning costs. Research and Development will also play abigger role in improving the competitiveness through innovations.

The Company's overseas subsidiaries in Netherlands North America Mexico and Shanghaiare fully geared up and will play a major role in achieving quantum growth in sales andprofitability thereby pushing exports. This among other measures will help the Companyconsolidate its position further as a reliable global player in the Pigments market.

Barring any unforeseen circumstances the current year's prospects look favourable.


Your Directors place on record their gratitude to Bank of Maharashtra State Bank ofIndia Bank of Baroda ICICI Bank Limited HDFC Bank Limited HSBC Limited StandardChartered Bank Citi Bank N.A. IDFC Bank Limited Kotak Mahindra Bank Limited Yes Bankand Export Import Bank of India for their co-operation and assistance. Your Directors alsoplace on record their appreciation of the services rendered by BMGI and PragatiLeadership. The Board is also grateful to the Government Authorities Members CustomersSuppliers Business Associates and Employees of the Company for their continuedco-operation and support.

For and on behalf of the Board of Directors
PUNE : 27th June 2018 CHAIRMAN