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Clariant Chemicals India Directors Report, Clariant Reports by Directors
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Clariant Chemicals India
BSE: 506390|NSE: CLNINDIA|ISIN: INE492A01029|SECTOR: Dyes & Pigments
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Download Annual Report PDF Format 2011 | 2010
Directors Report Year End : Dec '13    « Dec 12
The Directors are pleased to present the 57th annual report and
 audited statement of accounts for the year ended December 31, 2013.
 
 Financial Results
 
 The financial performance of the Company for the year ended December 31,
 2013 is summarized below:
 
                                                   Rs. Lakhs
 
                                             2013            2012
 
 Sales (Gross- including excise duty)      1,290,00.62      1,145,99.32
 
 Net sales                                 1,213,20.25      1,071,22.57
 
 Profit before exceptional items & tax        113,53.18        133,11.00
 
 Add : Exceptional items                     112,24.63          9,20.47
 
 Profit before tax                           225,77.81        142,31.47
 
 Less: Tax expenses (incl. deferred tax )     59,00.97         41,01.43
 
 Profit after tax                            166,76.84        101,30.04
 
 Add: Balance brought forward from           132,26.44        126,30.48
 previous year
 
 Amount available for appropriation          299,03.28        227,60.52
 
 Appropriations :
 
 General reserve                              16,67.68         10,13.00
 
 Interim dividend                             26,66.07         26,66.07
 
 Proposed dividend (final)                    53,32.15         46,65.63
 
 Tax on dividend (interim, final
 proposed & incl. previous period)            13,95.34         11,89.38
 
 Balance carried forward to balance sheet    188,42.04        132,26.44
 
 Review of operations
 
 The Company has registered a record performance over previous year,
 despite challenging macro economic conditions, high inflation,
 depreciation of Indian currency against major currencies and negative
 business sentiments prevailing throughout the year and across the
 industry. Thanks to the sustained drive and team work of the entire
 organisation, performance remained high on agenda. This resulted into
 unprecedented record sales growth throughout the year. The performance
 in terms of net working capital was affected by higher inventory and the
 profitability impacted by inflation led cost push in most of the
 operating areas.
 
 The Company registered sales of Rs. 1,213.20 crores as compared to Rs.
 1,071.23 crores, growth of 13.3 percent sales. Considering the impact
 of sale of textile, paper and emulsion business (TPE business) efective
 from September 30, 2013, growth in sales on like to like basis was a
 record 25.3 percent over previous year. Out of the total sales revenue
 of the Company for the year, 23.3 percent is contributed by exports.
 The increased cost of raw materials and inflationary rise in other
 expenses resulted into lowering of PBDIT margin before exceptional
 items from 14.6 percent to 11.4 percent.  Exceptional item represents
 profit from sale of TPE business (net of transfer of assets and other
 liabilities). Net profit after accounting for exceptional items and tax
 is significantly higher over the previous year. The Company remains
 focused to improve its core business and look for higher market share
 in the business segments in which it operates.
 
 Dividend
 
 During the year, your Directors had declared an interim dividend of Rs.
 10/- per share (100%) and the same was paid in August 2013.  Based on
 the performance for the year and the exceptional income arising from
 the sale of TPE business, the Board of Directors is pleased to
 recommend a final dividend of Rs. 20/- per share (200%).
 
 The total dividend for the year under review amounts to Rs. 30/- per
 share (300%) as compared to Rs. 27.5 per share (275%) paid for the
 previous year. The dividend together with tax thereon for the year
 entails cash out flow of Rs. 93,57.52 lakhs (previous year Rs. 85,57.12
 lakhs) and pay out of 56% of the net profit for the year.
 
 Sale of Businesses
 
 In accordance with the approval of shareholders granted pursuant to
 provisions of section 293(1)(a) of the Companies Act, 1956, the Company
 has executed agreement with Archroma India Pvt. Ltd.  and sold its TPE
 business as going concern on slump sales basis for a total
 consideration of Rs. 209.15 crores, on September 30, 2013.  The profit
 arising from the sale of business, net of assets and liabilities
 transferred to Archroma India Pvt. Ltd. and after considering the
 provisions for various expenses incurred or to be incurred to transfer
 the business as going concern, the net profit of Rs. 114.45 crores has
 been included in the exceptional income for the year.
 
 Pending receipt of certain licenses and approvals in the name of
 Archroma, the Company had entered into business continuation agreement
 with Archroma to run the business in its name for and on behalf of
 Archroma till the last of the permission and approval is received. On
 receipt of the last permission, the business continuation agreement was
 terminated on 31st January, 2014.
 
 Sale of Leather Service Business:
 
 Considering its long-term strategy and overall objective to serve
 markets with future perspective and strong growth rates, Clariant
 decided to sell its leather services business and thereby reposition
 its portfolio. The company intends to sell the leather services
 business together with the assets and liabilities pertaining to this
 business as going concern on slump sale basis to M/s. Stahl India
 Private Limited, an affiliate of Stahl Holdings B.V. Group for a
 consideration of Rs. 156 crores, subject to adjustment, if any, as of
 the effective date. The consideration so received by the Company (net of
 tax) will be used for furtherance of the Company''s business.
 
 The company has production facilities for manufacture of leather dyes
 and chemicals located at Kanchipuram in Tamilnadu. The sale of business
 include transfer of all assets including land, buildings, plant and
 other assets located at Kanchipuram, the laboratories and relevant ofce
 set-up located at Ranipet, Kolkata and Kanpur, employees related to
 productions, sales & marketing and service functions engaged for
 leather service business.
 
 The leather service business contributed about 20.9% of the net sales
 of the Company for the year. The decision to sell the business as going
 concern at a value arrived at by M/s. Ernst & Young LLP was considered
 by the Board and was approved by the Shareholders pursuant to section
 293(1)(a) of the Companies Act. The Directors would like to assure that
 given the present market conditions prevailing for the business under
 sale, the decision will be in the best interest of the Company and its
 shareholders.
 
 Sale of Kolshet Land:
 
 With a view to unlock the value of the real estate, the Company decided
 to sale its land measuring about 87 acres located at Kolshet, Thane. In
 accordance with approval granted by the shareholders pursuant to
 provision of section 293(1)(a) of the Companies Act, 1956, the Company
 is in process to complete the sale of land. The shareholders will be
 appropriately informed once the agreement is concluded with the
 interested buyer.
 
 Acquisition of M/s. Plastichemix Industries:
 
 In order to deploy the surplus funds for business opportunities, the
 Company considered it appropriate to increase its foothold in growing
 business of masterbatches and thus executed an agreement to acquire
 business currently run by M/s. Plastichemix Industries, a partnership
 frm owned by Sheth family. M/s.  Plastichemix Industries has set up
 manufacturing operations at Nandesari, Rania and Kalol in Gujarat. In
 terms of agreement signed between the Company and M/s. Plastichemix
 Industries, upon closure of the certain events and on closing of
 accounts, the Company expects to acquire the business as going concern
 and on slump sale basis effective from April 1, 2014. M/s. Ernst & Young
 LLP has carried out the due diligence and also provided valuation
 report. The consideration agreed to be paid to M/s. Plastichemix
 Industries amounting to Rs. 135 crores, subject to adjustment if any,
 is negotiated and arrived at after considering the strategic benefits
 expected to be realised by the Company from the acquisition.
 
 Relocation to New office:
 
 In order to monetise the value of the Kolshet real estate, the Company
 decided to relocate its operations hitherto carried out at Kolshet to a
 new location. The Company has leased out about 142,000 sq. ft. of space
 for relocating its offices and laboratories currently located at Kolshet
 to Reliable Tech Park, Airoli, Navi Mumbai. The new location is
 expected to be ready for occupation effective from June, 2014.
 
 The manufacturing operations for masterbatches has been relocated from
 Kolshet, Thane to Renaissance Warehouse Park situated at village
 Vashere, Taluka Bhiwandi, District Thane and the relocated facility has
 started the production in December 2013.
 
 Registered Office:
 
 In view of shifting of its offices from Kolshet to Airoli, the Company is
 proposing to relocate its registered office from Sandoz baug, Kolshet
 Road, Thane to Reliable Tech Park, Airoli, Navi Mumbai.
 
 Fixed Deposits
 
 The Company did not accept any fixed deposit during the year under
 review. There were no overdue or unclaimed deposits outstanding as on
 December 31, 2013.
 
 Corporate Governance, Management Discussion and Analysis
 
 The Company is committed to compliance standards, ensuring checks and
 balances between the Board and Management, as well as a sustainable
 approach to create value for all stakeholders. As stipulated under
 clause 49 of the listing agreement, report on corporate governance,
 management discussion and analysis as well as auditor''s certificate
 confrming the compliance with the conditions of corporate governance
 are attached herewith and forms part of this annual report.
 
 Particulars of Employees
 
 As per provisions of section 217(2A) of the Companies Act, 1956 read
 with the Companies (Particulars of Employees) Rules, 1975, Board''s
 report shall include a statement providing the particulars of employees
 who are in receipt of remuneration as prescribed under the section.
 However, pursuant to provisions of Section 219(1)(b)(iv) of the
 Companies Act, 1956, the report and accounts are being sent to members
 excluding the statement of particulars of employees. Any member
 interested in obtaining a copy of this statement, may write to the
 Company Secretary at the registered ofce of the Company.
 
 Directors
 
 During the year, Mr. Bansi S. Mehta, Diwan Arun Nanda and Dr. H.
 Schloemer resigned as members of the Board. The Board considered and
 appointed Mr. Y. H. Malegam, Dr. (Mrs.) Indu R.  Shahani and Mr. Karl
 H. Dierssen to fill up the casual vacancies caused by resignations. The
 Board of Directors wishes to place on record its appreciation for the
 valuable services rendered by Mr.  Mehta, Diwan Nanda and Dr. Schloemer
 during their tenure as directors of the Company. The Board considered
 and appointed Mr. B.L. Gaggar as Executive Director of the Company
 effective from July 16, 2013. The appointment of Mr. Gaggar and terms
 thereof is subject to approval of members and are set out in the notice
 convening annual general meeting.
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Mr. A. Muench retires by
 rotation at the forthcoming Annual General Meeting, and being eligible,
 ofers himself for re-appointment.
 
 Details of the directors seeking re-appointment as required under
 clause 49 of the listing agreements with the stock exchanges are
 provided in the report on Corporate Governance forming part of the
 annual report.
 
 Directors'' Responsibility Statement
 
 In terms of section 217 (2AA) of the Companies Act, 1956 your directors
 confirm that- (a) in the preparation of the annual accounts, the
 applicable accounting standards have been followed;
 
 (b) they have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company as at December 31, 2013 and of the profit of the Company for
 that year;
 
 (c) they have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 1956 for safeguarding the assets of the Company and for
 preventing and detecting fraud and other irregularities; and
 
 (d) they have prepared the annual accounts on a going concern basis.
 
 Conservation of Energy, Research and Development, Technology
 Absorption, Foreign Exchange Earnings and Outgo Information pursuant to
 section 217(1)(e) of the Companies Act, 1956 read with the Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules,
 1988, is annexed hereto and forms part of the report.
 
 Auditors
 
 M/s. Price water house Coopers (PwC) are the statutory auditors of
 Clariant Group. With a view to have common auditors, it was proposed to
 consider the appointment of M/s. Price Waterhouse, Indian affiliate of
 PwC as statutory auditors of the Company. The Board considered the
 proposal and proposes the appointment of M/s. Price Waterhouse as
 statutory auditors in place of the retiring auditors, M/s. Deloitte
 Haskins & Sells, who being eligible, offer themselves for
 re-appointment.
 
 Cost Audit
 
 The Board of Directors, in pursuance of order under section 233B(2) of
 the Companies Act, 1956, appointed M/s. Nalin I. Mehta, Cost
 Accountants, as cost auditors of the Company to carry out the audit of
 the cost accounts relating to organic and inorganic chemicals of the
 Company for the financial year 2014, subject to approval of Central
 Government, if any. The cost audit report for the financial year 2012
 has been fled on due date.
 
 Acknowledgement
 
 The Board of Directors wish to place on record its sincere appreciation
 for the support received from its stakeholders including shareholders,
 bankers, distributors, suppliers and business associates. The Directors
 recognize and appreciate the sincere and hard work, loyalty, dedicated
 efforts and contribution of all the employees that ensured sustained
 performance in a challenging business environment.
 
 The Directors also express their appreciation of the assistance and
 unstinted support received from Clariant group companies.
 
                         For and on behalf of the Board of Directors,
 
                                                          R. A. Shah
 
 Mumbai, February 26, 2014                                  Chairman
Source : Dion Global Solutions Limited
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