The Directors are pleased to present the 58th annual report and
audited statement of accounts for the year ended December 31, 2014. As
per clarification provided by the Ministry of Corporate Affairs vide
Circular No. 08/2014 dated 4th April, 2014 the financial statements and
the documents required to be attached thereto, the auditor''s and
directors'' report in respect of the financial year under reference
shall continue to be governed by the relevant provisions of the
Companies Act, 1956, schedules and rules made there under.
The financial performance of the Company for the year ended December
31, 2014 is summarized below:
RS. in Lakhs
Sales (Gross- including excise duty) 1,082,48.16 1,290,00.62
Net sales 1,008,20.49 1,213,20.25
Profit before exceptional items & tax 3,82.75 113,53.18
Add : Exceptional items 1,183,58.50 112,24.63
Profit before tax 1,187,41.25 225,77.81
Less: Tax expenses (incl. deferred tax ) 244,09.70 59,00.97
Profit after tax 943,31.55 166,76.84
Add: Balance brought forward from 188,42.04 132,26.44
Amount available for appropriation 1,131,73.59 299,03.28
General reserve 9433.16 16,67.68
Interim dividend 103,97.69 26,66.07
Proposed dividend (final) - 53,32.15
Tax on dividend (interim, final proposed 17,67.09 13,95.34
& incl. previous period)
Balance carried forward to balance sheet 91,575.65 188,42.04
Review of operations
2014 was the year of transformation for the Company. The year witnessed
major events in the form of sale of leather service business,
acquisition of masterbatches business, shifting of registered office
and sale of Kolshet site. In spite of revenue loss arising out of sale
of textile, paper and emulsion business effective from October 1, 2013
and leather service business effective from May 1, 2014, the Company
has been able to grow significantly in continued businesses. Despite
negative business sentiments, high inflation and depreciation of Indian
currency against major currencies during first half of the year, the
Company has been able to minimize the revenue loss. Thanks to the
acquisition of masterbatches business which provided support in
recouping the revenue loss and improved Company''s market place for this
business, sustained drive by marketing, resulted into record sales
growth throughout the year. The performance in terms of net profit was
affected by higher raw material prices and associated costs of
restructuring the business.
The Company registered sales of RS. 1,008.20 crores as compared to RS.
1,213.20 crores, negative growth of 16.9% in sales. Out of the total
sales revenue of the Company for the year, 26% is contributed by
exports. After considering the impact of sale of Textile, Paper and
Emulsion business (TPE business) effective from October 1, 2013, and
sale of leather services business effective from May 1, 2014, the
growth in sales on like to like basis was a record 43.6% over the
previous year. The increased cost of raw materials and inflationary
rise in other expenses resulted into lowering of PBDIT margin before
exceptional items from 11.4% to 3.8%. Exceptional items for the current
year mainly represent profit from sale of leather business (net of
transfer of assets and other liabilities) RS. 104.09 crores and profit
from sale of Kolshet site RS. 1085.48 crores. Exceptional item for
previous year mainly represents sale of TPE business. Considering the
exceptional items, the net profit after provision for 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.
During the year, your Directors had declared an interim dividend of RS.
39/- per share (390%) for Financial year 2014 and the same was paid in
August 2014 as compared to RS.30.00 per share (300%) paid for the
previous Financial year. The dividend together with tax thereon for the
year entails cash outflow of RS. 121.65 crores (previous year RS.
93.57crores) and pay out of 12.9 % of the net profits for the year.
Based on the exceptional income arising from the sale of Kolshet land,
the interim dividend of RS. 140/- per share for the Financial year 2015
was declared and paid in January 2015. The interim dividend together
with tax thereon for the year entails cash outflow of RS. 447.88 crores
and pay out of 41.3 % of the net profits from sale of Kolshet site.
The two interim dividends paid for FY 2014 and FY 2015 together amounts
to RS. 179 per share (1790%). The Board of Directors do not recommend
final dividend for 2014.
Sale of Leather Service Business
In accordance with the approval of shareholders granted pursuant to
provisions of Section 293(1) (a) of the Companies Act, 1956 and as per
value of business arrived at by M/s. Ernst & Young LLP, considered and
approved by the Board, the Company executed Business Transfer Agreement
with Stahl India Pvt. Ltd. and sold its Leather service business as
going concern on slump sales basis for a total consideration of RS. 156
crores, on May 1, 2014. The profit arising from the sale of business,
net of assets and liabilities transferred to Stahl India Pvt. Ltd. and
after considering the provisions for various expenses incurred or to be
incurred for transfer the business as going concern, the net profit of
RS. 104.09 crores has been included in the exceptional income for the
Acquisition of M/s. Plastichemix Industries
In terms of agreement signed between the Company and M/s. Plastichemix
Industries, a partnership firm owned by Sheth family, the Company
acquired the business of Masterbatches including manufacturing
facilities set up at Nandesari, Rania and Kalol in Gujarat as going
concern effective from April 10, 2014 for an aggregate consideration of
RS. 131 crores, net of adjustment.The acquisition helped the Company in
improving its sales and improving market share in the business of
Sale of Kolshet Site
In accordance with approval granted by the shareholders pursuant to
provision of Section 293(1)(a) of the Companies Act, 1956, the Company
executed agreement for sale of about 87 acres of land together with the
buildings and structures standing thereon situated at Kolshet, Balkum
and Dhokali village of Thane with M/s. Ishwar Realty and Technologies
Pvt. Ltd. (a subsidiary of Lodha Developers Private Limited). As per
terms of the agreement, on receipt of total consideration of RS.
1102.25 crores, the transaction was concluded and the possession of the
land was handed over to the buyers as of December 31, 2014.
Relocation to New office
The Company has leased out about 142,000 sq. ft. of office space in
Reliable Tech Park, Airoli, Navi Mumbai for a term of 20 years from
M/s. Reliable Exports. All offices and laboratories were moved out of
Kolshet and relocated to the new premises on July 1, 2014 and October
1, 2014 respectively. A sum of RS. 65 crores was incurred in creating
facilities at new office.
In view of change in office location, the registered office of the
Company shifted from Sandoz baug, Kolshet Road, Thane to Reliable Tech
Park, Airoli, Navi Mumbai effective from July 1, 2014.
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, 2014.
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
confirming 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, Boards''
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 Company
Secretary at the registered office of the Company.
During the year, Mr. R. A. Shah resigned as member of the Board
effective from September 30, 2014. The Board considered and appointed
Mr. Bharat V. Patel as Director and Chairman of the Company. The Board
of Directors wishes to place on record its sincere appreciation for the
valuable services rendered by Mr. Shah since formation of Clariant in
India as Director and Chairman of the Company. During the year, Mr.
Viktor Bernhardt was appointed as Director to fill up the casual
vacancy caused by resignation of Mr. Philipp Hammel who resigned as
Director effective from February 26, 2014. Mr. Viktor Bernhardt
resigned from the Directorship of the Company effective from February
12, 2015, Mr. Mario Brocchi was appointed as Director to fill up the
casual vacancy caused by the resignation of Mr. Viktor Bernhardt with
effect from February 12, 2015. The Board of Directors places on record
its sincere appreciation for the contribution and valuable service
rendered by Mr. Philipp Hammel and Mr. Viktor Bernhardt during their
In accordance with the provisions of the Companies Act, 2013 and the
Articles of Association of the Company, Mr. Mario Brocchi retire by
rotation at the forthcoming Annual General Meeting, since the Director
in place of whom he is appointed in the casual vacancy, would have
retired if he had not vacated the office. Being eligible, he offers
himself for re-appointment.
Pursuant to Companies Act, 2013 and Clause 49 of the Listing Agreement,
Mr. Y. H. Malegam, Dr. (Mrs.) Indu Shahani and Mr. Bharat V. Patel are
proposed to be re-appointed as Independent Directors for a period of 4
years from April 1, 2015 and they shall not be liable to retire by
rotation. In the opinion of the Board of Directors, these Directors are
independent of management and they fulfilled the conditions specified
in the Companies Act and the Rules made thereunder. The above
appointments and re-appointments form part of the Notice of the 58th
Annual General Meeting and the respective Resolutions are recommended
for your approval.
As per provisions of Section 198 read with Section 309 of the Companies
Act, 1956, the remuneration payable to an individual managing or whole
time director shall not exceed individually 5% and collectively 10%.
However, the managerial remuneration paid to Vice-Chairman & Managing
Director and Executive Director -Finance & Company Secretary of the
Company for the Financial year 2014 was approved by shareholders at the
Annual General Meeting held on May 6, 2014, pursuant to provisions of
Section 198, 269, 309, 310 read with other applicable provisions and
schedule XIII of the Companies Act, 1956 and the same was approved as
minimum remuneration, ifthe Company has no profits or profits are
inadequate. In view of circular no. 46 dated July 14, 2011, approval of
the Central Government is not required for payment of managerial
remuneration, if the managerial person is not having any interest in
the capital of the Company or its holding company, directly or through
any other statutory body etc.
Pursuant to provisions of Section 197(1) of Companies Act, 2013, which
is applicable effective from April, 1, 2014, total managerial
remuneration payable by the Company to its directors, including
managing director and whole time directors shall not exceed 11% of the
net profits of the Company for the financial year, computed in
accordance with provisions of Section 198 of the Act, provided that the
Company in general meeting may, with the approval of Central
Government, authorise the payment of remuneration exceeding 11 percent
of the net profits of the Company. Considering the business projections
for 2015, the management feels that as an abundant caution, the Company
may seek approval of Central Government for payment of remuneration to
Dr. Deepak Parikh, Vice-Chairman and Managing Director and Mr. B. L.
Gaggar, Executive Director-Finance & Company Secretary for the
Financial year 2015, which may exceed the limits prescribed under
Section 197 read with Schedule V of the Companies Act, 2013 and for
waiver of remuneration payable / paid in excess, if any.
The Board commends the passing of resolution for payment of
remuneration to managing director and executive director.
Profiles of the directors proposed for reappointment, as required under
Clause 49 of the Listing Agreement, are given in the Notice of the 58th
Annual General Meeting.
Directors'' Responsibility Statement
In terms of Section 217 (2AA) of the Companies Act, 1956 your Directors
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed and have provided proper
explanation relating to material departures;
(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, 2014 and of the profit of the Company
for year ended on that date;
(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.
M/s. Price Waterhouse LLP, Chartered Accountants (Firm Regn. No
012754N/ N500016), retire at the conclusion of the ensuing Annual
General Meeting and being eligible, offer themselves for reappointment.
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 2015, subject to approval of Central
Government, if any. The cost audit report for the Financial year 2013
has been filed on due date.
Pursuant to provisions of Section 204 of the Companies Act, 2013, the
Board appointed Mr. Jagdish Ahuja, Practising Company Secretary, as
Secretarial Auditor to carry out the secretarial audit for the
Financial year 2014. Since the provisions relating to the disclosures
are not applicable for the year under review, the secretarial audit
report is not enclosed to the Boards'' report for the year ended
December 31, 2014.
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
Bharat V. Patel
Mumbai, February 12, 2015 Chairman