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Clariant Chemicals India

BSE: 506390|NSE: CLNINDIA|ISIN: INE492A01029|SECTOR: Dyes & Pigments
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Directors Report Year End : Mar '17    Mar 16

Dear Members,

The Directors are pleased to present the 60th Annual Report together with the Audited Statement of Accounts for the Year ended March 31, 2017.

These Financial Statements are the first Financial Statements of the Company under Indian Accounting Standards.

1. Financial performance of the Company

(Rs. in Lakhs)

Particulars

12 months ended 31.03.2017

15 months ended 31.03.2016

Sales (Gross- including excise duty)

101986.16

118813.11

Profit before tax

3628.77

5026.61

Less: Tax expenses (incl. deferred tax)

(1180.73)

(935.52)

Profit after tax

2448.04

4091.09

Profit from discontinued operations (Net of tax expenses)

-

1845.85

Total profit for the period

2448.04

5936.94

Add: Balance brought forward from previous period

52360.56

91614.53

Amount available for appropriation

54808.60

97551.47

Appropriations :

Interim dividend

-

37325.04

Final dividend

2308.18

-

Corporate Tax on dividend

469.90

7463.04

Transfer for equity instruments through Other comprehensive income (OCI)

(1187.10)

-

Other comprehensive income (OCI)

73.98

(65.26)

Utilised for buyback expenses

-

302.75

Depreciation adjustment on account of change in useful life of assets

-

165.34

Balance carried forward to the balance sheet

53143.64

52360.56

2. Review of operations

The operational performance for the current year is not strictly comparable with that of the previous period in view of the previous period being that for 15 months. The Company’s continuing operations reported sales for the year ended March 31, 2017 stood at Rs.101986.16 Lakhs as against Rs.118813.11 Lakhs for the previous 15 months period ended March 31, 2016. However on a like to like period for the 12 months, Company recorded a sales growth of 7.8%. Of the total sales revenue for the year under review, 21% is contributed by exports. The Company’s continued focus on sales growth, effective raw material management and cost control measures, helped in improving the Company’s operational PBDIT (excluding other income) to Rs.6713.22 Lakhs (6.6% of sales) against Rs.6432.77 Lakhs (5.4% of sales) during the previous 15 months period ended March 31, 2016. The Company remains committed and focused on its drive for sustainable growth in all segments it operates, through better material and cost management, targeting new markets and introducing innovative products.

3. Dividend

The Board of Directors are pleased to recommend a final Dividend of Rs.25/- per share (250%).

The final dividend together with tax thereon entails cash outflow of Rs. 6945.20 Lakhs and a payout of 227% of the total comprehensive income for the year ended 31 March 2017.

The total dividend for the period under review amounts to Rs.25 per share (250%) as compared to Rs.150 per share (1500%) paid for the previous year. (previous year includes final dividend ofRs. 10 per share & interim dividend of Rs.140 per share based on the exceptional income arising from the sale of Kolshet land).

Pursuant to the requirement of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company have formulated and adopted Dividend Distribution Policy which is available on the website of the Company at www.clariant.com and also annexed as “Annexure A”.

4. Corporate Governance, Management Discussion and Analysis Report

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 SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, 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.

5. Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future

During the year under review, there has been no such significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

6. Material changes between the date of the Board report and end of financial year

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

7. Subsidiary Company

As on March 31, 2017, the Company does not have any subsidiary.

8. Details of Directors and Key Managerial Personnel

During the year under review, the Board of Directors, at their meeting held on January 28, 2017, appointed Mr. Adnan Ahmad as Executive Director of the Company effective from April 3, 2017 and further as Vice-Chairman and Managing Director effective from June 1, 2017 in place of Dr. Deepak Parikh who will step down as the Vice-Chairman and Managing Director of the Company effective from closing of working hours of May 31, 2017, consequent to his appointment as Head of Region, North America within the Clariant Group.

Notice, as required, under Section 160 of the Companies Act, 2013, have been received from one of the members proposing the candidature of Mr. Adnan Ahmad as Executive Director of the Company effective from April 3, 2017 and further as the Vice-Chairman & Managing Director effective from June 1, 2017.

The Board placed on records its sincere appreciation to Dr. Deepak Parikh for his excellent leadership in steering the overall growth and development of the Company and the contributions made during his tenure.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Alfred Muench retires by rotation at the ensuing Annual General Meeting, and being eligible, he offers himself for re-appointment.

The above appointment and re-appointment forms part of the Notice of the 60th Annual General Meeting and the respective Resolutions are recommended for your approval.

All Independent Directors of the Company have given declarations that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

During the year under review, Mr. Sanjay Ghadge was appointed as the Chief Financial Officer in place of Ms. Raksha Kamdar, Interim Chief Financial Officer, with effect from May 20, 2016.

There were no other changes in the Key Managerial Personnel of the Company during the year under review.

9. Audit Committee

The details on the composition, meeting, attendance, etc. of the Audit Committee are provided in the Corporate Governance Section of the Annual Report. The Board has accepted all the recommendations of the Audit Committee during the Financial Year under review.

10. Number of meeting of the Board

During the year under review, the Board of Directors met 5 times on May 20, 2016, August 12, 2016, December 1, 2016, January 28, 2017 and February 10, 2017.

11. Conservation of energy, technology absorption, foreign exchange earnings and outgo

As required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the relevant information and data for the year ended March 31, 2017 are annexed to this report as “Annexure B”.

12. Corporate Social Responsibility

In terms of the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility (“CSR”) Committee. Effective from June 1, 2017, the Committee constitutes of following members:

Name

Category

Dr. (Mrs.) Indu Shahani

Chairperson, Independent

Director

Mr. Kewal Handa

Independent Director

Mr. Adnan Ahmad

Vice-Chairman &

Managing Director

Mr. Karl Holger Dierssen

Non-Executive Director

Your Company also has in place a CSR policy and the same is available on the website of the Company at www.clariant.com. A detailed report as per Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is attached as “Annexure C” forming part of this report.

13. Nomination and Remuneration Policy

The Board has, on the recommendation of Nomination and Remuneration Committee, framed a policy on Nomination and Remuneration of its Directors and Key Managerial Personnel, which is attached as “Annexure D”.

14. Board Evaluation and Familiarisation programme

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out the annual evaluation of its own performance and Board Committees by seeking the inputs of Directors on various aspects of the Board / Committee Governance. The Board have reviewed the performance of the individual directors and the Chairperson. The manner in which the evaluation has been carried out is stated in the Corporate Governance Report.

The details of programme for familiarization of the Independent Directors of your Company is available on the Company’s website at www.clariant.com.

15. Particulars of Employee

As per provisions of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosure pertaining to the particulars of employees who are in receipt of remuneration as prescribed under the Section is attached as “Annexure E”.

The statement of particulars of employees pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Annual Report. However, pursuant to provisions of Section 136 (1) of the Companies Act, 2013, the report and accounts are being sent to members excluding this 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.

16. Directors’ Responsibility Statement

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013 with respect to Directors’ Responsibility Statement, it is hereby confirmed that:

(i) In the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) The Directors had 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 March 31, 2017 and of the profit and loss of the Company for that period;

(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) The Directors had prepared the annual accounts on a going concern basis;

(v) The Directors had laid down Internal Financial Controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

(vi) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. Statutory Auditor & Audit Report

In accordance with Section 139 of the Companies Act, 2013, M/s. Price Waterhouse Chartered Accountants LLP, (Firm Regn. No 012754N/ N500016), were appointed as Statutory Auditors by the members of the Company for a period of 4 years from the conclusion of 58th Annual General Meeting, subject to ratification by the shareholders at every subsequent Annual General Meeting. The Statutory Auditors being eligible offer themselves for reappointment. Your Directors recommends the ratification of their appointment as Statutory Auditors of the Company from the conclusion of this Annual General Meeting till the conclusion of next Annual General Meeting.

The Auditor’s in their report have commented that the back up of the books of accounts and other books and papers maintained in electronic mode has not been maintained on servers physically located in India. The Company would like to clarify that the Company’s SAP is centralized in Global Data Centers outside India where the backup storage is maintained. The Company is reviewing the maintenance of backup of SAP data in India as required under Rule 3 of the Companies (Account) Rules, 2014.

18. Cost Audit

The Board of Directors, in pursuance of order under Section 148 of the Companies Act, 2013, appointed M/s. RA & Co., Cost Accountants, as Cost Auditors of the Company to carry out the audit of the cost accounts relating to “Dyes” for the Financial year 2017-18, subject to approval of Central Government, if any. The cost audit report for the 15 months ended March 31, 2016 has been filed on due date.

19. Secretarial Audit Report

Pursuant to provisions of Section 204 of the Companies Act, 2013, and Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. V. V. Chakradeo, Practising Company Secretary, as Secretarial Auditor to carry out the secretarial audit for the Financial year 2016-17.

The Secretarial Audit Report is annexed herewith an “Annexure F”. The Secretarial Auditors Report does not contain any qualification, reservation or adverse remark and is self-explanatory and thus does not require any further comments.

20. Internal Financial Controls and their Adequacy

The details in respect of Internal Financial Controls and their adequacy are included in the Management Discussion & Analysis Report, which forms part of this Report.

21. Extract of Annual Return

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013, an extract of the Annual Return in form MGT-9 is annexed herewith as “Annexure G” to this report.

22. Risk management policy

The Company has a robust Risk Management to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company’s competitive advantage. Many risks identified by the business and functions are systematically addressed through mitigating actions on a continuing basis. The Company has framed a Risk Management Policy to manage the risks involved in all activities of the Company, to maximize opportunities and minimize adversities.

23. Related Party Transactions

In line with the requirements of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a Policy on Material Related Party Transactions which is available on Company’s website at www.clariant.com.

All the Related Party Transactions entered during the year under review were in ordinary course of business and on arm’s length basis. All the Related Party Transactions are placed before Audit Committee for review and approval. Prior omnibus approval are granted by Audit Committee for Related Party Transactions which are of repetitive nature, entered in the ordinary course of business and are on arm’s length basis.

The disclosure of Related Party Transactions as required under Section 134(3)(h) of Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 in the Form AOC-2 is attached as “Annexure H” to this report.

24. Particulars of loans, guarantees or investments

The details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013, is given in the notes forming part of Financial Statements.

25. Public Deposits

During the year under review, the Company has not accepted any deposits from the public falling under Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the balance sheet date.

26. Vigil Mechanism

The Company believes in upholding professional integrity and ethical behavior in the conduct of its business. To uphold and promote these standards, the Company has adopted Group’s Integrity Line Policy which is akin to Whistle Blower Policy or Vigil Mechanism Policy for its Directors and Employees to report genuine concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct without fear of reprisal.

27. Prevention of Sexual Harassment of Women at Workplace

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, there has been one instance of an allegation of Sexual Harassment which is under investigation.

28. Details in respect of frauds reported by auditors under sub-section (12) of Section 143 “other than those which are reportable to the Central Government”

No matters of actual or alleged fraud has been reported by the auditors under sub-section (12) of Section 143 of the Companies Act, 2013.

29. 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

Mr. Kewal Handa Dr. Deepak Parikh

Chairman Vice-Chairman & Managing Director

DIN (00056826) DIN (06504537)

Navi Mumbai, May 23, 2017

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