The Directors are pleased to present the 56th annual report and
 audited statement of accounts for the year ended December 31,2012.
 
 Financial Results
 
 The financial performance of the Company for the year ended December
 31, 2012 is summarized below:
 
                                                             Rs. Lakhs
 
                                                      2012          2011
 
 Sales (Gross- including excise duty)           1145,99.32    1015,85.85
 
 Net sales                                      1071,22.57     956,08.12
 
 Profit before exceptional items & tax           133,11.00     154,07.71
 
 Add: Exceptional items                            9,20.47     241,33.20
 
 Profit before tax                               142,31.47     395,40.91
 
 Less: Tax expenses (incl. deferred tax)          41,01.43      91,37.01
 
 Profit after tax                                101,30.04     304,03.90
 
 Add : Balance brought forward from
 previous year                                   126,30.48      38,37.85
 
 Amount available for appropriation              227,60.52     342,41.75
 
 Appropriations:
 
 General reserve                                  10,13.00      30,40.39
 
 Interim dividend                                 26,66.07      79,98.22
 
 Proposed dividend (final)                        46,65.63      79,98.22
 
 Tax on dividend (interim, final
 proposed & incl. previous period)                11,89.38      25,74.44
 
 Balance carried forward to balance sheet        132,26.44     126,30.48
 
 Review of operations
 
 The business sentiments, confronted with the challenges of market
 conditions and slowdown in global demand, remained extremely
 challenging and the recessionary economic conditions led initial
 slowdown in sales growth. Thanks to the sustained efforts of the
 marketing team, improved marketing performance of the second half
 resulted into record sales and growth. The performance in terms of net
 working capital was affected by built-up of inventory and the
 profitability is significantly impacted by inflation led cost push in
 most of the operating areas. Directors are pleased to inform that in
 spite of challenging conditions, your Company has registered best ever
 performance in terms of sales growth over previous year.
 
 The Company registered sales ofRs. 1071.23 crores as compared to Rs.
 956.08 crores registering a record growth of 12.0 percent sales. Out of
 the total sales revenue of the Company for the year, 25.3 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 17.7 percent to 14.6 percent.  Net
 profit after accounting for exceptional items and tax is lower 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.
 
 In view of prolonged litigation, the Company could not implement its
 project for manufacturing of Masterbatches at Ambernath, the site
 acquired by the Company in 2008 from MIDC.
 
 Dividend
 
 During the year, your Directors had declared an interim dividend of Rs.
 10/- per share (100%) and the same was paid in August 2012. Based on
 the performance for the year and the policy for distribution of profits
 to the shareholders adopted by the Company, the Board of Directors is
 pleased to recommend a final dividend ofRs. 17.5/- per share (175%).
 
 The total dividend for the year under review amounts to Rs. 27.5/- per
 share (275%) as compared to Rs. 60/- per share (600%) paid for the
 previous year, including special dividend attributable to exceptional
 income. The dividend together with tax thereon for the year entails
 cash out flow of Rs. 85,31.08 Lakhs (previous year Rs. 185,91.46 Lakhs)
 and pay out of 84% of the net profit for the year.
 
 Sale of Businesses
 
 Clariant AG Switzerland, the ultimate Holding Company has announced
 that USA based SK Capital has agreed to purchase the business units
 textile chemicals, paper specialties and business line emulsions from
 Clariant and that this will include the transfer of the whole R&D,
 applications, sales and marketing organisation along with production
 plants and sites worldwide.
 
 Clariant Chemicals (India) Ltd. has production facilities for
 manufacture of textile chemicals and produces paper specialties and
 emulsion products at its Roha plant. The textile chemicals, paper
 specialties and emulsion businesses, included in dyes and specialty
 chemicals segment, together contribute about 35% of the net sales of
 the Company. The decision to sell the businesses including a
 manufacturing plant for textile products situated at Roha and other
 assets dedicated to the businesses under divestment, at a value to be
 arrived at by the professional valuers, will be considered by the Board
 and approval of shareholders will be sought at appropriate time in
 accordance with the requirements of the Companies Act, 1956. The
 Directors would like to assure its shareholders that given the present
 market conditions prevailing for the businesses under sale, the
 decision will be in the best interest of the Company and its
 shareholders.
 
 Fixed Deposits
 
 The Company did not accept any fixed deposits during the year under
 review. There were no overdue or unclaimed deposits outstanding as on
 December 31, 2012.
 
 Management Discussion and Analysis Report
 
 In accordance with Clause 49 of the listing agreements, the Management
 Discussion & Analysis Report forms a part of this report.
 
 Corporate Governance
 
 The Company has always strived to maintain applicable standards of good
 corporate governance and the commitment to good corporate governance is
 embodied in its vision, mission and corporate values. The Company aims
 to be the leader in specialty chemicals, adopting functional excellence
 as part of its culture and its corporate values to foster a shared and
 common set of behaviors amongst all the employees, to help Clariant to
 realise its goal of sustainable value creation. The report on corporate
 governance as stipulated under Clause 49 of the listing agreements
 forms part of this report. The requisite certificate from the auditors
 of the Company confirming compliance with the conditions of corporate
 governance as stipulated under the said clause is attached to this
 report.
 
 Particulars of Employees
 
 The particulars of employees required to be furnished under section
 217(2A) of the Companies Act, 1956 read with the Companies (Particulars
 of Employees) Rules, 1975 as amended, forms part of this report.
 However, as per provisions of section 219 (1) (b) (iv) of the Companies
 Act, 1956, the report and accounts are being sent to all the
 shareholders, excluding the statement of particulars of employees. Any
 shareholder interested in obtaining a copy of this statement, may write
 to the Company Secretary at the registered office of the Company.
 
 Directors
 
 In accordance with the provisions of the Companies Act, 1956 and the
 Articles of Association of the Company, Diwan A. Nanda and Dr. H.
 Schloemer will retire by rotation at the forthcoming Annual General
 Meeting, and being eligible, offer themselves for re-appointment. The
 Directors recommend their re-appointment.
 
 Details of the Directors seeking re-appointment are provided in the
 Corporate Governance Report forming part of this report, as required
 under Clause 49 of the listing agreements with the stock exchanges.
 
 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, 2012 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;
 
 (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(l)(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. Deloitte Haskins & Sells, Chartered Accountants, retire at the
 conclusion of the ensuing Annual General Meeting and being eligible,
 offer themselves for re-appointment.
 
 Cost Audit
 
 The Board of Directors, in pursuance of an order under section 233B(2)
 of the Companies Act, 1956, appointed M/s. R. Nanabhoy & Co., Cost
 Accountants, as cost auditors of the Company to carry out the audit of
 the cost accounts relating to dyes and pigments of the Company for the
 financial year 2013.
 
 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 28, 2013                                     Chairman