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Clariant Chemicals India Directors Report, Clariant Reports by Directors
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Clariant Chemicals India
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Directors Report Year End : Dec '14    « Dec 13
Dear Members,
 
 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. 
 
 Financial Performance
 
 The financial performance of the Company for the year ended December
 31, 2014 is summarized below:
 
                                                           RS. in Lakhs
 
                                                   2014            2013
 
 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
 previous year
 
 Amount available for appropriation           1,131,73.59     299,03.28
 
 Appropriations :
 
 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.
 
 Dividend
 
 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
 year.
 
 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 
 Masterbatches.
 
 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.
 
 Registered 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.
 
 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, 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. 
 
 Directors
 
 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
 tenure.
 
 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
 confirm that-
 
 (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.
 
 Auditors
 
 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.
 
 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 2015, subject to approval of Central
 Government, if any. The cost audit report for the Financial year 2013
 has been filed on due date.
 
 Secretarial Audit
 
 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.
 
 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
                                    
                                                        Bharat V. Patel
 Mumbai, February 12, 2015                                     Chairman
Source : Dion Global Solutions Limited
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