The Directors are pleased to present the 57th annual report and
audited statement of accounts for the year ended December 31, 2013.
The financial performance of the Company for the year ended December 31,
2013 is summarized below:
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
Amount available for appropriation 299,03.28 227,60.52
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
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.
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
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
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.
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.
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.
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
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
(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 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
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.
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