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Diamines and Chemicals Ltd.

BSE: 500120 | NSE: | Series: NA | ISIN: INE591D01014 | SECTOR: Petrochemicals

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

To the Members,

The Directors are pleased to present the 42nd Annual Report of the Company together with the Audited Statements of Accounts for the year ended 31st March, 2018.

1. Financial Results

The Company’s financial performances for the year under review along with previous year’s figures are given hereunder

(Rs. In lacs)

Particulars

Year Ended

March 31, 2018

March 31, 2017

Net Sales and Other Income

3,994.29

3,882.38

Profit before Finance costs and Depreciation

1,203.24

940.97

Expenses

Finance cost

31.98

172.79

Depreciation and amortisation expenses

194.81

194.59

Profit from ordinary activities before tax and Exceptional

Item

976.45

573.59

Exception Items

152.52

NIL

Profit from ordinary activities before tax

823.93

573.59

Tax expense

Current tax

216.55

150.00

Deferred tax

(101.52)

(56.22)

Net Profit from ordinary activities after tax

708.90

479.81

Other comprehensive income /(expense) (net of tax)

(28.89)

21.73

Total comprehensive income for the period

680.01

501.54

Net Profit / (loss) attributable to

a) Owners of the Company

708.90

479.81

b) Non controlling interest

NIL

NIL

Other comprehensive income attributable to

a) Owners of the Company

(28.89)

21.73

b) Non controlling interest

NIL

NIL

Total comprehensive income attributable to

a) Owners of the Company

680.01

501.54

b) Non controlling interest

NIL

NIL

Balance of profit brought forward

2,176.96

1,782.02

Dividend

- Interim

NIL

NIL

- Proposed Final

(146.75)

NIL

Corporate Dividend Tax

(29.87)

NIL

Transfer to General Reserve

Balance carried to Balance Sheet

2,706.96

2,176.96

Basic & diluted earning per equity share on Net profit from

7.25

4.90

ordinary activities after tax (face value Rs. 10/- each)

(In Rupees)

2. Dividend

The Board of Directors recommended a final dividend of Rs.2.50 per Ordinary share on 9783240 ordinary shares of Rs.10/- each for the year ended on March 31, 2018.

3. Transfer to Reserves

Pursuant to provisions of Section 134(3)(j) of the Companies Act, 2013, the company has not proposed to transfer any amount to general reserves account of the company during the year under review.

4. Review of Business Operations, performance highlights and Future Prospects

Your Directors wish to present the details of Business operations done during the year under review:

The period under review was a favorable year for your Company which also reflects in its performance.

Total income for the year 2017-18 was registered at Rs.3,994.29 lacs as compared to income of Rs.3,882.38 lacs for the year 2016-17.

Net profit after tax was Rs.708.90 lacs as compared to Rs.479.81 lacs in previous financial year.

Sales volumes for the year 2017-18 were at 1,952.45 MT as compared to 1746.962 MT for the year 2015-16.

5. Transfer of Unclaimed Dividend to Investor Education And Protection Fund

In terms of Section 124 and Section 125 of the Companies Act, 2013, unclaimed or unpaid Final Dividend relating to the financial year 2010-11 is due for remittance on 18th September, 2018, which has not been claimed by shareholders of the Company. Shareholders are required to lodge their claims with the Company’s RTA, MCS Share Transfer Agent Limited for unclaimed dividend. Pursuant to the provisions of Investor Education and Protection Fund, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company on the website of the Company (www.dacl.co.in), as also on the website of the Ministry of Corporate Affairs (www.mca.gov.in).

6. Material Changes And Commitment, if any, affecting the Financial Position of the Company occurred between the end of the Financial Year to which this financial statements relate and the date of the report

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 this Report.

7. Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year, pursuant to Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosures Requirement) Regulations, 2015 forms part of the Annual Report, attached herewith as “ANNEXURE-A”.

8. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information pertaining to 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, is furnished in ANNEXURE - B and is attached to this report.

Your Company understands and appreciates the responsibility and importance of conservation of energy and continues to put efforts in reducing or optimizing energy consumption for its operations.

The Company has taken various measures for conservation of energy such as:

- Reduction in steam consumptions, electricity and cooling water by debottlenecking of various operations

- Improvement in the yields and planned increase in throughput

- Improved steam condensate recovery by installing new designs of traps and monitoring trap performance

- Utilization of by-products steams

- Modification in coal fired boiler to improve efficiency by increasing coal to steam ratio

9. Safety, Health And Environment:

a) Safety:

The Company encourages a high level of awareness of safety issues among its employees and strives for continuous improvement. All incidents are analysed in the safety committee meetings and corrective actions are taken immediately. Employees are trained in safe practices to be followed at work place.

The Company is active member of local Crisis group such as Offsite Industrial Emergency Control Room (OIECR). External safety audits are carried out from time to time and audit recommendations are implemented.

Safety promotional activities such as celebration of National Safety day, arranging poster competition, slogan competition and prize distribution are conducted every year to encourage safety culture. Company also conducts Mock drill regularly on quarterly basis and outcome of Mock drill is analyzed and necessary improvements are implemented regularly. Company also makes continuous efforts to increase Safety awareness with regular and contractual employees and workers.

b) Health:

Your Company attaches utmost importance to the health of its employees. Periodic checkup of employees is done to monitor their health. Company also has Occupational Health Center open for 24 hours, and Ambulance facility at its Manufacturing site. Health related issues if any are discussed with visiting Medical Officer. Company also has a tie up with one hospital in the City to provide timely medical assistance to the employees/workers in case of emergencies.

c) Environment:

Company always strives hard to give importance to environmental issues in normal course of operations. Adherence to Environmental and pollution control Norms as per Gujarat Pollution Control guidelines is of high concern to the Company. The Company is also signatory to “Responsible Care”, a voluntary initiative of International Council of Chemical association (ICC) being implemented by Indian Chemical Council to safely handle the products from inception in research laboratory through manufacturing and distribution to utilization, reuse, recycle and finally their disposal.

d) Renewable Source of Energy:

Your Company is also contributing in reducing Carbon foot printing from the Environment by generating power through renewable sources and by harnessing wind Energy. The Company has installed 3 (three) Wind Turbine Generators (WTG) of total 3.50 MW Capacity and are always ensured in full operational mode.

10. Corporate Social Responsibility Initiatives and Policy

The Company believes in contributing to harmonious and sustainable development of society and that a company’s performance must be measured not only by its bottom line but also with respect to the social contributions made by the company while achieving its financial goals. During the year the CSR

Expenditure incurred by the company was '' 3.72 Lacs in the area of Education and Empowerment. The Annual Report on CSR Activities is annexed herewith as ANNEXURE - C.

11. Particulars of Loans, Guarantees or Investments made under section 186 of the Companies Act, 2013

The particulars of Loans, guarantees or investments made under Section 186 are furnished in ANNEXURE-D and are attached to this report.

12. Material Orders Passed by Regulatory/Court:

There were no significant and material orders passed by any regulators and/or courts and tribunals which may have the impact on the going concern status and company’s operations in future.

13. Internal Financial Controls:

The Board of Directors of the Company has laid down adequate internal financial controls which are operating effectively. The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. During the year, policies and procedures are adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, safeguarding of its assets, the prevention and detection of its frauds and errors, the accuracy and completeness of the accounting records and the timely preparations of reliable financial information. The scope of Internal Audit is well defined in the organization. The Internal Audit report is regularly placed before the Audit Committee of the Board. The Management monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies. Based on the report of Internal Auditors, process owners undertake corrective action in their respective areas and thereby strengthening the controls continuously. Significant audit observations, if any, and corrective actions suggested and taken are presented to the Audit Committee of the Board.

14. Particulars of Contracts or arrangements made with Related Parties:

All transactions entered into with the Related Parties as defined under the Companies Act, 2013 read with Regulation 23 of the SEBI, (Listing Obligations And Disclosure Requirements) Regulations, 2015 during the financial year were in the ordinary course of business and on arm’s length basis and do not attract the provisions of Section 188 of the Companies Act, 2013.

All other Related Party Transactions are placed before the Audit Committee as also the Board for approval. The policy on materiality of related party transactions and dealing with related party transactions is uploaded on the Company’s website “www.dacl.co.in”.

Since, there were no materially significant Related Party transaction during the year under review, the details, required in AOC-2 is not applicable to the Company.

15. Explanation or Comments on qualifications, reservations or adverse remarks or disclaimers made by the Auditors and Practicing Company Secretary in their reports:

There were no qualifications, reservations or adverse remarks made either by the Statutory Auditors or by the Practicing Company Secretary in their respective reports.

16. Extracts of Annual Return

In accordance with Section 134 (3) (a) of the Companies Act, 2013, the extracts of Annual Return pursuant to the provisions of Section 92 (3) in prescribed form MGT-9 is furnished in ANNEXURE-E and forms part of this report.

17. Number of Board Meetings conducted during the year under review:

The Company had 6 (Six) Board meetings during the financial year. During the year under review, Board Meetings were held respectively on 11th April, 2017, 28th April, 2017, 20th July, 2017, 22nd August, 2017, 9th November, 2017 and 24th January, 2018. The details of attendance at the Board Meetings is stated herein below for each Director and the details of attendance at Annual General Meeting for each Director along with their other Directorships is stated in the Corporate Governance Report which forms part of this Report. :

Sr.

No.

Name of the Director

No. of Board Meetings attended out of 6 held

1.

Mr. Yogesh M. Kothari

6

2.

Mr. Amit M. Mehta

6

3.

Mr. Kirat Patel

6

4.

Mr. Dhruv Kaji

2

5.

Mr. Rajendra Chhabra

6

6.

Mr. G.S. Venkatachalam

6

7.

Dr. Ambrish Dalal

2

8.

Mr. Shreyas Mehta

3

9.

Mrs. Darshana Mankad

3

18. Directors Responsibility Statement:

In accordance with the provisions of Section 134(5) of the Companies Act, 2013 the Board hereby submits its responsibility Statement that:—

a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) 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 at the end of the financial year and of the profit and loss of the company for that period;

c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The directors had prepared the annual accounts on a going concern basis;

e) 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

f) 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.

19. Subsidiary Company, its Performance & Financial Position:

During the year under review, no Company has become or ceased to become subsidiary or associate or joint venture Company of M/s. Diamines and Chemicals Limited.

20. Deposits:

The Company has neither accepted nor renewed any deposits falling within the purview of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014 as amended from time to time, during the year under review and therefore details mentioned in Rule 8(5)(v)& (vi) of Companies (Accounts) Rules, 2014 relating to deposits, covered under Chapter V of the Act is not required to be given.

21. Directors:

Mr. Kirat Patel (DIN:00019239), Director of the company retires at this Annual General Meeting and being eligible offer himself for re-appointment. Your Directors recommend his re-appointment.

During the year under review, Mrs. Darshana Mankad, Independent women director resigned from the Directorship with effect from 24th January, 2018. Also, during the year under review, the term of Mr. G. S. Venkatachalam as an Executive Director of the Company expired as on 6th February, 2018 and he was re-appointed as an Executive Director (Whole-Time Director) of the Company with effect from 7th February, 2018 by the board of directors of the Company in their meeting held on 24th January, 2018, subject to confirmation by the Members at the ensuing Annual General Meeting. Ms. Kejal Pandya (DIN: 07048046) is appointed as an Additional Director in the category of Women Independent Director of the Company with effect from 27th April, 2018. None of the Directors is disqualified for appointment/ re-appointment under Section 164 of the Companies Act, 2013. As required by law, this position is also reflected in the Auditors’ Report. The composition of the Board, meetings of the Board held during the year and the attendance of the Directors thereat have been mentioned in the Report on Corporate Governance in the Annual Report.

22. Declarations of Independent Directors:

All the Independent Directors have submitted their declaration to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

23. Familiarization Programmes:

The Company has adopted a familiarization policy for independent directors. The policy as well as the details with regard to no. of hours and details of imparting the training to the independent directors of the Company are available on the Company’s website www.dacl.co.in

24. Board Evaluation:

Regulation 17(10) of the SEBI, (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV, of the Companies Act, 2013, states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The Board approved the evaluation results as collated by the nomination and remuneration committee. None of the independent directors are due for re-appointment.

25. Particulars regarding Employees Remuneration:

Disclosure pertaining to the remuneration and details as required under Section 197(12) of the Act, and the Rules framed thereunder is enclosed as ANNEXURE - F to the Director''s Report. The information in respect of employees of the company required pursuant to rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will be provided upon request. In terms of Section 136 of the Companies Act 2013, the Report and Accounts are being sent to the Members and other entitled thereto, excluding the aforesaid Annexure which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

26. Key Managerial Personnel:

As required under Section 203 of the Companies Act, 2013, the Company has noted that Mr. G. S.Venkatachalam, Executive Director of the Company, Mr. Sudip Ray, Chief Financial Officer and Ms. Scany Parmar, Company Secretary are the Key Managerial Personnel of the Company.

Mr. A. R. Chaturmutha, Chief Financial Officer, resigned from the Company with effect from 28.07.2017. The Board has accepted his resignation and relieved him from duties. The Board Members appointed Mr. Sudip Ray holding ICAI membership number as 117549, as the Chief Financial Officer of the Company with effect from 4th May, 2018.

27. Auditors:

a. Statutory Auditors

As per the provisions of section 139 of Companies Act, 2013 the term of office of M/s. Bansi S. Mehta & Co., Chartered Accountants, as Statutory Auditors of the company will conclude from the conclusion of the forth coming Annual General Meeting of the Company. The Board of Directors places on record its appreciation for the services rendered by M/s. Bansi S. Mehta & Co. as the Statutory Auditors of the Company. Subject to the approval of the Members, the Board of Directors of the Company has recommended the appointment of Messrs. K.C Mehta & Co, Chartered Accountants (ICAI Firm Registration No. 106237W) as Statutory Auditors of the Company pursuant to Section 139 of the Companies Act, 2013. The Members’ attention is drawn to a Resolution proposing the appointment of M/s. K.C. Mehta & Co., as Statutory Auditors of the Company for a period of 5 (Five) years in place of retiring statutory auditors, which is included in Item No. 4 of the Notice for Convening the Annual General Meeting.

b. Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Sandip Sheth & Associates., Company Secretaries, as secretarial auditors of the Company, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as “ANNEXURE-G”.

c. Internal Auditors

Pursuant to provisions of section 138 (1) of the Companies Act, 2013, the Company has appointed M/s. Anirudh Sonpal & Associates, Chartered Accountants, as Internal auditors of the Company, to undertake the Internal Audit of the Company.

28. Instances of Fraud, if any, reported by the Auditors:

There have been no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013.

29. Risk Management Policy:

The Company has a risk management policy which from time to time is reviewed by the Audit Committee of the Directors as well as by the Board of Directors. The policy is reviewed quarterly by assessing the threats and opportunities that will impact the objectives set for the Company as a whole. The policy is designed to provide the categorization of this into threats and its cause, impact, treatment and control measures. As part of the risk management policy, the relevant parameters for manufacturing sites are analyzed to minimize risk associate with protection of environment, safety of operations and health of people at work and monitor regularly with reference to statutory regulations and guidelines define by the company. The company fulfills its legal requirement concerning ambition, waste water and waste disposal. Improving work place safety continued top priority at manufacturing site.

30. Disclosure of composition of Audit Committee and Providing Vigil Mechanism:

The Company has in place an Audit Committee in terms of requirements of the applicable provisions of the Companies Act, 2013, Rules made there under and Listing (Obligations and Disclosure Requirements) Regulations, 2015. The details of the composition of the Audit Committee, terms of reference and meetings held are provided in the Corporate Governance Report which forms part of this Report.

The Company has established a vigil mechanism and oversees through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company.

The Company has disclosed information about establishment of the Whistleblower Policy on its website (Link: http://www.dacl.co.in/investors/Whistle blower policy-DACL.pdf).

31. Shares

a. SHARE CAPITAL

During the year under review the Total Authorized Share Capital is '' 17,55,00,000/- (Rupees Seventeen Crore Fifty-Five Lacs Only) and paid-up, issued and subscribed share capital of the company is '' 9,78,32,400/- (Rupees Nine Crore Seventy-Eight Lacs Thirty-Two Thousand Four Hundred Only).

b. BUY BACK OF SECURITIES

The Company has not bought back any of its securities during the year under review.

c. SWEAT EQUITY

The Company has not issued any Sweat Equity Shares during the year under review.

d. BONUS SHARES

No Bonus Shares were issued during the year under review.

e. EMPLOYEES STOCK OPTION PLAN

The Company has not provided any Stock Option Scheme to the employees.

32. Insurance:

All the properties and assets of the Company are adequately insured.

33. Code of Conduct:

The Board of Directors has laid down a Code of Conduct applicable to the Board of Directors and Senior management which is available on Company’s website. All Board members and senior management personnel have affirmed compliance with the Code of Conduct.

34. Insider Trading Policy:

As required under the new Insider Trading Policy Regulations of SEBI, your Directors have framed new Insider Trading Regulations and Code of Internal Procedures and Conducts for Regulating, Monitoring and Reporting of Trading by Insider. For details please refer to the company’s website.

Web link is http://www.dacl.co.in/investors/SEBI Disc.pdf

35. Nomination And Remuneration Policy:

The Board has, on the recommendation of the Nomination & Remuneration Committee, framed and adopted a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy on the appointment and remuneration of Directors and Key Managerial Personnel provides a framework based on which our human resources management aligns their recruitment plans for the strategic growth of the Company. The policy is available on our website at following linkhttp://www.dacl.co.in/investors/Remuneration%20policy%20DACL.pdf

36. Compliance with Secretarial Standards:

The Board of Directors of the Company has complied with the all the applicable secretarial standards as issued by the Institute of Company Secretaries of India and approved by the Central Government from time to time.

37. Corporate governance:

Pursuant to the Regulation 27 of the SEBI, (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section forming part of this report and titled as “Corporate Governance” is attached herewith as “ANNEXURE-H”.

38. Disclosure Under Sexual Harassment of Women at Workplace (Prevention, Prohibition And Redressal) Act, 2013:

In line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has set up Internal Complaints Committees at its workplaces to redress complaints received regarding sexual harassment. No complaints have been reported during the financial year 2017-18. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

39. Acknowledgement:

Your Directors place on record their sincere thanks to bankers, business associates, consultants, and various Government Authorities for their continued support extended to your Companies activities during the year under review. Your Directors also acknowledges gratefully the shareholders for their support and confidence reposed on your Company.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

Chairman

DIN:00010015

Date : May 4, 2018

Place : Mumbai

Director’s Report