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Directors Report of Apar Industries Ltd.

Mar 31, 2016

Dear Shareholders,

The Directors have immense pleasure in submitting the 27th Annual Report of the Company together with the audited annual accounts showing the financial position of the Company for the year ended 31st March, 2016. Consolidated results include the results of (a) Petroleum Specialities Pte. Ltd., Singapore (PSPL), a Wholly-Owned Subsidiary of the Company (WOS), (b) Quantum Apar Speciality Oils Pty. Ltd., Subsidiary of PSPL and (c) Petroleum Specialities FZE, Sharjah, a WOS of PSPL.

1. Financial results

Particulars Company

2015-16 2014-15 % of Increase

Sales turnover 5,009.95 5,010.97 -0.02% (after deduction of excise duty )

Other income 3.37 8.37

Profit for the year before finance cost, depreciation / 359.01 249.61 43.83% amortisation, tax expenses and exceptional items

Deducting there from:

- Depreciation / amortisation 37.69 31.04

Finance Costs 151.56 150.09

Profit before adjustment of exceptional items, taxation 169.76 68.48 147.92% and minority interest

Exceptional items (Profit on sale of Trust Shares - Refer (43.15) 0.25 Note 20 (a) of Annual Audited Accounts)

Profit before taxation for the year 212.91 68.23 212.07%

Deducting there from:

- Tax expenses 55.93 20.37

Net profit for the year after taxation and before 156.98 47.86 227.99% minority interest Adjustment of:

- Minority Interest (profit) /loss .. ..

Net profit after taxation and above adjustments 156.98 47.86 227.99%

Add: Profit brought forward from previous year 208.84 183.71

Add/(Less) :Adjustment (net) on account of Amalgamation 0.00 ..

of Subsidiary w.e.f. 01st January, 2015

Amount available for appropriations 365.82 231.57

Appropriation made by the Board of Directors:

- Transitional provisions for depreciation net of deferred .. 2.84 tax

- General reserve 15.00 5.00

- Tax on Dividend paid by Subsidiary company .. ..

Dividends on Equity shares :

- Interim-cum-Final Dividend at Rs. 6.50 (65.00 %) per 25.02 .. share

- Proposed dividend at Rs. Nil (0.00 %) per share (previous .. 13.47 year Rs. 3.50 (35.00%)

- Income tax on dividends 5.06 1.42

- Leaving balance of profit carried to balance sheet 320.74 208.84

Earnings per equity share (EPS)

- Basic & Diluted before & after extraordinary items 40.78 12.44

Particular Consolidated

2015-16 2014-15 % of Increase

Sales turnover 5,080.03 5,121.86 -0.82% (after deduction of excise duty)

Other income 3.37 1.75

Profit for the year before finance cost ,depreciation/ amortisation, tax expenses 366.65 253.78 44.48%

-Depreciation 37.77 31.21

Finance cost 151.38 149.85

Profit before adjustment of exceptional items taxation 177.50 72.72 144.09%

Exceptional (43.15) 0.25

Profit before taxation for the year 220.65 72.47 204.48%

-tax expenses 57.10 23.06

Net profit for the year after taxation and before minority interest 163.55 49.41 231.01%

Minority interest Profit/ loss (0.76) 0.10

Net profit after taxation and above adjustment 162.79 49.51 228.79%

Profit brought forward from previous year 299.40 272.72 Add/Less Adjustment on account of Amalgamation of Subsidiary 1st January, 2015 (7.57) ..

Amount Available for appropriations 454.62 322.23

Transitional Provisions for Depreciation net of deferred tax .. 2.83

General reserve 15.00 5.00

Tax on Dividend Paid Subsidiary Company .. 0.11

Interim cum final Dividend at 6.50 per share 25.02 ..

Proposed dividend at Rs.Nil 0,00% Per share year Rs 3.50 .. 13.47

Income tax on dividends 5.06 1.42

Leaving balance of profit carried to balance sheet 409.54 299.40

basics & Diluted before extraordinary items 42.29 12.87

2. Dividend:

Your Company has paid an interim dividend @ Rs. 6.50 (65.00 %), [including Special Dividend @ Re. 1.00 (10.00 %) on account of 100th Birth Anniversary of Late Shri Dharmsinh D. Desai, Founder of the Company ] per Equity Share for the financial year 2015-2016 on 38,496,769 Equity Shares of the face value of Rs. 10/- each, amounting to Rs. 25.02 Crores for the financial year 2015-2016.

The members are requested to confirm the above interim dividend at the ensuing Annual General Meeting (AGM) of the Company.

The Board of Directors do not recommend any Final Dividend for the Financial Year 2015-16 and accordingly, the Interim Dividend @ Rs. 6.50 (65.00 %) declared and paid in March, 2016 may be treated as Interim-cum-Final Dividend.

3. Amalgamation of Apar Lubricants Limited with the Company :

The Company''s Wholly-owned Subsidiary, Apar Lubricants Limited (ALL) (formerly Apar ChemateK Lubricants Limited) was amalgamated with the Company by Order of the Hon''ble High Court of Gujarat dated 23rd October, 2015. The Scheme of Amalgamation has become effective from 10th November, 2015 with retrospective effect from 1st January, 2015, being the Appointed Date and the said business is now carried on as part of Company''s Oil Division.

Consequent to the Amalgamation of ALL with the Company, the entire Authorised Share Capital of ALL viz 1,00,00,000 Equity Shares of Rs. 10/- each aggregating to Rs. 10,00,00,000/- has been added to the Authorised Share Capital of the Company. Hence the Authorised Share Capital of the Company now stands at Rs. 1,019,987,500/- divided into 101,998,750 Equity Shares of Rs. 10/- each.

4. Transfer to Reserves:

The Company proposes to transfer an amount of Rs. 15.00 Crores to the General reserves. An amount of Rs. 409.54 Crore is proposed to be retained in the Consolidated Statement of Profit and Loss.

5. Management Discussion and Analysis / Outlook :

Management Discussion and Analysis FY16 was a pivotal year for the Indian power sector, which saw the government setting the stage for the next round of initiatives to move the sector forward. With strong focus on 24x7 power for all, revival of Discoms through UDAY, amendments to the national tariff policy and strong capital expenditure in Transmission and Distribution (transmission projects worth Rs. 1 lakh Crores were launched in the year), India''s power sector is well poised for take-off.

As the benefits of these measures gradually percolate down, Apar, with 70% of its revenue coming from the power sector, and a leading presence in India''s Transmission & Distribution (T&D) sector stands to strongly benefit. Apar is the fourth-largest transformer oil manufacturer in the world and among the world''s top five largest conductor manufacturers. The company is a leading player in cables, largest in cables for Renewable sector. Apart from being a market leader in India, the Company has a formidable global presence, exporting to over 100 countries.

The company has built a strong basket of futuristic value- added products focussed on increasing efficiency in T&D. Already the government has announced its emphasis on building high-quality T&D infrastructure with a shift in favour of efficient transmission structures. Apar''s in-house R&D initiatives and strategic tie-ups with global firms, such as CTC Global, USA, and ENI S.p.A, Italy, have resulted in a portfolio of new technology products like extra-high- voltage transformer oils, high temperature conductors, Elastomeric, E-Beam and optical fibre cables (OFC).

During the year, the Company bagged Four awards: Indian Wind Energy Forum Excellence Award for Outstanding Achievements and Leadership in the Wind industry; Indian Rooftop Solar Summit (IRSS) 2016 Award for Outstanding Contribution in the Development of the Rooftop Solar Industry; the First Few Intelligence Business Award as the Solar Cable Company of the Year and for development of New Conductor viz High Temperature Low Sag by Power Grid Corporation India Ltd.

The awards are in recognition to the Company''s extensive R&D efforts.

Our leadership across businesses, higher-value-added product offerings, strong global presence, technical capabilities and continued focus on R&D, coupled with industry opportunities like turnaround of discoms, expected shift towards high-efficiency T&D network and increased investment in the renewable sector & railways will lead to Pair''s profitable growth, going forward.

The opportunities and outlook that exist for the Company are as follows:

Global scenario

The global power sector is expected to attract investments worth $19.7 trillion from 2015 to 2040. In line with the 2°C climate change goal, concerted efforts are being made to reduce the environmental consequences of power generation. Renewable energy investment witnessed a new world record in 2015 with investment of $286 billion flowing into green energy projects and is expected to account for half of the additional global power generation overtaking coal around 2030 to become the largest power source.

Increasing global energy production over the past decade has led to the rising need for expanding T&D networks globally. It has been estimated that new T&D infrastructure would require a cumulative investment of $1.9 trillion by 2024 to meet the growing energy demands. This includes substations, power lines, and associated equipment and new technology. The power transformer market is projected to reach $29.9 billion by 2020, from $20.7 billion in 2015, at a CAGR of 7.6%. The global low voltage cable & accessories market is projected to grow to $147.3 billion at a CAGR of 7.0% from 2015 to 2020.

The year gone by saw commodity driven economies like Australia, South Africa, other parts of Africa and the Middle East facing a cash crunch due to fall in commodity prices. These economies have huge need for T&D Investment, however the cash crunch has led to a curtailment or delay of investment spending. However, keeping these factors in mind, Apar has been strategically focussing on the domestic market in the short to medium term.

India''s path to power

India''s power sector is expected to receive investments of about $250 billion over the next 5 years to catch up and keep pace with electricity demand, which is increasing at 5% per annum. With renewable energy being a thrust area, the government has set an ambitious plan to add 175 GW of renewable energy generation capacity with addition of 100GW under Solar and 60 GW under wind energy by 2022 at total investment of $120 billion. Transmission segment is expected to see investment of $50 billion.

UDAY - Government''s flagship initiative to fix the weakest link in the Indian Power Sector: The Ujwal Discom Assurance Yojna or UDAY aspires to financially turn around distribution companies by:

a) Reducing the interest cost of discoms,

b) Improving the operational efficiencies of discoms,

c) Lowering the cost of power, and

d) Enforcing financial discipline on discoms through state finances.

Under UDAY, states will take over 75% of the outstanding debt of discoms as on 30th September, 2015, over the next two years, and will issue non-SLR, including state development bonds to the respective financial institutions (FIs) holding the discom debt. The expected rate of interest on these bonds will be 8-9% versus 13-15% on existing debt, savings of Rs. 15,000 Crores per year for the discoms. The future losses of the discoms will be taken over and funded by the states progressively from 5% in FY18 to 50% by FY21. As at the end of this fiscal year, 10 states, i.e. Jharkhand, Bihar, Uttar Pradesh, Madhya Pradesh, Gujarat, Rajasthan, Haryana, Punjab, Jammu & Kashmir and Uttarakhand, had signed the respective Memorandum of Understanding to join UDAY.

Other initiatives in the T&D sector include schemes, such as Deen Dayal Upadhyaya Gram Jyoti Yojana (Rs. 75,893 Crores) and Integrated Power Development Scheme (Rs. 65,424 Crores), among others.

Conductors: The market for Electrical Conductors is expected to grow at 13.5% till 2018. During FY17, 7,500 MW of inter-regional transmission capacity, along with about 19,436 circuit km (ckm) of transmission lines and 3,934 MW HVDC terminal capacity are expected to be added, so as to reach the targets specified in the 12th Plan. It is estimated that during the 13th Plan period, about 62,800 circuit kilometres (ckm) of transmission lines of 400 kV and above voltage level transmission systems would be required.

Transformers: Transformer orders of around Rs. 13,070 Crores are expected to materialize in FY17. To achieve the targets specified in the 12th Plan, a total of 25,852 MVA of AC transformation capacity and 7,500 MW of HVDC systems are estimated to be added in FY17. During the 13th Plan period, ~1,28,000 MVA of transformation capacity of the 400 kV and above voltage level & 15,000 MW of HVDC terminal capacity is planned to be added.

Cables: The market has been growing steadily and is expected to touch Rs. 57,200 Crores by 2018. The wire and cables market in India comprises nearly 40% of the electrical industry. The industry is growing at a CAGR of 15% as a result of growth in the power and infrastructure segments. Rollout of 3G and broadband on a pan-India basis and revival of distribution companies will be important drivers of growth.

Auto Lubes: FY16 ended on a positive note for the automobile industry, with all the segments – cars, two-wheelers, CVs and tractors – posting good growth in the month of March. The Society of Indian Automobile Manufacturers (SIAM) has forecast a positive outlook for overall sales across vehicle categories for 2016-17 motorcycle sales are forecast to grow between 0-3% compared to decline in FY16, Passenger vehicle sales are projected to grow between 6-8%. Industry experts expect low fuel prices, benign interest rates and benefits from the 7th Pay Commission to drive four-wheeler volumes. A sustainable recovery in demand linked to the rural markets will be dependent on normal monsoons.

(a) Overall Business performance

We are happy to report Apar delivered strong performance despite a challenging environment during the year which saw: a lack of long term visibility in the domestic market led to volatile ordering, a credit crunch in various commodity driven economies impacting investment in global T&D markets, coupled with falling raw material prices, and a volatile foreign exchange rate. The Company reported consolidated revenue (net of excise) of Rs. 5,080 Crores in FY16 as compared to Rs. 5,121 Crores in FY15, driven by revenue growth of over 20% in Cables and 10% in Conductors, which partially offset the decline in Specialty Oils, which was affected by the fall in crude prices. Not only were our volumes across all business segments at historical highs, there has been significant improvement in our profitability across segments. EBITDA margin increased from 5.0% to 7.2% during the year. This was primarily led by the improvement in profitability in our Specialty Oils and Cables business. The margin expansion has been possible because of better cost management and a focused approach to increase contribution of higher value-added products. The profit after tax, excluding an exceptional gain of Rs. 43 Crores from the placement of treasury stock, came in at Rs. 120 Crores as compared to Rs. 49 Crores in the previous year. The Company is undergoing capacity expansion in the Conductors and Specialty Oils segments and is at an advanced stage of planning an expansion of its Power Cables capacity. Our overall outlook remains positive as we expect both the domestic and export scenarios to improve in all our business segments.

Business Segments (i) Conductors

Performance review 2015-16

(Rs, in crore)

Particulars 2015-16 2014-15 Variation (%) Turnover 2,550 2,320 10%

Segment profit / 131 117 12%

(Loss)

Export 1,025 997 3%

The Conductors business reported revenue growth of 10%, driven by improved market conditions in the domestic market. Exports contributed ~ 40.3% of revenue from Conductors. Volumes for the year grew by 13% to reach 170,070 tonnes compared to 150,557 tonnes in previous year. In the export market, the biggest positive development has been the reduction of the cost difference between the London Metal Exchange and the Shanghai Metal Exchange where the peak difference was as high as $400 per tonnes. This restores a level playing field for the company to participate in most of the export opportunities.

EBITDA per metric ton post forex adjustment for the period came in at Rs. 7,606 compared to Rs. 7,698 in the previous year, as the orders that were executed at the beginning of the year were booked at a time of aggressive pricing in the domestic market. EBITDA per metric ton post-forex adjustments for the last quarter was at Rs. 9,705 compared to Rs. 6,717 in the first quarter of the year.

The Company has been actively growing its presence in the High Efficiency Conductors (HEC) segment. HEC revenue grew to 6.2% of overall Conductor revenue in FY16, from 1.1% in FY15. During the year, we also received our biggest order of ACCC & AL59 from UPPTCL and GETCO, respectively. In both cases, these orders are in excess of Rs. 50 Crores. We have also received an order for GAP Conductors from GETCO. We successfully completed the First Longest transmission line Re-Conduct ring work with ACCC Casablanca conductor for Odisha Power Transmission Corporation ltd. Other projects Export orders have contributed 29% of the order book. Our Conductor capacity utilization stands at 100% for the entire year.

Demand for Conductors is expected to grow strongly, driven by successful implementation of UDAY, which aims to reduce AT&C losses to 15% in 2018-19 from 32% in 2013-14, inducing huge investments in T&D infrastructure.

Risks and concerns

The cyclical nature of the power business has an obvious impact on our performance. Project delays from the customers'' side may result in underutilization of capacity even though the order book remains robust. There can be delay in debtor collections due to stress at the customers'' end. Regional political instability and changes in the external environment in certain export markets affect execution of delivery. The volatility in Aluminium premiums has been an area of concern, mainly with respect to exports, and is a challenge to manage in the absence of any hedging mechanism. Efforts by various aluminium manufacturers may result in implementation of Safeguard duty which will increase the raw material prices and have a negative impact on fixed price contracts in the short to medium term. Any delay in the implementation of GST may impact the competitiveness of our new facility at Jharsuguda.

(ii) Specialty Oil

Performance review 2015-16

(Rs, in crore) Company Consolidated Particular

2015-16 2014-15 Variation (%) 2015-16 2014-15 Variation (%)

Turnover 1,771 2,115 -16% 1,841 2,251 -18%

Segment profit / (Loss) 187 98 91% 195 102 91%

Export 548 640 -17% 618 751 -18%

completed in the high efficiency segment were: Varanasi to Sarnath Substation, Chinhat-Barabanki line, Hardoi Rd- NKN line for UPPTCL and New Pirana to Pirana Feeders (ACCC DRAKE), Pirana to Jamalpur S/S (ACCC LISBON), Vinzol-Vastral (ACCC Lisbon) for Torrent Power and Bamnauli Naraina DC Line for PGCIL. We are clearly seeing that the off take of HECs is now gradually showing a rising trend on all parameters like volume of orders, number of clients adopting these technologies, variety of HECs being deployed, as well as repeat orders of progressively larger sizes. The margins for these HECs are higher as compared to conventional conductors, and are likely to improve the profitability of the Conductor business.

The Company is setting up a Conductor plant in Jharsuguda (Orissa) of 30,000 MT capacity at an investment of Rs. 36 Crores. The plant is strategically located, given increasing generation capacity in eastern India, along with its proximity to smelters, for logistical benefits. Work on the plant is in full swing and it should be commissioned on schedule by October-17.

The segment''s order book is at Rs. 1,751 Crores as of March 31, 2016, compared to Rs. 1,452 Crores as on March 31, 2015.

In Specialty Oils, revenue for the year came in at Rs. 1,841 Crores, lower than last year, primarily due to falling Crude oil prices. However, we posted 2.6% growth in aggregate volume, highest ever volume till date led by Rubber processing oil, Auto & Industrial Lubricants and White Oils.

EBITDA per KL after forex adjustment for the year increased significantly to Rs. 5,407, up from Rs. 2,722 in the previous year, which can be attributed to sale of richer product mix, disciplined pricing, good client mix and lower raw material costs.

The Company is setting up a port-based plant at Hamriyah, Sharjah, of 100,000 KL capacity at an investment of $ 15.5 million (Rs. 100 Crores). This will add new opportunities like bulk exports and is strategically located in terms of proximity to customers.

The Auto Lubes segment continued to grow and delivered 2.9% volume growth to reach 23,480 KL, highest ever achieved despite demand from the rural sector being especially low. The net sales stood at Rs. 263 Crores compared to Rs. 273 Crores in the previous year. Profitability in the segment continues to be relatively better due to improved product mix, clients mix, disciplined pricing and lower raw material cost. As the Company implements its strategy of expanding distribution network and continuous efforts towards increasing share of higher-margin products, we are quite confident that in the coming year we should see relatively good results for the segment.

Risks and concerns

The Company is exposed to volatility in the prices of its raw materials and in foreign exchange rates. However, in order to mitigate its risks, the Company continues to exercise prudence in its inventory control and hedging strategies. Also, addition in global refining capacities has resulted in a mismatch in demand and supply, which has an effect on base oil prices. The prices of long-term buy contracts take time to correct in case of fluctuations in crude prices as formula prices are always backward looking. Debtors'' collection period can increase on account of stressed financial condition of customers. The Company had to implement strict credit controls to limit exposure to customers facing cash flow issues. Rapid commoditization taking place at the lower end especially at technical grade white oils may have an impact on the margins. Exports markets are facing the heat as Cash strapped commodity driven developing markets are forced to cut key investments like Transmission & Distribution Investments.

(iii) Cables division

Performance review 2015-16

(Rs, in crore)

Particulars 2015-16 2014-15 Variation (%)

Turnover 675 560 20%

Segment profit / 28 20 40%

(Loss)

Export 101 78 29%

The Cables business delivered strong revenue growth of 20%, despite lower metal, commodity and polymer prices. Revenue growth was driven by growth in our Elastomeric, and Power Cables segments. These segments grew by 68% and 24%, respectively. Copper and Aluminium processing increased by 76 % and 29 % YOY respectively - depicting the increased volumes. The EBITDA margins post forex adjustment has increased by 20 basis points, from 5.5% in FY15 to 5.7% in FY16.

Our focus on the Renewable Energy sector, both Wind and Solar, has been yielding good results. Today, we are the largest supplier in the country to the segment and are working with major companies, such as Suzlon, Wind World, Gamesa etc. Besides, orders from Defence and Railways, involving electron beam cables, are also likely to improve as several projects in both these sectors are being announced. The order book as on March 31, 2016, is up 8% to reach Rs. 199 Crores versus Rs. 184 Crores in the previous year.

The Company is also at an advanced stage of planning an expansion of its power cables capacity as demand for power cables is expected to increase, driven by the increased spending capability of discoms following successful implementation of UDAY. We also expect EBITDA in the coming year to further improve in the Cables segment as a reflection of better product mix and higher volumes.

Risks and concerns

The excess capacity in the power cables segment impacts pricing. Collection periods can get extended and delivery schedules delayed due to lack of financial arrangements by key customers in the renewable energy sector and EPC contractors. In optical fiber cables, clientele is concentrated among a handful of telecom companies and BBNL wherein the Capex spending have been severely impacted. The cyclical nature of their tendering too, has a bearing on the order situation in the industry.

(b) Operations of subsidiaries:

(i) Petroleum Specialities Pte. Ltd, Singapore (PSPL), a Wholly Owned Subsidiary (WOS) :

During the year under review, Net sales of PSPL was US$ 7.93 Million as against US$ 24.52 Million in the previous year and Profit after tax stood at US$ 0.65 Million as against US$ 0.61 Million in the previous year. Operations of its downstream subsidiaries are :

- Quantum Apar Speciality Oils Pty. Ltd., Australia (Quantum)

PSPL holds 65% equity in Quantum. It has reported Net sales of AUD 8.38 Million as against AUD 9.02 Million in the previous year and Profit after tax of AUD 0.41 Million as against AUD 0.07 Million in the previous year.

After the end of the Financial Year, the Directors and Shareholders of the Company decided to cease the business, liquidate all the Assets and payout all the liabilities and return the net proceeds to shareholders. It is anticipated that the whole process will complete in 6 months period. Company has appointed a Distributor for sale of Petroleum Products and Lubricants in Australian & New Zealand markets.

- Petroleum Specialities FZE (PSF)

PSF was registered in November, 2014 as Free Zone Establishment under an Industrial License issued by Hamriyah Free Zone Authority Government of Sharjah, UAE for setting manufacturing facility for manufacture of a comprehensive range of Speciality Oils and Lubricants. During the year Share Capital of PSF increased from US$ 40825 to US$ 34,05,995. PSPL holds 100% equity in PSF. As at the end of March, 2016 total US$ 10.02 million capital expenditure has been incurred for setting up the Plant. The Construction of the Plant is under progress. There has been no material change in the nature of the business of the subsidiaries. A statement containing salient features of the financial statements of the Company''s subsidiaries in Form AOC-1 is attached to the financial statements of the Company.

(c) Cautionary statement

The statements made in the Management Discussion & Analysis section, describing the Company''s goals, expectations and predictions among others do contain some forward looking views of the management. The actual performance of the Company is dependent on several external factors, many of which are beyond the control of the management viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in the foreign exchange market, volatility in commodity prices, applicable laws / regulations, tax structure, domestic / international industry scenario, movement in international prices of raw materials and economic developments within the country among others.

(d) Internal control systems (ICS) and their adequacy

The Company established adequate ICS in respect of all the divisions of the Company. The ICS are aimed at promoting operational efficiencies and achieving savings in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution, which was implemented by the Company at all business units (including Cable unit) has been operating successfully. For tightening and more effective internal control systems and risk management, the Company continued the engagement of M/s. KPMG India Pvt. Ltd., Chartered Accountants as Internal Auditors of the Company. The system cum internal audit reports of the Internal Auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken. Further, all business segment prepare their annual budget, which are reviewed along with performance at regular intervals.

(e) Development of human resources

The Company promotes an open and transparent working environment to enhance teamwork and build business focus. The Company equally gives importance to the development of human resource (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company practices performance / production linked incentive schemes and introduced Employees Stock Option Scheme as detailed in an attachment to this report. The Company also takes adequate steps for in-house training of employees and maintaining a safe and healthy environment.

6. Directors and Key Managerial Personnel :

Mr. Chaitanya N. Desai, Director shall retire by rotation at the ensuing annual general meeting of the Company and he, being eligible, offers himself for re-appointment.

The Independent Directors hold office for a fixed term of five years.

In accordance with Section 149(7) of the Act, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI Regulations.

Details of the proposal for re-appointment of Mr. Chaitanya N. Desai are mentioned in the Statement pursuant to Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges as annexed to the Notice of the 27th Annual General Meeting.

The Board recommends re-appointment of Mr. Chaitanya N. Desai as a Director of the Company.

Board Evaluation :

Pursuant to the provisions of the Companies Act, 2013 and SEBI Regulations, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum- Remuneration Committee, Corporate Social Responsibility (CSR) Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy :

The Board has, on the recommendation of Nomination and Compensation-cum-Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings :

During the year five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

7. Deposits :

Company has not accepted deposits during the year. There were no outstanding deposits and no amount remaining unclaimed with the Company as on 31st March, 2016.

8. Particulars of Loans, Guarantees or Investments :

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

9. Directors'' Responsibility Statement :

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013 :

i. that in the preparation of the annual accounts for the financial year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the financial year ended on that date.

iii. that proper and sufficient care has been taken 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. that the annual accounts have been prepared on a going concern basis.

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

10. Related Party Transactions :

All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board has been uploaded on the Company''s website.

None of the Directors has any pecuniary relationships or transactions vis-à-vis the Company.

11. Adoption of New Articles :

The Companies Act, 2013 and The Companies (Amendment) Act, 2015 have necessitated changes in the Articles of Association of the Company. It is accordingly, proposed that a new set of Articles of Association be adopted by the members and a Special Resolution to this effect is included at Item No. 6 in the Notice of the Annual General Meeting (AGM). The Board recommends the resolution for adoption by the Members.

12. Auditors : Statutory Auditors

In terms of Section 139 of the Companies Act, 2013 read with The Companies (Audit and Auditors) Rules, 2014 and in terms of the Ordinary Resolution passed by the Shareholders of the Company at the 26th Annual General Meeting, M/s. Sharp & Tannan, the present Statutory Auditors of the Company have been appointed to hold office from the conclusion of the 26th AGM till the Conclusion of 31st AGM to be held in the year 2020 subject to ratification by the Members at every Annual General Meeting. An Ordinary Resolution in this respect is included in item No. 4 of the Notice of AGM and Board recommends the said Resolution.

M/s. Sharp & Tannan, have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed there under for re-appointment as Auditors of the Company.

The Notes on financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation or adverse remark.

Cost Auditors :

Pursuant to Section 148 of the Companies Act, 2013, read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of Conductors, Oils and Cables Divisions of the Company are required to be audited by a Cost Accountant. Your Directors, on the recommendation of the Audit Committee, appointed Mr. T. M. Rathi to audit the cost accounts of the Company for the financial year 2016-17 on a remuneration of Rs. 1,20,000/-. A Resolution seeking members'' ratification for the appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor is included at Item No. 5 of the Notice convening the AGM and Board recommends the said Resolution.

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 Mr. Hemang M. Mehta of H. M. Mehta & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure - I". The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.

13. Other Information :

a. Green Initiative

To support the "Green Initiative" under taken by the Ministry of Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated / implemented the same from the year 2010-11. As permitted delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode wherever possible.

Further, the Company has started using recyclable steel drums in place of wooden pallets in its Conductors Divisions in order to protect the environment and reduce costs for the Company.

b. Corporate Social Responsibility (CSR)

The Corporate Social Responsibility (CSR) Committee constituted by the Board of Directors in terms of the provisions of Section 135(1) of the Companies Act, 2013 reviews and restates the Company''s CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Companies Act, 2013.

With the strong belief in the principle of Trusteeship, Apar Group continues to serve the community through a focus on healthcare and up liftmen of poor sections of Society, education, Food and mid-day meal for children, Environmental sustainability and Health and Welfare of Senior Citizens initiatives.

The Annual Report on CSR activities is annexed herewith as "Annexure - II".

c. Attached to and forming part of this report are the following inter alia:

i) Particulars relating to Employee Stock Option Scheme – "Annexure – III"

ii) Particulars of Information as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - a Statement showing the names and other particulars of the Employees drawing remuneration in excess of the limits set in the Rules - "Annexure - IV (a)" and Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 - "Annexure - IV (b)".

iii) Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo - "Annexure - V".

iv) Report on Corporate Governance and auditors'' certificate regarding compliance of conditions of corporate governance.

v) Statement containing brief financial details of the subsidiaries in form AOC-1 which is attached to the financial statements of the Company.

d. Extract of Annual Return :

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - VI".

e. The company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiaries, Quantum Apar Speciality Oils Pty. Ltd., Australia and Petroleum Specialities FZE, Sharjah, WOS of PSPL. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2016 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.

Further, pursuant to provisions of Section 136 of the Act, the financial statements of the Company, Consolidated Financial Statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company.

14. General :

No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.

3. No Managing Director of the Company receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

15. Acknowledgement :

Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.

For and on behalf of the Board

Dr. N. D. Desai

Place : Mumbai Chairman

Date : May 25, 2016. DIN - 00005285


Mar 31, 2015

Dear Shareholders,

The Directors have immense pleasure in submitting the 26th Annual Report of the Company together with the audited annual accounts showing the financial position of the Company for the year ended 31st March, 2015. Consolidated results include the results of (a) Petroleum Specialities Pte. Ltd., Singapore (PSPL), a Wholly-Owned Subsidiary of the Company (WOS) (b) Apar Lubricants Limited, a WOS (c) Quantum Apar Speciality Oils Pty. Ltd., Subsidiary of PSPL and (d) Petroleum Specilities FZE, Sharjah, a WOS of PSPL.

1. Financial results

(Rs in crore) Particulars Company 2014-15 2013-14

Sales turnover 5,010.97 4,481.90 (after deduction of excise duty )

Other income 8.37 4.47

Profit for the year before finance cost, depreciation / amortisation, tax expenses and 249.62 279.90 exceptional items

Deducting therefrom:

- Depreciation / amortisation 31.04 26.89

Finance Costs 150.09 145.81

Profit before adjustment of exceptional items, transfer to capital assets, 68.49 107.20 taxation and minority interest

Exceptional items 0.25 0.86

Transfer to Capital Assets 0.01 3.51

Profit before taxation for the year 68.23 102.83

Deducting therefrom:

- Tax expenses 20.37 34.04

Net profit for the year after taxation and before minority interest 47.86 68.79

Adjustment of:

- Minority Interest (profit)/loss .. ..

Net profit after taxation and above adjustments 47.86 68.79

Add: Profit brought forward from previous year 183.71 158.55

Amount available for appropriations 231.57 227.34

Appropriation made by the Board of Directors:

- Transitional provisions for depreciation net of deferred tax - 2.84

- General reserve 5.00 20.00

- Tax on Dividend paid by Subsidiary company Dividends on Equity shares:

- Proposed dividend at Rs. 3.50 (35.00%) per share (previous year Rs.5.25 (52.50%) 13.47 20.20

- Income tax on dividends 1.42 3.43

- Leaving balance of profit carried to balance sheet 208.84 183.71

Earnings per equity share (EPS)

- Basic & Diluted before & after extraordinary items 12.44 17.88



Paticular Consolidated 2014-15 2013-14

Sales turnover (after deduction of excise duty 5,121.86 4,631.63

Other income 1.75 4.47

Profit for the year before finance cost, depreciation / amortisation, tax expenses and exceptional items 253.79 305.40

Deducting therefrom:

-Depreciation / amortisation 31.21 27.02

Finance Costs 149.85 145.48

Profit before adjustment of 72.73 132.90 exceptional items, transfer to capital assets, taxation and minority interest

Exceptional item s 0.25 0.86

Transfer to Capital Asset 0.01 3.51

Profit before taxation for the year 72.47 128.53

Deducting therefrom:

-Tax expenses 23.06 38.62

Net profit for the year after taxation and before minority interest Adjustment of: 49.41 89.91

-Minority Interest (profit)/loss 0.1 -0.26

Net profit after taxation and above 49.51 89.65 adjustments

Add: Profit brought forward from previous 272.72 227.70 year

Amount available for appropriations 322.23 317.35

Appropriation made by the Board of Directors:

-Transitional provisions for depreciation 2.83 - net of deferred tax

-General reserve 5.00 21.00

-Tax on Dividend paid by Subsidiary 0.11 - company

Dividends on Equity shares :

-Proposed dividend at Rs. 3.50 (35.00%) per share (previous year Rs. 5.25 (52.50%) 13.47 20.20

-Income tax on dividends 1.42 3.43

-Leaving balance of profit carried to balance sheet Earnings per equity share (EPS) 299.40 272.72

-Basic & Diluted before & after 12.87 23.30 extraordinary items

2. Dividend:

Despite unforeseen circumstances in terms of sudden reduction in base oil prices as explained in the following paras, the Board of Directors have maintained its policy on dividend payout ratio of 25 to 30% and recommended the dividend for FY 2014-15 on the capital of 38,496,769 Equity Shares of the face value of Rs. 10/- each fully paid @ Rs. 3.50 (35 %) per share [(previous year Rs. 5.25 (52.50 %) per share.)]

This dividend amounting to Rs. 14.89 Crores (including dividend tax) is payable after declaration by shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.

3. Share Capital:

During the year under review, the Company has issued and allotted 26,072 Equity Shares of Rs. 10/- each at the premium of Rs.197.05 per share to the Employees of the Company under Apar Industries Limited Stock Option Plan - 2007 at an exercise price of Rs. 207.05 per share. Thereafter, on 14th May, 2015, the Company has further issued and allotted 266 Equity shares to the Employees under the said Plan.

Consequently, the Issued, Subscribed and Paid-up Equity Share Capital of the Company have increased to Rs. 38.50 Crores divided into 38,496,769 Equity Shares of Rs. 10/- each.

4. Amalgamation of Apar Lubricants Limited with the Company :

The Company''s Wholly-owned Subsidiary, Apar Lubricants Limited (ALL) (formerly Apar ChemateK Lubricants Limited) is in the business of distribution and marketing of "ENI" brand, and its erstwhile AGIP brand auto lubricants, manufactured by the Company. In order to combine the said business with the existing Oil business of the Company, the Board of Directors of the Company have decided to amalgamate the said Wholly-Owned Subsidiary (WOS), ALL with the Company with effect from the Appointed Date of 1st January, 2015 subject to the approval of the Hon''ble High Court of Gujarat and other regulatory authorities. The Company has made necessary application to both NSE (designated Stock Exchange) and BSE under Clause 24(f) of the Listing Agreement for approval of the Scheme of Amalgamation.

6. Directors and Key Managerial Personnel :

Mr. Kushal N. Desai, Director shall retire by rotation at the ensuing annual general meeting of the Company and he, being eligible, offers himself for re-appointment.

At the Annual General Meeting held on 1st August, 2014, the shareholders of the Company-

a. re-appointed the existing Independent Directors, Dr.

N. K. Thingalaya and Mr. F. B. Virani as Independent

Directors of the Company under the Companies Act, 2013 each to hold office for five consecutive years upto the conclusion of 30th Annual General Meeting of the Company in the calendar year 2019.

b. appointed Mr. Suyash Saraogi and Mrs. Nina Kapasi as Independent Directors under the Act for a period of five consecutive years upto the conclusion of 30th Annual General Meeting of the Company in the calendar year 2019.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The Board of Directors had on the recommendation of Nomination and Compensation-cum-Remuneration Committee re-appointed -

a. Mr. Kushal N. Desai as Managing Director and Chief Executive Officer of the Company for a further period of three years from 1st January, 2015 to 31st December, 2017.

b. Mr. Chaitanya N. Desai as Managing Director of the Company for a further period of three years i.e. from 1st January, 2015 to 31st January, 2015 as Joint Managing Director and from 1st February, 2015 to 31st December, 2017 as Managing Director.

Details of the proposal for re-appointment of Mr. Kushal N. Desai and Mr. Chaitanya N. Desai are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 and Statement pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges as annexed to the Notice of the 26th Annual General Meeting.

The Board recommends re-appointments / appointments of all the above Directors.

Pursuant to the provisions of Section 203 of the Companies Act 2013, appointments of Mr. Kushal N. Desai, Managing Director and Chief Executive Officer, Mr. V.C. Diwadkar, Chief Financial Officer and Mr. Sanjaya Kunder, Company Secretary as Key Managerial Personnel (KMPs) of the Company were formalized.

Board Evaluation :

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit Committee, Nomination and Compensation-cum-Remuneration Committee, Corporate Social Responsibility (CSR) Committee and Share Transfer and Shareholders Grievance-cum-Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Remuneration Policy :

The Board has, on the recommendation of Nomination and Compensation-cum-Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

Meetings :

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year, four Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

7. Deposits :

In view of the new Companies Act, 2013, the Company has decided not to accept any further deposits and repaid all the deposits prematurely. There were no outstanding deposits and no amount remaining unclaimed with the Company as on 31st March, 2015.

8. Particulars of Loans, Guarantees or Investments :

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

9. Directors'' Responsibility Statement :

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

i. that in the preparation of the annual accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

ii. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the profit of the Company for the financial year ended on that date.

iii. that proper and sufficient care has been taken 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 annual accounts have been prepared on a going concern basis.

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

10. Related Party Transactions :

All related party transactions that were entered into during the financial year were on an arm''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company

with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a quarterly basis for the transactions which are of a foreseen and repetitive nature. A statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.

The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website.

None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

11. Auditors :

Statutory Auditors

In terms of Section 139 of the Companies Act, 2013, the first term of appointment of M/s. Sharp & Tannan, the Statutory Auditors of the Company shall expire on the conclusion of ensuing 26th AGM. In terms of the said Section read with The Companies (Audit and Auditors] Rules, 2014, they can be appointed for another term of 5 years subject to ratification by the Members at every Annual General Meeting.

M/s. Sharp & Tannan, have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of the Company.

The Audit Committee at its meeting held on 14th May, 2015 has recommended their appointment as Statutory Auditors of the Company for the 2nd term of 5 years to end on conclusion of 31st Annual General Meeting to be held in the year 2020. You are requested to approve their appointment.

Cost Auditors :

Pursuant to Section 148 of the Companies Act, 2013, read with The Companies (Cost Records and Audit] Amendment Rules, 2014, the cost audit records maintained by the Company in respect of Conductors, Oils and Cables Divisions of the Company are required to be audited by a Cost Accountant. Your Directors, on the recommendation of the Audit Committee, appointed Mr. T.M.Rathi to audit the cost accounts of the Company for the financial year 2015 on a remuneration of Rs. 1,20,000/-. A Resolution seeking members'' ratification for the appointment and remuneration payable to Mr. T. M. Rathi, Cost Auditor is included at Item No. 7 of the Notice convening the Annual General Meeting.

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 Mr. Hemang M. Mehta of H. M. Mehta & Associates, Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure I".

12. Other Information : a. Green Initiative

To support the "Green Initiative" taken by the Ministry of Corporate Affairs (MCA], to contribute towards

a greener environment, the Company has already initiated / implemented the same from the year 2010- 11. As permitted by Circular Nos. 17/2011 dated April 21, 2011 and 18/2011 dated April 29, 2011 issued by the MCA, delivery of notices / documents and annual reports etc. are being sent to the shareholders by electronic mode wherever possible.

Further, the Company has started using recyclable steel drums in place of wooden pallets in its Conductors Divisions in order to protect the environment and reduce costs for the Company.

b. Corporate Social Responsibility (CSR)

The Board of Directors constituted a Corporate Social Responsibility (CSR] Committee in terms of the provisions of Section 135(1] of the Companies Act, 2013 on 30th May, 2014. This CSR Committee reviews and restates the Company''s CSR policy in order to make it more comprehensive and aligned with the activities specified in Schedule VII of the Companies Act, 2013.

With the strong belief in the principle of Trusteeship, Apar Group continues to serve the community through a focus on healthcare, education, Food and mid-day meal for children, Environmental sustainability and Health and Welfare of Senior Citizens initiatives.

The Annual Report on CSR activities is annexed herewith as "Annexure - II".

c. Attached to and forming part of this report are the following inter alia:

i] Particulars relating to Employee Stock Option Scheme

- "Annexure - III"

ii] Particulars of Information as per Section 197 of the

Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial

Personnel] Rules, 2014 - a Statement showing the names and other particulars of the Employees drawing remuneration in excess of the limits set in the Rules

- "Annexure - IV (a)" and Disclosures pertaining to

remuneration and other details as required under Section 197(12] of the Act read with Rule 5(1] of the Companies (Appointment and Remuneration of Managerial

Personnel] Rules, 2014 - "Annexure - IV(b)".

iii] Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo - "Annexure - V".

iv] Report on Corporate Governance and auditors'' certificate regarding compliance of conditions of corporate governance.

v] Statement containing brief financial details of the subsidiaries.

d. Extract of Annual Return :

The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure - VI".

e. The Company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its

wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiaries, Quantum Apar Speciality Oils Pty. Ltd., Australia and Petroleum Specialities FZE, Sharjah, WOS of PSPL and Apar Lubricants Limited, a WOS of the Company. As per the provisions of Section 129(3) read with Section 136 of the Companies Act, 2013, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2015 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.

13. General :

No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOP referred to in this Report.

3. No Managing Director of the Company receive any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

There were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

14. Acknowledgement :

Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.


Mar 31, 2013

To The Shareholders,

The Directors have immense pleasure in submitting the 24th Annual Report of the Company together with the Audited Annual Accounts showing the financial position of the Company for the year ended 31st March, 2013.

1. Financial results

Standalone results for the year 2012-13 include effect of amalgamation of Marine Cables & Wires Private Limited (MCWPL) with the Company from 1st April, 2012 being the transfer date as detailed in para 2(a) of this report. However, the same for the year 2011-12 are without such inclusion and therefore not comparable.

Consolidated results include the results of (a) Petroleum Specialities Pte. Ltd, Singapore (PSPL), a wholly-owned subsidiary (WOS) of the Company (b) Apar ChemateK Lubricants Ltd., a subsidiary company and (c) Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL.

Rs. in Crore

Company Consolidated Particulars Increase over Increase over 2012-13 2011-12 2012-13 2011-12 previous year previous year

Sales turnover (after deduction of excise duty ) 4,532.19 3,453.26 31.2% 4,650.69 3,594.89 29.4%

Other income 7.70 0.54 2.25 0.54

Profit for the year before finance cost, depreciation / 303.09 196.94 53.9% 313.50 216.00 45.1%

amortisation, tax expenses and exceptional items

Deducting there from:

- Depreciation / amortisation 23.86 21.28 24.01 21.77

Finance Cost 134.31 114.13 134.57 115.52

PROFIT BEFORE ADJUSTMENT OF EXCEPTIONAL 144.92 61.53 154.92 78.71

ITEMS, TAXATION AND MINORITY INTEREST

Exceptional items 4.62 1.96 4.62 1.96

PROFIT BEFORE TAXATION FOR THE YEAR 140.30 59.57 135.5% 150.30 76.75 95.8%

Deducting there from:

- Tax expenses 38.14 0.25 40.17 2.65

Net profit for the year after taxation and before 102.16 59.32 72.2% 110.13 74.10 48.6%

minority interest

Adjustment of:

- Minority Interest (profit)/ loss (0.68) (1.06)

NET PROFIT AFTER TAXATION AND ABOVE 102.16 59.32 109.45 73.04

ADJUSTMENTS

Add: Profit brought forward from previous year 104.12 173.54 160.14 155.08

(Less) : Loss of Amalgamating Subsidiary (5.76) (101.95) 0.08 (41.19)

Amount available for appropriations 200.52 130.91 269.67 186.93

Appropriation made by the Board of Directors:

- General reserve (18.34) (8.90) (18.34) (8.90)

Dividends on Equity Shares :

- Proposed final dividend at Rs. 5.25 (52.50%) per (20.20) (15.39) (20.20) (15.39)

share (previous year Rs. 4.00 (40%)

- Income tax on dividends (3.43) (2.50) (3.43) (2.50)

- Leaving balance of profit carried to balance sheet 158.55 104.12 227.70 160.14 Earnings per Equity Share (EPS)

- Basic & Diluted before & after extraordinary items 26.56 15.55 28.45 19.15

2. a) Rehabilitation Scheme of Marine Cables & Wires Private Limited, a wholly-owned subsidiary company (MCWPL) through amalgamation with the Company:

The Hon''ble Board for Industrial and Financial Reconstruction (BIFR) at its hearing on May 16, 2013 sanctioned the Rehabilitation Scheme of Marine Cables & Wires Private Limited (MCWPL) envisaging its'' amalgamation with the Company from transfer date 1st April, 2012. After the amalgamation, MCWPL''s business is carried on in the name and style as ''Apar Industries Limited (Unit: Uniflex Cables- Plant 2)''.

b) Discharge of erstwhile Uniflex Cables Ltd. from purview of SICA:

Upon implementation of the Rehabilitation Scheme of erstwhile Uniflex Cables Ltd., the then subsidiary company, Hon''ble BIFR vide its Order dated January 8, 2013 have discharged the UCL from the purview of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA);

c) Enhancement in shareholding in Apar ChemateK Lubricants Limited (ACLL):

During the year under consideration, Company purchased 47.5% Equity Shares of ACLL from joint venture partner, Chematek SpA and consequently, ACLL has become a subsidiary of the Company.

3. Dividend:

Considering the financial results achieved during the year under review as compared to the previous year, the Board of Directors has recommended the dividend for financial year 2012-13 on the capital of 38,470,431 Equity Shares of the face value of Rs. 10/- each fully-paid @ Rs. 5.25 ( 52.50 %) per share [(previous year Rs. 4.00 (40%) per share)].

This dividend amounting Rs. 20.20 crore is payable after declaration by shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.

4. Directors

Dr. N. K. Thingalaya and Mr. F. B. Virani, Directors shall retire by rotation at the ensuing annual general meeting of the Company and they, being eligible, offer themselves for reappointment. The Board recommends the reappointment of these Directors.

6. Directors'' responsibility statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with regard to directors'' responsibility statement, it is hereby confirmed that -

i. In the preparation of the annual accounts for the financial year ended March 31, 2013, the applicable accounting standards were followed along with proper explanation relating to material departures, if any.

ii. Appropriate accounting policies were selected and applied consistently and judgments and estimates were made that were 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 of the Company for the financial year under review.

iii. Proper and sufficient care was taken 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.

iv. The annual accounts were prepared on a ''going concern'' basis.

7. Audit

M/s. Sharp & Tannan, Chartered Accountants, Mumbai, Statutory Auditors of the Company shall be retiring at the ensuing Annual General Meeting, and they being eligible, offer themselves for reappointment. The Audit Committee of Directors at its meeting held on 31st May, 2013 recommended re-appointment of M/s. Sharp & Tannan as Statutory Auditors of the Company for the financial year 2013-14.

8. Other information

a. Green Initiative

To support the ''Green Initiative'' taken by the Ministry of

Corporate Affairs (MCA), to contribute towards a greener environment, the Company has already initiated /implemented the same from the year 2010-11. As permitted by Circular Nos. 17/2011 dated April 21, 2011 and 18/2011 dated April 29, 2011 issued by the MCA, delivery of notices/documents and annual reports etc. are being sent to the shareholders by electronic mode wherever possible.

Further, the Company has started using recyclable steel drums in place of wooden pallets in its conductors division in order to protect the environment and reduce costs for the Company.

b. Corporate Social Responsibility (CSR)

With the strong belief in the principle of trusteeship, Apar Group continues to serve the community through a focus on education, healthcare and mid-day meal initiatives. During the year, the Company has contributed to the Dharmsinh Desai Foundation/Dharmsinh Desai University for its project for establishment of the Faculty of Medical Sciences leading to MBBS (Project). Apar Group has been an active participant in the free mid-day meal programmes across rural villages and schools in the Mumbai hinterland, feeding over 600,000 children a day and providing medical aid, clothing, books and education.

c. Attached to and forming part of this report are the following:

i) Particulars relating to Employee Stock Option Scheme.

ii) Particulars of Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

iii) Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo.

iv) Report on Corporate Governance and auditors'' certificate regarding compliance of conditions of corporate governance. The Ministry of Corporate Affairs has issued ''Corporate Governance Voluntary Guidelines'' in December 2009. While these guidelines are recommendatory in nature, the Company is in the process of adopting these guidelines gradually.

v) Statement containing brief financial details of the subsidiaries.

d. In accordance with the General Circular dated February

8, 2011 issued by Ministry of Corporate Affairs, granting exemption under Section 212(8) of the Companies Act, 1956, the Company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiary Quantum Apar Speciality Oils Pty. Ltd., Australia, and Apar ChemateK Lubricants Limited, subsidiary of the Company. As per the terms of Circular, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2013 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.

e. As on March 31, 2013, there was no fixed deposit remained unclaimed.

9. Acknowledgement

Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.

For and on behalf of the Board

Place: Mumbai Dr. N. D. Desai

Date: May 31, 2013 Chairman


Mar 31, 2011

The Shareholders,

The Directors have pleasure in submitting the 22nd Annual Report of the Company together with the audited annual accounts showing the financial position of the Company for the year ended 31st March, 2011.

1. A) Financial results (rs. in million)

Particulars Company Consolidated * 2010-11 2009-10 2010-11 2009-10

Sales turnover (after deduction of excise duty) 27,184.69 19,980.54 30,283.00 22,355.45

Other income 70.51 166.39 61.86 160.00

Profit for the year before interest, depreciation / amortisation,taxation and exceptional items 1,701.65 1,385.11 1,878.25 1,532.76 Deducting there from:

- Depreciation / amortisation 137.09 118.79 205.16 185.13

- Interest -32.06 195.60 134.65 331.99

PROFIT BEFORE ADJUSTMENT OF EXCEPTIONAL ITEMS, TAXATION, AND MINORITY INTEREST 1,596.62 1,070.72 1,538.44 1,015.64

Exceptional items 1.97 22.61 - 11.56

PROFIT BEFORE TAXATION FOR THE YEAR 1,594.65 1,048.11 1,538.44 1,004.08 Deducting there from:

- Provision for taxation 536.12 186.74 578.03 223.86

Net profit for the year after taxation and before minority interest 1,058.53 861.37 960.41 780.22 Adjustment of :

- Minority interest (profit)/loss - - (7.15) 67.21

NET PROFIT AFTER TAXATION AND ABOVE ADJUSTMENTS 1,058.53 861.37 953.26 847.43

Extraordinary items - impairment loss on investments # - 555.54 - 603.08

Balance profit 1,058.53 305.83 953.26 244.35

Add: Balance of profit brought forward from the previous year 1,027.96 998.17 948.63 980.32

Amount available for appropriations 2,086.49 1,304.00 1,901.89 1,224.67

Appropriations made by the Board of Directors

- General reserve 110.00 87.50 110.00 87.50

Dividends on equity shares

- Interim dividend at Rs 2.50 (25%) per share 80.84 - 80.84

- Income tax on Interim dividends 13.43 - 13.43

- Proposed dividend at Rs. 3.50 (35%) per share 125.90 161.68 125.90 161.68

- Income tax on dividends 20.91 26.86 20.91 26.86

Leaving balance of profit carried to balance sheet 1,735.41 1,027.96 1,550.81 948.63

Earnings per equity share (EPS)

- Basic and diluted before extraordinary items 32.74 26.64 29.48 26.21

- Basic and diluted after extraordinary items 32.74 9.46 29.48 7.56

* Consolidated results include the results of -

a) Petroleum Specialities Pte. Ltd, Singapore (PSPL) and ## Poweroil Speciality Products FZE, Sharjah, wholly-owned subsidiaries (WOS) of the Company;

b) Uniflex Cables Ltd (UCL), a subsidiary company

c) Apar ChemateK Lubricants Ltd., a joint venture company

d) Marine Cables & Wires Private Limited (MCWPL), WOS of UCL and

e) Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL

# Non-cash loss on impairment of equity investment in UCL & MCWPL ##Since Closed.

1. B) Financial positions of the Company after considering the effect of draft scheme of the amalgamation (DRS) of UCL with the Company are as under. DRS has been submitted to BIFR for it's final approval. (refer para 3(c)) (Rs. in million)

Particulars Standalone Consolidated (as at 31st March, 2011) (as at 31st March, 2011)

Pre-amalgamation Post-amalg amation Pre-amalga mation Post-amalga mation

Sales (net of excise duty) 27,184.69 29,206.24 30,283.00 30,283.00

Profit before tax 1,594.65 1,311.83 1,538.44 1,538.44

Profit after tax 1,058.53 1,174.23 953.26 1,351.78

Earnings per share 32.74 33.71 29.48 38.81

Share Capital 323.36 348.34 323.36 348.34

Reserve and Surplus 3,423.93 3,468.47 3,190.85 3,589.37

2. Dividend:

a. Your Company has paid an interim dividend @ Rs. 2.50 (25%) per share on 32,336,031 Equity Shares of the face value of Rs. 10/- each, amounting to Rs. 80.84 Million for the financial year 2010-2011.

The members are requested to confirm the above interim dividend at the ensuing Annual General Meeting (AGM) of the Company.

b. Final Dividend:

Considering the improved financial results achieved during the year under review as compared to the previous year, the Board of Directors has recommended the final dividend for financial year 2010-11 on 35,972,394 Equity Shares of the face value of Rs.10/-each fully paid @ Rs. 3.50 (35 %) per share.

Total dividend for the financial year 2010-11 including interim dividend already paid aggregating to Rs 6.00 (60%) per equity share.

This final dividend amounting to Rs. 125.90 Million is payable after declaration by shareholders at the ensuing Annua General Meeting (AGM) and you are requested to declare the same.

4. Issue of Further Shares

During the year under review, the Board of Directors at its meeting held on 30th March, 2011, approved the issue of 3,636,363 Equity Shares of Rs. 10/- each at a Premium of Rs. 210/- per share to Templeton Strategic Emerging Markets Fund III, L.D.C., Cayman Islands (Templeton), a Foreign investor, on Preferential Allotment basis and Shareholders of the Company at their Extra-Ordinary General Meeting (EGM) held on 29th April, 2011 approved the above issue in terms of provisions of Section 81(1A) of the Companies Act, 1956 by passing a Special Resolution to that effect.

The Committee of Board of Directors at its meeting held on 4th May, 2011, upon receipt of the full subscription amount approved the allotment of the said 3,636,363 Equity Shares of Rs. 10/- each at a Premium of Rs. 210/- per share to Templeton and consequently Issued, Subscribed and Paid-up Equity Share Capital of the Company have increased to Rs. 359,723,940/- divided into 35,972,394 Equity Shares of Rs. 10/- each fully paid.

5. Directors

a) Mr. Rajesh Sehgal was appointed as an Additional Director of the Company w.e.f. June 27, 2011. He has been nominated as a Director in the capacity of an Investor Director by Templeton, in terms of the provisions of the Subscription and Investor Rights Agreement entered into between the Company and Templeton, the allottee of 3,636,363 Equity Shares of Rs. 10/- each. In pursuance of the provisions of Section 260 of the Companies Act, 1956, Mr. Sehgal will hold office as director upto the date of ensuing Annual General Meeting. The Company has received a Notice under Section 257 of the Companies Act, 1956, proposing his candidature as Director, not liable to retire by rotation. The Board recommends his appointment.

b) Mr. F. B. Virani and Mr. Kushal N. Desai, Directors shal retire by rotation at the ensuing annual general meeting of the Company and they, being eligible, offer themselves for reappointment. The Board recommends the re-appointment of these Directors.

6. Directors' responsibility statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with regard to directors' responsibility statement, it is hereby confirmed that-

i. In the preparation of the annual accounts for the financia year ended March 31, 2011, the applicable accounting standards were followed along with proper explanation relating to material departures, if any.

ii. Appropriate accounting policies were selected and applied consistently and judgments and estimates were made that were 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 of the Company for the financial year under review.

iii. Proper and sufficient care was taken 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.

iv. The annual accounts were prepared on a going concern basis.

7. Audit

The qualification in paragraph 2(f) of attached Auditors' Report are self-explanatory and do not call for any further comments or explanations. In this regard, attention is also invited to paragraph 3 (a) (ii) of this Report.

M/s. Sharp & Tannan, Chartered Accountants, Mumbai, Statutory Auditors of the Company shall be retiring at the ensuing Annual General Meeting, and they being eligible, offer themselves for reappointment. The Audit Committee of Directors at its meeting held on 27th May, 2011 recommended reappointment of M/s. Sharp & Tannan as Statutory Auditors of the Company for the financial year 2011-12.

8. Other information

a. Attached to and forming part of this report are the following:

i) Particulars relating to Employee Stock Option Scheme.

ii) Particulars of Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975

iii) Particulars relating to conservation of energy, technology absorption, research & development and foreign exchange earnings and outgo.

iv) Report on Corporate Governance and auditors' certificate regarding compliance of conditions of corporate governance. The Ministry of Corporate Affairs has issued "Corporate Governance Voluntary Guidelines" in December 2009. While these guidelines are recommendatory in nature, the Company is in the process of adopting these guideline gradually.

v) Statement containing brief financial details of the subsidiaries.

b. Ministry of Corporate Affairs vide its letter dated February 14, 2011 has informed the Company that vide its Genera Circular dated February 8, 2011, Companies have been granted exemption under Section 212 (8) of the Companies Act, 1956. In accordance with Circular, the Company has not attached the Balance Sheet, Profit & Loss Accounts and other documents of its wholly-owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd., Singapore as well as its subsidiary Quantum Apar Speciality Oils Pty. Ltd., Australia and

Poweroil Speciality Products FZE, Sharjah, Uniflex Cables Limited (UCL), subsidiary of the Company and Marine Cables & Wires Private Limited, wholly-owned subsidiary of UCL. As per the terms of circular, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2011 are included in the annual report and shall form part of this report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.

c. As on March 31, 2011 the aggregate fixed deposits of Rs. 0.059 million were due for repayment but remained unclaimed. Letters have been sent to such depositor to claim the amounts due to them.

9. Acknowledgement

Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.

For and on behalf of the Board

Place: Mumbai Dr. N. D. Desai Date: 27th June, 2011 Chairman


Mar 31, 2010

The Directors have pleasure in submitting the 21st Annual Report of the Company together with the audited annual accounts showing the financial position of the Company for the year ended March 31, 2010.

1. Financial results Rs. in millions Particulars Company Consolidated* 2009-10 2008-09 2009-10 2008-69 Sales turnover 19,980.54 24,634.13 22,355.45 26,370.60 (after deduction of excise duty amount of) Other income 166.39 63.23 60.00 62.26 Profit for the year before interest, depreciation/ amortisation, taxation and exceptional items 1,385.11 524.03 1,532.76 565.02 Deducting there from: - Depreciation / amortization 118.79 109.93 185.13 147.15 -Interest 195.60 312.49 331.99 412.50 PROFIT BEFORE ADJUSTMENT OF EXCEPTIONAL ITEMS, TAXATION, SHARE OF ASSOCIATES NET LOSS AND MINORITY INTEREST 1,070.72 101.61 1,015.64 5.37 Exceptional items 22.61 17.40 11.56 17.40 PROFIT BEFORE TAXATION FOR THE YEAR 1,048.11 84.21 1,004.08 (12.03) Deducting there from: - Provision for taxation 186.74 31.14 223.86 23.41 Net profit for the year after taxation and before share of associatesnet loss and minority interest 861.37 53.07 780.22 (35.44) Adjustment of: -loss of associate concern (prior to it becoming subsidiary) 0.00 0.00 0.00 57.89 -Minority interest in subsidiary/joint venture (profit)/loss 67.21 40.11 NET PROFIT AFTER TAXATION AND ABOVE ADJUSTMENTS. 861.37 53.07 847.43 (53.22) Extraordinary items - impairment loss on investments # 555.54 0.00 603.08 0.00 Balance profit 305.83 53.07 244.35 (53.22) Add: Balance of profit brought forward from the previous year 998.17 945.10 980.32 1,033.54 Amount available for appropriations 1,304.00 998.17 1,224.67 980.32 Appropriations made by the Board of Directors: - General reserve 87.50 - 87.50 - - Dividends on equity shares: - Proposed dividend at Rs. 5 (50%) per share 161.68 - 161.68 - - Income tax on dividends 26.86 - 26.86 - - Leaving balance of profit carried to balance sheet 1,027.96 998.17 948.63 980.32 Earnings per equity share (EPS) - Basic and diluted before extraordinary items 26.64 1.64 26.21 (1.65) - Basic and diluted after extraordinary items 9.46 1.64 7.56 (1.65)

* Consolidated results include the results of-

(a) Petroleum Specialities Pte. Ltd, Singapore (PSPL) and Poweroil Speciality Products FZE, Sharjah, wholly-owned subsidiaries (WOS) of the Company:

(b) Uniflex Cables Ltd (UCL), a subsidiary company

(c) Apar ChemateK Lubricants Ltd., a joint venture company

(d) Marine Cables & Wires Private Limited, WOS of UCL (MCWPL) and

(e) Quantum Apar Speciality Oils Pty. Ltd., subsidiary of PSPL

# Non-cash loss on impairment of equity investment in UCL & MCWPL (see para 3 (c) of this Report).

2. Dividend

The Board of Directors recommended final dividend for 2009-10 on 32,336,031 equity shares at Rs. 5 (50%) per share.

This final dividend is payable after declaration by shareholders at the ensuing Annual General Meeting (AGM) and you are requested to declare the same.

3, Management discussion and analysis/ outlook

(a) Industry structure, development, opportunities, threats, outlook and risk and concerns

The Indian power sector continues to see substantial investment in the generation, transmission and distribution segments. The power generation should increase by about 50 KMW in the Eleventh Five Year Plan compared to 52.3 KMW in past 1 5 years. As a consequence, there will be a significant spending on the Transmission and Distribution (T&D) segment to transmit and distribute the power. The Twelfth Five Year Plan is expected to add about 100,000 MW additionally. Given that the additions in the Eleventh Plan is back ended, there is an expectation that T&D investment will accelerate over the next 5-7 years.

The Company has two business segments, each of which continued to maintain significant market share positions. The Company is deriving about 75% of its revenue from power sector on the basis of use by the end customer. Margins from the manufacturing activities during 2009-10 were substantially improved to Rs. 1,385.11 million from Rs. 524.03 million in the previous year. The segment-wise operations were as under:

(i) Transformer oil and speciality oils segment

This division contributed 51 % of the Companys revenue. Details of production, sales revenue and segment profit (standalone basis) are:

2009-10 2008-09 Variation Turnover KL #2,47,689 #1,99,648 (+) 48,041 Rs/million 10,251.51 10,804.33 *(-) 552.82 Segment profit- Rs/million 879.54 (377.73) (+) 1,257.27

# Includes conversion by the Company on customers account. *Due to reduced sale price in line with reduced cost of base oils (an international phenomena).

After the business suffered very badly in Q3FY09 and Q4FY09 (a world-wide phenomena), there was a very strong turnaround both in terms of volume and margins during the financial year 2009-10. This is attributed to growth in sales of transformer oil, white oils and industrial oil sub-segments, both in the domestic and exports markets.

The sales mix of transformer oils improved on account of more sales to higher rating power transformers and special requirements.

The Company expects continued growth of at least 15% in the transformer oil segment for the next 3-4 years based on indications of the ongoing expansions in the power sector in India. More specifically, the growth in the EHV segment as the transmission networks being built are expected to increase the demand, where the Company has a clear leadership position with approvals from major transformer OEMs and utilities like Power Grid Corporation of India Ltd. (PGCIL).

The Company has also established itself as the largest marketer in India of new generation eco-friendly non-labelled rubber process oils for the tire sector that meets the new European and Japanese standards.

The net sales turnover of the "Agip" brand automotive lubricants produced by the Company with license and technical know-how of ENI-S.p.A of Italy and marketed by Apar ChemateK Lubricants Ltd., (50:50 joint venture company with ChemateK SpA) (ACL) increased substantially by 31.1%. ACL earned a profit of Rs. 49.98 million during the FY 2009-10 as against loss of Rs. 41.54 million in the previous year.

Risk and concerns

The Company imports over 90% of its base oils. There has been continuous volatility in base oil prices and in foreign exchange rates. To protect itself, the Company has been quoting prices only on a monthly basis or using the IEEMA price - variation formula for long term deals. It has also been following a hedging strategy to cover foreign exchange exposure as soon as sales prices are fixed, thereby converting $ payables to Rs. for pricing of products. There is a cost for taking forward covers which the Company needs to absorb. However, given the current volatility, it is a prudent strategy to follow.

(ii) Conductor division

Sales revenue in FY10 was down by 28.9% from Rs. 13,860.16 million to Rs. 9,858.18 million on account of reduction in volume by 16.3% from 89,71 5 MT to 75,075 MT.

Segment level profit for the year was down by 38.4% from Rs. 975.98 million to Rs. 601.02 million.

There were several factors that resulted in the above lower performances.

- Second half FY10 had lower order execution as there were delays/re-schedulement of several orders that had been booked. Some of this is attributable to delayed financial closures (from FY09 crisis post September 2008) or project delays due to customer having right of way issues. However, the postponement of these orders execution will result in a substantially higher volume in FY11.

- There were delays in both tenders and awarding contracts from power grid which resulted in these getting shifted into FY11.

- After the 2008 financial crisis, the demand for conductors was affected in the short term. It resulted in a very competitive environment, where the Company was out- priced in bidding for some contracts.

- However, the order book as of April 1, for FY11 is Rs. 10,832.4 million in confirmed orders and Rs. 2,865 million in the pipeline. We expect total volume to grow by about 30% in FY11 over FY10 with a corresponding increase in profitability for this segment. Approximately, 75% of these orders (confirmed and pipeline) will be executed in FY11.

The Company followed a conservative hedging strategy both on foreign exchange and metal front. All fixed price contracts were hedged on a back to back basis. The mark to market losses (MTM) on such contracts as of March 31, 2010 in accordance with announcement dated March 28, 2008, issued by the Institute of Chartered Accountants of India, amounting to Rs. 400.03 million have not been provided in the accounts, as it is notional in nature and said loss would get extinguished on execution of firm sale price orders corresponding to these commodity contracts. The MTM loss is largely due to a single large export order which has delivery schedule that runs through

the end of calendar year 2011.

Risk and concerns

There is continued volatility in the commodity markets. Even though, the Company hedges the metal on LME, there can be mark to market losses until completion of the Contract. There is also substantial volatility in the foreign exchange market which can lead to changes in the value addition, that the company has targeted.

(b) Qualified institutional / private placement

In order to meet the funds requirement and to strengthen the financial position and capital base of the Company by augmenting its long-term resources, the Company would need access to external funds at different points of time in the future. It is proposed to seek an enabling resolution of the members at the ensuing Annual General Meeting (AGM) and for the purpose, appropriate resolutions with explanatory statement are incorporated in the notice of AGM. The Board of Directors recommends the resolutions.

(c) Operations of subsidiaries Uniflex Cables Ltd. (UCL) and its wholly-owned subsidiary, Marine Cables & Wires Private Limited (MCWPL)

The Company got involved in day to day management of UCL, since September 2008 and thereafter, it has taken several steps in the area of productivity improvement, debottlenecking of manufacturing facility, expansion of production lines and markets and strengthening of managerial resources. This resulted in UCL being prepared for facing long term challenges and steps taken during the year for improvement of operations were reflected in its increased net sales during the last four month period (December 2009 to March 2010) of Rs. 876.1 million as against total net sales of Rs. 930.08 million for the first eight months of the financial year 2009-10. Accordingly net sales, during 2009-10, were Rs. 1,806.18 million against Rs. 1,278.59 million in the previous financial year 2008-09. Net loss in the last quarter of FY 2009-10 were Rs. 51.49 million against the average loss per quarter of Rs. 74.32 million in the preceding three quarter of the financial year 2009-10. However, this was not sufficient to break-even and UCL has incurred a net loss of Rs. 274.58 million after tax as against a loss of Rs. 286.75 million for the previous year 2008-09.

UCL faced a very competitive environment in which there was severe margin erosion in the face of diminishing demand. However, in second half of FY10, the demand for power cables improved considerably. This resulted in better sales and margins improved to some extent, but still not fully recovered to the extent pre-September 2008 levels. UCL, however, streamlined production, invested in upgrading equipment, manpower and processes and expects to do over Rs. 2,750 million in net sales in Prl 1, with a cash break-even level of profitability.

On account of losses incurred during the year under review and also with carried forward losses of past years, the entire net worth of the UCL got eroded as at the end of the financial year March 31, 2010. UCL is required under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) to make a reference to the Board for Industrial & Financial Re- construction (BIFR) for determination whether the UCL is a sick industrial company or not and UCL will shortly file the same. The Company shall provide required support for revival of the unit.

The Company has an equity investment of Rs. 834.37 million in UCL as at March 31, 2010. Considering the present net worth position of UCL the Company deems it prudent to provide for impairment in the value of equity investment in UCL. Accordingly, the Company provided (non-cash charge) Rs. 555.4 million in its 2009-10 accounts as an extraordinary item.

During the year ended March 31, 2010, MCWPL earned profit of Rs. 6.62 million (before tax) as against loss of Rs. 5.79 million in the previous year. On account of brought forwarded losses of the previous years, its entire net worth got eroded as at the end of financial year March 31, 2009 and MCWPL had filed required reference to BIFR in the month of October 2009. BIFR vide its order dated February 5, 2010 has declared MCWPL as sick industrial company and directed MCWPL to submit Draft Rehabilitation Scheme (DRS) for its revival which will be submitted shortly by MCWPL. The Company shall provide required support for its revival and the Board authorised the management to discuss the proposal to be submitted by MCWPL to BIFR for amalgamation of MCWPL with the Company.

(d) Cautionary statement

The statements made in the management discussion & analysis

section, describing the Companys goals, expectations, or predictions etc. do contain some forward looking views of the management. The actual performance of the Company is dependent on several external factors many of which are beyond the control of the management viz. growth of Indian economy, continuation of industrial reforms, fluctuations in value of Rupee in foreign exchange market. Volatility in commodity prices applicable laws/ regulations, tax structure, domestic/ international industry scenario, movement in international prices of raw materials and economic developments within the country etc.

(e) Internal control systems (ICS) and their adequacy

The Company established adequate ICS in respect of all the divisions of the Company. The ICS are aimed at promoting operational efficiencies and achieving saving in cost and overheads in all business operations. The System Application and Product (SAP), a world class business process integration software solution which was implemented by the Company at all business units has been operating successfully.

For tightening and more effective internal control systems and risk management, the Company continued the engagement of M/s. KPMG India Pvt. Ltd., Chartered Accountants as internal auditors of the Company.

The system cum internal audit reports of the internal auditors are discussed at the Audit Committee meetings and appropriate corrective steps have been taken.

Further, all business segment prepare their annual budget, which are reviewed along with performance at regular interval.

(f) Development of human resources

The Company promotes open and transparent working environment to enhance teamwork and build business focus. The Company equally gives importance to the development of human resource (HR). It updates its HR policy in line with the changing HR culture in the industry as a whole. In order to foster excellence and reward those employees who perform well, the Company practices performance/production linked incentive schemes and introduced Employees Stock Option Scheme referred to in para 7 (a)(i) and as detailed in an attachment to this report. The main object of the Scheme is to create and maintain optimum performance level and profit driven culture and improve productivity.

The Company also takes adequate steps for in-house training of employees and maintaining safety and healthy environment for workers working within the factory premises.

4. Directors

a) Mr.V A Gore, Director of the Company and Chairman of the Audit Committee expired on December 2, 2009 after short duration of illness. Mr. Gore was associated with the Company for the last over 15 years. The Board deeply mourns the sad demise of Mr. V A Gore and place on record their sincere appreciation for the valuable guidance and assistance provided by Mr. Gore during his tenure as a Director of the Company.

b) Mr. Gary Ng Jit Meng, who was appointed by M/s. Shinny Limited in terms of Clause 7 of the investment agreement, ceased to be a director by resignation w.e.f. conclusion of the Board of Directors meeting on January 21, 2010. The Board places on record its appreciation for the valuable guidance and support rendered by Mr. Gary Ng Jit Meng during the tenure of his association with the Company.

c) Mr. C N Desai and Dr. N KThingalaya, Directors shall retire by rotation at the ensuing annual general meeting of the Company and they, being eligible, offer themselves for reappointment. The Board recommends the re-appointment of these Directors.

5. Directors responsibility statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956 with regard to directors responsibility statement, it is hereby confirmed that-

i. In the preparation of the annual accounts for the financial year ended March 31, 2010, the applicable accounting standards were followed along with proper explanation relating to material departures, if any.

ii. Appropriate accounting policies were selected and applied consistently and judgements and estimates were made that were 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 of the Company for the financial year under review.

iii. Proper and sufficient care was taken 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.

iv. The annual accounts were prepared on a going concern basis.

6. Audit

The qualification in paragraph 4 of attached Auditors Report are self- explanatory and do not call for any further comments or explanations. In this regard attention is also invited to paragraph 3(a) (ii) of this Report.

M/s. Price WaterHouse (PW), Chartered Accountants, Mumbai, Statutory Auditors of the Company shall be retiring at the ensuing Annual General Meeting, and they being eligible, offer themselves for reappointment. The Audit Committee of Directors at its meeting held on May 25, 2010 recommended reappointment of M/s. PW as statutory auditors of the Company for the financial year 2010-11.

7. Other information

a. Attached to and forming part of this report are the following:

(i) Particulars relating to Employee Stock Option Scheme.

(ii) Particulars relating to conservation of energy, technology absorption, Research and Development and foreign exchange earnings and outgo.

(iii) Report on Corporate Governance and auditors certificate regarding compliance of conditions of corporate governance. The Ministry of Corporate Affairs has issued "Corporate Governance Voluntary Guidelines" in December 2009. While these guidelines are recommendatory in nature, the Company is in the process of adopting these guideline gradually.

b. Particulars of employees - Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (particulars of employees) Rules, 1975, forms part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the Act, the report and the accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Act. Any member interested in obtaining such particulars may inspect the same at the registered office of the Company or write to the Company Secretary for a copy thereof.

c. The Company has been granted exemption for the year ended March 31, 2010 by the Ministry of Corporate Affairs vide its letter dated March 19, 2010 (Exemption Letter), from attaching to its Balance Sheet, the annual report of Companys wholly- owned foreign subsidiaries viz. Petroleum Specialities Pte. Ltd.. Singapore as well as its subsidiary Quantum Apar Speciality Oils Pty. Ltd., Australia and Poweroil Speciality Products FZE, Sharjah, Uniflex Cables Limited, subsidiary of the Company and Marine Cables & Wires Private Limited, subsidiary of Uniflex Cables Limited. As per the terms of exemption, a statement containing brief financial details of the said subsidiaries for the year ended March 31, 2010 are included in the annual report. The annual accounts of the said subsidiaries and the related information will be made available to any member of the Company seeking

such information at any point of time and are also available for inspection by any member of the Company at the registered office of the Company.

d. As on March 31, 2010, the aggregate fixed deposits of Rs. 0.761 million were due for repayment but remained unclaimed. Letters have been sent to such depositors to claim the amounts due to them.

8. Acknowledgement

Your Directors wish to place on record their sincere appreciation for continuous cooperation, support and assistance provided by stakeholders, financial institutions, banks, government bodies, technical collaborators, customers, dealers and suppliers of the Company. Your Directors also wish to place on record their appreciation for the dedicated services rendered by the loyal employees of the Company.

For and on behalf of the Board Place: Mumbai Dr. N. D. Desai Date: May 25, 2010 Chairman

 
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