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Directors Report of Deepak Nitrite Ltd.

Mar 31, 2016

Dear Shareholders,

The Directors have pleasure in presenting the Forty Fifth Annual
Report together with the Audited Financial Statements for the year
ended March 31, 201 6.

FINANCIAL RESULTS (Rs, in Crore)

STANDALONE CONSOLIDATED

2015-16 2014-15 2015-16 2014-15

Sales & Other Income 1,337.27 1,329.221 1,374.52 1,329.23

Gross Profit (before
interest, depreciation,
and tax) 168.22 140.17 166.32 139.72

Less:

Interest 37.45 36.41 37.65 36.41

Depreciation 39.45 36.02 139.54 36.02

Provision for
Current Tax 19.85 13.45 19.90 13.45

Provision for
Deferred Tax 10.32 12.07 10.32 12.07

MAT Credit
Entitlement Recognized (3.99) (11.22) (3.99) (11.22)

Loss for the year
from Associates - - 10.17 0.09

Profit After Tax 65.14 53.441 62.73 52.90

Surplus in Profit &
Loss Account Brought
Forward 188.28 163.87 187.67 163.80

Transferred to Share
Capital towards issuing
Bonus Equity Shares - (10.45) - (10.45)

Depreciation Adjustment
on Account of Schedule
II net of Deferred .

Tax Asset I

Amount available for
appropriation 253.42 205.86 250.40 205.25
Appropriation:

Dividend 13.95 10.45 13.95 10.45

Corporate Dividend Tax 2.84 2.13 2.84 2.13

General Reserve 5.00 5.00 5.00 5.00

Balance carried
to the Balance Sheet 231.63 188.28 228.61 187.67

PERFORMANCE REVIEW

The Financial Year 201 5-16 ("FY 201 5-1 6") was an extremely
challenging year for the chemical industry. The sharp decline in the
prices of global crude oil and related petrochemical intermediates as
well as continuous weakness in key emerging markets had an adverse
impact on the chemical industry. In this backdrop, your Company
delivered a strong performance. It has reported a steady growth in
profitability during the year while recording progress on several
strategic initiatives, including expansion plans.

On a standalone basis, your Company registered a marginal growth of
0.6% in revenues which stood at Rs, 1,335.73 crore in FY 201 5-1 6
compared to Rs, 1,327.16 crore in FY 201 4-1 5. This was driven by
healthy volume growth of 9%. Due to the decline in the prices of crude
oil and related petrochemical intermediates, there was a commensurate
reduction in realizations of some products. As a result, the strong
growth in volumes has been offset by lower realization leading to
moderate growth in absolute revenues though operating margins improved.
Initiatives taken by your Company to improve operating efficiency,
de-bottlenecking of production lines, improvement in working capital
and control of operating and finance cost helped to register 35% growth
in Profit Before Tax as compared to the previous year.

The commendable growth in volumes was backed by healthy trajectory in
the Fine & Specialty Chemicals (FSC) segment which includes agro hem
intermediates as well as pharma and personal care intermediates. The
shift towards higher contribution products in the overall product mix
and traction from newly introduced products has been instrumental in
the strong performance of this segment. Within the Fluorescent
Whitening Agent (FWA) segment, the performance of Optical


Brightening Agents (OBA) improved due to volume growth on account of
better acceptance of your Company''s products, doubling the customer
base and expanding the geographies in both domestic and export markets.
Your Company is able to acquire orders from large MNC customer in paper
and detergent industry. The revenue performance of the Bulk Chemicals &
Commodities (BCC) segment reflects the situation of lower crude oil
prices during FY 2015-16. The fall in crude oil prices and related
petrochemical intermediates had a cascading effect on the top line of
this segment. Your Company was, however, able to maintain the spread.

Export markets of Europe, USA and China supported the momentum with
procurement of high volumes on the back of high visibility. Export
markets contributed 40% to your Company''s top line, while the
contribution from domestic market stood at 60%. Export revenue was
marginally higher by 2% to Rs, 525.75 crore. Your Company launched a
special grade of Sodium Nitrite for exports market in FY 201 5-1 6 and
the response so far has been promising.

Profit before Tax for FY 2015-16 came in at Rs, 91.33 crore compared to
Rs, 67.74 crore in FY 2014-15. Your Company was able to successfully
maintain the spread in most of its products in the face of reduced
realizations, especially for the products linked to crude oil and
petrochemical intermediates. Profit After Tax for the year was higher
by 21 .9% to Rs, 65.14 crore compared to Rs, 53.44 crore in FY 2014-15.
Earnings Per Share in FY 2015-16 was Rs, 6.07 on enhance capital
compared to Rs, 5.1 1 per Share in FY 201 4-1 5.

The outlook remains favorable. Your Company is confident of delivering
value-led growth in all the three SBUs of Bulk Chemicals & Commodities,
Fine & Specialty Chemicals and Fluorescent Whitening Agents.
Significant efforts have been undertaken to customize the product
portfolio and drive customer acceptance which are expected to result in
higher volumes of OBA products. This will lead to an increase in the
utilization rate at the FWA facility in Dahej. Your Company''s
established business segments will continue to see enhanced momentum
given the relative stability in the global prices of crude oil,
improved sentiment in both domestic and international markets, the
foray into complementary segments of pharma and personal care
intermediates and an improved outlook for agro hem products in light of
expectations of a normal monsoon. In addition, further improvements in
operational efficiency along with cost reduction initiatives will help
improve the overall profitability in the near future.

A review of the performance during the year is given under the section
Management Discussion and Analysis Report, which forms part of this
report.

ISSUE OF SHARES

During FY 2015-16, your Company, offered Equity Shares to the Qualified
Institutional Buyers ("QIBs") on private placement basis through
Qualified Institutions Placement ("QIP"), in accordance with Chapter
VIII of SEBI (Issue of Capital and Disclosure Requirements)
Regulations, 2009. Accordingly, 11,750,000 Equity Shares of Rs, 2/-
each were allotted to QIBs on January 6, 2016 at an issue price of Rs,
70.90 per Equity Share (including premium of Rs, 68.90 per Equity
Share). The QIP issue proceeds aggregating to Rs, 83.31 crore will be
utilized in accordance with the objects stated in the offer document.
Pending utilization, the unutilized amount of issue proceeds have been
invested in Liquid Mutual Funds.

Post issuance of Equity Shares under QIP, the issued, subscribed and
paid-up capital of your Company has increased from Rs, 20.91 crore in
FY 201 4-1 5 to Rs, 23.26 crore in FY 201 5-1 6.

DIVIDEND

Based on your Company''s performance, the Board of Directors has
recommended payment of dividend of Rs, 1 .20 (Rupee One and Paisa
Twenty only) per Equity Share for the year ended March 31, 2016 on
11,62,88,190 Equity Shares of Rs, 2/- each, as against Rs, 1 /- (Rupee
One only) per Equity Share (after adjustment for sub-division and
bonus) in the previous year.

The total sum of the dividend, if approved, including Corporate
Dividend Tax, will be Rs, 16.79 crore (previous year Rs, 12.58 crore).

TRANSFER TO RESERVES

Your Company proposes to transfer Rs, 5 crore to the General Reserves
out of the amount available for appropriation and an amount of Rs, 231
.63 crore is proposed to be retained in the
Statement of Profit and Loss.

UPDATE ON PHENOL AND ACETONE PROJECT

Last year your Company announced setting up of a Greenfield project to
manufacture Phenol and Acetone at Dahej, in the State of Gujarat,
through its wholly owned subsidiary, Deepak Phenolics Limited. Till
March 2016, total investment made by your Company in Deepak Phenolics
Limited was Rs, 61.84 crore. Kellogg Brown & Root International, Inc.
has been selected for technology and engineering services while M/s.
ThyssenKrupp Industrial Solutions (India) Pvt. Ltd. has been selected
as the Engineering, Procurement, and Construction Management (EPCM)
contractor. Basic engineering has been completed and significant
progress has been made on detailed engineering. The Project management
team is established and the Project is being implemented as per
schedule. On Project procurement side, orders for majority of long lead
items have been placed or are in the process of negotiation.

Deepak Phenolics Limited has started seeding phenol market with an
objective to develop relationships with all major clients in India. The
demand for phenol continues to be buoyant in India and is expected to
increase steadily based on consumption trends of end-user industries.
Phenol imports remain strong and the country''s current demand will
absorb the entire capacity that your Company plans to install thereby
substituting imports. Further, the abundant availability of phenol in
the local market is expected to spur pent-up demand which is expected
to further expand the market.

SALE OF LAND AT PUNE

In order to monetize the value of your Company''s unutilized assets and
improve shareholders value by freeing up capital to facilitate growth,
your Directors had approved the sale of freehold land and surrender/
assignment of leasehold rights in respect of lands situated at Sinhagad
Road, Pune, Maharashtra.

Your Directors are pleased to inform that during April, 2016, the said
transactions were concluded for a total consideration of Rs, 79.26
crore. The profit on sale of land and surrender / assignment of
leasehold rights will be recognized in the first quarter of FY 201 6-1
7.

FINANCE

Your Company adheres to strict guidelines to efficiently manage its
working capital level and maintain its debt at a reasonable level. The
long term debt of your Company decreased during the year due to
repayment of external commercial borrowing and term loan borrowed in
earlier years. Interest cost is expected to moderate further as the FWA
business gains momentum with increase in volumes. Depreciation
increased due to capitalization of the Hydrogenation facility. Your
Company''s improved financials have helped improvement in the financial
parameters. In addition, there is active management of foreign exchange
exposures to minimize risk to your Company arising out of imports and
repayment of external commercial borrowings.

Your Company has been able to effectively manage its cash flows due to
prudent management. There has been a continued focus to reduce the
overall interest costs. Healthy cash flow, repayment of term loan and
effective management of working capital led to decrease in overall debt
level to Rs, 495 crore. The Debt to Equity ratio is now at a better and
comfortable level at 1 .04 times as on March 31, 2016.

ICRA Limited re-affirmed the long-term rating of [ICRA] A and Short
Term rating of [ICRA] Al assigned to the fund based limits and
non-fund based limits of your Company. ICRA also re-affirmed the
short-term rating of [ICRA] Al assigned to the Commercial Paper
programme.

DIRECTORS

The Board of Directors at their meeting held on May 9, 2016, appointed
Shri Maulik D. Mehta as an Additional Director and subject to the
approval of shareholders, also approved the appointment of Shri Maulik
D. Mehta as a Whole-Time Director of your Company w.e.f. May 9, 2016.
As per provisions of Companies Act, 201 3, Shri Maulik D. Mehta holds
office as an Additional Director upto the ensuing Annual General
Meeting. Your Company has received a notice from a Member proposing
the candidature of Shri Maulik D. Mehta for appointment as a
Director along with requisite fees. The respective resolutions for the
appointment of Shri Maulik D. Mehta as a Director and Whole-Time
Director for approval by the Members are given in the Notice for the
Annual General Meeting.

As required under the provisions of Section 152 of the Companies Act,
2013, Shri C. K. Mehta, a Director liable to retire by rotation, will
be retiring at the ensuing Annual General Meeting. Although he is
eligible for re-appointment at the ensuing Annual General Meeting, he
has not offered himself for the re-appointment due to his advancing
age. The Board of Directors while extending their gratitude for the
valuable contribution of Shri C. K. Mehta as the Chairman of your
Company, have decided not to fill the vacancy that will be caused by
the retirement of Shri C. K. Mehta not offering himself for
re-appointment. However, in order to continue to have the guidance and
benefit from the wealth of experience of Shri C. K. Mehta, the Board of
Directors has requested Shri C. K Mehta to continue as the Chairman -
Emeritus and Shri C. K. Mehta has assented to the request.

Shri C. K. Mehta is the founder of your Company and has been the
Chairman since October, 1998. He is an eminent personality with proven
business acumen of successfully building formidable corporate
conglomerates in his illustrious career spanning over six decades. The
able leadership of Shri C. K. Mehta, his futuristic vision, dedication
and commitment for the service of the society, has taken your Company
to such greater heights and earned its name not only at the national
level but has achieved international acclaim too. Shri C. K. Mehta has
also been at the forefront for promoting several philanthropic
activities, especially for education and health care. The Board of
Directors of your Company places on record their sincere appreciation
for the relentless guidance and support of Shri C. K. Mehta and his
contribution towards growth of your Company.

KEY MANAGERIAL PERSONNEL

Shri Umesh Asaikar, Executive Director, Shri Sanjay Upadhyay, Chief
Financial Officer and Shri Arvind Bajpai, Company Secretary are the Key
Managerial Personnel of your Company. There has been no change in Key
Managerial Personnel of your Company during the FY 201 5-1 6.

MEETINGS OF THE BOARD

During FY 2015-16, five (5) Board Meetings were held. The details of
the Board Meetings with regard to their dates and attendance of each of
the Directors thereat have been set out in the Report on Corporate
Governance, which forms part of this Report.

INDEPENDENT DIRECTORS

The Independent Directors of your Company have furnished the
declaration that they meet the criteria of independence as provided in
Section 149 (6) of the Companies Act, 2013.


PERFORMANCE EVALUATION

Pursuant to the provisions of Companies Act, 2013 and SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (''Listing
Regulations''), the Board of Directors have carried out annual
evaluation of its own performance, Board Committees and individual
Directors.

The performance of the Board /Committee was evaluated after seeking
inputs from all the Directors / Committee members on the basis of the
defined criteria including composition and structure, effectiveness of
meetings, information and functioning.

Performance evaluation of Independent Directors was done by the entire
board, excluding the Independent Director being evaluated, on the basis
of following evaluation criteria:

- Relevant Knowledge, Expertise and Experience.

- Devotion of time and attention to the Company''s long term strategic
issues.

- Addressing the most relevant issues for the Company.

- Discussing and endorsing the Company''s strategy.

- Professional Conduct, Ethics and Integrity.

- Understanding of Duties, Roles and Function as Independent Director.

Your Directors have expressed their satisfaction for the evaluation
process.

AUDIT COMMITTEE

The Audit Committee consists of all Independent Directors with Shri
Sudhin Choksey as the Chairman of the Committee. The other members of
the Audit Committee are Shri SudhirMankad and Shri S. K. An and. The
terms of reference of the Audit Committee, details of meetings held
during the year and attendance of members are set out in the Report on
Corporate Governance, which forms part of this Report.

STATUTORY AUDITOR''S REPORT

The observations made in the Auditor''s Report of M/s. B. K. Khare &
Co., Chartered Accountants, read together with relevant notes thereon,
are self-explanatory and hence do not call for any comments. There is
no qualification, reservation, adverse remark or disclaimer by the
Statutory Auditors in their Report.

SECRETARIAL AUDITOR''S REPORT

The Secretarial Audit Report of M/s. KANJ & Associates, Company
Secretaries, for the year ended March 31, 201 6 do not contain any
qualification, reservation, adverse remark or disclaimer by the
Secretarial Auditors. The Secretarial Audit Report is annexed as
Annexure - A, which forms part of this Report.

AUDITORS

(A) Statutory Auditors:

In compliance with the Companies (Audit and Auditors) Rules, 2014, the
Members, at the 43rd Annual General Meeting of the Company held on
August 8, 2014, appointed M/s. B. K. Khare & Co., Chartered
Accountants, Mumbai, as Statutory Auditors of the Company to hold the
office until the conclusion of 46th Annual General Meeting of the
Company.

As required under the provisions of Section 139 of the Companies Act,
201 3, their appointment as Statutory Auditors is subject to
ratification by the Members at every Annual General Meeting.
Accordingly, Members are requested to ratify their said appointment at
the ensuing Annual General Meeting of the Company.

(B) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013
read with the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, the Secretarial Audit for the year ended March
31, 2016 was carried out by the Secretarial Auditor, M/s. KANJ &
Associates, Company Secretaries, Pune. The Board of Directors of your
Company has appointed M/s. KANJ & Associates, Company Secretaries, Pune
to carry out Secretarial Audit of the Company for FY 2016-1 7.

(C) Cost Auditors:

The Board of Directors of your Company has appointed M/s. B. M. Sharma
& Company, Cost Accountants, to conduct audit of your Company''s cost
records for FY 2016-17 at a remuneration of Rs, 6,50,000/- (Rupees Six
Lacs Fifty Thousands only) plus out of pocket expenses. As required
under the provisions of Companies Act, 201 3, the remuneration of Cost
Auditors as approved by the Board of Directors is subject to
ratification by the shareholders at the ensuing Annual General Meeting.

The Cost Audit Report will be filed within the prescribed period of 1
80 days from the close of the Financial Year.

(D) Internal Auditors:

The Board of Directors has appointed M/s. Deloitte Haskins & Sells as
Internal Auditors of your Company to conduct the Internal Audit for FY
201 6-1 7.

CHANGE IN REGISTRAR & SHARE TRANSFER AGENT

The Company has changed its Registrar & Share Transfer Agent from M/s.
Sharepro Services (I) Pvt. Ltd. to M/s. Link In time India Pvt. Ltd.

FIXED DEPOSITS

During FY 2015-16, your Company has not accepted or renewed any Fixed
Deposits.


As on March 31, 2016, 44 warrants aggregating to Rs, 9,23,437 issued by
your Company to the respective deposit holders towards compulsory
repayment of deposits and interest thereon in accordance with the
provisions of Section 74 of the Companies Act, 2013, remained
nucleated. There has been no default in repayment of deposits or
interest thereon during the year and there are no deposits outstanding
as on March 31, 2016.

VIGIL MECHANISM

In accordance with the provisions of Section 1 77 of the Companies Act,
2013 and requirements of Listing Regulations, your Company has a vigil
mechanism which has been incorporated in the Whistle Blower Policy for
Directors and employees to report genuine concerns. The Whistle Blower
Policy also provides for adequate safeguards against victimization of
persons who use vigil mechanism and for direct access to the Chairman
of the Audit Committee in appropriate or exceptional cases. The Whistle
Blower Policy is uploaded on the website of your Company.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the year
ended March 31, 2016 were at arm''s length basis and in the ordinary
course of business. There were no materially significant related party
transactions entered into by your Company during the year and hence no
information is required to be provided as prescribed under Section 1
34(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the
Companies (Accounts) Rules, 2014.

SUBSIDIARIES AND ASSOCIATES

As required under Rule 8(1) of the Companies (Accounts) Rules, 2014,
the Board''s Report has been prepared on a Standalone basis.

Your Company has following subsidiaries and associate:

(a) Deepak Phenolics Limited

Your Company''s Phenol and Acetone Project is being undertaken through
Deepak Phenolics Limited, a wholly owned subsidiary of your Company.

(b) Deepak Nitrite Corporation Inc. (USA)

A wholly owned subsidiary company is formed in the United States of
America to cater to the marketing requirements of your Company in the
North and South American region.

(c) Deepak Gulf LLC

Deepak Gulf LLC is an associate company where your Company has 49%
shareholding.

Pursuant to the provisions of Section 1 29(3) of the Companies Act,
2013 read with Rule 8(1) of the Companies (Accounts)

Rules, 2014, a statement containing salient features of the financial
statements of your Company''s subsidiaries in Form AOC-1 is attached to
the Financial Statements.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF
THE COMPANIES ACT, 2013

The particulars of Loans granted and Investments made by your Company
have been disclosed in the Financial Statements.

MATERIAL CHANGES

There have been no material changes and commitments affecting the
financial position of your Company since the close of Financial Year
i.e. since March 31, 201 6 except as disclosed in this Report. Further,
it is hereby confirmed that there has been no change in the nature of
business of your Company.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 1 34(5) of the Companies Act,
201 3 ("the Act"), the Board of Directors of your Company, to the best
of their knowledge and ability, confirm that:

(a) in the preparation of the Annual Accounts, the applicable
accounting standards have been followed and there are no material
departures;

(b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company at the end of the Financial Year and of the profit of the
Company for that period;

(c) they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;

(d) they have prepared the Annual Accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by
the Company and that such internal financial controls are adequate and
are operating effectively;

(f) they have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.

CORPORATE GOVERNANCE

As required under Listing Regulations, a Report on Corporate Governance
with a Certificate from the Statutory Auditors of your Company
confirming compliance of the conditions of Corporate Governance and a
Management Discussion and Analysis are attached, which form part of
this Report.


CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) activities are being
undertaken by your Company through Deepak Foundation, a charitable
trust of the group as implementing agency for CSR activities of your
Company. Through Deepak Foundation, your Company supports in
development of underprivileged communities through various social
interventions. The CSR activities during FY 2015-16 were focused on
women empowerment through skills building in health and livelihood
promotion, primary healthcare services, early childhood care and
development and education. The interventions were spread around the
plants of your Company, located at Dahej & Nandesari in Gujarat, Roha &
Taloja in Maharashtra and Hyderabad in Telangana.

During FY 201 5-1 6, your Company has spent Rs, 1 57.60 Lacs (including
the unspent amount of Rs, 1 5.72 Lacs in the previous year) on CSR
activities, against the requirement of Rs, 1 22 Lacs, being 2% of
average of the net profits for the preceding three years.

The major CSR activities carried during FY 201 5-1 6 were:

Comprehensive Emergency Obstetric and Newborn Care (CEmONC)

It was constructed by Deepak Foundation within the premise of the
government''s Community Health Centre (CHC), Jabugam, Pavi Jetpur of
Chhota Udepur district in February 2006 under the large scale
intervention project of Safe Motherhood and Child Survival (SMCS). This
is the only First Referral Unit (FRU) at the CHC in the area serving a
tribal population of 9,00,000 round the clock with availability of
skilled manpower. CEmONC operates under the specific objectives of
strengthening the health delivery system for maternal and child care;
providing immediate care to the emergency obstetric cases referred from
grassroots level and public health facilities; providing timely
referral of complicated cases to tertiary level hospitals

Mobile Health Unit (MHU)

MHU was initiated as a means to ensure delivery of general health care
services to the poorest and vulnerable segments of population in rural
and tribal areas. The MHU operate with the overall goal of providing
access to primary healthcare with the objectives for deploying primary
healthcare and speciality services at the doorstep; facilitate basis
diagnostic care services; community health education for poor and
vulnerable segments of population.

Integrated Child Development Services (ICDS)

Your Company, through Deepak Foundation has been supporting and
supervising activities of Anganwadi Centers under ICDS scheme of the
Department of Women and Child Development, Government of Gujarat. This
scheme offers a package of services comprising of supplementary
nutrition, immunization, health checkups, referral services, non-formal
preschool education, and nutrition and health education. Deepak
Foundation has entered into partnership with Department of Women and
Child Development, Government of Gujarat to manage and monitor 65
Anganwadi centres in Nandesari of Vadodara district, Gujarat. The
Foundation undertakes various value addition programs with the support
of your Company such as tracking and facilitation of severely
undernourished children, promoting adolescent health, maintaining
hygiene and sanitation, improving health and nutrition awareness. It
also provides free treatment to children identified with severe
malnutrition as well as chronic disorders.

Deepak Occupational Health Centre (DOHC)

DOHC was initiated to provide comprehensive occupational health
services to industries. The centre is equipped with trained medical and
paramedical staff along with well- equipped laboratory and pharmacy
facilities. DOHC renders services that include outpatient and inpatient
care for industrial workers and their families; injury care; general
OPDs and specialized OPDs for ophthalmic, dental and skin diseases;
diagnosis and treatment of occupational health problems; periodic and
annual medical check-ups; industrial training on first aid, Personal
Protective Equipment (PPE), Health and Safety, Chemical Hazards;
promotion of occupational health programs; health counseling.

The brief outline of the CSR policy of your Company, composition of the
Committee and report on initiatives undertaken by your Company on CSR
activities during the year are set out in Annexure-B of this Report in
the format prescribed in the Companies (Corporate Social Responsibility
Policy) Rules, 2014.

REMUNERATION POLICY

In compliance with the provisions of Section 178 of the Companies Act,
2013 and the Listing Regulations, the Remuneration Policy of your
Company is set out as Annexure-C.

EXTRACTS OF ANNUAL RETURN

The extract of Annual Return as required under Section 134(3)(a) of the
Companies Act, 2013 read with Rule 12(1) of the Companies (Management
and Administration) Rules, 2014, is annexed as Annexure-D.

PARTICULARS OF EMPLOYEES

The information required under Section 1 97 of the Companies Act, 2013
read with Rule 5(1) and 5(2) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 201 4, is annexed as
Annexure-E.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO

Pursuant to the requirement of Section 134(3)(m) of the Companies Act,
2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the
relevant data pertaining to the conservation of energy, technology
absorption and foreign exchange earnings and outgo are provided in
Annexure-F of this report.

STATE OF COMPANY''S AFFAIRS

The state of Company''s affairs is given under the heading ''Performance
Review'' and various other headings in this Report and in the Management
Discussion and Analysis, which forms part of this Report.

INTERNAL CONTROL SYSTEMS

Your Company has a proper and adequate internal control system, which
includes internal financial controls, to ensure compliance with various
policies, practices and statutes, and that all assets are safeguarded
and protected against loss from unauthorized use or disposition and
that those transactions are authorized, recorded and reported
correctly.

The internal control is exercised through documented policies,
guidelines and procedures. The Internal Auditor''s team carries out
extensive audits throughout the year across all locations and across
all functional areas. The audit observations and corrective action
taken thereon are periodically reviewed by the Audit Committee to
ensure effectiveness of the internal control system. The internal
control is designed to ensure that the financial and other records are
reliable for preparing financial statements and other data, and for
maintaining accountability of persons.

RISK MANAGEMENT

Risk Management is a very important part of business in today''s
economic environment. The main aim of risk management is to identify,
monitor and take precautionary measures in respect of the events that
may pose risks for the business.

Your Company has in place a Risk Management Framework adopted by the
Board of Directors of your Company. The Framework provides an
integrated approach to identify, assess, monitor and mitigate risks in
various aspects of your Company''s business. Risks identified by the
functions are systematically addressed through mitigating actions on a
continuing basis. Your Company has a duly constituted Risk Management
Committee which oversees the risk assessment and mitigation process
regularly. The composition of Risk Management Committee is disclosed in
the Report on Corporate Governance, which forms part of this Report.

RESEARCH & DEVELOPMENT

Your Company has a Research and Development facility at Nandesari,
Gujarat with pilot plants at Roha, Maharashtra and Nandesari, Gujarat.
This facility has been recognized by the Department of Science and
Technology.

Your Company has spruced up its Research & Development facility for
innovation and to collaborate with its customers to understand consumer
preference and develop new product applications to cater to the needs
of its customers. Your Company focuses its Research and Development
efforts to develop cost effective cleaner technologies to improve
profitability. Through its Research and Development capabilities, your
Company has been successful in developing and enhancing its portfolio
of customized products. Your Company believes that its ability to
develop new product applications and ability to customize products to
suit customer needs have helped in expanding its customer base, thereby
enabling it to establish leadership position.

SAFETY, HEALTH & ENVIRONMENT

Employee''s Health, Safety and Environmental protection are core
business values within your Company. It is your Company''s objective to
protect its employees, property and environment in which it operates.
It strives towards excellence and align its growth path to make
tomorrow safer, cleaner, greener and more sustainable. Your Company is
committed to maintain its operations and workplace free from incidents
and significant risk to the health and safety of its stake holders
through improved engineering practices, strong channels of
communication, safety awareness, robust checking systems and sound
training practices.

Your Company regularly monitors the occupational health of employees
working in designated hazardous areas with respect to exposure to
hazardous chemicals and processes. Your Company has well-equipped
Occupational Health Centers at all its manufacturing locations to
monitor health of employees on regular basis. It also monitors
employees for any indications of lifestyle or work-style related
diseases and provides counseling.

All the manufacturing locations of your Company have a well defined
Environment Management System. It follows well- mapped procedure in
order to select projects, assess impacts on society and environment and
mitigate any adverse impacts. It has instituted a compliance
management system which mandates undertaking an adverse impact analysis
and risk analysis study and implementation of actions based on such
analysis.

Environmental performance indicators of your Company are defined and
monitored by the top management regularly. Special emphasis is given
on resource conservation and process innovations to convert waste
streams into saleable products and minimize use of water in processing.

Your Company proactively fulfils the environmental requirements of
customers by delivering products that match international standards.
Your Company continues to focus on proper treatment of effluents and
reduction of pollution as a part of its Green and ecofriendly
initiatives. This has made your Company a safe and healthy place to
work.


Your Company is signatory to the ''Responsible Care'' initiatives and
Responsible care logo holding organization.

Quality, Environment & Occupational Health & Safety Management System
at all manufacturing plants and corporate office have been assessed,
registered and certified as per ISO 9001, ISO 14001 & OHSAS 18001.

All raw materials and products within supply chain framework of your
Company are transported in a secure manner, for the safety of its
customers, carriers, suppliers, distributors and contractors. Your
Company takes utmost care during transportation and ensures that it
complies with all the checks and measures for a safe and secure
delivery.

AWARDS & ACCOLADES

Your Company was conferred with supplier excellence award in the
"Outstanding Performance" category for the year 2015 from a leading
global agrochemical major Bayer Crop Science. This award recognizes the
quality and excellence of your Company''s products in the Fine &
Specialty Chemicals offering.

HUMAN RESOURCES

Your Company''s HR philosophy is to establish and build a high
performing organization, where each individual is motivated to perform
to the fullest capacity; to contribute to developing and achieving
individual excellence and departmental objectives and continuously
improve performance to realize the full potential of its personnel.
During the year under review, your Company''s industrial relations at
all manufacturing and other locations have remained amicable. All these
efforts are concentrated on attracting and retaining the best talent in
the industry as people are at the center of your Company''s growth.

INSURANCE

All the insurable interests of your Company including inventories,
buildings, plant and machinery are adequately insured against risk of
fire and other risks.

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN
AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has in place a Anti-Discrimination and Harassment policy
in line with the requirements of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. The
Internal Complaint Committee has been set up to redress complaints
received regarding sexual harassment at workplace. All employees
(permanent, contractual, temporary, trainees) are covered under the
policy. There were no complaint received from any employee during FY
2015-16 and hence no complaint is outstanding as on March 31, 201 6 for
redressal.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their gratitude to all
investors, clients, vendors, bankers, regulatory and government
authorities, stock exchanges and business associates for their
co-operation, encouragement and continued support extended to your
Company. Your Directors also wish to place on record their appreciation
for the hard work and efforts put in by all the employees and their
contribution towards growth of your Company.

For and on behalf of the Board

Place: Mumbai C.K. MEHTA

Date: May 9, 201 6 Chairman


Mar 31, 2013

Dear Shareholders,

The Directors have the pleasure in presenting the Forty Second Annual Report of your Company, together with the audited Statement of Accounts for the financial year ended March 31, 2013.

FINANCIAL RESULTS

Particulars 2012-13 2011-12 (Rs. in Lacs) (Rs. in Lacs)

Sales & Other Income 1,03,010.04 79,273.32

Gross Profit (before interest, 8,122.22 5,880.45 depreciation and tax)

Less:

(i) Interest 970.56 943.27

(ii) Depreciation 1,893.86 1,778.58

(iii) Provision for Tax

- For the Year

-Current Tax 820.25 749.51

- Deferred Tax 655.20 72.70

- Prior Year

- Current Tax - 28.11

Profit After Tax 3,782.35 2,308.28

Add: Surplus in Statement of Profit & 11,973.90 10,895.29 Loss Brought Forward

Amount available for appropriation 15,756.25 13,203.57

Appropriation :

Dividend 837.09 627.82

Corporate Dividend Tax 142.26 101.85

General Reserve 500.00 500.00 (as required by Section 205 (2A) of the Companies Act,1956)

Balance carried to the Balance Sheet 14,276.90 11,973.90

15,756.25 13,203.57

DIVIDEND

Considering the overall improved performance of your Company, the Board of Directors are pleased to recommend a dividend of Rs. 8.00 per equity share for the year ended March 31, 2013 on 1,04,63,679 Equity Shares, as against Rs. 6.00 (Rupees six) per equity share in the previousyear.

The total amount of dividend, if approved, including Corporate Dividend Tax, will beRs. 9.79 crores (previousyearRs. 7.29 crores).

THEYEARIN RETROSPECT

The financial year 2012-13 proved to be a benchmark year for your Company''s performance. Your Company has achieved a significant milestone this year by crossing the Rs. 1,000 crores turnover mark. In spite of headstrong global and domestic challenges, your Company has outperformed competition and, revenues and profits have touched new highs. Turnover for FY 2012-13 stood at Rs. 1004.09 crores as compared to Rs. 776.91 crores in FY 2011-12. These were driven by increased volumes as a result of de-bottlenecking activities and progressively higher realisations. Exports flourished and products like Fuel Additives were also major contributors to the top line.

Exports to key markets in Europe continued to remain strong and your Company enjoyed a favourable traction from its expanding presence in the US as well. The export turnover increased by 27.71% over FY 2011-12 and in absolute terms stood atRs. 447.59 crores in FY 2012-13 over Rs. 350.47 crores in FY 2011-12.

Profit before Interest, Depreciation and Tax for the year was Rs. 81.22 crores as compared to Rs. 58.80 crores in the previousyear. Profit After Tax was Rs. 37.82 crores as compared to Rs. 23.08 crores in FY 2011-12. Earnings per Share was Rs. 36.15 as compared to Rs. 22.06 per Share in FY 2011-12.

On the global front, the US market is showing signs of a more stable recovery while Europe seems to be facing continuing challenges. The Middle East has recovered steadily from the political unrest and China and India, though still slowly recovering, remain the key engines for global growth. Your Company has shown resilience even though the global operating environment over the last few years has been demanding. Growth in exports to economies that are in economic turmoil is a testament to strong customer relationships and a growth-driven business model thatyourCompanyfollows.

For the next financial year the key focus will be on expansion plans. The greenfield expansion at Dahej, will make your Company, the only player to completely backward integrate its processes and manufacture OBA (Optical Brightening Agents) from Toluene. On the other hand, the brownfield expansion at Nandesari will help your Company make a completely new foray in renewable energy which will aid in the manufacture of Solar Salts. Since many Solar Projects in India as well as overseas are temporarily delayed there is a need to mitigate the short-term risk of dependence on Solar Energy sector. With this in view, your Company has initiated Research & Development efforts to develop salts for other applications.

Your Company has also taken measures to address currency risk through prudent hedging policies as exports play a significant role.

A review of the performance during the year is given under the section "Management Discussion and Analysis Report".

GREENFIELD EXPANSION AT DAHEJ

Your Company''s new state-of-the-art greenfield plant at Dahej (Dist. Bharuch, Gujarat) will be manufacturing OBA (Optical Brightening Agents), a Performance Chemical. This will make your Company the only fully-integrated player in the world. After the successful completion of production trial runs at its OBA Plant, your Company commenced its first stream of commercial production of OBA on March 15, 2013 involving a capex cost of around Rs. 140 crores. The other part of the facility is well on track and is expected to be operational by the beginning of the second quarter of FY2013-14.

Your Company would be offering OBA at the door-step not only from the world''s largest Brightener Plant but it would be offering equally matching logistic solutions and after-sale technical services.

BROWNFIELD EXPANSION AT NANDESARI

Your Company, through its brownfield expansion at Nandesari (Gujarat), envisaged a dual purpose of expanding the production capacity and also foraying into a new business segment of Solar Salts.

The Salt Project at Nandesari was set up with the objectives of meeting the emerging demand for solar salt application and for catering to the high-end Sodium Nitrite market in the US. Since many Solar Projects in India as well as overseas are temporarily delayed there is need to mitigate the short-term risk of dependence on Solar Energy sector. With this in view, your Company has initiated Research & Development efforts to develop salts for other applications. The project is expected to be operational by the first quarter of FY2013-14.

FINANCE

Your Company lays emphasis on its working capital program as well as long term debt in order to effectively manage debt levels. Prudent management has always enabled your Company to maintain healthy cash flows. The focus has been to reduce interest costs, and although your Company has borrowed ECB of USD 45 million (fully drawn for expansions at Dahej & Nandesari), the Debt to Equity has still been maintained at reasonable levels; Debt to Equity as on March 31, 2013 stood at 1.20.

The Capital Expenditure during the year was Rs. 170.61 crores and was mainly for your Company''s Greenfield and Brownfield projects at Dahej and Nandesari.

DIRECTORS

During the year under review, Shri Hasmukh Shah ceased to be the Director of your Company since August 4, 2012. As members are aware, Shri Shah had not opted for his re-appointment at the 41st Annual General Meeting.

Shri Berjis Desai resigned from the directorship of your Company w.e.f. October 25, 2012, due to his other commitments. During the tenure of his directorship, your Company has benefited immensely by his extensive knowledge and experience on various legal aspects concerning your Company''s business. The Board of Directors place on record their sincere appreciation for the valuable contribution, guidance and suggestions provided by Shri Desai during his tenure.

Dr. Swaminathan Sivaram and Shri Umesh Asaikar have been appointed as Additional Directors by the Board of Directors on May 9, 2013. Under the provisions of Section 260 of the Companies Act, 1956 and Article 127(a) of the Articles of Association of your Company, Dr. Swaminathan Sivaram and Shri Umesh Asaikar will hold office up to the date of forthcoming Annual General Meeting. Notices have been received from members pursuant to Section 257 of the Companies Act, 1956, together with necessary deposits, proposing the appointments of Dr. Swaminathan Sivaram and Shri Umesh Asaikar as Directors on the Board of your Company. Resolutions for the appointment of Dr. Swaminathan Sivaram and Shri Umesh Asaikar as Directors of your Company have been incorporated in the Notice for the forthcoming Annual General Meeting forthe member''s approval.

Subject to the approval of shareholders at the ensuing Annual General Meeting, the Board of Directors at their meeting held on May 9, 2013, appointed Shri Umesh Asaikar as the Executive Director with effect from May 9, 2013. Prior to his appointment as the Executive Director, Shri Asaikar was functioning as the Chief Executive Officer of your Company.

In accordance with the Articles of Association of your Company, Shri Nimesh Kampani and Shri Sudhin Choksey will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Shri A. K. Dasgupta, who is also due to retire by rotation at the ensuing Annual General Meeting, has indicated his desire not to seek re-appointment.

Shri A. K. Dasgupta joined the Board of your Company way back in the year 1976. The Board places on record its appreciation for the valuable services rendered by Shri A. K. Dasgupta during his long association with your Company. It is proposed not to fill the vacancy so caused on the Board of Directors.

FIXEDDEPOSITS

The total amount of Fixed Deposits held by your Company from shareholders and public was Rs. 15.06 crores as on March 31, 2013 (previous year Rs. 17.87 crores). Your Company does not have any deposits which have matured and are claimed but remain unpaid.

CORPORATE GOVERNANCE

Your Company has been following the principles of good corporate governance over the years and lays a strong emphasis on transparency, accountability and integrity. Pursuant to Clause 49 of the Listing Agreement, the Management Discussion and Analysis, and the Corporate Governance Report, together with the Auditors'' Certificate on compliance with the conditions of Corporate Governance as laid down, forms a part of this Annual Report.

RESEARCH & DEVELOPMENT

Every year your Company spends around 1% of its revenues on Research & Development. Innovation can help scale greater heights and discovery of new products can have long lasting impact on revenues. The year under review saw fruition of Research & Development efforts as Fuel Additives turnover atRs. 196 crores was achieved and a newly developed chemical in Fine & Speciality segment was supplied to a transnational Company reinforcing further the synergistic relationship that the two Companies enjoy

SAFETY, HEALTH & ENVIRONMENT

It is of utmost importance to a company with the status, size and scale of your Company to follow best practices with regard to safety. Inthe chemicals business, processes must be carried out with the highest degree of safety to avoid hazardous reactions. Your Company conducts regular maintenance checks of all its machinery at all plants and makes sure that every employee is well-trained before operating on any machine. This makes your Company a safe place to work.

Your Company matches international environmental standards and makes sure that natural environment is protected. To make a company a healthy place to work, the environment must be green and eco-friendly.

A noteworthy addition this year was the establishment of the Responsible Care system. Your Company was audited by expert auditors from various fields in Sept-12, and based on their feedback the Indian Chemical Council has honoured your Company with the Responsible Care logo. Your Company is now responsible care logo holding company. This indicates that your Company is committed to not just development but sustainable development - by adopting technology and processes that have minimum impact on the environment, and operates the facilities in a responsible way Health, Safety & Environment (HSE) management continued to receive top priority this year as well. Processes were reviewed on various parameters including safety, efficiency, quality, quantity and sustainability. Benchmarking against global best practices, continuous improvement programes and Responsible Care initiatives have ensured safe operations at all our locations. Your Company has adopted a HSE audit program which is a critical component of the HSE governance process. The audit program is specifically designed to ensure that stakeholder expectations, HSE Policy, HSE management systems and Responsible Care management systems are being effectively implemented across the organisation. HSE performance of each manufacturing facility is reviewed by top management and lessons learned from incidents and best practices are shared among all locations. Further, your Company has reinforced ties with the global institution, the British Safety Council, to get access to the best available practices across the globe.

Employees'' well-being is ensured through consistent health monitoring. The facilities at every Occupational Health Center (OHC) have been upgraded and have 24X7 ambulance service to ensure quick transportation to the near-by hospitals. Medical facilities have been extended to contractual workforce as well. Occupational health of employees is monitored to assess the exposure to hazardous chemicals. It is your Company''s constant endeavor to focus on prevention of pollution, control of pollution and compliance with the environmental norms.

HUMAN RESOURCES

Your Company recognises that its people are central to its operations and growth strategy, and all efforts are made to attract and retain the best talent in the industry. Your Company''s Human Resource policy is focused on every individual''s skill sets'' development, keeping the morale and performance level high, providing employees a platform for personal growth within the organisation, suitably recognising and rewarding individual achievements, while simultaneously addressing the business needs of your Company. Emphasis is being placed on building a cohesive workforce to maximise returns for all stakeholders. Focused attention is given to updation of knowledge and application of new technologies available to reduce costs and to meetthe business challenges.

Your Directors are pleased to report that industrial relations at all manufacturing and other locations have remained amicable during the year under review. Your Company''s initiative to provide a constructive work environment enables it to attract and retain employees with high potential and caliber.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information required under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is annexed hereto as Annexure ''A'' and forms part of this Report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the Annexure to the Directors'' Report. However, having regard to the provisions of Section 219(1)(b)(iv) of the Act, the Annual Report excluding the aforesaid information is being sent to all members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company

INSURANCE

All the insurable interests of your Company, including inventories, buildings, plant and machinery are adequately insured against risk of fire and other risks.

CORPORATE SOCIAL RESPONSIBILITY

Your Company remains committed to social development through Deepak Foundation.

During the year under review, your Company has been accredited with the coveted Businessworld FICCI CSR Award 2011-12 by the Federation of Indian Chambers of Commerce and Industry (FICCI) in category I B - Large Enterprises. The honour was bestowed upon your Company for its contribution and efforts, through Deepak Foundation, towards the upliftment of women in the society and making them economically independent as well as inculcating awareness about health-related issues in their mind. The award demonstrates your Company''s continuous endeavours and achievement in corporate social responsibility activities.

Deepak Foundation (accredited by Credibility Alliance and an ISO 9001:2008 organisation) is a CSR initiative of your Company. The Public Health Training Institute under this initiative was set up through an Memorandum of Understanding with the Department of Health & Family Welfare of the Govt. of Gujarat. One of the prime objectives of this Institute was to undertake phased trainings of ASHAs on Modules 6 & 7 in three blocks of the Vadodara district; thus strengthening ASHA''s role in villages as an important "Healthcare Provider at Grass root Level". An assessment of needs was also undertaken in the Dahej industrial area to plan developmental interventions in the surrounding area. The Foundation is also planning to initiate a plumbing course in the Nandesari industrial area in collaboration with the Indian Institute of Entrepreneurship Development & Research, Pune. For this purpose, a location has been identified and construction of the infrastructure for the work shed will shortly commence. Apart from this, a Reverse Osmosis (RO) plant was installed jointly with the Nandesari Industrial Association at the Nandesari School to ensure pure water supply for the school''s 1300 students.

The Foundation has initiated "Apna Kisan Malls" in three blocks of Vadodara viz. Naswadi, Pavijetpur and Kawant. Nearly 1500 farmers have enrolled and benefited from this in terms of increase in production at minimal investment. A Mobile Medical Unit was also started in Kawant, in partnership with NRHM Gujarat, which provides essential healthcare and referral services in 40 villages. A computer training center was established in Naswadi, with the objective of spreading computer literacy among tribals, especially youth, in association with the Jankalyan Computer Saksharata Mission.

AUDITOR''S REPORT

The Auditor''s Report to the Shareholders, read with relevant notes thereon, are self-explanatory and do not contain any qualifications, and hence do not call for any comments under section 217 of the Companies Act, 1956.

AUDITORS

M/s. B. K. Khare & Co., Chartered Accountants, Mumbai, who are the statutory auditors of your Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re- appointment. It is proposed to re-appoint them as Statutory Auditors of your Company for FY 2013-14. Members are requested to consider their re-appointment and fix their remuneration at the ensuing Annual General Meeting. The auditors, underthe provisions of Companies Act, 1956, have furnished a certificate of eligibility for re-appointment.

COSTAUDITORS

The Central Government, vide order dated January 24, 2012 has prescribed cost audit for a number of industries, with effect from the financial year 2012-13. Accordingly, the Board of Directors, with the prior approval of the Central Government, have appointed M/s. B. M. Sharma & Company, Cost Accountants, to conduct audit of your Company''s cost records for the financial year 2012-13.

The Cost Audit Report will be filed with the Central Government within the prescribed time of 180 days from the close of the financial year.

DIRECTORS'' RESPONSIBILITYSTATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956, the Board of Directors of your Company confirm that:

1. In the preparation of accounts, the applicable accounting standards have been followed and that there are no material departures;

2. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as of March 31, 2013, and the profit of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of your Company, and for preventing and detecting fraud and other irregularities; and

4. The Annual Accounts of your Company have been prepared on an on-going concern basis.

ACKNOWLEDGEMENT

The Directors wish to place on record their appreciation of the continued support and co-operation received from Financial Institutions, Banks, Government authorities and other stakeholders. Your Directors also acknowledge the support extended by your Company''s employees for their dedicated service.

For and on behalf of the Board

Place : Mumbai C. K. MEHTA

Date : May 9, 2013 Chairman


Mar 31, 2012

The Directors have the pleasure of presenting your Company's Forty First Annual Report, together with the Audited Statement of Accounts for the financial year ended March 31, 2012.

FINANCIAL Results

2011-12 2010-11 (Rs in Lacs) (Rs in Lacs)

Sales & Other Income 79,273.32 67,741.60

Gross Profit (before interest, 5,810.85 6,216.88 depreciation, impairment and tax)

Less :

(i) Interest 943.27 551.18

(ii) Depreciation 1,778.58 1,813.38

(iii) Impairment (69.60) 156.64

(iv) Provision for Tax

- for the Year

- Current Tax 749.51 1,162.95

- Deferred Tax 72.70 (165.90)

- Prior Year

- Current Tax 28.11 150.38

- Deferred Tax - (31.46)

Profit After Tax 2,308.28 2,579.71

Add: Surplus in Statement of Profit & Loss Brought Forward 10,895.27 9,545.22

Amount available for appropriation 13,203.56 12,124.96

Appropriation :

Dividend 627.82 627.82

Corporate Dividend Tax 101.85 101.85

General Reserve 500.00 500.00 (as required by Section 205 (2A) of the Companies Act,1956)

Balance carried to the Balance 11,973.89 10,895.29 Sheet 13,203.54 12,124.94

dividend

Your Directors are pleased to recommend the payment of a dividend of Rs 6.00 (Rupees six) per equity share {same as in the previous year i.e. Rs 6.00 (Rupees six) per equity share} on 1,04,63,679 Equity Shares.

The dividend, if approved along with the Corporate Dividend Tax, will absorb a sum of Rs 729.67 lacs (Previous year Rs 729.67 lacs).

THE YEAR IN RETROSPECT

Notwithstanding the challenging operating environment that prevailed, FY 2011-12 was a year of steady progress for your Company as turnover increased by 18%. Turnover grew to Rs 776.91 crores from Rs 661.08 crores in the previous year to touch a new high. This increase in turnover was driven by increased volume off-take, contribution from emerging product lines like Fuel Additives and Xylidines, as well as efforts to expand its base in new geographies like U.S. and China. Volume growth was achieved by de-bottlenecking activities undertaken in earlier years. The Fuel Additives business also touched a new high during FY 2011-12, generating a revenue of almost Rs 100 crores as compared to Rs 63 crores in the previous year. The share of overall revenue contributed by the domestic market decreased from 58% to 56%, and in absolute terms, revenue grew from Rs 390 crores in FY 2010-11 to Rs 439 crores in FY 2011-12. While the share of exports to total revenues increased from 42% to 44%, revenue increased significantly on an absolute basis from Rs 282 crores to Rs 350 crores.

The Profit before Interest, Depreciation, Impairment and Tax for the year was Rs 58.11 crores compared to Rs 62.17 crores in previous year, and Profit After Tax for the year was Rs 23.08 crores as against Rs 25.80 crores in FY 2010-11. Earnings per Share stood at Rs 22.06 in FY 2011-12, as compared to Rs 24.65 per Share in FY 2010-11.

The year under review threw up varying operating conditions for countries around the world. Continued stagnation in the developed economies, intensification of the Eurozone debt crisis, persistent inflation in emerging markets and the events in the Middle East led to sluggish demand. However, your Company's business showed remarkable resilience, mainly on account of a robust domestic demand and because of the fact that a majority of the Company's exports in Europe are to economically stronger countries such as Germany and Switzerland. Further, exports to markets such as the U.S. and China are still at a nascent stage but your Company is confident of growing on the small base established in these countries.

In the domestic markets, your Company saw continued demand from agrochemicals, pharma and dyes & pigments segments, as well as growth in products like Fuel Additives and Xylidines.

While revenue growth was good, given the prevailing circumstances, profitability was muted due to price increases in raw materials, firming up of interest rates and fluctuations in foreign exchange rates. However, these pressures are showing signs of moderating and your Company is confident of improved margins, going forward.

During the year, your Company also continued to make steady progress on key strategic initiatives. A key area of your Company's focus, over the last few quarters, has been expansion, for which it has tied up US $ 45 million in ECBs at competitive rates for greenfield and brownfield projects at Dahej and Nandesari respectively. Once these projects become functional, your Company is hopeful of crossing revenues of the Rs 1,000 crore mark in the near future.

Your Company has steadfastly maintained its policy of taking adequate measures to hedge currency risk, as a significant part of its revenues come from exports.

A detailed review of the performance during the year is given under the section Management Discussion and Analysis Report.

GREENFIELD EXPANSION

Your Company had embarked on a greenfield expansion at Dahej by establishing a new facility which would be a forward integration step of its Fine & Speciality Chemical - DASDA for manufacturing Optical Brightening Agents (OBA). With the completion of this greenfield project at Dahej, your Company will be amongst the few fully integrated players in the world to be present across the entire value chain from Toluene to Optical Brightening Agent - OBA (Toluene -> PNT -> DASDA -> OBA). This plant will enable your Company to penetrate deeper into the global markets which is estimated at Rs 4200 crores. The project is well on track and it is expected to be operational by FY 2013.

brownfield expansion

Your Company through its brownfield expansion has achieved a dual purpose of expanding the production capacity and also foraying into a new business segment (Heat storage related Solar Salts).

Your Company's existing facility of Sodium Nitrite is operating at almost full capacity. This expansion will enhance the manufacturing capacity by at least 50%. The additional production will cater mainly to the high price export market.

Your Company is also embarking on a new business segment i.e. heat storage related Solar Salts. It is creating a capacity which would make it capable of manufacturing sodium and potassium nitrate of advanced quality, matching the needs of Solar Industry. The demands for such solar salts would be project based particularly where solar companies are targeting peak power supply. A part of this facility has been commissioned in FY 2012.

FINANCE

Your Company has availed External Commercial Borrowing (ECB) of USD 45 million for the projects at very competitive rates. Out of the above, USD 40 million has already been drawn.

Effective Working Capital management has always been a key aspect of your Company's growth plan, especially in the last few years. This focus has enabled your Company to reduce its interest costs significantly over the years and the gearing is also very comfortable with debt-equity ratio of 0.68.

As a result, the cash flows of your Company have improved and it has enough leveraging ability for its expansion plans.

ICRA has re-affirmed your Company's short term rating at A1 and long term rating at LA .

DIRECTORS

During the year under review, Shri Shrenik K. Lalbhai resigned from the directorship of the Company with effect from May 25, 2011, due to his advancing age. The Board of Directors place on record their sincere appreciation for Shri Shrenik K. Lalbhai's valuable contribution and guidance provided as a Chairman of the Company from 1 971 to 1 998 and as a Director of the Company thereafter. Under the able leadership of Shri Shrenik K. Lalbhai, your Company made progress and earned its name not only at the national level but has achieved international acclaim too.

In accordance with the provision of the Companies Act, 1956 and those contained in the Articles of Association of your Company, Shri C. K. Mehta and Shri Sudhir Mankad retire by rotation at the 41st Annual General Meeting and being eligible, offer themselves for re-appointment.

Shri Hasmukh Shah, who is also due to retire by rotation has indicated his desire not to seek re-appointment.

Shri Shah was associated as a Director with your Company since October 21, 2003. The Board of Directors place on record their sincere appreciation of the valuable services rendered, advice given and contribution made by Shri Hasmukh Shah towards the growth of the Company and also his commitment to social work for the betterment of the society. It is proposed not to fill the vacancy so caused in the Board of Directors.

Shri S. K. Anand was appointed as an Additional Director by the Board of Directors on November 4, 2011. Under the provisions of Section 260 of the Companies Act, 1956 and Article 127(a) of the Articles of Association of your Company, Shri Anand holds office up to the date of forthcoming Annual General Meeting. Your Company has received a notice in writing from a Member proposing the candidature of Shri S. K. Anand for his appointment as Director of your Company. The Resolution seeking approval of the members for appointment of Shri S.K. Anand as a Director of your Company has been incorporated in the Notice of the forthcoming Annual General Meeting.

FIxED DEPOSITS

The total amount of Fixed Deposits held by your Company from the Shareholders and public was Rs 17.87 crores as at March 31, 2012 (Rs 24.33 crores). Your Company does not have any deposits which are matured and claimed but remain unpaid.

CORPORATE GOvERNANCE

Your Company believes in maintaining the highest standards of Corporate Governance.

A Report on Corporate Governance as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges

forms part of this Annual Report. A Certificate from the Statutory Auditors of your Company confirming compliance of the conditions of Corporate Governance, as stipulated under the aforesaid Clause 49, is annexed to the Report on Corporate Governance.

RESEARCH & DEvELOPMENT

Your Company plays strong emphasis on Research & Development and innovation as levers for value creation. Your Company has a world-class set-up, including a dedicated pilot plant at Roha primarily for the purpose of Research and Development. Its continued focus on R&D has been yielding rich dividends and Fuel Additives, which were developed in-house, have alone contributed to nearly Rs 100 crores in revenue this year. Your Company invests around 1% of its revenues in R&D each year and is working on several initiatives, which it hopes to commercialise in the ensuing financial years.

SAFETY, HEALTH & ENvIRONMENT

Your Company takes matters of safety, health and environment very seriously. There is great emphasis on the well-being of all employees and the health of employees is consistently being monitored. Your Company's facilities are monitored on a regular basis to ensure a safe working environment.

With the ever increasing threat of pollution caused due to factories all over India, it is your Company's constant endeavour to focus strongly on pollution control, treatment of effluents and compliance of stringent environmental norms. Adherence to these is of utmost importance not only to your Company but also to its customers and has contributed to the stability of your Company's relationships with world class international companies.

Your Company is committed to sustainable development and is a signatory to Global Responsible Care Core Principles. These principles, inter alia, govern technology, processes and products to minimise the impact to overall environment and to enhance sustainability. Your Company is committed to the Responsible Care Programme to achieve established goals, targets and objectives with due consideration for the environment.

HUMAN RESOURCES

Your Directors are pleased to inform that industrial relations at all manufacturing and other locations remained amicable during the year under review. Your Company's initiatives to provide a constructive work environment enables it to attract and retain employees with high potential and calibre.

Your Company recognises that its people are central to its growth strategy and all efforts are made to attract and retain the best talent in the industry. Your Company's human resource policy is focussed on the development of the skill-sets of the individuals, keeping the morale and performance level high, providing employees the platform for personal growth within the organisation, suitably recognising and rewarding individual achievements, while simultaneously addressing the business needs of your Company.

CONSERvATION OF ENERGY & TECHNOLOGY ABSORPTION AND Foreign ExCHANGE EARNINGS AND OUTGO

As required by the Companies (Disclosure of particulars in the Report of Board Directors) Rules, 1988, the relevant data pertaining to the conservation of energy, technology absorption and foreign exchange earnings and outgo is given in Annexure 'A' forming part of this report.

INSURANCE

All the insurable interests of your Company, including inventories, buildings, plant and machinery, are adequately insured against risk of fire and other risks.

CORPORATE SOCIAL RESPONSIBILITY

Deepak Foundation is a CSR initiative of your Company. Having worked in the areas of maternal and child health for the past 28 years, the Foundation has taken a major stride forward by establishing a Public Health Training Institute in Vadodara.The institute was established within a year of signing an MoU with the Department of Health & Family Welfare.

The core activity of PHTI comprises four major divisions: 1) Training and Capacity Building 2) Research and Surveillance,

3) Clinical Services and 4) Livelihood.

The Foundation was accredited by Credibility Alliance and also certified as an ISO 9001:2008 organisation during the year.

AUDITOR'S REPORT

The Auditor's Report to the Shareholders, read together with relevant notes thereon, are self-explanatory and do not contain any qualifications and hence do not call for any comments under section 217 of the Companies Act, 1956.

AUDITORS

The Auditors, M/s. B.K. Khare & Company, Chartered Accountants, Mumbai, hold office until the conclusion of the 41st Annual General Meeting and are recommended for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be in the limits prescribed under section 224 (1B) of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, the Board of Directors of your Company confirm that:

1 . In the presentation of annual accounts for the year ended March 31, 2012 the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as of March 31, 2012 and of the profit of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The annual accounts of the Company have been prepared on a going concern basis.

PERSONNEL

The Board of Directors wishes to express their appreciation for the outstanding contribution made by the employees to the operations of your Company during the year.

The information required under section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this report. However, under the terms of Section 219(1) (b) (iv) of the Companies Act 1956, the Report and Accounts are being sent to all Shareholders of the Company, excluding the statement of particulars of the employees. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company.

acknowledgement

Your Directors wish to acknowledge the contributions of all the stakeholders and are grateful for the co-operation of various government authorities, excellent support received from shareholders, banks, dealers and other business associates. Your Director recognise and appreciate the significant contributions made by employees at all levels through their competence, perseverance and hard work that has enabled your Company to reach the new highs in a very challenging environment.

For and on behalf of the Board

Place : Mumbai C. K. MEHTA

Date : May 4, 2012 Chairman


Mar 31, 2011

Dear Shareholders,

The Directors have pleasure in presenting the Fortieth Annual Report, together with the Audited Statement of Accounts, for the financial year ended March 31, 2011.

FINANCIAL RESULTS 2010-11 2009-10

(Rs.) (Rs.)

Sales & Other Income 677,41,61,732 546,45,78,360

Gross Profit (before interest, depreciation impairment and tax) 62,16,89,900 54,48,93,709

Less :

(i) Interest 5,51,18,788 6,66,12,600

(ii) Depreciation 18,13,38,236 17,51,01,574

(iii) Impairment 1,56,63,955 -

(iv) Provisions for Taxation

- For the Year

Current Tax 11,62,95,000 6,92,71,000

Deferred Tax (1,65,90,000) 2,12,02,000

- Prior Year

Current Tax 1,50,38,000 3,20,84,675

Deferred Tax (31,46,000) (1,95,15,000)

Profit After Tax 25,79,71,620 20,01,36,860

Add: Surplus in Proft & Loss Account Brought Forward 95,45,22,378 86,53,93,344

Amount available for appropriation 121,24,93,998 106,55,30,204 Appropriation :

Dividend 6,27,82,074 5,23,18,395

Corporate Dividend Tax 1,01,84,822 86,89,431

General Reserve 5,00,00,000 5,00,00,000 (as required by Section 205 (2A) of the Companies Act,1956)

Balance carried to the Balance Sheet 108,95,27,102 95,45,22,378

121,24,93,998 106,55,30,204

DIVIDEND

Your Directors are pleased to recommend the payment of a dividend of Rs. 6.00 (Rupees Six) per equity share (as against Rs. 5.00 (Rupees Five) per equity share in the previous year) on 1,04,63,679 Equity Shares.

The dividend, if approved along with the Corporate Dividend Tax, will absorb a sum of Rs. 729.67 lacs (Previous year Rs. 610.07 lacs).

THE YEAR IN RETROSPECT

This financial year 2010-2011 has laid an excellent foundation for your Company's plans for the years ahead. Your Company's revenue has grown by 24% to Rs. 660.46 crore when compared to revenues of Rs. 532.36 crore in the previous year. This was largely driven by strong demand in the domestic market which saw its domestic revenues increase from Rs.292.88 crore in FY 2009-10 toRs.390.34crore in FY 2010-11. The share of overall revenue contributed by the domestic market has increased from 54% to 58%. While the share of exports to total revenues has reduced to 42% when compared to 46% in the previous year, the gross revenue has increased significantly on an absolute basis to Rs. 130.03 crore. This portrays significant expansion in the top line numbers which has crossed the Rs. 600 crore mark during the year. The strong growths in revenues were largely driven by expansion in volumes which grew by 23%.

The Profit before Interest, Depreciation, Impairment and Tax for the year was Rs. 62.17 crore compared to Rs. 54.49 crore in previous year and Profit After Tax for the year was Rs. 25.80 crore compared to Rs. 20.01 crore in FY 2009-10. The Earnings per Share was Rs. 24.65 in FY 2010-11 compared to Rs.21.82 per share in FY 2009-10.

The global economy has encountered many unsettling events in the past year. Events like the unrest in the Middle East saw oil prices hitting USD 90 a barrel in January. Although the Indian economy has experienced very high growth this year, inflation remains a worry. Your Company has not been affected to a great extent and has taken necessary steps to mitigate the effects of these events.

Your Company continues to make significant inroads into China and USA. Although China is considered to be the epicenter of global manufacturing and is an extremely competitive market, we have been able to leverage strengths in quality, process expertise and environmental awareness to make inroads into the Chinese market. Exports to China during the year stood at Rs. 35 crore, while exports to USA this year stood at Rs.45 crore.

By catering to markets such as India, Europe, China and USA, your Company will be catering to the largest markets across the globe. Fuel Additives business continues to be promising despite the current global tensions, and your Company has made significant progress in all Aviation Fuels, Petrol Blending as well as Diesel Blending. Turnover from this business segment was around Rs. 63 crore during the year, and your Company sees a higher growth potential in this business for the current year.

Your Company continues to strive for in-house development of its products. The focus to develop new products, through expenditure of around 1% of its revenues, has led to successful creation of products like Fuel Additives, Xylidine Derivatives and Nitro Sulphuric Acid.

The business outlook remains strong as your Company anticipates the healthy demand for its products to continue. It has drawn up an expansion plan which will incorporate Green field expansion at Dahej and Brown field expansion at Nandesari at an estimated combined expenditure of around Rs. 200 crore.

Your Company has maintained its policy of taking adequate measures to hedge currency risk as a significant part of its revenues comes from exports.

A review of the performance during the year is given under the section Management Discussion and Analysis Report.

FINANCE

Effective Working Capital management has always been a key aspect in your Company's operations, especially in the last few years. Your Company has been able to reduce its interest costs significantly and its debt to equity ratio has been more or less stable, being 0.25 as compared to 0.30 for the preceding year. As a result the cash flows of your Company have improved and it has enough leveraging ability for its capacity expansion plans at Dahej.

You will be pleased to know that ICRA has upgraded your Company's short term rating from A1 to A1 and long term rating from LA to LA .

LISTING

During the year under review, the Equity Shares of your Company were listed on the National Stock Exchange of India Limited (NSE) with effect from September 29, 2010. This would facilitate the investors across the country to trade in Company's Equity Shares more conveniently.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and those contained in the Articles of Association of the Company, Shri M. R. B. Punja, Shri Berjis Desai and Dr. Richard H. Rupp retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

FIXED DEPOSITS

The total amount of Fixed Deposits held by your Company from the Shareholders and the Public was Rs. 24.33 crore as at March 31, 2011 (Rs. 27.03 crore). Your Company does not have any deposits which are matured and claimed but remain unpaid.

CORPORATE GOVERNANCE

Your Company believes in maintaining the highest standards of Corporate Governance. A Report on Corporate Governance as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges forms part of this Annual Report. A Certificate from the Statutory Auditors of the Company

confirming compliance of the conditions of Corporate Governance as stipulated under the aforesaid Clause 49, is annexed to the Report on Corporate Governance.

RESEARCH & DEVELOPMENT

Research & Development has always been a key focus area for your Company. Your Company strongly believes that it is through investment in its in-house Pilot Plant at Roha that your Company is able to develop competitive products. About 1% of its revenues go towards R&D. One of your Company's key developments last year was in the Fuel Additives sector. Your Company achieved revenue of around Rs. 63 crore through these products.

SAFETY, HEALTH & ENVIRONMENT

It is very important for a company with the scale and size of your Company to maintain top most standards with regards to safety. Safety of employees is paramount especially in the chemicals business and your Company takes utmost care in this department by not only following standard rules and regulations but also going above and beyond. All the plants and facilities of your Company are monitored on a regular basis to ensure safety of personnel. Your Company continues to focus on pollution control, treatment of effluents and compliance of stringent environmental norms.

Your Company's plant at Roha has received an award from National Safety Council-Maharashtra Chapter, for best safety performance.

Your Company recognises the importance of good environmental practices and strives to be on par with the best-in-class across the globe. Your Company's focus on environmental care is a USP for its global customers. This ensures that our industry gradually moves towards sustainable business practices.

Your Company is committed to sustainable development and Global Responsible Care Core Principles inter alia governing the technology, processes and products to minimise impact to the overall environment and to enhance sustainability. Responsible Care certification programme is at advanced stage of completion.

HUMAN RESOURCES

Your Company continues to regard human capital as its strategic resource. Sustained and focused efforts have been made to use in-house training programs, external professional development program and on-job training for up-gradation of the human capital. The inculcation of performance-based culture has been the high-priority area during the year.

In view of the ambitious growth plans, your Company has made significant addition to its Technology Skill base. Your Company has the requisite competencies to embark on a rapid and sustainable growth path.

Your Company continues to enjoy harmonious industrial relationship which has helped in scaling new levels of productivity.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required by the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 the relevant data pertaining to the conservation of energy, technology absorption and foreign exchange earnings and outgo are given in Annexure 'A' forming part of this report.

INSURANCE

All the insurable interests of your Company including inventories, buildings, plant and machinery are adequately insured against risk of fire and other risks.

COMMUNITY SERVICE

Your Company remains committed to social development through Deepak Foundation.

Deepak Foundation has been implementing health and livelihood projects in rural areas of Vadodara district, Gujarat, since past 28 years. Currently it provides services in all 1548 tribal and rural villages of the district covering a two million populace. The Foundation undertakes most of its ventures in partnership with concerned government departments to ensure sustainability and replicability of the initiatives.

The Foundation was instrumental in strengthening of community-based groups at Primary Health Center level (75), Block level (12) and District level (1) and was, the first in the entire State, to facilitate formulation of need-based, decentralised District Health Action Plan.

AUDITOR'S REPORT

The Auditor's Report to the Shareholders, read together with relevant notes thereon, are self-explanatory and do not contain any qualifications, and hence do not call for any comments under section 217 of the Companies Act, 1956.

AUDITORS

The Auditors, M/s. B.K. Khare & Co., Chartered Accountants, Mumbai, hold office until the conclusion of the 40th Annual General Meeting and are eligible for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be in accordance with the limits prescribed under section 224 (1B) of the Companies Act, 1956. Members are requested to consider their re-appointment and fix their remuneration in the ensuing Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

As required by sub-section (2AA) of section 217 of the Companies Act, 1956, the Board of Directors of your Company confirm that:

1. In the presentation of annual accounts for the year ended March 31, 2011, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of the profit of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with provisions of the Companies Act 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The annual accounts of the Company have been prepared on a going concern basis.

PERSONNEL

The Board of Directors wish to express their appreciation for the outstanding contribution made by the employees to the operations of your Company during the year.

The information required under Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, forms part of this report. However, under the terms of Section 219(1) (b) (iv) of the Companies Act 1956, the Report and Accounts are being sent to all Shareholders of the Company excluding the statement of particulars of the employees. Any Shareholder interested in obtaining a copy of the same may write to the Company Secretary at the Registered Office of the Company.

ACKNOWLEGDEMENT

Your Directors wish to acknowledge the contributions of all the stakeholders and are grateful for the co-operation of various government authorities, excellent support received from shareholders, Banks, Dealers and other business associates. Your Directors recognise and appreciate the hard work and efforts put in by all the employees of the Company and their contribution to the progress of the Company in a very challenging environment.

For and on behalf of the Board

Place : Mumbai C. K. MEHTA

Date : May 6, 2011 Chairman


Mar 31, 2010

The Directors have pleasure in presenting the Thirty Ninth Annual Report, together with the Audited Statement of Accounts, for the financial year ended 31st March, 2010.

FINANCIAL RESULTS 2009-10 2008-09

Rs. Rs. Sales & Other Income 546,45,78,361 582,89,44,185 Profit before Interest, Depreciation, Impairment and Tax 54,48,93,709 78,38,09,733 Less: (i) Interest 6,66,12,600 15,08,34,056 (ii) Depreciation 17,51,01,574 16,99,48,129 (iii) Impairment - 3,44,59,823 (iv) Provision for Taxation For the Year Current Tax 6,92,71,000 15,16,48,446 Deferred Tax 2,12,02,000 (2,74,50,638) Prior Year CurrentTax 3,20,84,675 15,17,000 Deferred Tax (1,95,15,000) - MAT Set off Reversal - 1,73,51,554 Fringe Benefit Tax - 27,00,536 Profit After Tax 20,01,36,860 28,28,00,826 Add: Surplus in Profit & Loss Account Brought Forward 86,53,93,344 68,50,82,869 Amount available for appropriation 106,55,30,204 96,78,83,695

Appropriation: Dividend 5,23,18,395 4,48,65,465 Corporate Dividend Tax 86,89,431 76,24,886 General Reserve 5,00,00,000 5,00,00,000 (as required by Section 205(2A) of the Companies Act, 1956) Balance carried to the Balance Sheet 95,45,22,378 86,53,93,344 106,55,30,204 96,78,83,695

DIVIDEND

Your Board of Directors are pleased to recommend the payment of dividend of Rs. 5.00 per Equity Share on the enhanced Equity Share Capital of 1,04,63,679 Equity Shares (post conversion of Warrants into Equity Shares) (Previous year: Rs. 5.00 per Equity. Share on 89,73,093 Equity Shares).

The dividend, if approved along with the Corporate Dividend Tax, will absorb a sum of Rs. 610.07 lacs (Previous year Rs. 524.90 lacs).

THE YEAR IN RETROSPECT

Financial Year 2009-10 has been an eventful year for your Company. The turnover for the year was Rs. 532 crores compared to Rs. 572 crores in the previous year. The export turnover for the year was Rs. 250 crores compared to Rs. 304 crores in the previous year. Your Company has been able to increase the quantitative volumes by more than 20% compared to the previous year.

The Profit before Interest, Depreciation, Impairment and Tax for the year was Rs. 54.49 crores compared to Rs. 78.38 crores in previous year and Profit After Tax for the year was Rs. 20.01 crores compared to Rs. 28.28 crores in the previous year. The Earning Per Share was Rs.21.82 compared to Rs.31.55 in the previous year on an enhanced capital following the conversion of Warrants during the year under review.

The Financial Year 2009-10 threw up several challenges for your Company. At the start of the year, the global economy was still reeling under the impact of the financial crisis and hence, the outlook was subdued. The general elections in India in May 2009 were an inflection point for the Indian economy and marked the beginning of the revival in the capital markets. As the year went by, several other regions around the world began to report an improvement in economic performance. Thus, the operating environment underwent several changes in the span of a single financial year. As your Company caters to various markets globally, it was faced with markets that were recovering in different ways and at different speeds.

Your Company was able to grow volumes due to its emphasis on high potential markets like China, where we see significant opportunities in select product categories. The opportunity is significantly larger than the domestic market and your Companys focus is to continue to make steady progress in those market. During the year under review, the turnover from the Chinese market has more than doubled to Rs. 42 crores, as compared to the previous year.

However, the recession has been a catalyst for change in the global economy. It has helped to enhance the attractiveness and competitiveness of emerging markets as a competent sourcing centres for a variety of products and services. Specific to the Speciality Chemicals Industry, it has forced the leading companies in the world to re-examine their business models. While your Company has responded well to the challenges thrown up by changes in the world economy, it has also undertaken several initiatives to take its performance forward. The introduction of products catering to the fuel additives space has helped to add incremental revenues during the year. These products have been developed through expertise in processes like hydrogenation and nitration. Your Company has also decreased its interest outgo by 56% through enhanced working capital management and has repaid some debts to further reduce its leverage. Lastly, there has been a concerted effort to undertake de-bottlenecking at the existing facilities to improve the potential performance of your Company. Further plans include enhancement of capacity at existing plants and setting up of a Greenfield facility atDahej.

During the year under review, a new hydrogenation stream was set up at Taloja Chemicals Division thereby enhancing the

capacity by 40%. Your Company also commissioned a Coal Fired Boiler at its Nandesari Plant to reduce energy consumption.

Your Company, being a net exporter, has taken adequate measures to hedge the currency risk.

A review of the performance during the year is given under the section Management Discussion and Analysis which forms part of the Annual Report.

CONVERSION OF WARRANTS INTO EQUITY SHARES

During the year under review, your Company has converted 14,90,586 Detachable Warrants, which were issued alongwith the Right Shares in the year 2006, into Equity Shares of Rs. 10/- each. These Detachable Warrants were converted into Equity Shares at a conversion price of Rs. 100/- for each Warrant i.e. face value Rs. 10/- and premium Rs. 90/- per Equity Share. Post conversion of Warrants, the Issued, Subscribed and Paid-up Share Capital of your Company has enhanced from Rs. 8.96 crores divided into 89,63,233 Equity Shares of Rs. 10/- each to Rs. 10.45 crores divided into 1,04,53,819 Equity Shares of Rs. 10/- each.

FINANCE

Your Company has focused on more effective working capital management in recent financial years resulting in improved free cash flows. The improved performance of your Company is also resulting in higher internal accruals. During the year under review, your Company repaid the term loan instalments of Rs. 17.39 crores, net of exchange revaluation. Corporate Loan of Rs. 24.50 crores was raised during the year. The net debt equity ratio has further improved from 0.47 to 0.30.

During the year under review, your Company has received proceeds of Rs. 14.91 crores towards Conversion of Detachable Warrants into Equity Shares. The proceeds of the issue have been utilised for the purpose mentioned in the Letter of Offer for the Rights Issue.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and those contained in the Articles of Association of the Company, Shri Nimesh Kampani, Shri A. K. Dasgupta and Shri Sudhin Choksey retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment.

FIXED DEPOSITS

The total amount of Fixed Deposits held by the Company from the Shareholders and the Public was Rs. 27.03 crores as at 31 st March, 2010 (Rs. 23.63 crores in the previous year). Your Company does not have any deposits which are matured and claimed but remain unpaid.

CORPORATE GOVERNANCE

The Board of Directors of your Company is committed to ensure that the affairs of your Company are governed in the best interests of the Shareholders, and that all endeavours would be made to maintain transparency and fairness in all facets of its operations. Your Company is also conscious of its responsibility as a good Corporate Citizen, and assures that its operations would be guided by ethics and social values.

Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a Report on Corporate Governance with Auditors Certificate on Compliance with the conditions of Corporate Governance have been attached to form part of the Annual Report.

During the year the Ministry of Corporate Affairs, Government of India has issued Corporate Governance Voluntary Guidelines, 2009 for adoption by companies. These guidelines provide Corporate India a framework to govern themselves voluntarily as per the highest standards of ethical and responsible conduct of business.

Your Company has taken initiatives to adhere to the Corporate Governance Voluntary Guidelines, 2009 to ensure that the Company is run in the best interests of the shareholders and the society.

RESEARCH & DEVELOPMENT

Your Company maintains a steadfast focus on its R&D activities. It believes that its R&D initiatives can be instrumental in identification of new applications, new processes or new products which will enable it to differentiate itself from competitors. Therefore, your Company has invested meaningfully in R&D infrastructure and personnel and has developed and test marketed many products during the year under review.

During the year, your Company introduced a range of products applicable as fuel additives. Your Company has been able to enhance its competitiveness in the production of these fuel additives through its ability to improve the overall manufacturing process for these products. This was made possible through its R&D initiatives which have helped to increase efficiencies and reduce wastage, resulting in improvement of the overall process. Further, your Company also introduced a new range of Xylidines which have application in the Agro-chemical and Pharmaceutical segments.

SAFETY, HEALTH & ENVIRONMENT

Your Company maintains the highest standards of safety at all of its plants and facilities. In addition to this, there is significant focus on pollution control, treatment of effluents and compliance with stringent environmental norms. Lastly, there is emphasis on the well-being of all employees and health of the employees is continuously monitored, while environment improvement measures in and around the plant area have been given due care and attention.

Your Company is committed to sustainable development and is a signatory to Global Responsible Care Core Principles. These principles inter alia govern the technology, processes and products to minimise impact to the overall environment and to enhance sustainability. Your Company is committed to the Responsible Care Programme to achieve established goals, targets and objectives with due consideration for the environment.

HUMAN RESOURCE

Your Company regards Human Resource as its prime source and the contribution from the employees has continuously been harnessed for the attainment of corporate goals. A planned management process is being pursued to move towards a performance-based culture. Your Company attaches utmost priority to the Human Resource Development, with a focus on knowledge, skills and behavioural aspects to meet the challenges of change and growth successfully.

Focussed attention was given to knowledge updating and application of new technologies available to reduce costs and to meet business challenges. Industrial relations during the year under review were harmonious and cordial.

Your Company has improved the overall team with a focus on adding skill sets in the areas of Technology and Marketing, keeping in mind long term strategic needs.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Particulars pertaining to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, as prescribed under Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules,1988, are given in Annexure A forming part of this report.

INSURANCE

All the insurable interests of your Company including inventories, buildings, plant and machinery are adequately insured against risk of fire and other risks.

COMMUNITY SERVICE

Your Company remains committed to social development through Deepak Foundation. Deepak Foundation firmly believes in bringing about change through community participation and is now striving to involve the community in the cause of not only health but overall development. Having brought about remarkable improvement in institutional deliveries in remote tribal and rural areas of Vadodara district, Deepak Foundation is now actively involved in mentoring of Village and Health Sanitation Committees (VHSCs). The Safe Motherhood and Child Survival (SMCS) project initiated by the Foundation in 2004-05 aims at developing and strengthening community ownership and monitoring of health services as a well thought out sustainable plan of project activities.

Currently, 1494 VHSCs of the district are being supported and strengthened by the Foundation through organising monthly meetings, trainings and mentoring. A series of fourteen "Jan Samvads" (Public Dialogues^were organised in the district in coordination with block level federations and Jan Samvad Committees of VHSC members during the year 2009-10. Over 6200 people from the innermost villages of the district participated in these Samvads. Community contribution of more than Rs. 3.25 Lakh poured in and more than 2000 applications on issues of Water and Sanitation, construction of roads, health, electricity and Anganwadis were submitted to

various government departments.

The Foundation has launched an ambitious project, namely Kawant Livelihood Project (KALP), in the most underprivileged tribal block of the state i.e. Kawant, with an aim to provide livelihood opportunities to 60% of the 30,000 households of the block. Till date, more than 6000 beneficiaries have been reached through Rashtriya Krishi Vikas Yojana (RKVY) and Integrated Wadi Agricultural Diversification Project (IWADP). These projects have covered agriculture, horticulture, water resources and dairy components. A Skills Development Center in Kawant has trained about 150 students in various vocational courses like gardening and nursery making, paravet training, sewing and beauty parlour training. In the coming years, more than 25,000 beneficiaries will be reached through these sectors. Two large check-dams with 4 lift irrigation schemes will be constructed on River Kara in Kawant to improve the irrigation coverage.

During the year under review, your Company has contributed Rs. 75 lacs towards the promotion of various activities of the Foundation related to social welfare.

AUDITORS REPORT

The Auditors Report to the Shareholders, read together with relevant notes thereon, are self-explanatory and do not contain any qualifications, and hence do not call for any comments under Section 217 of the Companies Act, 1956.

AUDITORS

The Auditors, M/s. B.K. Khare & Co., Chartered Accountants, Mumbai, retire at the ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept office, if reappointed.

DIRECTORS RESPONSIBILITY STATEMENT

As required by Sub-Section (2AA) of Section 217 of the Companies Act, 1956, the Board of Directors of your Company confirm that:

1. In the presentation of Annual Accounts for the year ended 31st March, 2010, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2. Accounting policies selected were applied consistently. Reasonable and prudent judgments and estimates were made so as to give a true and fair view of the state of affairs of the Company as of 31 st March, 2010 and of the profit of the Company for the year ended on that date;

3. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

4. The Annual Accounts of the Company have been prepared on a going concern basis.

PARTICULARS OF EMPLOYEES

In terms of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees forms part of this report. However, having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act 1956, the Annual Report excluding the aforesaid information is being sent to all the Members of the Company and others entitled thereto. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

ACKNOWLEGDEMENT

Your Directors wish to gratefully thank and acknowledge the co-operation, assistance and support extended by the Central Government, the State Government, Financial Institutions, Companys Bankers, Customers, other Business Associates and Shareholders. Your Directors also wish to place on record their appreciation of the all-round co- operation, hard work and contribution made by the employees at all levels to the continued growth and prosperity of the Company.

Your Directors hope for such continued support from all the above partners in the coming years also.

For and on behalf of the Board Place : Mumbai C. K. MEHTA Date : 14th May, 2010 Chairman

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