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Directors Report of Dharamsi Morarji Chemicals Company Ltd.

Mar 31, 2016

DIRECTORS’ REPORT (Including Management Discussion and Analysis Report)

The Directors'' are pleased to present their Ninety Fifth Annual Report together with the audited financial statements of the Company for the financial year ended 31st March, 2016.

FINANCIAL RESULTS

Financial Year ended 31st March, 2016 Rs. in lacs

Financial Year ended 31st March, 2015 Rs. in lacs

Sales Turnover (Net of Excise Duty)

9980.35

11948.32

Gross Profit / (Loss)

1540.38

1784.73

Less : Depreciation

225.83

243.85

Less : Exceptional Items

-

142.60

Profit / (Loss) before Taxation

1314.55

1398.28

Less : Provision for Taxation (MAT)

117.38

-

Profit (Loss) after Taxation

1197.17

1398.28

Add: Balance brought forward

61.83

(1295.81)

Add : Depreciation in respect of Earlier Year as per the provision contain at 7 (b) of Schedule II to the Companies Act, 2013

Nil

(40.64)

Balance carried forward

1259.00

61.83

The following is the Sales Turnover (Net of Excise Duty) by group of products:

Commodity Chemicals

3932.34

3987.98

Speciality Chemicals

5714.07

7446.07

Others

333.94

514.27

Total

9980.35

11948.32

Dividend

Though Your Company has made profit during the year, in view of the balance of accumulated losses, your Directors have not recommended any Dividend on Cumulative Preference Shares and Equity Shares of the Company, for the financial year ended 31st March, 2016.

MANAGEMENT DISCUSSION & ANALYSIS REPORT INCLUDING PROSPECTS IN THE INDUSTRY

As predicted by all leading global and economic institutions, India is a bright star in the world and Indian economy is expected to grow at 7.5%. As in the past, Indian chemical industry is expected to perform well.

The company has followed a policy of revamping and re-modelling of the manufacturing capacity by judiciously following combination of productivity improvement of existing plants and manufacturing facilities and creation of new multipurpose and flexible manufacturing infrastructure ( capable of producing multiple products and capable of carrying out multiple processes) through fresh capital expenditure.

The Company''s specialty chemical business is driven by extensive product R & D and process innovations which are significantly different from those in case of commodity chemicals business.

The growth of specialty chemicals is driven by both domestic consumption and exports. The specialty chemicals, finding application across consumers, are driven by overall growth of Indian economy. Specialty chemical exports are growing as India has the potential of becoming an important manufacturing hub for such chemicals.

Large parts of the world are under turmoil and while your company has so far not faced any significant disruptions on the customer side, growth in areas such as EU is likely to be muted. Business has been expanded to other several countries so as to ensure a good geographical spread.

On the process development side, your company continues to focus on the Sulphur and Ethanol chemistry. The expertise gained over the years, especially in the safe handling of hazardous chemicals, is being commercially exploited. Products are being selected based on experience in manufacturing process developed over the years. This includes development of novel process, an improvement in specifications or cost effectiveness owing to backward integration or economies of scale. With specialization in chemistry, rather than a particular end use, your company is attempting to insulate from the business cycles of any one industry. With specialization in multiple and multipurpose processes and the new products, your Company is better insulated from the cyclical fluctuations in the Chemical Industry.

The falling crude oil prices has resulted in lower prices of downstream chemicals such as Benzene and Sulphur. Consequently your company was required to reduce the selling prices of finished products when the need arose, which has partly reflected in lower turnover during the financial year ended 31st March 2016 as compared to the previous year. Your Company had planned essential maintenance shut down which has also affected the performance during the 3rd quarter of the year under review.

Overview of operations Chemicals

The turnover of Commodity Chemicals during the current Financial Year ended 31st March, 2016 was slightly lower at Rs. 39.32 crores as compared to the turnover of Rs. 39.88 crores during the previous Financial Year. The turnover of Specialty Chemicals during the current Financial Year ended 31st March, 2016 was Rs. 57.14 crores as compared to Rs. 74.46 crores in the previous year. The Export turnover of the Company during the current Financial Year ended 31st March, 2016 was Rs. 39.11 crores as compared to Rs. 51.76 crores for the previous Financial Year.

Fertilizers

The Company''s fertilizer business viz. Single Superphosphate (SSP) continues to remain suspended / discontinued. Your Company however continues on moderate scale the brand licensing arrangement of the Company''s popular “SHIP - BRAND” of SSP Fertilizer.

Cautionary Statement

Statements in this “Management Discussion and Analysis Report” describing the Company''s objectives, projections, estimates, expectations or predictions may be considered as “forward looking statements” within the meaning of applicable security laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of the future performance and outlook.

ADEQUACY OF INTERNAL CONTROLS

Your Company has well laid down policies, guidelines and procedures which form part of its internal control system. The Audit Committee of the Board periodically reviews reports of Internal Auditors, inter alia, on adherence by the operating Management of such policies and procedures and suggests changes/modifications and improvements on a continuous basis. The Company has an independent and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and the transactions are authorized, recorded and reported correctly. The internal control systems are supplemented by a programme of internal audit.

HUMAN RESOURCE DEVELOPMENT

As part of ongoing exercise of the restructuring and re-organization of the Company''s business, the Company undertakes periodic comprehensive reviews of its HR policies and amends the same suitably from time to time, to meet the emerging business requirements. Special emphasis is being led continually on recruitment of multi-disciplinary and experience staff to carry forward the growth objectiveness of the Company. Regular training programmes are being held for the benefit of the staff and the workmen.

Your Company believes in a collaborative approach and works closely with the unions, and Industrial relations have been cordial during the year under review.

BOARD EVALUATION

The board of directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to the provisions of the Companies Act, 2013 (the Act) and the corporate governance requirements as prescribed by Securities and Exchange Board of India ( “ SEBI ” ) under Clause 49 of the Listing Agreement.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning etc.

The Board and the Nomination and Remuneration Committee (“NRC”) reviewed the performance of the “Chief Executive Officer” and “Manager” of the Company under the Companies Act, 2013.

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of non-executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performances of the Board, its committees and individual Directors were also discussed.

NOMINATION AND REMUNERATION POLICY

The Policy on Nomination and Remuneration of Directors, Key Managerial Personnel and other employees have evolved and have been formulated in terms of the provisions of the Companies Act, 2013 and the listing agreement with a view to pay equitable and commensurate remuneration to the Directors, Key Managerial Personnel and other Employees of the Company.

The Company passed through adverse financial condition which had an inevitable impact on the existing compensation and pay structure rather than the qualification, experience and the industry standards.

The Chief Executive Officer (CEO) of the Company is being paid in accordance with the provisions of the Companies Act, 2013 and Schedule V of the Companies Act, 2013 which prescribes the ceiling on the maximum permissible remuneration in respect of Companies having inadequate profits.

In view of the inadequacy of profits, the Directors of the Company are not being paid any remuneration/commission etc. except the normal sitting fees.

The Management of the Company will therefore take into consideration the various applicable factors such as qualification, experience, industry standards etc. and evolve an appropriate policy in course of time once the Company starts making adequate profits.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS BY COMPANY

During the financial year 2015-16, the Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of anybody corporate pursuant to Section 186 of the Companies Act, 2013. The Company has given advance against salary to some employees in terms of the applicable policies of the Company.

SEXUAL HARASSMENT

During the year under review, there was not a single incident under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal), Act, 2013.

MEETINGS

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

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

AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

DIRECTORS/KEY MANAGEMENT PERSONNEL

Shri Laxmikumar Narottam Goculdas (holding DIN 00459347), Director, is retiring by rotation in accordance with the requirements of the Act and under the Article 135 of the Articles of Association of the Company, and being eligible, offer himself for re-appointment.

Shri Shantilal Tejshi Shah an Independent Directors resigned on 10th August, 2016 due to his personal commitments. It is not proposed to fill up the vacancy at present, since the Company is still complied as regards composition of the Board.

The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Act. Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent director during the year.

During the year, the non-executive Directors of the Company had no pecuniary relationship or transactions with the Company.

The Company continues its operations under the leadership of the Senior Corporate Management Team comprising of Shri Bimal Lalitsingh Goculdas, Chief Executive Officer, Shri D. T. Gokhale, Executive Vice President and Company Secretary and Shri D. K. Sundaram, Chief Finance Officer, who are the Key Managerial Personnel.

The Nomination and Remuneration Committee, at its meeting held on 12th February, 2016 recommended and the Board of Directors of the Company at its Board Meeting held on 12th February, 2016 have re-appointed Shri Bimal Lalitsingh Goculdas, subject to the approval of the shareholders by way of special resolution ( in view of inadequacy of profits ) at the ensuing Annual General Meeting as “ Chief Executive Officer” and “Manager” of the Company within the meaning of the Companies Act, 2013, for a period of three years with effect from 1st April, 2016.

The proposed Remuneration and terms and conditions of appointment of Shri Bimal Lalitsingh Goculdas “Chief Executive Officer” and “Manager” of the Company are as per the provisions of the Companies Act, 2013 and Schedule V thereto as given in the Special Resolution at item no. 5 of the accompanying Notice of the Meeting and the particulars contained therein are in accordance with the disclosures as required as per Schedule V Part II, Section II of the Companies Act, 2013:

The Board recommends the Resolution at Item No. 5 of the accompanying Notice for approval by the Members of the Company.

WHISTLE BLOWER POLICY

The Company has a whistle blower policy to report genuine concerns or grievances. The Whistle Blower policy has been posted on the website of the Company (www.dmcc.com).

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year under review were at arm''s length basis and were in the ordinary course of business.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The Audit Committee and the Board of Directors at their meetings have reviewed and approved all the related party transactions undertaken by the Company during the Financial Year.

The related party transactions entered into by the Company are disclosed in Note no. XIII 7(E) of the Notes to Accounts.

All Related Party Transactions are placed/routed through the Audit Committee and the Board of Directors.

None of the Directors has any pecuniary relationships or transactions with the Company.

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

RISK MANAGEMENT POLICY

The Company has formulated a Risk Management Policy which reflects the overall risk management philosophy, the Company''s overall approach to risk management, risk assessment, risk mitigation mechanism and the roll and responsibilities for risk management. Risk management forms an integral part of the business planning and review cycle.

The Company''s Risk Management Policy is designed to provide reasonable assurance that objectives are met by integrating management control into the daily operations, by ensuring compliance with legal requirements and by safe guarding the integrity of the Company''s financial reporting and its related disclosures.

The identification and analysis of and putting in place the process for mitigation of these risks is an ongoing process. The Company has also laid down procedure to inform the Audit Committee and the Board about the risk assessment and minimization procedures. These procedures are periodically reviewed to ensure that executive management control risks by means of a properly defined frame work.

The monthly review meetings of all the functional/departmental heads interalia discuss the relative risk management issues.

INSIDER TRADING

In compliance with the provisions of SEBI (Prohibition of Insider Trading) Regulation 2015 and to preserve the confidentiality and prevent misuse of unpublished price sensitive information, the Company has adopted a code of conduct to Regulate, Monitor and Report Trading by Insiders (‘Insider Trading Code'') and code of Practices and Procedures for Fair Disclosure of unpublished Price Sensitive Information (‘Code of Fair Disclosure'').

The Insider Trading Code is intended to prevent misuse of unpublished price sensitive information by insiders and connected persons and ensure that the Directors and specified persons of the Company and their dependents shall not derive any benefit or assist others to derive and benefit from access to and possession of price sensitive information about the Company which is not in the public domain, that is to say, insider information.

The code of Fair Disclosure ensures that the affairs of the Company are managed in a fair, transparent and ethical manner keeping in view the need and interest of all the Stakeholders.

ENVIRONMENT HEALTH AND SAFETY (EHS)

In the Company, it has been our prime endeavour to achieve environment health and safety (EHS). We thrive to achieve the objective by ensuring accident free work place. We have various EHS management processes and methodologies being deployed and implemented under the EHS to ensure that our employees become more safety conscious and strive to improve the organization’s approach towards loss prevention.

The Company has a system of in house EHS training for employees and workmen at the factory as also the practice of sending the employees/ workmen to various external EHS programmes.

All these EHS endeavours help the Company in its efforts in preventing loss of life and property damage.

AUDITORS

Messers. K.S.Aiyar & Co., Chartered Accountants, holding ICAI Firm Registration Number 100186W, who are the Statutory Auditors of your Company, hold office until the conclusion of the 96th Annual General Meeting of the Company to be held in the year 2017 (subject to ratification of their appointment at every AGM). It is proposed to ratify the appointment of Messers. K.S.Aiyar & Co., Chartered Accountants, holding ICAI Firm Registration Number 100186W as Statutory Auditors of the Company from the conclusion of this AGM till the conclusion of the 96th AGM. Messrs. K.S. Aiyar & Co., Chartered Accountants, under Section 139 of the Act, furnished a certificate of its eligibility for re-appointment. The Members are requested, to ratify their appointment as Statutory Auditors and to authorize the Board of Directors to fix their remuneration. In this connection, the attention of the Members is invited to item No.3 of the Notice.

AUDITORS’ OBSERVATIONS

In respect of the Auditors'' observation (in quotes):

“The Company had recognized net deferred tax asset in earlier years aggregating to Rs.2654.15 lacs till 31st March, 2009, considering unabsorbed loss upto 31st March, 2008 and unabsorbed depreciation up to 31st March, 2009. For the subsequent financial periods, further net deferred tax asset has not been recognized in view of management’s perceptions and reason detailed in Note No.V(c). We are not in a position to opine on the realisability of the said net deferred Tax Asset. Consequently, the Accumulated losses as at the end of the year would have been higher by Rs.2654.15 Lacs”.

The managements perception and reasons are detailed in Note no.V(c), and the same is reproduced here below:

Deferred Tax Assets (Net)

The break-up of the Deferred Tax Liability / (Deferred Tax asset) as on 31.03.2016 and 31.03.2015, recognized by the Company in the books of account, is as follows:

Particulars

As at 31-03-2016 Rs. In Lacs

As at 31-03-2015 Rs. In Lacs

Deferred Tax Liabilities :

Difference between book and tax depreciation

1611.05

1611.05

Others

221.90

221.90

Total

1832.95

1832.95

Deferred Tax Assets :

Unabsorbed depreciation / Business loss

3610.68

3610.68

Others

876.42

876.42

Total

4487.10

4487.10

Net Deferred Tax Liabilities / (Deferred Tax Assets) :

(2654.15)

(2654.15)

The Company''s export business over the last three years has been steadily growing at an impressive rate. This has been possible due to appropriate marketing efforts coupled with quality consciousness on the part of the Company. The focused R & D activity to identify and develop relevant products meeting high quality standards has always remained vital to the Company''s business and efforts are undertaken to spread this message across the customer base both abroad as well as domestic. The Company is confident of improving the current growth rate substantially in overseas business in addition to consolidating the domestic market both in Speciality and Bulk chemicals. In the near term, the Company expects to achieve this objective by making use of the available unutilized capacity as well as building up additional capacity. The marketing team is also being strengthened. Consequently, there is virtual certainty of realization of “Deferred Tax asset” mainly resulting from unabsorbed depreciation and carried forward losses. Accordingly, the recognized “Deferred Tax Asset” of Rs.2654.15 Lacs as at 31.03.2009, without any addition, is being carried forward.

COST AUDITOR AND COST AUDIT REPORT

The Board of Directors, on the recommendation of Audit Committee has appointed Shri S.S. Dongare, Cost Accountant, as Cost Auditor of your Company to audit the cost accounts of the Company for Financial Year 2016-17 at remuneration of Rs. 66,000/- (Rupees Sixty Six Thousand Only) as also the payment of service tax as applicable and re-imbursement of actual out-of-pocket expenses incurred in connection with the aforesaid audit. As required under the Companies act, 2013, a resolution seeking members'' approval for the remuneration payable to the Cost Auditor forms part of the Notice convening the Annual General Meeting. In accordance with the requirement of the Central Government and pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company carries out an audit of cost records (Sulphuric Acid) maintained by the Company every year.

The cost Audit Report and the Compliance Report of your Company for the Financial Year ended 31st March, 2015, by Shri S.S. Dongare, Cost Accountant, which was due for filing with the Ministry of Corporate Affairs by 30th September, 2015, was duly filed on 12th October, 2015, accepted by the Government as filed in time.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as “Annexure I”.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

A Corporate Social Responsibility Committee of the Directors was constituted earlier consisting of Shri L. N. Goculdas as Chairman, Shri H. T. Kapadia, Shri M. T. Ankleshwaria and Shri A. W. Ketkar as members of the Committee.

During the current year the committee has been reconstituted with Ms. Mitika Laxmikumar Goculdas as Chairman, Shri H. T. Kapadia, Shri M. T. Ankleshwaria and Shri A. W. Ketkar as members of the Committee.

The Committee met once during the year and due to the average net profit of last three years being negative, your Company is not required to spend any amount towards Corporate Social Responsibility activities during the year under review, is annexed herewith as “Annexure II”.

However, as a gesture towards the Corporate Social Responsibility, the Company has donated an amount of Rs. 5,00,000/- (Rupees Five Lacs Only) to the Corbett Foundation for Assam Flood Relief.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed Shri A. D. Gupte, FCS No.300, and C.P.No. 1210 to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is included as “Annexure III” and forms integral part of this Report.

There is no qualification in the report of Secretarial Auditor, for the year under review.

PARTICULARS OF EMPLOYEES

The particulars of employees as required under section 197 and rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have not been furnished as there are no employees falling within the purview of the provisions of said section and the said rule during the period under review.

Information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in “Annexure IV” to this Report.

PUBLIC DEPOSITS

During the year 2015-16, your Company has not accepted/renewed any fixed deposit. The unclaimed deposits as on 31.03.2015 were Rs. 60,000/-. The Company had paid Rs. 20,000/- to depositors and paid/transferred Rs. 40,000/- to Investor Education and Protection Fund as required. Therefore no deposit has remained unclaimed as on 31 March, 2016.

DIRECTORS'' RESPONSIBILITY STATEMENT

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

(i) that in the preparation of the Annual Accounts for the year ended March 31, 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

(ii) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date;

(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) that the annual accounts have been prepared on a going concern basis;

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

(vi) that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good Corporate Governance over the years and the Board of Directors lay strong emphasis on transparency, accountability and integrity. Your Company has adopted a Code of Conduct which is approved by the Board of Directors as required under the Listing Agreement with the Stock Exchange, Mumbai. The Directors and the Management Staff have confirmed their adherence to the provisions of the said code. A separate report on Corporate Governance is annexed as a part of the Annual Report, along with the Auditors'' Certificate on its compliance.

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT-9, as required under Section 92 of the Companies Act, 2013, is included in this Report as Annexure-V and forms an integral part of this Report.

ACKNOWLEDGEMENTS

The Directors are thankful to your Company''s shareholders, customers, suppliers, and contractors, various departments of Central and State Governments and Banks for their continued valuable support. The relations between the employees and the management continue to be cordial. Your Directors place on record their appreciation of the sincere and devoted efforts of the employees at all levels and their continued co-operation, commitment, sense of understanding and the sacrifices made by them during the difficult and critical period which the Company is passing through. Management of your Company is confident that with the active co-operation from all the stake holder of the Company will be in a position to overcome this difficult phase.

For and on behalf of the Board

LAXMIKUMAR NAROTTAM GOCULDAS

Chairman

Registered Office

Prospect Chambers,

317/321, Dr. Dadabhoy Naoroji Road,

Fort, Mumbai 400 001.

Date : 10th August, 2016


Mar 31, 2013

The Directors are pleased to present their Ninety Second Annual Report, together with the accounts of the Company for the financial year ended 31st March, 2013.

FINANCIAL RESULTS

Financial Year ended Financial Year ended 31st March, 2013 31st March, 2012 Rs. in lacs Rs. in lacs

Sales Turnover (Net of Excise Duty) 8559.15 8132.75

Gross Profit / (Loss) 244.27 87.73

Less: Depreciation 509.96 486.06

Add: Non recurring items 3591.07 Nil

Profit/(Loss) before Taxation 3325.38 (398.33)

Less: Provision for Taxation

Profitl(Loss) after Taxation 3325.38 (398.33)

Add: Balance brought forward (6227.11) (5828.78)

Balance carried forward (2901.73) (6227.11)

The following is the Sales Tumover (Net of Excise Duty) by group of products:

Single Superphosphate Nil Nil

Commodity Chemicals 2972.70 4138.99 Specialty. Chemicals 4478.04 3176.95

Others 1108.41 816.81

Total 8559.15 8132.75

In view of the accumulated losses, your Directors have not recommended any Dividend on Cumulative Preference Shares and Equity Shares of the Company, for the financial year ended 31s1 March, 2013.

CORPORATE FINANCIAL RESTRUCTURING

In furtherance to the requisite approval of the shareholders of the Company obtained on 17th August, 2010, under Section 293(1) (a) of the Companies Act, 1956, for the sale/transfer/disposal of its land, factory buildings and plant and machinery at its Ambernath Factory, steps are being taken to complete Corporate Financial Restructuring. The Management is continuing its endeavors to complete the Corporate Financial Restructuring, with a view to improve the operational and financial performance of the Company.

ADEQUACY OF INTERNAL CONTROLS

Your Company has clearly laid down policies, guidelines and procedures which form part of its internal control system. The Audit Committee of the Board periodically reviews reports of Internal Auditors, inter alia, on adherence by the operating Management of such policies and procedures and suggests changes/modifications and improvements on a continuous basis. The Company has strong, independent and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal and the transactions are authorized, recorded and reported correctly. The internal control systems are supplemented''by a programme of internal audit.

HUMAN RESOURCE DEVELOPMENT

As an ongoing exercise of the restructuring and re-organisation, the Company undertakes periodic comprehensive reviews of its HR policies and amends the same suitably from time to time, to meet the emerging business requirements.

DIRECTORS/KEY MANAGEMENT PERSONNEL

Shri H.T Kapadia and Shri M.T.Ankleshwaria, Directors, are retiring by rotation under Article 135 of the Articles of Association of the Company and being eligible , offer themselves for re- appointment.

The Company continues -its operations under the leadership of the Senior Corporate Management Team comprising of Shri Bimal Lalitsingh Goculdas, Chief Executive Officer, Shri. D.T.Gokhale, Executive Vice President and Company Secretary and Shri D.K.Sundaram, Chief Finance Officer.

AUDITORS'' OBSERVATIONS

As regards the Auditors'' observation regarding the Deferred Tax Asset amounting to Rs. 2654.15 lacs as at the end of the Financial Year, ending 31s" March, 2009, it may please be noted that, thereafter, in view of the changed circumstances, the Company has not created any additional Deferred Tax Asset.

The Company''s Export Chemical business has been growing since last three years. The Company has also concentrated in R & D activity to identify and develop new products with high quality standards. The Company therefore expects to improve business growth in domestic and export markets at an increasing rate. The Company is also putting efforts in strengthening marketing strategy of the Company. In the circumstances , the Board of Directors reasonably expect, barring unforeseen circumstances, virtual certainty of realization of Deferred Tax Asset, mainly resulting from un- absolved depreciation and carried forward losses. Therefore, the said Deferred Tax Asset of Rs. 2654.15 Lacs as on 31st March, 2013 is being carried forward without any addition thereto since the Financial Year ending 31s1 March, 2009.

As regards the Auditors'' observation regarding non compliance with regard to the deposits accepted from public including non-filing of returns of Fixed Deposit, it may please be noted that the Company has not accepted or renewed any deposit from public and shareholders from the financial year 2006-2007 onwards and there is no default in respect of repayment of the matured Fixed Deposits and interest payable thereon. The Company has filed the Fixed Deposit Return on 261* June, 2013 for the Financial Year 2012-13.

The Company has also deposited all the unclaimed deposit amounts which are due for more than seven years with Investor Education and Protection Fund.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

As per Section 217 of the Companies Act, 1956, read with The Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange are given in the prescribed format as an Annexure-I to this report.

PARTICULARS OF EMPLOYEES

During the financial year ended 31" March, 2013 there was no employee within the purview of Sec.217(2A) of the Companies Act, 1956 read with The Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSITS

Out of the unclaimed deposits of Rs. 1826000/-as on 31st March, 2012, the Company has transferred/paid Rs. 1265000/-to Investor Education and Protection Fund as required. In addition, Rs.50000/- have been paid to the depositors, who claimed the same during the financial year 01.04.2012 to 31.03.2013. Therefore only 38 deposits aggregating to Rs. 511000/- have remained unclaimed as on 31st March, 2013.

AUDITORS

Mis. K. S. Aiyar & Co., Chartered Accountants, the existing Auditors have, under Section 224 (1-B) of the Companies Act, 1956, furnished a Certificate of their eligibility for re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors'' Responsibility Statement, it is hereby confirmed :

(i) That in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors 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 the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; .

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good Corporate Governance over the years and the Board of Directors lays strong emphasis on transparency, accountability and integrity. Your Company has adopted a Code of Conduct which is approved by the Board of Directors as required under the Listing Agreement with the Stock Exchange, Mumbai. The Directors and the Management Staff have confirmed their adherence to the provisions of the said code. Your Company has also evolved a Risk Management Policy regarding risk assessment and risk mitigation mechanism, which has been approved by the Board of Directors. A separate report on Corporate Governance is annexed as a part of the Annual Report, along with the Auditors'' Certificate on its compliance.

ACKNOWLEDGMENTS

The Directors are thankful to your Company''s shareholders, customers, suppliers, contractors, various departments of Central and State Governments and Banks for their continued valuable support.

The relations between the employees and the management continue to be cordial. Your Directors place on record their appreciation of the sincere and devoted efforts of the employees at all levels and their continued co-operation, commitment, sense of understanding and the sacrifices made by them during the difficult and critical period which the company is passing through.

Management of your Company is confident that with the active co-operation from all the stake holder of the Company, the Company will be in a position to overcome this difficult phase.

For and on behalf of the Board

LAXMIKUMAR NAROTTAM GOCULDAS

Chairman

Registered Office:

Prospect Chambers,

317/21, Dr. Dadabhoy Naoroji Road,

Fort, Mumbai - 400 001.

Date : 07th August, 2013.


Mar 31, 2012

The Directors are pleased to present their Ninety First Annual Report, together with the accounts of the Company for the financial year ended 31st March, 2012. (Twelve months)

FINANCIAL RESULTS

Financial Year Financial Year ended ended 31st March, 2012 31st March, 2011 (12 Months) (9 Months) Rs. in lacs Rs. in lacs

Sales Turnover (Net of Excise Duty) 8132.75 4295.80

Gross Profit/(Loss) 87.73 7.17

Less: Depreciation & Lenders' sacrifice Amortisation 486.06 486.70

Profit/(Loss) before Taxation (398.33) (479.53)

Less: Provision for Taxation - -

Profit/(Loss) after Taxation (398.33) (479.53)

Add: Balance brought forward (5828.78) (5349.25)

Balance carried forward (6227.11) (5828.78)

The following is the Sales Turnover (Net of Excise Duty) by group of products:

Single Superphosphate - 4.50

Commodity Chemicals 4138.99 2063.83

Specialty Chemicals 3176.95 1802.12

Others 816.81 425.35

Total 8132.75 4295.80

The financial statements for the previous financial year were prepared for a period of nine months commencing from 1st July, 2010 and ending on 31st March, 2011. Therefore, the Sales Turnover for the Financial Year ended 31st March, 2012 is not comparable with the Sales Turnover for the previous Financial Year ended 31st March, 2011 (9 months).

In view of the loss during the year under review, your Directors have not recommended any Dividend on Cumulative Preference Shares and Equity Shares of the Company, for the financial year ended 31st March, 2012.

CORPORATE FINANCIAL RESTRUCTURING

In furtherance to the requisite approval of the shareholders of the Company obtained on 17th August, 2010, under Section 293 (1) (a) of the Companies Act, 1956, for the sale/transfer/disposal of its land, factory buildings and plant and machinery at its Ambernath Factory, steps are being taken to complete Corporate Financial Restructuring. The Management is continuing its endeavors to complete the Corporate Financial Restructuring, with a view to improve the operational and financial performance of the Company.

ADEQUACY OF INTERNAL CONTROLS

Your Company has clearly laid down policies, guidelines and procedures which form part of its internal control system. The Audit Committee of the Board periodically reviews reports of Internal Auditors, inter alia, on adherence by the operating Management of such policies and procedures and suggests changes/modifications and improvements on a continuous basis. The Company has a strong, independent and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposal and that transactions are authorised, recorded and reported correctly. The internal control systems are supplemented by a programme of internal audit.

HUMAN RESOURCE DEVELOPMENT

As an ongoing exercise of the restructuring and re-organisation, the Company undertakes periodic comprehensive reviews of its HR policies and amends the same suitably from time to time, to meet the emerging business requirements.

DIRECTORS/KEY MANAGEMENT PERSONNEL

The Board regrets to inform the Shareholders about the sad and sudden demise of Shri D.N. Vaze, Chief Finance Officer of the Company, on 9th August 2012. He has been associated with the Company for the last many years in various capacities. He has been guiding force to the Management and staff of the Company. The Directors, the Management and the Employees of the Company are deeply grieved at the sad and sudden demise of Shri D.N. Vaze. The Board recognises and place on record their appreciation for his deep sense of commitment, loyalty towards the Company and the valuable contribution made by him in the Management of the Company, especially during the financial crisis which the Company had undergone.

Shri Arvind W. Ketkar and Shri Shantilal T. Shah, Directors, are retiring by rotation under Article 135 of the Articles of Association of the Company and being eligible, offer themselves for re- appointment.

The Board of Directors of the Company at its meeting held on 4th November, 2011, has appointed Ms. Mitika Laxmikumar Goculdas, as an additional Director on the Board of Directors of the Company. Ms. Mitika Laxmikumar Goculdas, is MBA (Finance) from Pennsylvania State University, USA. She has total work experience of 16 years including her stint as Vice President with Merrill Lynch both at USA and Dubai. She has experience in Finance, Industry and International Trade. As per provisions of Section 260 of the Companies Act, 1956 and Article 126 of the Articles of Association of the Company, Ms. Mitika Laxmikumar Goculdas, will hold office of Director upto the date of ensuing Annual General Meeting. Appointment of Ms. Mitika Laxmikumar Goculdas, as a Director liable to retire by rotation is proposed at Sr. No. 5 of the Notice of the ensuing Annual General Meeting. Your Directors recommend the appointment of Ms. Mitika Laxmikumar Goculdas, as Director of the Company.

Subject to the approval of the Shareholders, the Board of Directors of the Company at its meeting held on 2nd April, 2012 has re- appointed Shri Bimal Lalitsingh Goculdas (who is also a Managing Director of Borax Morarji Limited) as Chief Executive Officer and "Manager" of the Company within the meaning of the Companies Act, 1956 for a period of 3 years with effect from 1st April, 2012.

AUDITORS' OBSERVATIONS

As regards the Auditors' observation regarding recognition of "Deferred Tax Asset" amounting to Rs. 2654.15 lacs, the Company, based on the proposed association with a "Strategic Investor", is confident that this proposed association will result in significant additional revenue and profits.

As regards the Auditors' observation regarding Trade Receivables that could not be classified as outstanding for a period of more than six months from the due date instead of invoice date as required by the revised Schedule VI to the Companies Act, 1956, the Management is of the view that the revised classification does not have any material impact on the financial statements except for the Presentation and Disclosure of the same. However the necessary modification in the existing computer programme is being carried out and the same will be completed in due course of time during the current financial year 2012-2013.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

As per Section 217 of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange are given in the prescribed format as an Annexure-I to this report.

PARTICULARS OF EMPLOYEES

During the financial year ended 31st March, 2012 there was no employee within the purview of Sec. 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSITS

Out of deposits which matured during the financial year ended 31st March, 2012, 151 deposits aggregating to Rs. 18,26,000/- remained unclaimed as on 31st March, 2012, of which NH deposit amounting to Rs. Nil has since been claimed and repaid.

AUDITORS

M/s. K S Aiyar & Co., Chartered Accountants, the existing Auditors have, under Section 224 (1-B) of the Companies Act, 1956, furnished a Certificate of their eligibility for re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors 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 the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good Corporate Governance over the years and the Board of Directors lays strong emphasis on transparency, accountability and integrity. Your Company has adopted a Code of Conduct which is approved by the Board of Directors as required under the Listing Agreement with the Stock Exchange, Mumbai. The Directors and the Management Staff have confirmed their adherence to the provisions of the said code. Your Company has also evolved a Risk Management Policy regarding risk assessment and risk mitigation mechanism, which has been approved by the Board of Directors. A separate report on Corporate Governance is annexed as a part of the Annual Report, along with the Auditors' Certificate on its compliance.

ACKNOWLEDGMENTS

The Directors are thankful to your Company's shareholders, customers, suppliers, contractors, various departments of Central and State Governments and Banks for their continued valuable support.

The relations between the employees and the management continue to be cordial. Your Directors place on record their appreciation of the sincere and devoted efforts of the employees at all levels and their continued co-operation, commitment, sense of understanding and the sacrifices made by them during the difficult and critical period which the company is passing through.

Management of your Company is confident that with the active co-operation from all the stake holders of the Company, the Company will be in a position to overcome this difficult phase.

For and on behalf of the Board

LAXMIKUMAR NAROTTAM GOCULDAS Chairman

Registered Office:

Prospect Chambers, 317/21, Dr. Dadabhoy Naoroji Road, Fort, Mumbai - 400 001. Date :08th August, 2012.


Mar 31, 2011

Dear Members,

The Directors are pleased to present their Ninetieth Annual Report together with the accounts of the Company for the financial year ended 31 st March, 2011 (nine months).

FINANCIAL RESULTS

Financial Year ended Financial Year ended

31s'March, 2011 301h June, 2010

(9 Months) (15 Months)

Rs. in lacs Rs. in lacs

Gross Turnover 4743.72 6584.40

Gross Profit / (Loss) 7.19 (2387.21)

Less: Depreciation & Lenders' Sacrifice Amortisation 486.70 798.84

Profit/(Loss) before Taxation (479.51) (3186.05)

Less: Provision for Taxation 0.02 0.02

Profit/(Loss) after Taxation (479.53) (3186.07)

Add: Balance brought forward (8877.89) (5691.82)

Balance carried forward (9357.42) (8877.89)

The following is the Gross turnover by group of products:

Single Superphosphate 4.50 41.15

Commodity Chemicals 2376.19 3443.30

Specialty Chemicals 1914.75 2745.13

Others 448.28 354.82

Total 4743.72 6584.40

The Company has closed the current financial year of nine months as on 31s" March, 2011 as decided by the Board of Directors of the Company. Accordingly, financial statements for the current financial year have been prepared for a period of nine months commencing from 1 st July, 2010 and ending on 31s1 March, 2011. Therefore, the Gross Turnover for the Financial Year ended 31st March, 2011 is not comparable with the Gross Turnover for the previous Financial Year ended 30th June, 2010(15 months).

In view of the loss during the year under review, your Directors have not recommended any Dividend on Cumulative Preference Shares and Equity Shares of the Company, for the nine months financial year ended 31st March, 2011.

DIRECTORS/KEY MANAGEMENT PERSONNEL

Shri Laxmikumar Narottam Goculdas and Shri M.T. Ankleshwaria, Directors, are retiring by rotation under Article 135 of the Articles of Association of the Company and being eligible, offer themselves for re- appointment.

Shri D. P. Goculdas, Chief Executive Officer (Agri. Business) of the Company resigned from the services of the Company with effect from 6th April, 2011. The Board places on record its appreciation for the valuable contributions made by Shri D. P. Goculdas, during his tenure of services with the Company.

The Company continues its operations under the leadership of the Senior Corporate Management Team comprising of Shri Bimal Lalitsingh Goculdas, Chief Executive Officer, Shri D. N. Vaze, Chief Finance Officer and Shri D.T.Gokhale, Vice President (Legal/ Corporate Affairs) and Company Secretary.

AUDITORS' OBSERVATIONS

As regards the Auditors' observation regarding recognition of "Deferred Tax Asset" amounting to Rs. 2654.15 lacs, the Company, based on the proposed association with a "Strategic Investor", is confident that this proposed association will result in significant additional revenue and profits.

As regards the Auditors' observation regarding crediting of "Waived Dues" aggregating to Rs. 3362.76 lacs (representing only the principal amount of borrowings ) to the "Capital Reserve" of the Company, this amount has been credited to the "Capital Reserve" since these "Waived Dues" are of capital nature. Further, this treatment of crediting the "Waived Dues" to the "Capital Reserve" (instead of crediting the same to the Profit-and Loss Account) is in compliance with the applicable Accounting Standards referred to in sub-section ( 3C) of Section 211 of the Companies Act, 1956.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

As per Section 217 of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange are given in the prescribed format as an Annexure-I to this report.

PARTICULARS OF EMPLOYEES

During the nine months financial year ended 31st March, 2011 there was no employee within the purview of Sec.217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSITS

Out of deposits which matured during the nine months financial year ended 31 * March, 2011,171 deposits aggregating to Rs. 18,88,000/- remained unclaimed as on 31st March, 2011, of which 4 deposits amounting to Rs. 42,000/- have since been claimed and repaid.

AUDITORS

M/s. K S Aiyar & Co., Chartered Accountants, the existing Auditors have, under Section 224 (1-B) of the Companies Act, 1956, furnished a Certificate of their eligibility for re-appointment.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors' Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the annual account?, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors 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 the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good Corporate Governance over the years and the Board of Directors lays strong emphasis on indecency, accountability and integrity. Your Company has adopted a Code of Conduct which is approved by the Board of Directors as required under the Listing Agreement with the Stock Exchange, Mumbai. The Directors and the Management Staff have confirmed their adherence to the provisions of the said code. Your Company has also evolved a Risk Management Policy regarding risk assessment and risk mitigation mechanism, which has been approved by the Board of Directors. A separate report on Corporate Governance is annexed as a part of the Annual Report, along with the Auditors' Certificate on its compliance.

ACKNOWLEDGMENTS

The Directors are thankful to your Company's shareholders, customers, suppliers, contractors, various departments of Central and State Governments and Banks for their continued valuable support.

The relations between the employees and the management continue to be cordial. Your Directors place on record their appreciation of the sincere and devoted efforts of the employees at all levels and their continued co-operation, commitment, sense of understanding and the sacrifices made by them during the difficult and critical period which the company is passing through.

Management of your Company is confident that with the active co-operation from all the stake holders of the Company, the Company will be in a position to overcome this difficult phase.

For and on behalf of the Board

Laxmikumar Narottam Goculdas

Chairman

Registered Office:

Prospect Chambers,

317/21, Dr. Dadabhoy Naoroji Road,

Fort, Mumbai - 400 001.

Date : 25th July, 2011.


Jun 30, 2010

The Directors are pleased to present their Eighty Ninth Annual Report together with the accounts of the Company for the extended financial year ended 30th June, 2010 (fifteen months).

FMANCIAL RESULTS

Financial Year ended Financial Year ended 30th June, 2010 31st March, 2009 (15 Months) (18 Months) Rs. in lacs Rs. in lacs

Gross Turnover 6584.40 17677.35

Gross Profit/(Loss) (2387.21) (2054.57)

Less: Depreciation & Lenders sacrifice Amortisation 798.84 1158.99

PmW(Loss) before Taxation (3186.05) (3213.26)

Add: Deferred Tax Asset 0.00 505.98

Profit/(Loss) after considering Deferred Tax Asset (3186.05) (2707.28)

Less: Provision for Taxation /Fringe Benefit Tax 0.02 18.04

Profil/(Loss) after Taxation (3186.07) (2725.32)

Add: Balance brought forward (5691.82) (2966.30)

Balance carried forward (8877.89) (5691.82)

The following is the gross turnover by group of products:

Single Superphosphate 41.15 1690.68

Commodity Chemicals 3443.30 10243.66

SpeoaKtyOieiriicate 2745.13 4135.62

Others 354.82 1607.39

Total 6584.40 17677.35

The Company has extended the current financial year by three months upto 30* June, 2010 in accordance with the provisions of Sec.210 (4) of the Companies Act, 1956. Accordingly, financial statements for the current financial year have been prepared for a period of fifteen months commencing from 1st April, 2009 and ending on 30* June, 2010.

In view of the loss during the year under review, your Directors have not recommended any Dividend on Cumulative Preference Shares and Equity Shares of the Company, for the extended financial year ended 30* Jane, 2010.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

(a) Overview of operations

(i) The Companys fertiliser business continued to get adversely affected inter alia due to strained liquidity and shortage of Working Capital. This has forced your Company to reduce volumes of the fertiliser business, during the year under review. Consequently the turnover in respect of fertilizers during the current financial year ended 30* June, 2010 was very small.

(it) The turnover of Commodity Chemicals during the current financial year ended 30*1 June, 2010 was also lower at Rs. 34 crates as compared to the turnover of Rs. -102 crores. during the previous financial year ended 31st March, 2009 mainly due to substantial reduction in seang prices. The turnover of Speciality Chemicals during the current financial year was also lower at Rs. 27 crores, as compared to the turnover of Rs. 41 crores during the previous financial year ended 31s1 March, 2009, due to reduction in selling prices as wefl as lower volumes. The selling prices of both Commodity Chemicals and Speciality Chemicals were lower during the current financial year, mainly due to substantial reduction in the purchase prices of the main raw material viz. sulphur.

Prospects in the Industry:

Fertilisers and Chemicals

The Companys Fertilisers and Chemical businesses continue to be adversely affected by severe working capital constraints experienced by the Company, resulting in reduced capacity utilization. The Company expects to increase its capacity utilization, after completing Corporate Financial Restructuring.

Cautionary Statement

Statements in this "Management Discussion and Analysis Report" describing the Companys objectives, projections, estimates, expectations or predictions may be considered as "forward looking statements" within the meaning of applicable securities laws and regulations. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of the future performance and outlook.

CORPORATE FINANCIAL RESTRUCTURING

The Management is continuing its endeavors for Corporate Financial Restructuring, with a view to improve the operational and financial performance of the Company. Towards this end, the Company has obtained the requisite approval of its shareholders under Section 293 (1) (a) of the Companies Act, 1956 for sale/transfer/disposal of its land, factory buildings and plant and machinery at its Ambernath Factory.

ADEQUACY OF INTERNAL CONTROLS

Your Company has clearly laid down policies, guidelines and procedures which form part of its internal control system. The Audit Committee of the Board periodically reviews reports of Internal Auditors, inter alia, on adherence by the operating Management of such policies and procedures and suggests changes/modifications and improvements on a continuous basis. The Company has a strong, independent and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposal and that transactions are authorised, recorded and reported correctly. The internal control systems are supplemented by a programme of internal audit.

HUMAN RESOURCE DEVELOPMENT

As an ongoing exercise of the restructuring and re-organisation, the Company has undertaken periodic comprehensive reviews of its HR policies and amended the same suitably from time to time.

DIRECTORS

During the period under report, we lost the beloved Chairman of our Company, Shri Ranchhoddas Mathradas Goculdas on 9th November, 2009. He had a very long association with the Company as a Director from 6th May, 1961 and the Chairman of the Company from 8th May, 1978. He was a versatile personality with a vision. He was the guiding force and an architect of various corporate decisions and policies of the Company. The Board of Directors place on record its deep sense of appreciation for the invaluable contribution made by late Shri Ranchhoddas Mathradas Goculdas over several decades, during his long tenure with the Company. Consequent upon the sad demise of late Shri Ranchhoddas Mathradas Goculdas on 991 November, 2009, Shri Laxmikumar Narottam Goculdas (the then Vice Chairman of the Company) was elected as the Chairman of the Company as well as the Chairman of the Board of Directors of the Company, from 10th November, 2009.

During the period under review, Shri C.B. Nalawala ceased to be a Director of the Company from 10th September, 2009. Shri Kumar Bakhru a nominee Director of General Insurance Corporation of India, also ceased to be a Director of the Company from 23rd January, 2010. The Board of Directors place on record their appreciation for the valuable guidance and advise given by both of them to the Company during their long association with the Company as also the contributions made by both of them during the deliberations at the Board Meetings of the Company.

Shri H.T.Kapadia, a Director, is retiring by rotation under Article 135 of the Articles of Association of the Company and being eligible, offers himself for re-appointment.

The Board of Directors of the Company at its meeting held on 22nd January, 2010, has appointed Shri Arvind W. Ketkar as an Additional Director - on the Board of Directors of the Company. Shri Arvind W. Ketkar has in-depth knowledge in Finance and Accounting and has been in practice as a Chartered Accountant for over thirty nine years. As per provisions of Section 260 of the Companies Act, 1956 and Article 126 of the Articles of Association of the Company, Shri Arvind W. Ketkar will hold office of Director upto the date of ensuing Annual General Meeting. Appointment of Shri Arvind W. Ketkar as a Director liable to retire by rotation is proposed at Sr. No. 4 of the Notice of the ensuing Annual General Meeting. Your Directors recommend the appointment of Shri Arvind W. Ketkar, as Director of your Company.

The Board of Directors of the Company at its meeting held on 27th July, 2010, has appointed Shri Shantilal T. Shah as an Additional Director on the Board of Directors of the Company. Shri Shantilal T. Shah is in Chemical business for last 45 years and has got vast experience in marketing, finance and administration of the Chemical Industry. As per provisions of Section 260 of the Companies Act, 1956 and Article 126 of the Articles of Association of the Company, Shri Shantilal T. Shah will hold office of Director upto the date of ensuing Annual General Meeting. Appointment of Shri Shantilal T. Shah as a Director liable to retire by rotation is proposed at Sr. No. 5 of the Notice of the ensuing Annual General Meeting. Your Directors recommend the appointment of Shri Shantilal T. Shah, as Director of your Company.

AUDITORSOBSERVATION

As regards the Auditors observation regarding recognition of "Deferred Tax Asset" amounting to Rs. 2654.15 lacs, the Company, based on the proposed association with a "Strategic Investor", is confident that this proposed association will result in significant additional turnover and profits.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

As per Section 217 of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange are given in the prescribed format as an Annexure-I to this report.

PARTICULARS OF EMPLOYEES

During the extended financial year ended 30th June, 2010, there was no employee within the purview of Sec.217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) RuIps, 1975.

PUBLIC DEPOSITS

Out of deposits which matured during extended financial year ended 30* June, 2010,172 deposits aggregating to Rs. 21,91,000/- remained unclaimed as on 30th June, 2010, of which 1 deposit amounting to Rs. 10,000/- has since been claimed and repaid.

AUDITORS

M/s. K S Aiyar & Co., Chartered Accountants, the existing Auditors have, under Section 224 (1 -B) Of the Companies Act, 1956, furnished a Certificate of their eligibility for re-appointment.

DIRECTORSRESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed:

(i) That in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors 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 the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good Corporate Governance over the years and the Board of Directors lays strong emphasis on transparency, accountability and integrity. Your Company has adopted a Code of Conduct which is approved by the Board of Directors as required under the Listing Agreement with the Stock Exchange, Mumbai. The Directors and the Management Staff have confirmed their adherence to the provisions of the said code. Your Company has also evolved a Risk Management Policy regarding risk assessment and risk mitigation mechanism,which has been approved by the Board of Directors. A separate report on Corporate Governance is annexed as a part of the Annual Report, along with the Auditors Certificate on its compliance.

ACKNOWLEDGMENTS

The Directors are thankful to you and your Companys customers, suppliers, contractors, various departments of Central and State Governments, Financial Institutions and Banks for their continued valuable support.

The relations between the employees and the management continue to be cordial. Your Directors place on record their appreciation of the sincere and devoted efforts of the employees at all levels and their continued co-operation, commitment, sense of understanding and sacrifices shown by them during the difficult and critical period which the company is passing through.

Management of your Company is confident that with active co-operation from all employees, the Company will be in a position to overcome this difficult phase.

For and on beharf of the Board

L. N. GOCULDAS

Chairman

Registered Office:

Prospect Chambers,

317/21, Dr. Dadabhoy Naoroji Road,

Fort, Mumbai - 400 001.

Date : 3rd November, 2010.


Mar 31, 2009

The Directors are pleased to present their Eighty Eighth Annual Report together with the accounts of the Company for the extended financial year ended 31st March, 2009 (eighteen months).

FINANCIAL RESULTS



Financial Year ended Financial Year ended

31 st March, 2009 30th September, 2007

(18 Months) (18 Months)

Rs. in lacs Rs. in lacs

Gross Turnover 17677.35 28125.53

Gross Profit / (Loss) (2054.27) (2486.15)

Less : Depreciation & Lenders sacrifice Amortisation 1158.99 1260.13

Profit/(Loss) before exceptional Item & Taxation (3213.26) (3746.28) Add: Exceptional Item

Waiver of dues by Banks /Financial Institution by One Time Settlement Nil 139.31

Profit/(Loss) after exceptional Item but before Taxation (3213.26) (3606.97)

Add: Deferred Tax Asset 505.98 2148.17

Profit/(Loss) after exceptional Item and after considering Deferred Tax Asset (2707.28) (1458.80)

Less: Provision for Taxation/ Fringe Benefit Tax 18.04 25.05

Profit/(Loss) after Taxation (2725.32) (1483.85)

Add: Balance brought forward (2966.50) (1482.65)

Balance carried forward (5691.82) (2966.50)

The following is the gross turnover by group of products:

Single Superphosphate 1690.68 8487.21

Commodity Chemicals 10243.66 11054.28

Speciality Chemicals 4135.62 7974.10

Others 1607.39 609.94

17677.35 28125.53

The Company has extended the current financial year by six months upto 31st March, 2009 in accordance with the approval received by the Company from the Registrar of Companies, Maharashtra State, Mumbai. Accordingly, financial statements for the current financial year have been prepared for a period of eighteen months commencing from 1st October, 2007 and ending on 31st March, 2009.

In view of the loss during the year under review, your Directors have not recommended any Dividend on Cumulative Preference Shares and Equity Shares of the Company, for the extended financial year ended 31 st March, 2009.

PROPOSAL FOR ONE TIME SETTLEMENT (O.T.S.) OF DUES TO SECURED LENDERS

The Company had submitted a proposal to its Secured Lenders to settle their dues by way of One Time Settlement (O.T.S.) As the shareholders are aware, the proposal was accepted by one of the Secured Lenders and their dues have been settled accordingly. The Companys proposal is under consideration of the remaining Secured Lenders.

ADEQUACY OF INTERNAL CONTROLS

Your Company has clearly laid down policies, guidelines and procedures which form part of its internal control system. The Audit Committee of the Board periodically reviews reports of Internal Auditors, inter alia, on adherence by the operating Management of such policies and procedures and suggests changes/modifications and improvements on a continuous basis. The Company has a strong, independent and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposal and that transactions are authorised, recorded and reported correctly. The internal control systems are supplemented by an extensive programme of internal audit.

HUMAN RESOURCE DEVELOPMENT

As an ongoing exercise of the restructuring and re-organisation, the Company has undertaken periodic comprehensive reviews of its HR policies and amended the same suitably from time to time.

RESEARCH & DEVELOPMENT

Inspite of heavy odds, your Company has continued its Research and Development initiatives and endeavours, keeping in view the long term perspective for growth.

SUBSIDIARY

The audited statements of accounts of DMCC Oil Terminals (Navlakhi) Limited (DOTL), a subsidiary of the Company, for the extended financial year ended 30th September, 2007, together with the reports of its Directors and Auditors are attached to the accounts of the Company, as required under Section 212 of the Companies Act, 1956.

DIRECTORS

During the year under review, Shri R. Kannan, Nominee Director of ICO Bank Ltd, resigned from the Board of Directors, effective 22nd January 2008, consequent upon the withdrawal of his nomination by ICICI Bank Ltd. Mrs. U. D. Morarji also resigned from the Board of Directors, effective 8th December 2008. The Board of Directors place on record their appreciation for the valuable guidance and advice given by both of them to the Company during their long association with the Company as also the contributions made by both of them during the deliberations at the Board meetings.

Shri OB. Nalawala, a Director, is retiring by rotation at the conclusion of the ensuing Annual General Meeting of the Company, scheduled to be held on 9th September, 2009. Although eligible, he does not offer himself for re-appointment. Shri. C. B. Nalawala was on the Board of the Company since March, 2002. The Board of Directors place on record their appreciation for the valuable guidance and advice given by him to the Company, during his long association with the Company as also the contribution made by him during the deliberations at the Board meetings and the Audit Committee meetings during his tenure as a director and Chairman of the Audit Committee, respectively.

The Board of Directors of the Company, at its meeting held on 31st July 2009, has appointed Shri M.T. Ankleshwaria as an additional Director on the Board of Directors of the Company. Shri M.T. Ankleshwaria has indepth knowledge in Finance and Accounting and has been in practice as a Chartered Accountant, for over three decades. Mr. Ankleshwaria is also the Head of Department of Accountancy at N.M.College of Commerce & Economics, Vile Parle (W), Mumbai 56. As per provisions of Section 260 of the Companies Act, 1956, and Article 126 of the Articles of Association of the Company. Shri M.T. Ankleshwaria will hold office of Director upto the date of ensuing Annual General Meeting. Appointment of Shri M.T. Ankleshwaria as a Director liable to retire by rotation is proposed at Sr.No.3 of the Notice of the ensuing Annual General meeting. Your Directors recommend the appointment of Shri M.T. Ankleshwaria, as a Director of your Company.

Shri Dilip Pratapsingh Goculdas was appointed as Managing Director (Agri Business) of the Company for a period of two years with effect from 1st April, 2007. Subject to the approval of the shareholders at the ensuing Annual General meeting, he has now been appointed as Chief Executive Officer (Agri Business) and "Manager" under the Companies Act, 1956, for a period of three years with effect from 1 st April, 2009.

Shri Bimal Lalitsingh Goculdas was appointed as Managing Director (Chemical Business) of the Company for a period of two years with effect from 1st April, 2007. Subject to the approval of the shareholders at the ensuing Annual General meeting, he has now been appointed as Chief Executive Officer (Chemical Business) and "Manager" under the Companies Act, 1956, for a period of three years with effect from 1st April, 2009.

Shri Dilipkumar Nilkanth Vaze was appointed as Executive Director (Finance) of the Company for a period of three years with effect from 1st April, 2006. He has now been appointed as Chief Finance Officer of the Company, with effect from 1st April, 2009.

AUDITORS OBSERVATIONS

1. As regards the Auditors observation regarding the non-compliance of the certain conditions of the revised Corporate Debt Restructuring (CDR) package, the Management is in the process of complying with the same, in due course of time.

2. As regards the Auditors observation regarding non-provision of interest of Rs. 785.82 lacs, the Company has not recognized this interest amount since the banks concerned have not debited the same to the respective accounts of the Company.

3. As regards the Auditors observation regarding recognition of "Deferred Tax Asset" amounting to Rs.2654.15 lacs, the Company, based on the proposed association with a "Strategic Investor", is confident that this proposed association will result in significant additional turnover and profits.

4. As regards the Auditors observation regarding preparing the Annual Accounts on a "Going Concern Basis", notwithstanding the negative net worth of the Company as on 31st March, 2009, the Managements views are as under:

Though the net worth of the Company as on 31st March, 2009 is negative, the Company has prepared Financial Statements for the year ended 31st March, 2009 (eighteen months), on a "Going Concern Basis", since the Company is confident that its profitability will improve in future, in view of the following :

a. a new activity of trading (in various fertilisers & other agri inputs) which the Company will commence in association with a " Strategic investor" after completing OTS of dues to Banks and

b. Continuing efforts by the Company for improving efficiency, restructuring/rationalisation of operations and optimisation of costs.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE

As per Section 217 of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange are given in the prescribed format as an Annexure-I to this report.

PARTICULARS OF EMPLOYEES

During the extended financial year ended 31st March, 2009 there was no employee within the purview of Sec.217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

PUBLIC DEPOSITS

Out of deposits which matured during extended financial year ended 31st March, 2009, 173 deposits aggregating to Rs. 22,06,000/- remained unclaimed as on 31st March 2009, of which 1 deposit amounting to Rs. 15,000 has since been claimed and repaid.

AUDITORS

M/s. K S Aiyar & Co., Chartered Accountants, the existing Auditors have, under Section 224 (1-B) of the Companies Act, 1956, furnished a Certificate of their eligibility for re-appointment.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 217 (2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed :

(i) That in the preparation of the annual accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

(ii) That the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company has been practicing the principles of good Corporate Governance over the years and the Board of Directors lays strong emphasis on transparency, accountability and integrity. Your Company has adopted a Code of Conduct which is approved by the Board of Directors as required under the Listing Agreement with the Stock Exchange, Mumbai. The Directors and the Management Staff have confirmed their adherence to the provisions of the said code. Your Company has also evolved a Risk Management Policy regarding risk assessment and risk mitigation mechanism, which has been approved by the Board of Directors. A separate report on Corporate Governance is annexed as a part of the Annual Report, along with the Auditors Certificate on its compliance.

ACKNOWLEDGMENTS

The Directors are thankful to your Companys customers, suppliers, contractors, various departments of Central and State Governments, Financial Institutions and Banks for their continued valuable support.

The relations between the employees and the management continue to be cordial. Your Directors place on record their appreciation of the sincere and devoted efforts of the employees at all levels and their continued co-operation, commitment, sense of understanding and sacrifices shown by them during the difficult and critical period which the company is passing through.

Management of your Company is confident that with active co-operation from all employees, the Company will be in a position to overcome this difficult phase.

For and on behalf of the Board

R. M. GOCULDAS

Chairman

Registered Office:

Prospect Chambers, 317/21, Dr. Dadabhoy Naoroji Road, Fort, Mumbai - 400 001.

Date :31st July, 2009.

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