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Directors Report of DIC India Ltd.

Dec 31, 2015

PERFORMANCE REVIEW

The Company recorded a turnover of Rs.7460.62 million as against Rs.7186.95 million in the previous year registering an increase of 5 % in terms of value as well as volume. Coupled with a fall in input prices and adopting various strategies, the Company went from a Loss (before tax) of Rs.392.23 million in the previous year to profit before tax of Rs 402.97 million. Similarly, profit after tax was Rs 297.12 million as against a negative profit after tax of Rs.308.90 million.

(Rs. In Million)

2015 2014

Sales excluding excise duty 7460.62 7186.95

Other Income 34.78 35.04

Total Revenue 7495.40 7221.99

Profit before Taxation 402.97 (392.23)

Provision for Taxation including deferred taxation (105.85) 83.34

Profit after Tax 297.12 (308.89)

Profit brought forward from the previous year 1203.81 1512.71

Amount available for Appropriation: 1480.23 1203.81

Appropriation- Proposed Dividend 36.72 -

Tax on Dividend 7.47 -

General reserve 10.00 -

Balance Carried Forward 1435.06 1203.81

The Company operates in two segments - printing inks and lamination adhesives. While the Company registered an increase of 2.68% in the turnover of printing inks at Rs 6933.26 million (previous year Rs 6752.14 million), it registered an increase of 19.64% in the turnover of lamination adhesives which increased from Rs 469.85 million in the previous year to Rs 562.14 million during the year under review. The profit from the ink segment and lamination adhesives were Rs 536.86 million (previous year loss of Rs 211.12 million) and Rs 27.59 million (previous year loss of Rs 11.79 million) respectively.

The Board in its meeting held on 23rd March 2015 had appointed Mr. Shailendra Hari Singh as the Managing Director and CEO with effect from 23rd March 2015 for the period of five years.

To ensure that the Company is able to maintain its profitability, your management has taken several steps like cost effectiveness, rationalization of expenditures, improving operational efficiencies and induction of new technology. The Management expects that the Company would be able to repeat its performances in the future also.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS

Your company actively seeks out opportunities available in the market and works on converting the opportunities into viable market. The primary threat comes from the fact that the opportunities are equally visible to your Company's competitors who are also trying to exploit the opportunity to their benefit. A combination of product innovations, consistent quality delivery and continuous enhancement of capability and efficiency of distribution pipeline will help your Company address the threat.

The growth of the Company is linked to the overall economic growth. Primary risk to the business will be on account of adverse changes to the economy. Volatility in raw material prices like crude, resin etc is a concern. The Management monitors raw material demand and supply, prices and acts pro-actively to minimize the risk.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

CHANGES IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the financial year ended 31st December 2015.

OUTLOOK

The printing ink industry comprise of publication and commercial, packaging and others. Amongst them, the packaging application segment is the main growth driver in the printing ink industry led by growth in demand for flexible packaging and other packaging materials in various industries. As per surveys, the global printing inks market is poised to sustain a healthy compounded annual growth rate (CAGR) of 5.0% from 2014 through 2020. India being amongst the fastest growing economy is no exception and would replicate the growth.

TRANSFER TO RESERVES

The Company proposes to transfer a sum of Rs. 1,000,000 to Reserve during the financial year ended 31st December 2015.

DIVIDEND

Your Board recommends the rate of dividend declared to be Rs 4.00 per share (FY2014 Rs.Nil per share), subject to approval of shareholders at the ensuing Annual General Meeting.

CHANGE IN SHARE CAPITAL

The paid up share capital of the Company as on 31st December 2015 was Rs 91.98 million and there has been no change in the capital structure of the Company.

PUBLIC DEPOSITS

The Company has not accepted any deposits during the year under review.

BOARD MEETINGS

The Board evaluates all the decisions on a collective consensus basis amongst the Directors. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

During the financial year ended 31st December 2015, 8 (eight) Meetings of the Board of Directors of the Company were held.

The details of the Board Meetings held during the F.Y. 2015 have been furnished under Clause I(2)(D) in the Corporate Governance Report forming a part of this Annual Report.

DECLARATION BY INDEPENDENT DIRECTORS

All the Independent Directors have given declaration to the Company stating their independence pursuant to Section 149(6) of the Companies Act, 2013 and the same have been placed and noted by the Board in its meeting held on 4th February 2015.

REMUNERATION POLICY

A Nomination and Remuneration Policy has been formulated pursuant to the provisions of Section 178 and other applicable provisions of the Companies Act, 2013 and Rules thereto stating therein the Companies policy on Directors' appointment and remuneration by the Nomination and Remuneration Committee and approved by the Board of Directors at its meeting held on 5th December 2014.

The said policy may be referred to, at the Company's official website at the weblink, http://www.dicindialtd.co/corp- gov-nrp.html.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not given any loan, guarantees or made any investments exceeding sixty per cent of its paid-up share capital, free reserves and securities premium account or one hundred per cent of its free reserves and securities premium account, whichever is more, as prescribed in Section 186 of the Companies Act, 2013.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

A Related Party Policy has been devised by the Board of Directors at its meeting held on 5th December 2014 for determining the materiality of transactions with related parties and dealings with them. The said policy may be referred to, at the Company's official website at the web link, http://www.dicindialtd.co/corp-gov-rptp.html. The Audit Committee reviews all related party transactions quarterly.

Further the members may note that the Company has not entered into the following kinds of related party transactions:

- Contracts/arrangement/transactions which are not at arm's length basis

- Any Material contracts/arrangement/transactions

EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 forms part of this report and is annexed herewith and marked as Annexure C.

ANNUAL EVALUATION OF BOARD'S PERFORMANCE

According to Regulation of 25(3) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a meeting of the Independent Directors is required to be held to evaluate the performance of the Non-Independent Directors. Accordingly, a meeting of Independent Directors was held on 4th August 2015 wherein the performance of the non-independent directors, including the Chairman was evaluated.

The Nomination and Remuneration Committee at its meeting held on 4th February 2015 established the relevant criteria. Based on the said criteria, the Board at its meeting held on 5th February 2016 critically adjudged the performance of the Independent Directors.

CAPITAL EXPENDITURE

Capital Expenditure during the year, towards tangible & intangible assets, amounted to Rs. 56.77 million, a major part of which was spent on building and plant & machinery.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

As required under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, the information relating to Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo is annexed and forms a part of this Report.

SUBSIDIARY/ASSOCIATES/JOINT VENTURE COMPANIES

The Company does not have any subsidiary/associate/joint venture company for the year ended 31st December 2015.

HUMAN RESOURCES

Your Company believes that the competence and commitment of the people are the principle drivers of competitive advantage that enable the enterprise to create and deliver value. The industrial relations climate of your Company continues to remain harmonious with focus on improving productivity, quality and safety. Efforts are being made to strengthen organizational culture in order to attract and retain the best talent in the industry. Training needs are identified in a systematic manner and regular training programmes are organised, both in-house and external where employees are nominated to participate. The Board records its appreciation of the commitment and support of the employees and looks forward to their continued support. As on 31st December 2015, the Company had 846 employees (including contractual and third party) on its pay roll.

Information in accordance with the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of this Report marked as Annexure B. As per the provisions of Section 136(1) of the Companies Act, 2013, the Annual report excluding the information on employee's particulars is being sent to the members which is, however, available for inspection at the Registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished without any fee and free of cost.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION&REDRESSAL) ACT 2013

No complaint has been brought to the notice of the Management during the year ended 31st December 2015.

WEBSITE OF THE COMPANY

The Company maintains a website www.dicindialtd.co where detailed information of the Company and its products are provided.

WHISTLE BLOWER MECHANISM

The Company has a Whistle Blower Policy in place for vigil mechanism. The said policy has been amended keeping in view of the amendments in the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said policy may be referred to, at the Company's official website at the weblink, http://www.dicindialtd.co/investers-wbp.html.

INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board.

LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Limited, BSE Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant material orders passed by the Regulators / Courts / Tribunals which would impact the going concern status of the Company and its future operations.

AUDIT COMMITTEE

The composition and terms of reference of the Audit Committee has been furnished under Clause I(3) in the Corporate Governance Report forming a part of this Annual Report. There had been no instances where the Board has not accepted the recommendations of the Audit Committee.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Committee has been constituted by the Board of Directors of the Company at its meeting held on 26th March 2014 and subsequently reconstituted on 21st April 2015. The present constitution of the Committee is as follows:

Sl. No. Name of the Director Category Designation in the Committee

1 Mr Utpal Sengupta Independent Director Chairman

2 Mr Subir Bose Independent Director Member

3 Mr Yasuo Ikeda Whole-time Director Member

4 Mr Paul Koek Non-executive Director Member

5 Mr Shailendra Hari Singh Managing Director & CEO Member

The said policy may be referred to, at the Company's official website at the weblink, http://www.dicindialtd.co/corp- gov-csr.html.

As the members would be aware, the company had a loss of Rs 392.23 million during the year ended 31st December 2014 and as such, in view of the loss, the Management decided not to engage in CSR activity till the position of the Company was consolidated. Accordingly, no expenditure was incurred on the CSR front for the year ended on 31st December 2015.

For the financial year ended 31st December 2015, the Company has a profit after tax of Rs. 402.97 million. Pursuant to the provisions of Sec 135 of the Companies Act, 2013 and applicable Rules, the Company has a corpus of Rs 2.85 million in its CSR funds to be expended towards fulfilling its responsibility towards the society.

The Management of the Company held detailed discussion internally and it was decided that the company at present did not have the infrastructure to implement and regulate CSR activities on its own. Considering the same, detailed discussions were held with various eligible NGO's registered with the governing body, Indian Institute of Corporate Affairs, for exploring the best avenue open to the Company.

Your management is pleased to inform that the Company has decided to focus on child education as its core CSR activity and has accordingly executed MOU with Child Relief and You (CRY) to fund its Vikramshila Project in Monteswar block of Burdwan district in West Bengal which is expected to collectively benefit approx 5000 students between the age of 0-18 years who due to various reasons like lack of infrastructure, have no access to proper education. To ensure accountability, CRY will be asked to define "collective benefits" and payment will be phased in tune with the time frame, activities and measurable outcomes and timely reporting with indicators of achievement. The CSR Report is attached marked as Annexure A.

The Company wishes to inform the members that it is well aware of its responsibility towards fulfilling its social responsibility. The Company would take necessary action over the next two years to fulfill its CSR obligations.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors' protection and maximizing long-term shareholders value. The certificate of the Auditors, M/s Lovelock & Lewes, confirming compliance of conditions of Corporate Governance as stipulated under Schedule V(E) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 of the Stock Exchanges is annexed.

SAFETY AND ENVIRONMENT

Highest priority is accorded to environment, occupational health and safety by your Company. Your Company's factories at Kolkata, Noida and Ahmedabad are all ISO certified by BVQI. Kolkata and Noida plant are ISO 9001:2008, ISO 14001:2004 and BS OHSAS 18001:2007 certified while Ahmedabad plant is ISO 9001:2008 certified. Your Directors, through the Company's Safety, Health and Environment Department, oversee and review the integrated Environment, Occupational Health and Safety Audits which ensure comprehensive coverage of all Company locations. Various proactive measures have been adopted and implemented which inter-alia include adoption of cleaner technology, conservation of resources through waste reduction, recycling and reuse of waste materials and ongoing training of employees. Your Company's focus on sustainable development will continue to be reinforced by improving standards of safety and environmental protection and further strengthened by the association with DIC Corporation, Japan which accords vital importance to these aspects.

INFORMATION SYSTEM

In a business where information is critical, Information Technology plays a vital role, facilitating informed decision- making to grow the business. Over the years, the Company has invested extensively in infrastructure, people and processes with the objective to capture, protect and transmit information with speed and accuracy.

To align with the DIC Group requirement, the Company has installed SAP ERP suite for a reliable, high end, comprehensive, disciplined and integrated business solution.

DIRECTORS

Pursuant to the recommendation of the Nomination & Remuneration Committee who in its meeting held on 4th February 2015 had recommended the same, the Board in its meeting held on 23rd March 2015 had appointed Mr Shailendra Hari Singh as the Managing Director & CEO of the Company with effect from 23rd March 2015 for a period of 5 years.

Mr. Shailendra Hari Singh, born on 12th May 1964, graduated from Institute of Chemical Technology (formerly University Department of Chemical Technology, Mumbai) in 1985. He has around 30 years of experience in the chemical industry. Prior to his appointment in DIC India Ltd., Mr Singh was the Asia Pacific Coatings Industry Manager of Eastman Chemical Company based in Singapore where he was responsible for integrating & aligning marketing, sales & technology functions, defining key growth platforms and executing business strategy by defining key milestones, organization development & resource requirement.

In the present leadership role, Mr. Shailendra Hari Singh is responsible for leading the development and execution of the Group and Company's long term strategy and continuously generating and growing shareholder's value through sound business strategies and drive strong business growth.

The members through Postal Ballot, results of which was declared on 26th June 2015, has approved the appointment of Mr Shailendra Hari Singh as the Managing Director & Chief Executive Officer.

In terms of Articles of Association of the Company, Dr. P K Dutt retire from the Board by rotation and being eligible, offer himself for re-appointment. The appointment of Dr. Dutt form part of the Notice of Annual General Meeting and the Resolutions are recommended for your approval. The profile of Dr Dutt is given in the Notice of the Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(5) of the Act, the Directors state that:

i. In the preparation of the annual accounts, the applicable accounting standards had 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 at the end of the financial year and of the profit and loss of the company for that period;

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. The Directors had prepared the annual accounts on a going concern basis; and

v. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

COST AUDIT

In accordance with the provisions of Section 148 of the Companies Act, 2013 and the Companies (Audit & Auditors) Rules, 2014, the Company is required to appoint a cost auditor to audit the cost records of the applicable products of the Company relating to the business of manufacturing printing inks. Accordingly, M/s. Sinha Chaudhuri & Associates, Cost Accountants (Firm regn No. 000057) were appointed as the Cost Auditors for auditing the Company's cost accounts for the year ended 31st December 2016.

STATUTORY AUDITORS

Messrs Lovelock & Lewes, Chartered Accountants (FRN 301056E), retiring Auditors, being eligible, offer themselves for re-appointment.

STATUTORY AUDITORS' OBSERVATIONS

The notes on financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Auditors' Report is a Un-modified report and does not contain any qualification, reservation, adverse remark or disclaimer.

SECRETARIAL AUDITOR

The provisions of Section 204 read with Section 134(3) of the Companies Act, 2013 mandates Secretarial Audit of the Company to be done from the financial year commencing on or after 1st April 2014 by a Company Secretary in Practice. The Board in its meeting held on 5th February 2016 ratified the appointment of Mr. Tarun Chatterjee, Practising Company Secretary (Certificate of Practice No. 6935) as the Secretarial Auditor for the financial year ending 31st December 2015. The Secretarial Auditors' Report for the financial year ending 31st December 2015 is annexed to the Boards' Report.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company has transferred a total sum of Rs.0.14 million during the financial year 2015 to the Investor Education & Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956.

RESEARCH & DEVELOPMENT

The Company has obtained approval for In-house R&D facilities u/s 35(2AB) of Income Tax Act, 1961 for its units at Kolkata, Bengaluru and Noida from Government of India, Ministry of Science and Technology, New Delhi. This approval is valid till 31st March 2018. The Company will make suitable applications for renewal of approval for the above facilities in due course.

RISKS & MITIGATING STEPS

The Company has identified various risks faced by the Company from different areas. As required under Regulation 17 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has adopted a risk management policy whereby a proper framework is set up. Appropriate structures are present so that risks are inherently monitored and controlled. A combination of policies and procedures attempts to counter risk as and when they evolve. The Company has also formed a Risk management Committee which monitors the various functions and regions to establish any risk existing in the operational functions of the Company. The constitution and terms of reference are set out in details in the Corporate Governance Report.

The risks and its mitigating factors are discussed by the Committee and subsequently placed before the Board for their opinion and advice. The current risk management report was discussed by the Board in its meeting held on 11th December 2015.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions, Reserve Bank of India, Securities and Exchange Board of India and Central and State Governments for their consistent support and encouragement to the Company. I am sure you will join our Directors in conveying our sincere appreciation to all employees of the Company and Associates for their hard work and commitment. Their dedication and competence has ensured that the Company continues to be a significant and leading player in the printing ink industry.

On behalf of the Board



Dr. Prabir Kumar Dutt

Chairman

Place: Kolkata Shailendra Hari Singh

Date: 5th February 2016 Managing Director & CEO


Dec 31, 2013

The Directors have pleasure in presenting the Annual Report for the year ended 31st December 2013.

ECONOMIC ENVIRONMENT

After a dull 2012, a pick-up in real GDP growth in India was noticed in the reports of quarter ended June 2013, which was driven largely by robust growth of agricultural activity, supported by an improvement in net exports. However, this pick-up could not be sustained in the following quarters and a weakness was noticed in industrial activity, indicators of services and subdued domestic consumption demand hinting at continuing headwinds to growth. As per budget estimates, the Indian economy is expected to grow by 4.9% during 2013-14. While the agricultural growth is expected to return to trend levels, the outlook for industrial activity remains subdued given the slow pace of investments and structural bottlenecks such as shortage of power, coal, natural gas etc. Growth in services and exports is also likely to be sub-par in the backdrop of a sluggish global economy.

India''s "twin deficit" challenge also came under the spotlight during the year. The Current Account Deficit widened to an all time high at 5.4% of GDP during the first 9 months of 2012-13 vs. 4.1% during the same period of the previous year mainly contributed by high oil prices, subdued merchandise exports coupled with a marginal decline in net services exports. ''On the other hand, the fiscal deficit which seemed like heading towards 6% of GDP in the middle of the year, was reined in by the Government to 5.2% of GDP (Budget 2013 estimates) through aggressive compression in expenditure.

At the industry level, the cost of borrowing has been increased for the companies. The increased liability has burdened companies which have now resorted to cutting down expenditure. The extreme volatility in the rupee movement also impacted the economy in a major way during the financial year. Rupee depreciated to an all time high of Rs.68.84 in August 2013 against the dollar. With the depreciation of rupee, imports became costlier and thus became a burden and impacted the Company adversely.

The sudden downward movement of the rupee was finally arrested after the Reserve Bank of India stepped in with unprecedented fiscal measures. Further measures which resulted in declining of gold imports and turnaround in exports helped narrow the current account gap during the quarter ended September 2013. Several policy measures were announced by the Government during the year. Some of the key interventions include the setting up of the "Cabinet Committee on investments" to ensure expeditious clearance and implementation of big-ticket infrastructure projects, direct cash transfers of subsidies, diesel and LPG subsidy restructuring etc.

FINANCIAL RESULTS

(Rs. in Million)

2013 2012

Sales excluding excise duty 7086.64 7123.86

Other Income 39.34 40.48

Total Revenue 7125.98 7164.34

Operating Profit 159.46 367.08

Profit before Taxation 119.98 314.92

Provision for Taxation including deferred taxation (5.39) 99.97

Profit after Tax 125.37 214.95

Profit brought forward from the previous year 1442.84 1292.06

Profit available for Appropriation: 1568.21 1507.01

Appropriation-

Proposed Dividend 36.72 36.72

Tax on Dividend 6.24 5.96

General reserve 12.54 21.49

Balance Carried Forward 1512.71 1442.84

WEBSITE OF THE COMPANY

The Company maintains a website www.dicindialtd.co where detailed information of the Company and its products are provided.

INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board.

RELATED PARTIES

Notes to the Accounts sets out the nature of transactions with related parties. Transactions with related parties are carried out at arm''s length. The details of such transactions are placed before the Audit Committee. A statement of related party transactions pursuant to Accounting Standard 18 forms part of this Annual Report.

LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Limited, BSE Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges.

Further, DIC Asia Pacific Pte Ltd, the Company''s promoter vide its letter dated 22nd November 2013 indicated its intention to voluntarily delist the equity shares of the Company in accordance with Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 ("Delisting Regulations") and also intimated the indicative price of Rs. 260/- per equity share and floor price of Rs. 174/- per equity share, being the highest of the prices arrived at in accordance with Delisting Regulations. The Board of Directors have taken note of the intent of the Acquirer to delist, the equity shares on the price being calculated, inter alia, in accordance with the valuation report dated 22nd November 2013 issued by M/s. K J Sheth & Associates, Chartered Accountants. The Board has accorded approval for voluntary delisting of the equity shares of the Company from all the stock exchanges where the equity shares of the Company are currently listed, namely the BSE Limited (BSE), National Stock Exchange of India Limited (NSE) and The Calcutta Stock Exchange Limited (CSE). Accordingly, the approval of shareholders granted through Postal Ballot was sought and pursuant to the result of which has been declared on 20th January 2014, the members have granted their approval to the same.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company maintains DIC Group''s commitment to fulfill its environment, social and economic responsibilities. DIC Group has recently issued its CSR Report 2013 describing the efforts of the DIC Group to carry out its Corporate Social Responsibility.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors'' protection and maximizing long-term shareholders value. The certificate of the Auditors, M/s Lovelock & Lewes, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement of the Stock Exchanges is annexed.

SAFETY AND ENVIRONMENT

Highest priority is accorded to environment, occupational health and safety by your Company. Your Company''s factories at Kolkata, Noida, Mumbai and Ahmedabad are all ISO certified by BVQI. Kolkata and Noida plant are ISO 9001:2008, ISO 14001:2004 and BS OHSAS 18001:2007 certified while Mumbai and Ahmedabad plant are ISO 9001:2008 certified. Your Directors, through the Company''s Safety, Health and Environment Department, oversee and review the integrated Environment, Occupational Health and Safety Audits which ensure comprehensive coverage of all Company locations. Various proactive measures have been adopted and implemented which inter-alia include adoption of cleaner technology, conservation of resources through waste reduction, recycling and reuse of waste materials and ongoing training of employees. Your Company''s focus on sustainable development will continue to be reinforced by improving standards of safety and environmental protection and further strengthened by the association with DIC Corporation, Japan which accords vital importance to these aspects.

INFORMATION SYSTEM

In a business where information is critical, Information Technology plays a vital role, facilitating informed decision-making to grow the business. Over the years, the Company has invested extensively in infrastructure, people and processes with the objective to capture, protect and transmit information with speed and accuracy.

To align with the DIC Group requirement, the Company has installed SAP ERP suite for a reliable, high end, comprehensive, disciplined and integrated business solution.

DIRECTORS

Mr. Kazuo Kudo, the erstwhile Regional Managing Director of the holding Company, DIC Asia Pacific Pte Ltd, had been in the Board of the Company since 2nd June 2010. Subsequent to his taking a new assignment within the Group, he has tendered his resignation from the Board of Directors with effect from 13th June 2013.

The Board recorded its appreciation for the dedication, foresightedness, leadership and contribution made by Mr. K Kudo to the growth of the Company.

Pursuant to the resignation of Mr. Kazuo Kudo from the Board, Mr. Yoshiaki Masuda has been appointed as the Regional Managing Director of the Company''s holding Company, DIC Asia Pacific Pte Ltd., and has been nominated to the Board of DIC India Limited with effect from 13th June 2013. He also holds directorship in several other DIC Group Companies. Mr. Masuda''s appointment is valid till the date of forthcoming Annual General Meeting. The Company has received a notice from a shareholder pursuant to Section 257 of the Companies Act, 1956 proposing his re-appointment. Appropriate resolution seeking his appointment is appearing in the Notice convening the Annual General Meeting of the Company.

Further the Board has also inducted Mr. Yasuo Ikeda as an Additional Director in whole-time capacity designated as Chief Operating Officer of the Company in accordance with Section 161 of the Companies Act, 2013 (corresponding to Section 260 of the Companies Act, 1956) by the Board of Directors with effect from 1st January 2014 for a period of 3 years. This appointment is subject to approval of Central Government as Mr. Ikeda is a Japanese citizen and does not satisfy the residential requirement of staying in India for a period of one year prior to his appointment, as envisaged under Clause (e) of Part I of Schedule XIII of the Companies Act, 1956. Application has already been made to Central Government on 31st December 2013.

Mr. Samir Bhaumik, Managing Director of the Company whose tenure ended on 31st December 2013 has been re- appointed by the Board in its meeting held on 5th December 2013, as recommended by the Remuneration Committee, for a further period of 2 years i.e. from 1st January 2014 to 31st December 2015

Approval of shareholders w.r.t appointment of Mr. Yasuo Ikeda and re-appointment of Mr. Samir Bhaumik, has been sought for by Postal Ballot, the result of which would be declared on 7th February 2014.

In terms of Articles of Association of the Company, Dr. Prabir Kumar Dutt and Mr. Utpal Sengupta retire from the Board by rotation and being eligible, offer themselves for re-appointment.

Dr. Prabir Kumar Dutt holds 133 shares of the Company. Mr. Utpal Sengupta does not hold any shares of the Company.

The appointments of Mr. Yoshiaki Masuda, Dr. Prabir Kumar Dutt and Mr. Utpal Sengupta, form part of the Notice of Annual General Meeting and the Resolutions are recommended for your approval.

Profile of these Directors, as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, is given in the Notice of the Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors state that:

a) in the preparation of the annual accounts for the year ended 31st December 2013, applicable accounting standards have been followed with no material departure;

b) your Directors have selected such accounting policies and applied them consistently and made judgements 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 31st December 2013 and of the profit for the year ended on that date;

c) your Directors 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; and

d) the accounts for the year ended 31st December 2013 have been prepared on a going concern basis.

COST AUDIT

The Central Government vide its Notification No. 52/26/CAB-2010 dated 30th June 2011 has directed the audit of the cost accounts relating to Printing Inks to be carried out by the Cost Auditor. Accordingly, M/s. Sinha Chaudhuri & Associates having registration No. 000057 were appointed as the Cost Auditors for auditing the Company''s cost accounts for the year ended 31st December 2013.

AUDITORS

Messrs Lovelock & Lewes, Chartered Accountants, retiring Auditors, being eligible, offer themselves for re- appointment.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company has transferred a total sum of Rs.0.14 million during the financial year 2013 to the Investor Education & Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956.

RESEARCH & DEVELOPMENT

The Company has obtained approval for in-house R&D facilities u/s 35(2AB) of Income Tax Act, 1961 for its units at Kolkata and Noida from Government of India, Ministry of Science and Technology, New Delhi. This approval is valid till 31st March 2015.

RISKS & MITIGATING STEPS

The Company has identified various risks faced by the Company from different areas. The spiraling inflation without a commensurate increase in per capita incomes combined with a fall in capital investment have a potential to affect FMCG segment which will have its impact on Ink industry. Further, the unpredictable increase of crude price will have a significant impact on the cost and profitability of the Ink business. Continuous fall in INR/USD exchange rate may further impact the prices of imported inputs which will have its negative impact on the overall profitability.

As required under Clause 49 of the Listing Agreements, the Board has adopted a risk management policy whereby a proper framework is set up. Appropriate structures are present so that risks are inherently monitored and controlled. A combination of policies and procedures attempts to counter risk as and when they evolve. The internal audit department also periodically monitors the various functions and regions to establish any risk existing in the operational functions of the Company.

The risks and its mitigating factors are discussed by the management and subsequently placed before the Board for their opinion and advice. The current risk management report was discussed by the Board in its meeting held on 5th December 2013.

ACKNOWLEDGEMENT

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions, Reserve Bank of India, Securities and Exchange Board of India and Central and State Governments for their consistent support and encouragement to the Company. I am sure you will join our Directors in conveying our sincere appreciation to all employees of the Company and Associates for their hard work and commitment. Their dedication and competence has ensured that the Company continues to be a significant and leading player in the printing ink industry.

On behalf of the Board

SAMIR BHAUMIK

Managing Director

Kolkata YASUO IKEDA

5th February 2014 Chief Operating Officer


Dec 31, 2012

The Directors have pleasure in presenting the Annual Report for the year ended 31 st December 2012.

ECONOMIC ENVIRONMENT

In economic terms, the year 2012 has been a challenging one for India. It has seen the slowest rate of growth in a decade with 5 per cent GDP growth during the year. The year started in the shadow of the policy reversal on FDI policy in multi-brand retail, followed by a working budget without maj or policy reforms and concrete steps to control fiscal deficit, current account deficits, subsidies and tapering growth. While a slow recovery of the world economy is partly responsible for this downward trajectory, the rupee depreciation in 2012 has imposed severe challenges to control input cost, particularly companies with high import contents. The manufacturing sector has taken a dip and growing at 1.9 per cent. This is the lowest pace of growth for manufacturing sector in the past fourteen years. The private consumption has also posted a growth of 4.1 per cent, lowest in the last decade. Consumer industry, which is a major growth driver for our industry, has been very disappointing. Consumer goods contracted by 4.5 per cent on year to year basis in December, 2012. This is the sharpest contraction since 2009. Publishing and Print media have also registered a sharp contraction of 24 per cent and 21 per cent respectively.

However, there are few positive areas. Annual FDI was the highest during the year 2012. Annual food production was a new record. FII inflow amounting to Rs. 1181 billion as of 18th December 2012 is the highest among emerging economies. With policy corrections and investment friendly decisions, the long term GDP targets can still be achieved. However, the year 2012 as a whole has been rough in terms of economic and political developments.

FINANCIAL RESULTS

(Rs. in Million)

2012 2011

Sales excluding Excise Duty 7123.86 6,747.55

Other Income 40.48 53.88

Total Revenue 7164.34 6801.43

Operating Profit 367.08 416.58

Profit before Taxation 314.92 381.90

Provision for Taxation including Deferred Taxation 99.97 117.39

Profit after Tax 214.95 264.51

Profit brought forward from the previous year 1292.06 1096.68

Profit available for Appropriation 1507.01 1361.19

Appropriation-

Proposed Dividend 36.72 36.72

Tax on Dividend 5.96 5.96

General Reserve 21.49 26.45

Balance Carried Forward 1442.84 1292.06

PERFORMANCE REVIEW

In spite of all adverse economic environment, your Company has been able to maintain growth in Revenue from Rs.6747.55 million to Rs.7123.86 million registering an increase of 5.58 per cent. Profit before tax was Rs. 314.92 as against Rs.381.90 in the previous year. Profit for the year has been significantly affected by imposition of Entry Tax in West Bengal coupled with significant depreciation of rupee during the year.

NEW PROJECT

In order to increase the sustainability of your Company, we have set up a new plant for Lamination Adhesive at Bangaluru during the year. This product is related to packaging segment which has a potential growth area. Hence we would expect to service our packaging customers with extended product range.

OUTLOOK

The fourth quarter of 2012 has seen a positive approach from the Government to restore economy to 7-8 percent growth rate. However, the situation till now is fragile and 2013 looks to be an uncertain year. Persistent price rises, even during the period where commodity prices are down internationally, does not have much space for monetary easing. It is hoped that Government will carry out reforms including fiscal consolidation and regaining investors confidence. The Country has recently enacted reforms to allow more foreign investment in the retail sector which is expected to be a growth driver for our industry. We do hope more will be done if the world''s second largest populous nation is to return to the near double digit rate of growth.

DIVIDEND

Your Board recommends the rate of dividend declared to be Rs 4.00 per share (FY2011 - Rs.4.00 per share), subject to approval of shareholders at the ensuing Annual General Meeting.

CAPITAL EXPENDITURE

Capital expenditure during the year amounted to Rs.291.72 million, a major part of which was spent on setting up a new Lamination Adhesive Plant at Bangaluru.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

As 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, the information relating to Conservation of Energy, Technology Absorption and F oreign Exchange earnings & outgo is annexed to and forms a part of this Report.

Your Company has a Technical Collaboration Agreement with DIC Corporation, Japan in the areas of manufacturing printing ink, PU Resins and Lamination Adhesives. Products manufactured with the technical know how of the collaborators have been well received by the concerned customers.

DEPOSITS FROM PUBLIC

As on 31 st December 2012, the Company has no unclaimed deposit lying against it.

HUMAN RESOURCES

Your Company believes that the competence and commitment of the people are the principle drivers of competitive advantage that enables the enterprise to create and deliver value. The industrial relations climate of your Company continues to remain harmonious with focus on improving productivity, quality and safety. Efforts are being made to strengthen organizational culture in order to attract and retain the best talent in the industry. Training needs are identified in a systematic manner and regular training programmes are organised, both in-house and external where employees are nominated to participate. The Board records its appreciation of the commitment and support of the '' employees and looks forward to their continued support. As on 31st December 2012, the Company had 603 employees on its pay roll.

Information in accordance with the provisions of Section 217 (2 A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, this Report and Accounts are being sent to all the Members of the Company, excluding the Statement of Particulars of Employees. Any member interested in obtaining a copy of the said Statement may write to the Senior Executive Vice President (Corporate Affairs and Legal) & Company Secretary of the Company.

WEBSITE OF THE COMPANY

The Company maintains a website www. dicindialtd. co where detailed information of the Company and its products are provided.

INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board.

RELATED PARTIES

Notes to the Accounts sets out the nature of transactions with related parties. Transactions with Related Parties are carried out at arm''s length. The details of such transactions are placed before the Audit Committee. A statement of related party transactions pursuant to Accounting Standard 18 forms part of this Annual Report.

LISTING WITH STOCK EXCHANGES

Your Company is listed with The Calcutta Stock Exchange Limited, Bombay Stock Exchange Limited and National Stock Exchange of India Limited and the Company has paid the listing fees to each of the Exchanges.

CORPORATE SOCIALRESPONSIBILITY(CSR)

Your Company maintains DIC Group''s commitment to fulfill its environment, social and economic responsibilities.

DIC Group has recently issued its CSR Report 2012 describing the efforts of the DIC Group to carry out its Corporate Social Responsibility.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors'' protection and maximizing long-term shareholders value. The certificate of the Auditors, M/s Lovelock & Lewes, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement of the Stock Exchanges is annexed.

SAFETY AND ENVIRONMENT

Highest priority is accorded to environment, occupational health and safety by your Company. Your Company''s factories at Kolkata, Noida, Mumbai and Ahmedabad are all ISO certified by B VQI. Kolkata and Noida plant are ISO 9001:2008, ISO 14001:2004 and BS OHSAS 18001:2007 certified while Mumbai and Ahmedabad plant are ISO 9001:2008 certified. Your Directors, through the Company''s Safety, Health and Environment Department, oversee and review the integrated Environment, Occupational Health and Safety Audits which ensure comprehensive coverage of all Company locations. Various proactive measures have been adopted and implemented which inter- alia include adoption of cleaner technology, conservation of resources through waste reduction, recycling and reuse of waste materials and ongoing training of employees. Your Company''s focus on sustainable development will - continue to be reinforced by improving standards of safety and environmental protection and further strengthened by the association with DIC Corporation, Japan which accords vital importance to these aspects.

INFORMATION SYSTEM

Pursuant to the ORACLE license period coming to an end, the Company has installed SAP ERP suite for a reliable, high end, comprehensive, disciplined and integrated business solution. The same has been put in place with effect from 1st April 2012.

DIRECTORS

In terms of Articles of Association of the Company, Mr Subir Bose, Mr Bhaskar Nath Ghosh and Mr Kazuo Kudo retire from the Board by rotation and being eligible, offer themselves for re-appointment. They do not hold any shares of the Company.

The appointments of Mr S Bose, Mr B N Ghosh and Mr K Kudo, form part of the Notice of Annual General Meeting and the Resolutions are recommended for your approval.

Profile of these Directors, as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, is given in the Notice of the Annual General Meeting.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2 AA) of the Act, the Directors state that:

a) in the preparation of the annual accounts for the year ended 31st December 2012, applicable accounting standards have been followed with no material departure;

b) your Directors have selected such accounting policies and applied them consistently and made judgements 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 31 st December 2012 and of the profit for the year ended on that date;

c) your Directors 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; and

d) the accounts for the year ended 31 st December 2012 have been prepared on a going concern basis.

COST AUDIT

The Central Government vide its Notification No. 52/26/CAB-2010 dated 30th June 2011 has directed the audit of the cost accounts relating to Varnish to be carried out by the Cost Auditor. Accordingly, M/s. Sinha Chaudhuri & Associates having registration No. 000057 were appointed as the Cost Auditors for auditing the Company''s cost accounts for the year ended 31 st December 2012.

AUDITORS

Messrs Lovelock & Lewes, Chartered Accountants, retiring Auditors, being eligible, offer themselves for re-appointment.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company has transferred a total sum of Rs. 0.17 million during the financial year 2012 to the Investor Education & Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956.

RISKS & MITIGATING STEPS

The Company has identified various risks faced by the Company from different areas. The spiraling inflation without a commensurate increase in per capita income combined with a fall in capital investment have a potential to affect FMCG segment which will have its impact on Ink industry. Further, the unpredictable increase of crude price will - have a significant impact on the cost and profitability of the Ink business. Continuous fall in INR/U SD exchange rate may further impact the prices of imported inputs which will have its negative impact on the overall profitability.

As required under Clause 49 of the Listing Agreement, the Board has adopted a risk management policy whereby a proper framework is set up. Appropriate structures are present so that risks are inherently monitored and controlled.

A combination of policies and procedures attempts to counter risk as and when they evolve. The internal audit department also periodically monitors the various functions and regions to establish any risk existing in the operational functions of the Company.

The risks and its mitigating factors are discussed by the management and subsequently placed before the Board for their opinion and advice. The current risk management report was discussed by the Board in its meeting held on 11th December 2012.

ACKNOWLEDGEMENT

The Board of Directors take this opportunity to express its sincere appreciation for the continued support and confidence received from customers, distributors, suppliers, bankers, shareholders and other business associates.

Your Directors place on record their deep appreciation of the dedicated efforts and contribution of the employees at all levels and look forward to their continued support in the future as well.

Your Directors look forward to the future with confidence.

On behalf of the Board

DR PRABIR KRDUTT

Chairman

Kolkata SAMIR BHAUMIK

4th February 2013 Managing Director


Dec 31, 2011

FINANCIAL RESULTS

(Rs. in Million)

2011 2010

Net Sales 6747.55 5533.61

Other Income 52.64 119.07

Total Income 6800.19 5652.68

Operating Profit 416.58 344.57

Other Non Operating Income Nil 50.54

Profit before Taxation & Extraordinary Items 381.90 372.81

Extra Ordinary Income Nil 275.69

Provision for Taxation including deferred taxation 117.39 141.10

Profit after Tax 264.51 507.40

Balance brought forward from previous year 1096.68 693.79

Making a total available for appropriation 1361.19 1201.19

Out of which Directors have transferred to General Reserve 26.45 51.00

Your Board recommends for distribution as Dividend at the rate of Rs.4.00/- Share on 9,178,977 Equity Shares (together with Tax on Dividend & Surcharge) absorbing in all 42.68 53.51 (Previous year: Rs.5.00 per share on 9,178,977 equity share)

Leaving a balance carried forward of 1292.06 1096.68

PERFORMANCE REVIEW

During the year under review, your Company's overall net sales increased from Rs.5533.61 million to Rs.6747.55 million registering an increase of 21.94% in terms of value and 8.2% in terms of volume. During the year under review, the Company witnessed a significant increase in raw material cost partly due to the impact of a major Rupee depreciation in the second half. The Company could pass only a part of the increased input cost to the market. However, due to better product mix and strong cost control, the Company was able to increase its overall operating profit from Rs.344.57 million to Rs.416.58 million which translates into a growth of20.89% as compared to previous year. Your Company recorded a Pre-tax profit of Rs.381.90 million compared to Rs.322.27 million (excluding Rs.50.54 million towards dividend received from subsidiary) earned in the previous year registering an increase of 18.50%. The post tax profit recorded was Rs. 264.51 million as against Rs.507.40 million of previous year. The results of your Company against last year are not comparable due to the fact that the Company had recorded extra- ordinary income in the financial year ended 31 st December 2010 on account of sale of its stake in its wholly owned subsidiary, DIC Coatings India Limited.

ACCOUNTS OF SUBSIDIARY COMPANY

The Company has no subsidiary.

DIVIDEND

Considering the performance of the Company and keeping in mind the need to conserve resources for future growth, your Board recommends the rate of dividend declared to be Rs.4.00 per share (FY2010 Rs.5.00 per share), subject to approval of shareholders at the ensuing Annual General Meeting.

CAPITAL EXPENDITURE

Capital expenditure during the year amounted to Rs.138.64 million, a major part of which was spent on plant & equipment and building renovation.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

As 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, the information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo is annexed and forms a part of this Report.

DEPOSITS FROM PUBLIC

The Company had total unclaimed deposit amounting to Rs.0.25 million at the beginning of the year. After repaying the depositors, the balance amount of Rs.0.20 million remaining unpaid on expiry of 7 years as specified under the Companies Act, 1956 have been transferred to the Investor Education & Protection Fund. Pursuant to such transfer, no claim lies against the Company for unclaimed fixed deposits.

As on 31st December 2011, the Company has no unclaimed deposit lying against it.

HUMAN RESOURCES

Your Company believes that the competence and commitment of the people are the principle drivers of competitive advantage that enable the enterprise to create and deliver value. The industrial relations climate of your Company continues to remain harmonious with focus on improving productivity, quality and safety. Efforts are being made to strengthen organizational culture in order to attract and retain the best talent in the industry. Training needs are identified in a systematic manner and regular training programmes are organised, both in-house and external where employees are nominated to participate. The Board records its appreciation of the commitment and support of the employees and looks forward to their continued support. As on 31st December 2011, the Company had 630 employees on the pay roll.

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this Report. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, this Report and Accounts are being-sent to all the Members of the Company, excluding the Statement of Particulars of Employees. Any member interested in obtaining a copy of the said Statement may write to the Senior Executive Vice President (Corporate Affairs and Legal) & Company Secretary of the Company.

WEBSITE OF THE COMPANY

The Company has launched a new website www.dicindialtd.co where detailed information of the Company and its. products are provided.

INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board.

RELATED PARTIES

Notes to the Accounts sets out the nature of transactions with related parties. Transactions with Related Parties are carried out at arm's length. The details of such transactions are placed before the Audit Committee.

FINANCE

The Company's relationships with its consortium and other bankers continued to be cordial throughout the year. The Company would like to thank its Bankers for their support.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

While we do not have a formalized policy in this regard, the Company does support, in a small way, community welfare initiatives. DIC India Ltd's employees are committed to contribute to the realization of sustainable development through their everyday activities. The Company promotes the exchange of information to encourage greater awareness of CSR among its employees, as well as voluntary participation in related initiatives.

Determined to prevent disasters at manufacturing facilities, DIC conducts a variety of accident and safety drills and has taken the necessary steps to ensure full preparation against unforeseeable crises.

Guided by the principle of sustainable development, DIC implements a variety of measures aimed at reducing the environmental footprint. DIC strives to reduce the consumption of resources and energy to facilitate the efficient use of finite natural resources.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors' protection and maximizing long-term shareholders value. The certificate of the Auditors, M/s Lovelock & Lewes, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement of the Stock Exchanges is annexed.

SAFETY AND ENVIRONMENT

Highest priority is accorded to environment, occupational health and safety by your Company. Your Company's factories at Kolkata, Noida, Mumbai and Ahmedabad are all ISO certified by BVQI. Kolkata andNoida plant are ISO 9001:2008, ISO 14001:2004 and BS OHSAS 18001:2007 certified while Mumbai and Ahmedabad plant are ISO 9001:2008 certified. Your Directors, through the Company's Safety, Health and Environment Department, oversee and review the integrated Environment, Occupational Health and Safety Audits which ensure comprehensive coverage of all Company locations. Various proactive measures have been adopted and implemented which inter- alia include adoption of cleaner technology, conservation of resources through waste reduction, recycling and reuse of waste materials and ongoing training of employees. Your Company's focus on sustainable development will continue to be reinforced by improving standards of safety and environmental protection and further strengthened by the association with DIC Corporation, Japan which accords vital importance to these aspects.

As you are aware that the Ministry of Corporate Affairs (MCA) has vide its Circular No. 17/2011 dated 21st April 2011 and Circular No. 18/2011 dated 29th April 2011 (available on the website www.mca.gov.in) has introduced 'Green Initiative' whereby companies can now send various notices/documents/Annual Reports to their shareholders through electronic mode at the registered email address of the shareholders. The Company has accordingly initiated steps in this matter. Further, the Report and Accounts of your Company will also be available at the 'Investors' section of your Company's website, www.dicindialtd.co in a user friendly, downloadable format.

INFORMATION SYSTEM

The Company runs on ORACLE E-Business Suite Version 11.5 to remain updated with the latest system for better operational and timely information management. Pursuant to the ORACLE license period coming to an end, the Company is in the process of installing SAP ERP suite for a reliable, high end, comprehensive, disciplined and integrated business solution.

DIRECTORS

To broadbase the Board of Directors of the Company, Mr.Utpal Sengupta was inducted into the Board with effect from 26th July 2011 as an Additional Director. Mr U Sengupta's appointment is valid till the date of forthcoming Annual General Meeting. The Company has received a notice from a shareholder pursuant to Section 257 of the Companies Act, 1956 proposing his re-appointment. Appropriate resolution seeking his appointment is appearing in the Notice convening the Annual General Meeting of the Company.

Mr U Sengupta, an Independent Director, is not related to any of the other Director in the Company and does not hold any shares in the Company.

Pursuant to the approval of the members in their Annual General Meeting held on 28th April 2011, Dr P K Dutt was appointed as the Chairman of the Company till 31st March 2012 in the Wholetime capacity. Pursuant to the completion of his tenure, the Board in their meeting held on 8 th February 2012 appointed Dr. P K Dutt as the non- executive Chairman of the Company with effect from 1st April 2012.

In terms of Articles of Association of the Company, Mr D Banerjee, Mr P Koek and Mr B Choudhuri retire from the Board by rotation and being eligible, offer themselves for re-appointment. They do not hold any shares of the Company.

The appointments of Dr P K Dutt, Mr D Banerjee, Mr P Koek, Mr B Choudhuri and Mr U Sengupta, form part of the Notice of Annual General Meeting and the Resolutions are recommended for your approval.

Profile of these Directors, as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, is given in the Notice of the Annual General Meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2 AA) of the Act, the Directors state that:

a) in the preparation of the annual accounts for the year ended 31st December 2011, applicable accounting standards have been followed with no material departure;

b) your Directors have selected such accounting policies and applied them consistently and made judgements 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 31st December 2011 and of the profit for the year ended on that date;

c) your Directors 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; and

d) the accounts for the year ended 31st December 2011 have been prepared on a going Concern basis.

AUDITORS

Messrs Lovelock & Lewes, Chartered Accountants, retiring Auditors, being eligible, offer themselves for re-appointment.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company has transferred a total sum of Rs.0.41 million during the financial year 2011 to the Investor Education & Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividend amounting to Rs.0.16 million and a further Rs.0.25 million towards unclaimed fixed deposits & interests which has been lying with the Company for a period of 7 years from their respective due dates of payment.

RISKS & MITIGATING STEPS

Financial Risk

In the present scenario of interest volatility, the Company avails of various financing options to minimize the effect of interest risk.

Information Technology Risk

The Company is in the process of shifting from ORACLE to SAP in line with the Group policy. To ensure a smooth transition, the Company has a dedicated team of professionals who are going about to bring the change.

Operational Risk

The Company has a certified occupational health and safety management system which benefits to mitigate the risk associated with the health and safety of employees.

BUSINESS OUTLOOK AND FUTURE PROSPECTS

Inspite of slowdown in the economy, India is expected to register a growth of 7.6% for the fiscal year 2011-2012. According to reports, the main factors that could adversely impact the markets include oil prices, inflation, high rates and slowing growth.

Although there is a concern that further deterioration of economic crisis might occur, we expect that considering sustained domestic demand and its inherent strength, Indian economy would show rapid improvement.

Your Company's business strategy for the current financial year would be to consolidate the business which showed an impressive growth during last year and to focus on high quality market segment. By integrating individual technologies and functions from our Group's wide range of products, your Company will facilitate the development of new and high performance products. Further, your Company would focus on improving the operating margins through better productivity, greater focus on logistics and effective working capital management.

Your Company's continued focus on Research & Development enabled it to develop several environment friendly products including certain products in the field of high performance to cater to some niche markets. The R & D Centre is recognized by the Central Government, Ministry of Science and Technology. Your Company has a basket of several internationally recognised products and has plans to exploit these as well as to increase sales through new product launches and expanding market network.

The Company has continued its effort to implement all round cost saving measures and improving productivity to ensure that the Company's growth rate continues. The investment in Research and Development measures to upgrade its product portfolio and manufacturing process to cater to the future demands would be continued to maintain your Company's leadership in the market. It is the endeavour of your Company to deploy resources in a balanced manner so as to secure the interest of the shareholders in the short, medium and long term. With a significant improved customer base, experience in varied markets, continuous technical assistance from DIC Corporation, Japan, the world's largest ink manufacturing company and strong management team, your Company feels confident of sustained growth in all the market segments.

ACKNOWLEDGEMENT

The Board of Directors takes this opportunity to express its sincere appreciation for the continued support and confidence received from customers, distributors, suppliers, bankers, shareholders and other business associates.

Your Directors place on record their deep appreciation of the dedicated efforts and contribution of the employees at all levels and look forward to their continued support in the future as well.

Your Directors look forward to the future with confidence.

On behalf of the Board

DR P K DUTT

Chairman

Kolkata S BHAUMIK

8th February 2012 Managing Director


Dec 31, 2010

FINANCIAL RESULTS (Rs. in Million)

2010 2009

Net Sales 5,533.61 4,592.52

Other Income 119.07 103.90

Total Income 5,652.68 4,696.42

Operating Profit 344.59 316.37

Other Non-operating Income 50.54 50.54

Profit before Taxation & Extraordinary Items 372.81 319.53

Extraordinary Income 275.69 --

Provision for Taxation including Deferred Taxation 141.10 96.58

Profit after Tax 507.40 222.95

Balance brought forward from previous year 693.79 536.30

Making a total available for appropriation 1,201.19 759.25

Out of which Directors have transferred to General Reserve 51.00 22.50

Your Board recommends for distribution as normal dividend at the rate of Rs.4.00 Share and special dividend at the rate of Re.1.00 Share on 9,178,977 Equity Shares (together with Tax on Dividend & Surcharge) absorbing in all 53.51 42.96 (Previous year - Rs.4.00 per share on 9,178,977 Equity Share) Leaving a balance carried forward of 1,096.68 693.79

PERFORMANCE REVIEW

During the year your Companys overall net sales increased from Rs.4,592.52 million to Rs.5,533-61 million registering an increase of 20.50% in terms of value and 17.2% in terms of volume. During the year under review, the Company witnessed a significant increase in raw material cost. The Company could pass on the increase in input cost partially to customers, however, due to better product mix and strong cost control, the Company was able to increase its overall operating profit from Rs.3l6.37 Million to Rs.344.59 Million. During the year, the Company sold its entire holding of shares in the wholly owned subsidiary of the Company, M/s DIC Coatings India Limited at a consideration of Rs.400.68 million with a profit of Rs.275.69 Million resulting in a higher pre-tax profit of Rs.648.50 million compared to Rs.319-53 million earned in the previous year registering an increase of 102.9%. The post tax profit also accordingly increased to Rs.507.40 million compared to Rs.222.95 million in the previous year, an increase of 127.50%.

ACCOUNTS OF SUBSIDIARY COMPANY

During the year, the Company sold its entire shareholding in the only wholly owned subsidiary, DIC Coatings India Limited, to The Valspar (Singapore) Corporation Pte Limited and as on 31st December, 2010, there are no other subsidiary of the Company.

DIC COATINGS INDIA LIMITED

As had been informed to the Members in the past, the Management was evaluating various options to divest its shareholding held in DIC Coatings India Limited.

Accordingly, after exploring all avenues, your Board in its meeting held on 26th March, 2010, had approved the execution of a Share Purchase Agreement defining the terms of sale of the Companys entire shareholding in its wholly owned unlisted subsidiary, DIC Coatings India Limited, to The Valspar (Singapore) Corporation Pte Limited, a company incorporated and validly existing under the laws of Singapore. Thereafter the Board of Directors of DIC India Limited in its meeting held on 26th May, 2010 approved the sale of the entire shareholding in its wholly owned unlisted subsidiary, DIC Coatings India Limited, to The Valspar (Singapore) Corporation Pte Limited for an aggregate consideration of Rs.400,680,362. With effect from 1st June, 2010, DIC Coatings Limited ceased to be a subsidiary of your Company.

DIVIDEND

Considering the performance of the Company and keeping in mind the need to conserve resources for future growth, your Board recommends an increase in the rate of dividend declared to Rs.5.00 per share (including a special dividend of Re.1.00 per share) (FY2009 - Rs.4.00 per share), subject to approval of shareholders at the ensuing Annual General Meeting.

CAPITAL EXPENDITURE

Capital expenditure during the year amounted to Rs.133-52 million, a major part of which was spent on plant and equipment and building renovation.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

As required under Section 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo is annexed and forms a part of this Report.

DEPOSITS FROM PUBLIC

As on 31st December, 2010, 22 deposits aggregating to Rs.0.25 million remained unclaimed by the depositors.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors protection and maximizing long-term shareholders value. The certificate of the Auditors, M/s Lovelock & Lewes, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement of the Stock Exchanges is annexed

SAFETY AND ENVIRONMENT

Highest priority is accorded to environment, occupational health and safety by your Company. Your Companys main factories at Kolkata and Noida are recipient of ISO 14001 certification by BVQI. Your Directors, through the Companys Safety, Health and Environment Department, oversee and review the integrated environment, occupational health and safety audits which ensure comprehensive coverage of all Company locations. Various proactive measures have been adopted and implemented which inter-alia include adoption of cleaner technology, conservation of resources through waste reduction, recycling and reuse of waste materials and ongoing training of employees. Your Companys focus on sustainable development will continue to be reinforced by improving standards of safety and environmental protection and further strengthened by the association with DIC Corporation, Japan which accords vital importance to these aspects.

INFORMATION SYSTEM

The Company runs on ORACLE E-Business Suite Version 11.5 to remain updated with the latest system for better operational and timely information management. With ORACLE, a reliable, high end, comprehensive, disciplined and integrated business solution in place, the Company has gained from the inbuilt checks and balances and efficient controls by maintaining audit trails.

DIRECTORS

Mr A D Chatterjee has been the Wholetime Director of the Company since 2007. Subsequent to re-assignment of his duties within the DIC Group, he has been transferred to the holding company, DIC Asia Pacific Pte Ltd, Singapore and he has accordingly tendered his resignation from the Board with effect from 21st April, 2010.

Mr Mitsunobu Miyasaka, the erstwhile Regional Managing Director of the holding Company, DIC Asia Pacific Pte Ltd, Singapore had been in the Board of the Company since 18th April, 2007. Subsequent to his taking a new assignment within the Group, he has tendered his resignation from the Board of Directors with effect from 26th May, 2010.

The Board recorded its appreciation for the dedication, foresightedness, leadership and contribution made by Mr A D Chatterjee and Mr M Miyasaka to the growth of the Company.

Pursuant to the resignation of Mr M Miyasaka from the Board, Mr Kazuo Kudo has been appointed as the Regional Managing Director of the Companys holding Company and has been nominated to the Board of DIC India Limited with effect from 2nd June, 2010.. He also holds directorship in several other DIC Group Companies. Mr. Kudos appointment is valid till the date of forthcoming Annual General Meeting. The Company has received a notice from a shareholder pursuant to Section 257 of the Companies Act, 1956 proposing his re-appointment. Appropriate resolution seeking his appointment is appearing in the Notice convening the Annual General Meeting of the Company.

Mr K Kudo is not related to any Director in the Company and does not hold any shares in the Company.

Pursuant to the succession planning of the Company, the Board in its meeting held on 21st October 2010, had rescinded the present terms of appointment of Dr P K Dutt as the Chairman & Chief Executive Officer which was due to expire on 31st March, 2011 and has given a fresh term of appointment of 15 months to Dr Dutt as the Chairman of the Company with effect from 1st January, 2011 till 31st March, 2012.

The Board in the same meeting held on 21st October, 2010 had also rescinded the present terms of appointment of Mr Samir Bhaumik as the Wholetime Director which was due to expire on 28th October, 2012 and has given a fresh term of appointment to Mr Bhaumik as the Managing Director of the Company with effect from 1st January, 2011 for a period of 3 years.

In terms of Articles of Association of the Company, Mr S Bose and Mr P L Agarwal retire from the Board by rotation and being eligible, offer themselves for re-appointment. They do not hold any share in the Company.

The appointments of Dr P K Dutt, Mr S Bhaumik, Mr Kudo, Mr S Bose and Mr P L Agarwal, form part of the Notice of Annual General Meeting and the Resolutions are recommended for your approval.

Profile of these Directors, as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, is given in the Notice of the Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Act, the Directors state that:

a) in the preparation of the annual accounts for the year ended 31st December, 2010, applicable accounting standards have been followed with no material departure;

b) your Directors have selected such accounting policies and applied them consistently and made judgements 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 31st December, 2010 and of the profit for the year ended on that date;

c) your Directors 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; and

d) the accounts for the year ended 31st December, 2010 have been prepared on a going concern basis.

AUDITORS

Messrs Lovelock & Lewes, Chartered Accountants, retiring Auditors, being eligible, offer themselves for re-appointment.

TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND

The Company has transferred a total sum of Rs.0.31 million during the financial year 2010 to the Investor Education & Protection Fund established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividend amounting to Rs.0.17 million and a further Rs.0.14 million towards unclaimed fixed deposits & interests which has been lying with the Company for a period of 7 years from their respective due dates of payment.

RISKS & MITIGATING STEPS

Financial Risk

The Company has a system of periodical internal audit of all regions and also of various functional areas of the Company. The reports are placed before the Audit Committee and give directions towards rectification of the problem at hand.

Strategic Risk

The Company identified that being a knowledge based industry, intellectual property rights was a major area of threat. Accordingly, the Company has taken an intensive exercise to ensure all products and technologies used by the Company were covered under the applicable trademark and copyright Acts.

Operational Risk

The Company has a system to periodically review the operational risks and take suitable measures as may be appropriate to counter such risks.

BUSINESS OUTLOOK AND FUTURE PROSPECTS

India continues to remain one of the fastest growing economies in the world with a growth rate of 8.6% during 2010 -11. The GDP growth is reverting to its earlier high growth trajectory led by broad-based growth momentum. The growth process was further supported by the buoyant services sector and enhanced agricultural output. Industrial growth was robust, albeit, with greater volatility.

However, it was noticed that the robust growth has also coincided with sectoral imbalances whereby demand is growing faster than capacity thereby rising inflationary pressure. The fact that uncertain rainfalls have resulted in agricultural growth being lower than population growth has also added to the rising inflation particularly in food prices. For high growth to co-exist with a low inflation regime, structural policy measures to limit the magnitude of imbalances would be critical for which the Government is taking active measures.

Your Companys business strategy for the current financial year would be to consolidate the business which showed an impressive growth during last year and to focus on high quality market segment. By integrating individual technologies and functions from our Groups wide range of products, your Company will facilitate the development of new and high performance products in the commercial printing sectors. Further, your Company would focus on improving the operating margins through better productivity, greater focus on logistics and effective working capital management. The concern however remains on the uncertainty in oil price.

Your Companys continued focus on research & development enabled it to develop several environment friendly products including certain products in the field of high performance to cater to some niche markets. The R&D Centre is recognized by the Central Government, Ministry of Science and Technology. Your Company has a basket of several internationally recognised products and has plans to exploit these as well as to increase sales through new product launches and expanding market network.

The Company has continued its effort to implement all round cost saving measures and improving productivity to ensure that the Companys growth rate continues. The investment in research and development measures to upgrade its product portfolio and manufacturing process to cater to the future demands would be continued to maintain your companys leadership in the market. It is the endeavour of your Company to deploy resources in a balanced manner so as to secure the interest of the shareholders in the short, medium and long term. With a significant improved customer base, experience in varied markets, continuous technical assistance from DIC Corporation, Japan, the worlds largest ink manufacturing company and strong management team, your Company feels confident of sustained growth in all the market segments.

ACKNOWLEDGEMENT

The Board of Directors takes this opportunity to express its sincere appreciation for the continued support and confidence received from customers, distributors, suppliers, bankers, shareholders and other business associates.

Your Directors place on record their deep appreciation of the dedicated efforts and contribution of the employees at all levels and look forward to their continued support in the future as well.

Your Directors look forward to the future with confidence.

On behalf of the Board

DR P K DUTT

Chairman

Kolkata B CHOUDHURI

9th February, 2011 Director




Dec 31, 2009

FINANCIAL RESULTS (Rs. in Million)

2009 2008

Net Sales 4592.52 4719.29

Other Income 103.90 40.64

Total Income 4696.42 4759.93

Operating Profit 316.32 280.58

Profit before Taxation 319.53 231.48

Provision for Taxation including deferred taxation 96.58 80.54

Profit after Tax 222.95 150.94

Balance brought forward from previous year 536.30 438.05

Making a total available for appropriation 759.25 588.99

Out of which Directors have transferred to General Reserve 22.50 15.10

Your Board recommends for distribution as Dividend at the rate of Rs.4.00 per share on 9,178,977 Equity Shares (together with Tax on Dividend & Surcharge) absorbing in all 42.96 37.59

(Previous year: Rs.3-50 per share on 9,178,977 Equity Share)

Leaving a balance carried forward of 693.79 536.30

PERFORMANCE REVIEW

The Printing Ink market witnessed demand slowdown and sales price came down in general. The slowdown in the economy resulted in the reduction in number of pages by newspaper houses and also in the number of colour advertisement leading to lower demand for News Ink. Packaging Inks business started slowly but subsequently picked up volume. During the year the raw material cost remained low due to subdued global demand

Due to the above, your Companys overall net sales decreased from Rs.4,719.29 million to Rs.4,592.52 million registering a decline of 2.68%. Low raw material cost and improvement in operating efficiency resulted in increase in operating margin. Pre-tax profit was Rs.319.53 million compared to Rs.231.48 million earned in the previous year registering an impressive increase of 38.04%. The post tax profit was Rs.222.95 million in 2009 compared to Rs.150.94 million in the previous year, an increase of 47.71%.

ACCOUNTS OF SUBSIDIARY COMPANY

Your Company has been exempted from the provisions of Section 212(1) of the Companies Act, 1956 relating to the attachment of the accounts of its subsidiary, DIC Coatings India Limited, to its accounts for the financial year ended 31st December, 2009 pursuant to approval of the Central Government under Section 212(8) of the Companies Act, 1956. However, a statement of financial information regarding subsidiary company forms part of the Annual Report and is being disclosed pursuant to the direction of the Central Government while granting the aforesaid exemption. Shareholders desirous of obtaining the annual accounts of your Companys subsidiary may obtain the same upon request. The annual report and accounts of the subsidiary company will be kept for inspection at your Companys Registered Office and that of the subsidiary company.

DIC COATINGS INDIA LIMITED (DCIL)

During the year under review, Pesticide and Paint container business started out in a subdued way but improved subsequently. PP cap business performed at expected level. Aerosol container business was normal and growing. Crown customer also picked up in the latter half. Organosol business was stable. There was a decline in the Collapsible tube business. Battery jacket business was stable.

The Company witnessed a increase in sales from Rs.433.84 million in 2008 to Rs.457.56 million. The impact of lower raw material cost and improvement in operational efficiency resulted in the profit before tax being Rs.71.50 million as against Rs.44.92 million registered during the last year. Likewise, profit after- tax also increased from 29.78 million to Rs.48.32 million in the current year.

The Company had declared an interim dividend of Rs.2.50 per share (25%) and followed it up with a second interim dividend of Rs.2.20 (22%) per share in their meeting held on 22nd October, 2009. The total dividend pay-out for the year amounted to Rs.50,539,790.90.

As informed to the Stock Exchanges, the Management is evaluating various options to divest its shareholdings with DIC Coatings India Limited.

As stipulated by Clause 32 of the Listing Agreement with the Stock Exchanges, the consolidated financial statements have been prepared by the Company in accordance with the applicable accounting standards issued by the Institute of Chartered Accountants of India. The audited consolidated financial statements together with the Auditors Report form part of the Annual Report.

DIVIDEND

Considering the performance of the Company and keeping in mind the need to conserve resources for future growth, your Board recommends an increase in the rate of dividend declared to Rs.4.00 per share (FY2008 - Rs.3-50 per share), subject to approval of shareholders at the ensuing Annual General Meeting.

CAPITAL EXPENDITURE

Capital expenditure during the year amounted to Rs.94.99 million, a major part of which was spent on plant and equipment.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

As required under Section 217(l)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, the information relating to conservation of energy, technology absorption and foreign exchange earnings & outgo is annexed and forms a part of this Report.

DEPOSITS FROM PUBLIC

As on 31st December, 2009, 32 deposits aggregating to Rs.0.34 million remained unclaimed by the depositors.

HUMAN RESOURCES

Your Company believes that the competence and commitment of the people are the principle drivers of competitive advantage that enable the enterprise to create and deliver value. The industrial relations climate of your Company continues to remain harmonious with focus on improving productivity, quality and safety. Efforts are being made to strengthen organizational culture in order to attract and retain the best talent in the industry. Training needs are identified in a systematic manner and regular training programmes are organised, both in-house and external where employees are nominated to participate. The Board records its appreciation of the commitment and support of the employees and looks forward to their continued support.

As on 31st December, 2009, the Company had 620 employees on the pay roll. The statement showing particulars of employees pursuant to Section 217C2A) of the Companies Act, 1956 is annexed and forms an integral part of this Report.

INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal control procedures which is commensurate with the size and nature of business. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the Company are monitored and evaluated by internal auditors and their audit reports are periodically reviewed by the Audit Committee of the Board of Directors. The observations and comments of the Audit Committee are placed before the Board.

CORPORATE GOVERNANCE

Your Company attaches considerable significance to good Corporate Governance as an important step towards building investor confidence, improving investors protection and maximizing long-term shareholders value. The certificate of the Auditors, M/s Lovelock & Lewes, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement of the Stock Exchanges is annexed.

SAFETY AND ENVIRONMENT

Highest priority is accorded to environment, occupational health and safety by your Company. Your Companys main factories at Kolkata and Noida are recipient of ISO 14001 certification by BVQI. Your Directors, through the Companys Safety, Health and Environment Department, oversee and review the integrated Environment, Occupational Health and Safety Audits which ensure comprehensive coverage of all Company locations. Various proactive measures have been adopted and implemented which inter- alia include adoption of cleaner technology, conservation of resources through waste reduction, recycling and reuse of waste materials and ongoing training of employees. Your Companys focus on sustainable development will continue to be reinforced by improving standards of safety and environmental protection and further strengthened by the association with DIC Corporation, Japan which accords vital importance to these aspects.

INFORMATION SYSTEM

The Company runs on ORACLE E-Business Suite Version 11.5 to remain updated with the latest system for better operational and timely information management. With ORACLE, a reliable, high end, comprehensive, disciplined and integrated business solution is in place, the Company has gained from the inbuilt checks and balances and efficient controls by maintaining audit trails.

DIRECTORS

The Board inducted Mr Bhaskar Nath Ghosh into the Board of Company with effect from 25th July, 2009. Mr B N Ghosh brings with his 37 years of experience, vast knowledge in field of finance eg. investment planning, corporate projections, risk management, long term financial planning and corporate decision making. Mr B N Ghosh is not related to any Director in the Company and does not hold any shares in the Company.

The appointment of Mr B N Ghosh is valid till the date of forthcoming Annual General Meeting. The Company has received notice from a shareholder, pursuant to Section 257 of the Companies Act 1956, for the appointment of Mr B N Ghosh. Appropriate resolution seeking his appointment is appearing in the Notice convening the Annual General Meeting of the Company.

In terms of Articles of Association of the Company, Mr D Banerjee, Mr B Choudhuri and Mr P Koek retire from the Board by rotation and being eligible, offer themselves for re-appointment. They do not hold any share in the Company.

These appointments form part of the Notice of Annual General Meeting and the Resolutions are recommended for your approval.

Profile of these Directors, as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges, is given in the Notice of the Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Act, the Directors state that:

a) in the preparation of the annual accounts for the year ended 31st December, 2009, applicable accounting standards have been followed with no material departure;

b) your Directors have selected such accounting policies and applied them consistently and made judgements 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 31st December, 2009 and of the profit for the year ended on that date;

c) your Directors 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; and

d) the accounts for the year ended 31st December, 2009 have been prepared on a going concern basis.

AUDITORS

Messrs Lovelock & Lewes, Chartered Accountants, retiring Auditors, being eligible, offer themselves for re-appointment.



ACKNOWLEDGEMENT

The Board of Directors takes this opportunity to express its sincere appreciation for the continued support and confidence received from customers, distributors, suppliers, bankers, shareholders and other business associates.

Your Directors place on record their deep appreciation of the dedicated efforts and contribution of the employees at all levels and look forward to their continued support in the future as well.

Your Directors look forward to the future with confidence.

On behalf of the Board

DR P K DUTT

Chairman & Chief Executive Officer

Kolkata B CHOUDHURI

10th February, 2010 Director

 
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