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Directors Report of Haryana Leather Chemicals Ltd.

Mar 31, 2014

Dear Members,

The Directors of Haryana Leather Chemicals Ltd. are pleased to present the 29th Annual Report and Audited Statement of the Company''s accounts for the year ended on 31st March, 2014.

FINANCIAL RESULTS

A summary of the financial results for the year 2013-2014 is given below:

2013-14 2012- 13 (Rs. in Lacs) (Rs. in Lacs)

Sales Turnover (Net of Excise) 4479.39 3967.14

Gross Profit 467.86 398.49

Deductions

Depreciation 78.49 75.2

Interest 12.85 20.42

Profit before tax 376.52 302.87

Less: Provision for Income Tax for the year 93.48 92.00

Less: Provision for Fringe Benefit Tax (FBT) - -

Less: Provision for taxation / FBT earlier year 1.59 28.11

Add: Provision for Income Tax written back - -

Less: Previous year''s adjustment - -

Less/(Add): Deferred tax liability 9.71 4.29

Profit after tax and available for appropriation 271.74 178.36

Less: Provision for dividend 34.36 29.45

Less: Provision for dividend tax 5.84 5.01

Less: Transfer to general reserve 34.73 21.58

Profit carried to balance sheet 196.81 122.32

OPERATIONS

During the year the Company has achieved a sales turnover of Rs. 4479 lacs against Rs. 3967 lacs for the previous year. The net profit for the year is Rs. 272 lacs against Rs.178 lacs for the previous year. The exports are at Rs.1632 lacs compared to the previous year''s exports of Rs. 1673 lacs.

The Company has recorded approximately 12% growth in sales in comparison to previous year and 50% increase in profit carried to Balance Sheet.

DIRECTORS

Pursuant to the provisions of the Articles of Association of the Company, the Directors - Mr. Pradeep Behl, Dot. Massimo Medini, Lt. Gen. (Retd.) H.C. Dutta retire by rotation at the forthcoming Annual General Meeting to be held on 20th September, 2014 and being eligible they offer themselves for re-appointment.

STATUTORY AUDITORS

The statutory auditors of the Company M/s S. C. DEWAN & Co., Chartered Accountants, Panchkula are retiring at the forthcoming Annual General Meeting and they are eligible for re-appointment, offers themselves for the same. Their appointment, if made, will be in accordance with section 224 (1-B) of the Companies Act, 1956 (hereinafter referred to the "Act").

Auditor''s report does not need any comments from the directors.

PARTICULARS OF EMPLOYEES u/s 217(2) (A)

The Company did not employ any person drawing a remuneration of Rs. 5,00,000.00 or above for one month or part of the month or Rs. 60,00,000.00 or above for one year, whose particulars are required to be mentioned u/s 217(2)(A) of the Companies Act, 1956.

SECRETARIAL COMPLIANCE CERTIFICATE

As the paid up share capital of the Company is more than Rs. 10,00,000/- and below Rs. 5,00,00,000/- so a certificate from the Company Secretary in practice is attached with the report as per the requirements of section 383A of the Companies Act, 1956 who has conducted audit of the books and other documents of the Company and has given the certificate.

COST AUDITOR''S COMPLIANCE CERTIFICATE

As the Central Government has by an order directed that an audit of cost accounts of the Company should be conducted in the manner specified in MCA order 52/26/CAB -2010 Dt. 24-01-2012, by an auditor who shall be a Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959, so a certificate from the Cost Auditor in practice is taken as per the requirements of section 209( 1 )(d) of the Companies Act, 1956 who has conducted audit of the books and other documents of the Company and has given the certificate.

TRANSFER OF FUNDS TO INVESTOR EDUCATION AND PROTECTION FUND

As the Company is distributing dividend to its shareholders since 2006 on recommendation of the shareholders of the Company. The Board also authorised to take all the necessary steps to transfer the unpaid / unclaimed dividend of Equity Shareholders for the year 2006-2007 to the Investor Education and Protection Fund (IEPF) of the Central Government established under sub section (1) of section 205C of the Companies Act, 1956 on the date as per the provisions of the relevant section of the Act.

FIXED DEPOSIT

The Company has not accepted / renewed any fixed deposits during the period under review.

CORPORATE GOVERNANCE

A certificate on the compliance of conditions of corporate governance has been obtained from the Statutory Auditors of the Company and the same has been given below as Annexure.

DIRECTORS'' RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956.

The Board of Directors of the Company confirms that:

a. during the preparing of the annual accounts, the applicable accounting standards have been followed and no material departure has taken place;

b. the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give an accurate view of the state of affairs of the Company as at March 31, 2014 and of the profit of the Company for the year ended on that date;

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

d. annual accounts have been prepared on an ongoing concern basis.

QUALITY CONTROL

The Company''s quality control system has gained further strength with focus on Restricted Substances List (RSL) of REACFI (Registration, Evaluation and Authorization of Chemicals). New RSL inclusions of 2013 have been successfully addressed by the Company. The Company has expanded its in-house chromatography platform by "state of the art" instruments, and key inputs are screened for suspected RSL.

Quality incidences reported by customers were deeply investigated and corrections in product specifications and processes have been implemented to avoid any recurrence. The Company has also undertaken restructuring of its quality policy and new document system that will comply with the requirements of ISO 9001 : 2008 and ISO 14000 : 2004 is being put in place.

EXPORT OPERATIONS

In spite of recessionary trends in China, a key export market, the Company has been able to maintain its export operations -though growth targets could not be realized. The Company has identified thrust areas in Latin American markets and hopes for an early breakthrough in this distant market. The Company explored the possibility of setting up a representative office in the US to serve Latin American markets, but found that it will be more economical to operate through agents and dealers at this early stage. The efforts undertaken for entering Indonesian market have also yielded encouraging results and Company will consolidate its efforts further in this market.

TECHNOLOGY DEVELOPMENT

Since the last two years, the Company has been aggressively pursuing technology development of Di-Sulphone Syntan, Acrylic Impact and Flow Modifiers for use in PVC. A vital component of this project was a new generation spray dryer - a part of which has been imported. During the year the entire plant, its sequence of operation was tested and fuel consumption validated by producing full scale batches. The results from the plant in terms of yield and heat efficiency are satisfactory and the plant has been put to successful commercial production.

During the year the Company also tested several new technologies on bulk storage, fluid handling, pneumatic pumping and batching of key inputs with a view to improve plant efficiency and reduce batch process times. This activity was essential in view of emerging trends in transportation methods of chemicals in bulk tankers. The initial results of the new techniques are very satisfactory. In the coming few months this concept will be replicated to handle more products to improve operational convenience and faster batch cycle.

DIVIDEND

Considering the current growth and profitability, the Directors are pleased to recommend the dividend @ 7%.

PERSONNEL & INDUSTRIAL RELATION

The Company continues to maintain cordial relations across all levels of workforce. The key managerial staff has also maintained cordial relationship with their subordinates. The Company''s efforts to involve shop floor supervisors and workers in generating new technical ideas have caused improved efficiency and safety. A new software for online sanction of leaves is being tested. The Company has maintained the yearly increments and bonus system to ensure motivation at all levels.

ENVIRONMENT & POLLUTION CONTROL MEASURES

The Company has complied with all the required State Pollution Control Regulations and its Amendments from time to time. The waste water discharge has been further reduced and has almost reached a quantity where the Company can aspire to achieve a "zero discharge" status. The vacuum distillation process and equipment for recovery of water from waste water was evaluated and was found enviable for small volume. It was considered that instead of water recovery, the wash water should be minimized and reused in subsequent batches. This system of reuse of wash water has been implemented in few products and more are likely to be covered under this concept.

The Company has also initiated expansion of water testing lab to test key parameters like COD, BOD, TSS and TDS. The data generated through this exercise will enable further improvement from each effluent stream for stricter control in discharge of wash water.

ACKNOWLEDGEMENT

The Directors extend their sincere thanks to Company''s suppliers for enabling stricter quality controls; domestic and international dealers for their zealous approach for increased market share; representatives, service providers, financial institutions and technical consultants for their continued support.

The Directors deeply appreciate the involvement of all the employees in achieving the sales growth and for putting their best efforts towards meeting various challenges during the year.

For and on behalf of the Board of Directors of Haryana Leather Chemicals Limited

Place : New Delhi N.K. JAIN PANKAJ JAIN Date : 14th May, 2014 Chairman Managing Director-cum-Vice Chairman


Mar 31, 2013

Dear Shareholders,

The directors of Haryana Leather Chemicals Ltd. are pleased to present the 28th Annual Report and Audited

Statement of the company''s accounts for the year ended on 31st March, 2013,

FINANCIAL RESULTS

A summary of the financial results for the year 2012-2013 is given below:

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

Sales Turnover (Net of Excise) 3967.14 3219.97

Gross Profit 398.49 294.59

Deductions

Depreciation 75.20 74.62

Interest 20.42 17.21

Profit before Tax 302.87 202.76

Less: Provision for Income Tax for the year 92.00 47.15

Less: Provision for Fringe Benefit Tax for the Year

Less: Provision for Taxation /FBT earlier year 28.11 1.43

Add: Provision for Income Tax written back - 18.45

Less: Previous year Adjustment

Profit after Tax and available for Appropriation 178.36 169.92

Less: Provision for Dividend 29.45 29.45

Less: Provision for Dividend Tax 5.01 5.01

Less: Transfer to General Reserve 21.58 20.32

Profit carried to Balance Sheet 122.32 115.14

OPERATIONS

During the year the company has achieved a sales turnover of Rs. 3,967 lacs against Rs. 3,220 lacs for the previous year. The net profit for the year is Rs. 178 lacs against Rs. 169.92 lacs for the previous year. The exports are at Rs. 1,673 lacs compared to the previous year''s exports of Rs. 1,092 lacs. The company has recorded 53% growth in sales in export market as compared to last year.

DIRECTORS

Pursuant to the provisions of the Articles of Association of the Company, the directors - Mr. Pradeep Behl, Dot. Massimo Medini, Lt. Gen. (Retd.) H.C. Dutta retire by rotation at the forthcoming Annual General Meeting to be held on 7th August, 2013 and being eligible they offer themselves for re-appointment.

STATUTORY AUDITORS

The statutory Auditors of the company M/s. S. C. DEWAN & Co., Chartered Accountants, Panchkula are retiring at the forth coming Annual General Meeting and they are eligible for re-appointment offers themselves for the same. Their appointment, if made, will be in accordance with section 224 (1-B) of the Companies Act, 1956 (hereinafter referred to the "Act"). Auditor''s report does not need any comments from the directors.

PARTICULARS OF EMPLOYEES u/s 217(2) (A)

The company did not employ any person drawing a remuneration of Rs. 5,00,000/- or above for one month or part of the month or Rs. 60,00,000/- or above for one year, whose particulars are required to mention u/s 217(2)(A) of the Companies Act, 1956.

SECRETARIAL COMPLIANCE CERTIFICATE

As the paid up share capital of the company is more than Rs. 10,00,000/- and below Rs. 5,00,00,000/- so a certificate from the Company Secretary in practice is attached with the report as per the requirements of section 383A of the Companies Act. 1956 who has conducted audit of the books and other documents of the company and given the certificate.

TRANSFER OF FUNDS TO INVL t, ,, 1.0. ION FUND;

As the Company is distributing dividend to its shareholders since 2006 on recommendation of the shareholders of the Company. The Board also authorised to take all the necessary steps to transfer the unpaid / unclaimed Dividend of Equity Shareholders for the year 2005-2006 to the Investor Education and Protection Fund (IEPF) of the Central Government established under sub-section (1) of section 205C of the Companies Act, 1956 on the date as per the provisions of the relevant section of the Act.

FIXED DEPOSIT

The company has not accepted / renewed any fixed deposits during the period under review.

CORPORATE GOVERNANCE

A certificate on the compliance of conditions of corporate governance has been obtained from the Statutory Auditors of the company and the same has been given below as Annexure.

DIRECTORS'' RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956.

The Board of Directors of the company confirms that:

i. during the preparing of the annual accounts, the applicable accounting standards have been followed and no material departure has taken place;

ii. the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give an accurate view of the state of affairs of the company as at 31st March, 2013 and of the profit of the company for the year ended on that date;

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

iv. annual accounts have been prepared on an ongoing concern basis.

QUALITY CONTROL

The focus of company''s quality control has been to comply to REACH legislation (Registration, Evaluation and Authorization of Chemicals) of ECHA (European Chemical Agency) and to update changes in restricted substance list (RSL). Though most vendors have started certifying materials but regular validation from outside testing labs like SGS and INTERTEK has been carried out throughout the year. The company has also outlined an expansion plan of quality control lab to include more chromatography equipment to cover the expanding list of restricted substances.

All the quality incidences reported by customers in domestic and export market were promptly attended and resolved to their full satisfaction. The company continues to comply with the quality policy and the quality objectives outlined in the ISO 9001-2000 and ISO 14001 internal system and ISO certification are under renewal.

EXPORT OPERATIONS

Company''s efforts to increase exports have yielded significant results in most of the areas. The overall increase of sales revenue can be attributed mainly to an export growth of nearly 53% with revival of some key markets. Introduction of some high value products to markets in Poland and China also resulted in increased exports. Company also invited important dealers from Indonesia and Ethiopia for training and orientation on company''s new line of products targeted for these markets.

Company has also initiated alliances with competitors to initiate exports in those markets where the company could not find appropriate agents. Such alliances, especially in Latin America, can be extremely viable and beneficial for export growth. The company is also exploring possibility of setting up a representative office in the US to serve Latin American markets.

TECHNOLOGY DEVELOPMENT

The first phase of TDB funded project for commercialization of Polyurethane Dispersions has been successfully completed and the company has decided not to scale up to second phase in immediate future. Considering the revised phasing plan, the company has revised the financial outiay and has pre-paid the TDB loan of Rs. 125 lacs in monthly installment. As per the deed of settlement the monthly repayments covering the principle amount of TDB and the applicable interest started in Oct. 2012 and have concluded in June 2013. The scale up, if required in future, is proposed to be funded from internal accruals.

Plant erection work for the new spray dryer required for technology development of new generation of Di-Sulphone syntans, Acrylic impact and flow modifiers for PVC is in full swing and final stages. Upto March 2013, most of the equipment was in place - except the heater unit The stress testing of structure, dry air run are planned between July - August 2013. The entire commissioning and testing is projected to be completed before Sept. 2013.

DIVIDEND

Considering the current growth and profitability, the directors are pleased to recommend continuation of dividend of 6%.

PERSONNEL & INDUSTRIAL RELATION

Industrial relation remained cordial across all segments of skilled and unskilled workforce.

The company has been able to maintain cordial relations across all levels of workforce. The attrition rate of skilled workforce has been negligible. The feedback to employees through the annual appraisal system has instilled a sense of deeper responsibility amongst the mid-level managers and they are being further trained to take bigger operational responsibilities. The company has maintained the yearly increments and bonus system to ensure motivation at all levels.

ENVIRONMENT & POLLUTION CONTROL MEASURES

The company has been able to satisfactorily meet various statutory regulations of state pollution control board. The periodic sampling of air and water carried out by inspecting agency has validated that company has strictly adhered to the waste discharge norms. Inspite of increased production, the waste water discharge has not increased due to tighter control of wash cycles. The company continues to deliver all solid waste to Gujarat Enviro Protection & Infrastructure (Haryana) Pvt. Ltd. (GEIPL) common treatment facility for disposal.

The company is also actively considering various new technologies for waste water recovery. Preliminary discussions with some German Companies have revealed that using vacuum distillation process the waste water can be recovered using minimum energy. A techno - commercial evaluation of this technology is currently under progress.

ACKNOWLEDGEMENT

The Directors would like to extend their deep regards and sincere thanks to company''s suppliers, domestic and international dealers, representatives, service providers, financial institutions and technical consultants for their continued support.

The directors also acknowledge and appreciate the commitment of all the employees who are putting their best efforts towards company''s goals and objectives.

For and on behalf of the Board of Directors of

Haryana Leather Chemicals Limited

Place : GURGAON N.K. JAIN PANKAJ JAIN

Date : 5th July, 2013 Chairman Managing Director-cum-Vice Chairman


Mar 31, 2010

The directors are pleased to present the TWENTY FIFTH Annual Report and Audited statement of accounts of the company for the year ended on 31st March, 2010.

FINANCIAL RESULTS

A summary of financial results for the year 2009-2010 is given below :

(Rs. in Lacs) (Rs. in Lacs) 2009-2010 2008-2009

Sales Turnover (Net of Excise) 3236.07 2298.86

Gross Profit 437.98 248.40 Deductions

Depreciation 66.50 65.79

Interest 7.14 4.36

Profit before Tax 364.34 178.25

Less: Provision for Income Tax for the year 75.00 39.85

Less: Provision for Fringe Benefit Tax for the Year 0.00 4.00

Less: Provision for Taxation/FBT Earlier year 0.00 0.80

Add: Provision for Income Tax written back 13.57 3.25

Less: Previous year Adjustment 0.00 0.00

Less/(Add): Deferred Tax (0.92) (5.37)

Profit after Tax and available for Appropriation 303.83 142.22

Less: Provision for Dividend 29.45 29.45

Less: Provision for Dividend Tax 5.01 5.01

Less: Transfer to General Reserve 40.40 16.16

Profit carried to Balance Sheet 228.97 91.60

OPERATIONS

During the year the company has achieved a sales turn over of Rs.3236 lacs against Rs.2299 lacs for the previous year and net profit for the year is Rs.303.83 lacs against Rs.142.22 lacs for the previous year. During the year companys exports are Rs.1260 lacs compared to the previous years exports of Rs.848 lacs.

The company has been able to achieve higher sales in comparison to last year. The company has also recorded higher profits due to increase in sales and introduction of effective cost control measures.

DIRECTORS

During the year pursuant to the provisions of the Articles of Association of the company Mr. N.K. Jain, Dot. Mesimo Medini and Retd.Lt.Gen.H.C. Dutta, Directors retire by rotation at the forthcoming Annual-General Meeting to be held on 17.09.2010 and being eligible they offer themselves for re-appointment.

CORPORATE GOVERNANCE

A certificate on the compliance of conditions of corporate Governance has been obtained from the Statutory Auditors of the company and the same is given as Annexure.

DIRECTORS RESPONSIBILITY STATEMENT AS PER SECTION 217(2AA) OF THE COMPANIES ACT, 1956.

The Board of Directors of the company confirms:

i. that in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure; ii. that the selected accounting policies were applied consistently and the directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at 31st March, 2010 and of the profit of the company for the year ended on that date;

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

iv. that annual accounts have been prepared on a going concern basis.

FIXED DEPOSIT

The company has not accepted / renewed any fixed deposits during the period under review.

QUALITY CONTROL

The company continues with its present quality system of ISO 9001-2000. The company is strictly complying with the quality policy and the quality objectives outlined in the system. The company has also installed the document and control system on the environment management system defined under ISO 14001. The external audit is due in next few months. The company is also planning to merge the document system of quality and environment as per new ISO standards.

EXPORT OPERATIONS

Companys export operations continue to be focus of growth, yielding a robust growth of 40% in leather chemical exports. The EOU unit has maintained its customer and product base - even in those countries which were hit by economic recession. With new enquiries from African and CIS countries, the international business potential will require even more attention from top management. The export of non leather products is yet to give any significant result and a new product line up is under development to harness the potential.

TECHNOLOGY DEVELOPMENT

The research project on Polymeric Fatliquors sponsored by DSIR (Department of Scientific & Industrial Research) has been completed to the satisfaction of sponsoring authority. The company hopes to launch the products by middle of 2011. The company completed the project with a total cost of Rs.182 lacs as against the projected cost of Rs.227 lacs.

The company has successfully completed the trial production of PVC Acrylic Processing Aids (APA) and Acrylic Impact Modifiers (AIM). The seed marketing results have been very encouraging. The company is considering setting up a new production facility for which the technical feasibility has been completed. A new spray drying system is being considered to ease off the production constraints and also to address the environmental concerns during production.

DIVIDEND

Considering a stable cash flow situation, adequate profits and accruals during the year, your Directors are glad to recommend a dividend of 6%.

PERSONNEL & INDUSTRIAL RELATION

After the introduction of the new Performance Appraisal System - introduced last year - there has been a significant improvement in motivation and responsibility levels across all staff, managers and executives. The new talent pool of key executives was able to handle some challenging tasks and will continue to be more focused on product development, technical services, safety and environmental issues. Industrial relation remained cordial across all segment of skilled and unskilled workforce.

ENVIRONMENT & POLLUTION CONTROL MEASURES

The companys efforts on waste water minimization have yielded huge reduction of effluent water. The water treatment system has consistently met with all the statutory requirements. The company has started to use Gujarat Enviro Protection & Infrastructure (Haryana) Pvt. Ltd (GEIPL) common treatment facility for disposal of solid waste - as per the directives of state pollution control board.

ACKNOWLEDGEMENT

The Directors express their gratitude and sincere thanks to their various business partners, suppliers, domestic & international dealers and financial institutions, who have contributed in the companys growth. The directors appreciate the diligence, dedication and commitment of all those employees, who have worked hard towards companys growth.

For and on behalf of the Board of Directors of Haryana Leather Chemicals Limited

Place : New Delhi N.K. JAIN PANKAJ JAIN

Date : 10th day of August, 2010 Chairman Managing Director-cum- Vice Chairman



 
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