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Directors Report of Shalimar Paints Ltd.

Mar 31, 2014

Dear Shareholders,

The Directors are pleased to present the 112th Annual Report on the business and operations of the Company together with the audited financial statements for the year ended 31st March, 2014.

Financial results (Rs. in lacs)

Description 2013-14 2012-13

Revenue from Operations & Other Income 54630 56313

Expenses 52525 52494

PBIDT 2105 3819

Exceptional Items - 212

Profit before tax -360 1566

Provision for taxation

Current Tax - 489 Deferred Tax -81 -25

Profit after tax -279 1102

Add: Amount brought forward from last year''s account 2100 967

Add: Adjustment for Earlier year Tax - 31

Profit available for appropriation 1821 2100

Balance carried to Balance Sheet 1821 2100

Review of operations

The year passed by was a year of transition, the management changed its strategic direction to increase focus on the consumer business. A number of corrections and initiatives were taken through the year to prepare your Company for an accelerated profitable growth in coming years.

Your Company during the year under review suffered a loss (after tax) of Rs. 2.79 crores as against profit of Rs. 11.02 crores in the previous year. The turnover of the Company for year 2013-14 stood at Rs. 546.30 crores as against Rs. 563.13 crores in the previous year 2012-13. The decrease in sales is attributed to the economic slowdown and sluggishness in demand of industrial products.

Dividend

In view of the loss during the year under review, your Directors did not recommend any dividend.

Shifting of Corporate Office

During the year under review, the company has shifted its corporate office from Mumbai, Maharashtra to Gurgaon, Haryana. ESOP

During the year under review the Company had granted 4,88,000 ESOPs to the permanent employees of the Company pursuant to Employees Stock Option Scheme, 2013 formulated by Company in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines'') issued by SEBI. None of the options have been vested till date.

The Company has adopted intrinsic Value method for the valuation of the ESOPs granted under the said Scheme.

The particulars of options issued under the said Scheme as required by SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999 are appended as ''Annexure B'' and forms part of this report.

Fire at Howrah Plant

Your Company suffered a major set back when an accidental fire broke at the Company''s Howrah plant on 12th March, 2014.

Due to the fire both structure and equipment of paint mill suffered damages. Majority of the finished goods, work-in-progress and raw material lying at the factory were also destroyed, as a result, the plant has been inoperational.

Tinting systems

The Company continued with its policy of installation of tinting systems in various retail outlets across the country with a view to increase the demand for its high value products, especially water based products.

ISO Certifications

All the three plants of the Company at Howrah, Nashik and Sikandrabad are ISO 9000 accredited. The Nashik plant is also ISO 14001 accredited. These accreditations have been renewed in the year under review.

Subsidiaries

The Company has two subsidiaries, namely Shalimar Adhunik Nirman Limited (SANL) and Eastern Speciality Paints & Coatings Private Limited (ESPCPL). Since there was no business activity carried out either by SANL or by ESPCPL during the year under review, these subsidiaries have not prepared the Statement of Profit & Loss for the year 2013-14.

In terms of General Circular No. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, granting general exemption to attach the Subsidiaries'' Annual Accounts, as required under Section 212 of the Companies Act, 1956, the Board of Directors of the Company has decided not to attach the Annual Accounts of the said subsidiaries. Any member desires to obtain the copy of Annual Report & Accounts of SANL and ESPCPL may send his/her request to the Company Secretary of the Company.

The consolidated financial statement of the Company, SANL and ESPCPL duly audited by the Company''s Statutory Auditors are attached in the Annual Report.

Directors

Pursuant to Article 118 of the Articles of Association, Mr. Ratan Jindal, Non-Independent Non-Executive Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Dr. R. Srinivasan, who is liable to retire by rotation at the ensuing Annual General Meeting, has expressed his unwillingness to continue as Director of the Company. The Board of Directors has decided not to fill the vacancy caused by his unwillingness to be re-appointed.

Mr. Rajiv Rajvanshi and Ms. Pushpa Chowdhary were appointed as Additional Directors, in Independent Category, on the Board of the Company with effect from 20th September, 2013 and 30th May, 2014, respectively, who would hold office up to the conclusion of the ensuing Annual General Meeting.

In accordance with the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and the rules framed thereunder read with Schedule IV to the said Act, the term of office Independent Directors would be non-rotational for a consecutive period of five years from the date of ensuing Annual General Meeting i.e., 26th September, 2014.

To comply with the requirements of the Companies Act, 2013, as aforesaid, it is proposed to be appoint/re-appoint Mr. A. V. Lodha, Mr. Pujit Aggarwal, Mr. Rajiv Rajvanshi and Ms. Pushpa Chowdhary, Company''s independent directors, for a period of five consecutive years from the date of ensuing Annual General Meeting i.e., 26th September, 2014.

The Company has received declaration from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed, both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Brief resume of Mr. Ratan Jindal, Mr. A. V. Lodha, Mr. Pujit Aggarwal, Mr. Rajiv Rajvanshi and Ms. Pushpa Chowdhary are given in the Point No. 12 of the Report on Corporate Governance attached to this report.

Directors'' Responsibility Statement

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

i) In the preparation of the annual accounts for the year ended 31st March, 2014, the applicable accounting standards have been followed and there are no material departures from the same;

ii) The accounting policies have been selected and applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year;

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) The accounts have been prepared on a going concern basis.

Conservation of energy and technical absorption

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure ''A'' to the Directors'' Report.

Foreign exchange earnings and outgo

Foreign exchange earnings and outgo are outlined in Note nos. 2.31, 2.32, 2.33 and 2.34 of Notes to the Accounts.

Particulars of employees

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

Auditors

Messrs Chaturvedi and Partners, the Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment.

Cost Auditors

Your Board has appointed Messrs D. Sabyasachi & Co., Cost Accountants, to carry out the Cost Audit of the Company in respect of Paints & Varnishes. This appointment is to be made in each financial year and based on the application of your Company the Central Government has approved the re-appointment of Cost Auditors for the year under review. The necessary application will be made to the Central Government in due course seeking approval to the re-appointment of the Cost Auditors for the financial year 2014-15.

The Cost Audit report for the financial year ended 31st March, 2013 has been filed with the Ministry of Corporate Affairs, Cost Audit Branch, Government of India on 29.11.2013.

Listing

During the year, your Company''s equity shares continue to be listed with the BSE Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited.

However, the Board in its meeting held on 30th May, 2014 resolved to delist the equity shares of the Company from The Calcutta Stock Exchange Ltd.

The Company has paid annual listing fees to the respective Stock Exchanges. As the trading in equity shares of the Company is permitted only in dematerialized form, the Company has made the requisite arrangements with National Securities Depository Limited and Central Depository Services (India) Limited to enable investors to hold shares in dematerialized form.

Corporate Governance

The Company continues to comply with the requirements of the Listing Agreement with the Stock Exchanges where the Company''s shares are listed. The report on Corporate Governance for the financial year ended 31st March, 2014, together with Certificate on its compliance, pursuant to requirements of Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto as Annexure ''C'' to this Report.

Corporate Social Responsibility

Complementing every aspect of our business is our commitment to support positive transformation in the society. As one of the early adopters of CSR in the country, we have been supporting initiatives to promote education and environment conservation around our factories. Apart from energy and water conservation initiatives at our factories, we have been running a school at Howrah for primary and secondary school children. Through our CSR efforts, we aim to bring change that has a measurable, long-term impact on the communities of which we are a part.

Industrial relations and personnel

Industrial relations remained cordial and satisfactory. Your Directors wish to place on record their deep sense of appreciation of the devoted services rendered by all officers, staff and workers of the Company.

Acknowledgements

The Directors would like to place on record their grateful appreciation of the co-operation and assistance received from the financial institutions, banks, investors, valued customers, various government agencies and business associates during the year under review.

For and on behalf of the Board

New Delhi Ratan Jindal Sameer Nagpal 30th May, 2014 Director Managing Director & CEO


Mar 31, 2013

To the Shareholders

The Directors are pleased to present the 111th Annual Report on the business and operations of the Company together with the audited statement of accounts for the year ended 31 st March, 2013.

Financial results

(Rs. in lacs)

Description 2012-13 2011-12

Revenue from Operations & Other Income 59167 52872

Expenses 55348 49070

PBIDT 3819 3802

Exceptional Items 212 -

Profit before tax 1566 2096

Provision for taxation

Current Tax 489 682

Deferred Tax (25) (32)

Profit after tax 1102 1446

Add: Amount brought forward from last year''s account 967 761

Profit available for appropriation 2069 2207

Less: Proposed Dividend - 379

Tax on proposed dividend - 61

Amount transferred to General Reserve - 800

Balance carried to Balance Sheet 2069 967

Sub-division of Equity Shares

The equity share of face value of Rs.10/- each of the Company have been sub-divided into 5 equity shares of Rs.2/- each in terms of the approval of shareholders of the Company accorded on 26th October, 2012. The Board of Directors fixed 23rd November, 2012 as Record Date for this purpose. Consequently, the existing Issued, Subscribed and Paid-up Equity Share Capital of Rs. 3,78,56,200/- which were divided into 37,85,620 Equity Shares of Rs.10/- each have been sub-divided into 1,89,28,100 Equity Shares of Rs.2/- each. Similarly, the existing Authorised Share Capital of Rs. 8,00,00,000/- which was divided into 80,00,000 Equity Shares of Rs.10/- each has been sub-divided into 4,00,00,000 Equity Shares of Rs.2 / - each.

ESOP

With a view to attract, retain and motivate the best available talent, the Board of Directors of the Company has formulated Employees Stock Option Scheme in accordance with the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 (''Guidelines''). The salient features of the said Scheme is detailed in the Explanatory Statement annexed to Notice of the Annual General Meeting. The requisite approval of the shareholders of the Company to enable the Company to issue shares/options under the said Scheme is being sought at the forthcoming Annual General Meeting.

Dividend

The Board of Directors of your Company has decided to plough back the profit of the Company and therefore does not recommend any dividend.

Review of operations

The year under review continues to be impacted due to economic slowdown. The Company''s revenue from operations has increased from Rs. 529 crores in 2011-12 to Rs.592 crores in 2012-13, an increase of 12%, which can be considered satisfactory in view of the difficult economic condition. The profitability was however affected because of onetime cost incurred due to higher provisioning for bad debts and obsolete inventory.

Due to increase in the interest cost related to working capital financing, the finance costs have also increased from Rs. 15.22 crores in 2011-12 to Rs. 16.58 crores in 2012-13.

Tinting systems

The Company continued with its policy of installation of tinting systems in various retail outlets across the country with a view to increase the demand for its high value products, especially water based products.

ISO Certifications

All the three plants of the Company at Howrah, Nasik and Sikandrabad are ISO 9000 accredited. The Nasik plant is also ISO 14001 accredited. These accreditations have been renewed during the year under review.

Subsidiaries

The Company has two subsidiaries, namely Shalimar Adhunik Nirman Limited (SANL) and Eastern Speciality Paints & Coatings Private Limited (ESPCPL). Since there was no business activity carried out either by SANL or by ESPCPL during the year under review, these subsidiaries have not prepared the Statement of Profit & Loss for the year 2012-13.

In terms of General Circular No. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, granting general exemption to attach Subsidiaries'' Annual Accounts, as required under Section 212 of the Companies Act, 1956, the Board of Directors of the Company has decided not to attach the Annual Accounts of the said subsidiaries. Any member desires to obtain the copy of Annual Report & Accounts of SANL and ESPCPL may send his/her request to the Company Secretary of the Company.

The consolidated financial statement of the Company and its subsidiaries duly audited by the Company''s Statutory Auditors are attached in the Annual Report.

Directors

In accordance with Article 118 of the Articles of Association, Mr. Girish Jhunjhnuwala and Mr. A. V. Lodha retire by rotation and being eligible, offer themselves for re-appointment.

Mr. Sandeep Sarda, Executive Director of the Company has resigned from the Company. The Board has accepted his resignation with effect from 10th June, 2013. The Board also recorded its appreciation for the valuable contribution made by Mr. Sarda during his long association with the Company.

Mr. Sameer Nagpal, Chief Executive Officer of the Company, has been appointed as Additional Director of the Company with effect from 2 5th May, 2013 and will vacate his office at the forthcoming Annual General Meeting and shall seek election under Section 257 of the Companies Act, 1956. Mr. Nagpal, subject to necessary approvals, has also been appointed the Managing Director for a period of three years with effect from that date.

Brief resume of Mr. Jhunjhnuwala, Mr. Lodha and Mr. Nagpal are given in Point No.12 of the Report on Corporate Governance attached to this report.

Directors'' Responsibility Statement

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

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

ii) The accounting policies have been selected and applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year;

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) The accounts have been prepared on a going concern basis.

Conservation of energy and technical absorption

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure ''A'' to the Directors'' Report.

Foreign exchange earnings and outgo

Foreign exchange earnings and outgo are outlined in Note nos. 2.33, 2.34 and 2.35 of Notes to the Accounts. Particulars of employees

Information as required under Section 217(2 A) of the Companies Act, 1956 read with the 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, the report and accounts are being sent excluding the statement containing the particulars to be provided under Section 217(2A) of the Companies Act 1956. Any member interested in obtaining such particulars may write to the Company Secretary for a copy thereof.

Auditors

Messrs Chaturvedi and Partners, the Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment.

Cost Auditors

In compliance with the Central Government''s order, your Board has appointed Messrs D. Sabyasachi & Co., Cost Accountants, to carry out the Cost Audit of the Company in respect of Paints & Varnishes. This appointment is to be made in each financial year and based on the application of your Company the Central Government has approved the re-appointment of Cost Auditors for the year under review. The necessary application will be made to the Central Government in due course seeking approval to the re-appointment of the Cost Auditors for the financial year 2013-14.

The Cost Audit report for the financial year ended 31st March, 2012 has been filed with the Ministry of Corporate Affairs, Cost Audit Branch, Government of India, on 31st January, 2013 i.e. within the stipulated time as extended.

Listing

Your Company''s equity shares continue to be listed with the BSE Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited.

The Company has paid annual listing fees to the respective Stock Exchanges. As the trading in equity shares of the Company is permitted only in dematerialized form, the Company has made the requisite arrangements with National Securities Depository Limited and Central Depository Services (India) Limited to enable investors to hold shares in dematerialized form.

Corporate Governance

The Company continues to comply with the requirements of the Listing Agreement with the Stock Exchanges where the Company''s shares are listed. The report on Corporate Governance for the financial year ended 31st March, 2013, together with Certificate on its compliance, pursuant to requirements of Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto as Annexure ''B'' to this Report.

Acknowledgements

The Directors would like to place on record their grateful appreciation of the co-operation and assistance received from the financial institutions, banks, investors, valued customers, various government agencies and business associates during the year under review.

Industrial relations and personnel

Industrial relations remained cordial and satisfactory. Your Directors wish to place on record their deep sense of appreciation of the devoted services rendered by all officers, staff and workers of the Company.

For and on behalf of the Board

New Delhi Girish Jhunjhnuwala

25 th May, 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the 110th Annual Report on the business and operations of the Company and the audited statement of accounts for the year ended 31st March, 2012.

Financial results

(Rs. in lacs)

Particulars 2011-12 2010-11

Revenue from Operations & Other Income 52872 44332

Expenses 49070 41353

PBIDT 3802 2979

Profit before tax 2096 1664 Provision for taxation

Current Tax 682 463

Deferred Tax (32) 34

Profit after tax 1446 1167

Add: Amount brought forward from last year's account 761 646

Profit available for appropriation 2207 1813

Less: Proposed Dividend 379 303

Tax on proposed dividend 61 49

Amount transferred to General Reserve 800 700

Balance carried to Balance Sheet 967 761

Dividend

The Directors are pleased to recommend payment of dividend at the rate of Rs.10/- per equity share amounting to Rs.378.57 lacs as compared to Rs.8/- per equity share declared last year.

Review of operations

The Company's revenue from operations has increased from Rs. 443 crores in 2010-11 to Rs. 529 crores in 2011-12, an increase of 19%. Both the Decorative and Industrial segments have grown reasonably well. With the increase in international crude prices and the sharp depreciation of the rupee against major currencies, the raw material prices have increased sharply. The paint industry has tried to counter the increase in raw material costs by increasing prices at regular intervals. However since the raw material prices have been extremely volatile, it has, to some extent, affected the overall operating margins.

In spite of the sharp increase in the raw material prices, the Company has, with improvement in operational efficiencies and changes in the product mix, improved its PBIDT from Rs. 29.79 crores in 2010-11 to Rs. 38.02 crores in 2011-12, an increase of 28% over last year.

The Company has in 2011-12 launched a premium exterior emulsion under the brand name Self Clean. It has received a very favourable response to the launch.

In 2011-12 there has been a sharp increase in the interest rates by all the working capital bankers. As a result of increased utilization to finance the increased volume of business as well as increase in the interest rates, finance costs have increased from Rs. 9.75 crores to Rs.12.77 crores.

The Profit before Tax has increased from Rs. 16.64 crores to Rs. 20.96 crores, an increase of 26%.

Tinting systems

The Company continued with its policy of installation of tinting systems in various retail outlets across the country with a view to increase the demand for its high value products, especially water based products.

ISO Certifications

All the three plants of the Company at Howrah, Nasik and Sikandrabad are ISO 9000 accredited and these accreditations have been renewed in the year under review. The Nasik plant has also received ISO 14001 accreditation in 2011-12.

Subsidiary

The Company has only one subsidiary, namely Shalimar Adhunik Nirman Limited (SANL). Since there was no business activity carried out by SANL during the year under review, SANL has not prepared the Statement of Profit & Loss for the year 2011-12.

In terms of General Circular No. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, granting general exemption to attach the Subsidiaries' Annual Accounts, as required under Section 212 of the Companies Act, 1956, the Board of Directors of the Company has decided not to attach the Annual Accounts of the said subsidiary. Any member who desires to obtain the copy of Annual Report & Accounts of SANL may send his request to the Company Secretary of the Company.

The consolidated financial statement of the Company and SANL duly audited by the Company's Statutory Auditors are attached in the Annual Report.

Directors

In accordance with Article 118 of the Articles of Association, Mr. Rajiv Garg and Mr. Pujit Aggarwal, retire by rotation and being eligible, offer themselves for re-appointment.

Brief resumes of Mr.Rajiv Garg and Mr. Pujit Aggarwal, are given in Point No. 12 of the Report on Corporate Governance attached to this report.

Directors' Responsibility Statement

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

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii) The accounting policies have been selected and applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year;

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) The accounts have been prepared on a going concern basis. Conservation of energy and technical absorption

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure 'A' to the Directors' Report.

Particulars of employees

During the year under review there was no employee drawing remuneration exceeding the limits specified under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended.

Auditors

M/s. Chaturvedi and Partners, the Auditors of the Company, retire at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

Cost Auditors

In compliance with the Central Government's order, your Board has appointed Messrs. D. Sabyasachi & Co., Cost Accountants, to carry out the Cost Audit of the Company in respect of Paints & Varnishes. This appointment has to be made in each financial year and based on the application of your Company the Central Government has approved the re-appointment of Cost Auditor for the year under review. The Cost Audit Report for the year ended 31st March, 2011 has been submitted to Ministry of Corporate Affairs.

Listing

Your Company's equity shares continue to be listed with the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited.

The Company has paid annual listing fees to the respective Stock Exchanges. As the trading in equity shares of the Company is permitted only in dematerialized form, the Company has made the requisite arrangements with National Securities Depository Limited and Central Depository Services (India) Limited to enable investors to hold shares in dematerialized form.

Corporate Governance

The Company continues to comply with the requirements of the Listing Agreement with the Stock Exchanges where the Company's shares are listed. The report on Corporate Governance for the financial year ended 31st March, 2012, together with Certificate on its compliance, pursuant to requirements of Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto as Annexure 'B' to this Report.

Acknowledgements

The Directors would like to place on record their grateful appreciation of the co-operation and assistance received from the financial institutions, banks, investors, valued customers, various government agencies and business associates during the year under review.

Industrial relations and personnel

Industrial relations remained cordial and satisfactory. Your Directors wish to place on record their deep sense of appreciation of the devoted services rendered by all officers, staff and workers of the Company.

For and on behalf of the Board

New Delhi Girish Jhunjhnuwala

7th May, 2012 Chairman


Mar 31, 2011

To the Shareholders

The Directors are pleased to present the 109th Annual Report on the business and operations of the Company and the audited statement of accounts for the year ended 31st March, 2011.

Financial results

(Rs. in lacs)

Description 2010-11 2009-10

Net Sales 44014 39417

Expenses 41173 36807

PBIDT 2841 2610

Profit before tax 1664 1512

Provision for taxation

Current Tax 463 468

Deferred Tax 34 44

Profit after tax 1167 1000

Add: Amount brought forward from last year's account 646 578

Profit available for appropriation 1813 1578

Less: Proposed Dividend 303 284

Tax on Proposed Dividend 49 48

Amount transferred to General Reserve 700 600

Balance carried to Balance Sheet 761 646

Dividend

The Directors are pleased to recommend payment of dividend at the rate of Rs.8/- per equity share amounting to Rs. 303 lacs as compared to Rs.7.50 per equity share declared last year. This has affected the overall operating margins.

Review of operations

The Company's turnover has increased from Rs. 394 crores in 2009-10 to Rs. 440 crores in 2010-11. Both the Decorative and Industrial segments have grown reasonably well. However, with the increase in international crude prices, the raw material prices particularly of solvent based raw materials, have increased sharply. This has affected the overall operating margins.

In spite of sharp increase in the raw material prices the Company has, with improvement in operational efficiencies and changes in the product mix, improved its PBIDT from Rs. 26.10 crores in 2009-10 to Rs. 28.40 crores in 2010-11.

There has also been increase in the interest rates by all the working capital bankers. Further, in order to finance the increased volume of business, the utilisation levels have also increased. As a result of higher utilisation and increased interest rates, the interest costs have increased from Rs. 7.60 crores to Rs. 8.37 crores.

The Profit before Tax has increased from Rs. 15.12 crores to Rs. 16.64 crores.

Tinting systems

The Company continued with its policy of installation of tinting systems at various retail outlets across the country with a view to increase the demand for its high value products, especially water based products.

ISO Certifications

All the three plants of the Company at Howrah, Nasik and Sikandrabad are ISO 9000 accredited and these accreditations have been renewed in the year under review.

Subsidiary

The Company has only one subsidiary, namely Shalimar Adhunik Nirman Limited (SANL). Since there was no business activity carried out by SANL during the year under review, SANL has not prepared the Profit & Loss A/c for the year 2010-11.

In terms of General Circular No. 2/2011 dated 8th February, 2011 issued by the Ministry of Corporate Affairs, Government of India, granting general exemption to attach the Subsidiaries' Annual Accounts, as required under Section 212 of the Companies Act, 1956, the Board of Directors of the Company has decided not to attach the Annual Accounts of the said subsidiary. Any member who desires to obtain the copy of Annual Report & Accounts of SANL may send his request to the Company Secretary of the Company.

The consolidated financial statement of the Company and SANL duly audited by the Company's Statutory Auditors are attached in the Annual Report.

Directors

In accordance with Article 118 of the Articles of Association, Mr. Ratan Jindal and Dr. R. Srinivasan retire by rotation and being eligible, offer themselves for re-appointment.

Brief resume of Mr. Ratan Jindal and Dr. R. Srinivasan, are given in Point No. 12 of the Report on Corporate Governance attached to this report.

Directors' Responsibility Statement

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

i) In the preparation of the annual accounts, the applicable accounting standards have been followed along

with proper explanation relating to material departures;

ii) The accounting policies have been selected and applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that year;

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) The accounts have been prepared on a going concern basis.

Conservation of energy and technical absorption

The particulars as prescribed under Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in Annexure 'A' to the Directors' Report.

Foreign exchange earnings and outgo

Foreign exchange earnings and outgo are outlined in Note nos. 11, 12 and 13 of Schedule 19 to the Accounts.

Particulars of employees

During the year under review there was no employee drawing remuneration exceeding the limits specified under Section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended.

Auditors

M/s. Chaturvedi and Partners, the Auditors of the Company, retire at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment.

Listing

Your Company's equity shares continue to be listed with the Bombay Stock Exchange Limited, National Stock Exchange of India Limited and The Calcutta Stock Exchange Limited.

The Company has paid annual listing fees to the respective Stock Exchanges. As the trading in equity shares of the Company is permitted only in dematerialized form, the Company has made the requisite arrangements with National Securities Depository Limited and Central Depository Services (India) Limited to enable investors to hold shares in dematerialized form.

Corporate Governance

The Company continues to comply with the requirements of the Listing Agreement with the Stock Exchanges where the Company's shares are listed. The report on Corporate Governance for the financial year ended 31st March, 2011, together with Certificate on its compliance, pursuant to requirements of Clause 49 of the Listing Agreement with Stock Exchanges is annexed hereto as Annexure 'B' to this Report.

Acknowledgements

The Directors would like to place on record their grateful appreciation of the co-operation and assistance received from the financial institutions, banks, investors, valued customers, various government agencies and business associates during the year under review.

Industrial relations and personnel

Industrial relations remained cordial and satisfactory. Your Directors wish to place on record their deep sense of appreciation of the devoted services rendered by all officers, staff and workers of the Company.

For and on behalf of the Board

Girish Jhunjhnuwala Chairman

New Delhi 7th May, 2011

 
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