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Directors Report of Thirumalai Chemicals Ltd.

Mar 31, 2017

To,

The Members

Thirumalai Chemicals Limited

The Directors are pleased to present to you the Forty Fourth Annual Report & Audited Statement of Accounts of the Company for the year ended March 31, 2017. The Management Discussion and Analysis has also been incorporated into this report.

(Rs. In Mn)

STANDALONE FINANCIAL

Year Ended

Year ended

RESULTS

31 Mar 2017

31 Mar 2016

Revenue from Operations

8,614.7

7,804.4

Other Income

77.7

116.7

Total Revenue

8,692.4

7,921.1

Gross Profit / (Loss) before

1,422.1

957.7

Interest, Finance Charges and

Depreciation

Interest and Finance Charges

150.3

209.7

Profit / (Loss) before

1,271.8

748.0

Depreciation and Tax

Depreciation

141.4

107.9

Profit / (Loss) before Tax

1,130.4

640.1

Provision for Tax

(390.0)

(235.0)

Profit / (Loss) after Tax

740.4

405.1

Add : Provision for Deferred Tax

14.2

22.2

Profit / (Loss) after Tax

754.6

427.3

Balance in Profit & Loss Account

971.8

667.8

Less : Adjustments related to

0.0

0.0

Depreciation

Add : Profit / (Loss) for the year

754.6

427.3

Profit available for

1,726.4

1,095.1

appropriation

- On a Net Revenue from operation of Rs.8,614.7 Mn (Previous Year: Rs.7804.4 Mn)

- the Gross Profit of the Company amounted to Rs.1,422. 1 Mn (Previous Year: Rs.957. 70 Mn).

- After providing for Interest & Finance charges, and Depreciation, the Profit after Tax is Rs.754.6 Mn (Rs.427.3 Mn in the previous year).

- The Net Revenue includes Export Earning (FOB) of Rs.1,088.8 Mn (Previous Year: Rs.1023.8 Mn),

- and Other Income of Rs.77. 7 Mn (Previous Year: Rs.116.7 Mn),

Dividend

Based on the Company’s performance, the Directors are pleased to recommend for approval of the members a dividend of Rs.18.75 per share for the year ended March 31, 2017 (previous year a total of Rs.10 per share was paid by two interim dividends)

The final dividend on equity shares, if approved by the shareholders, would involve a cash outflow of Rs.231.1 Mn, including dividend taxes.

Subsidiaries

Tarderiv International Pte Ltd., Singapore is a 100 % investment subsidiary of your Company and it has a wholly owned step-down subsidiary , Cheminvest Pte Ltd. Singapore, which in turn owns 100% of Optimistic Organic Sdn. Bhd., Malaysia (OOSB) a manufacturing Company in Malaysia.

Business Performance

Your Company has improved its performance in 2016-17. The markets for our products were robust. We were able to make significant improvements in Business efficiencies and Margins, Costs, Working Capital management and Finance Charges. These have helped us improve profitability and Cash flows.

Indian demand for most products is growing steadily. We also see an increasing demand for better products & services, and in newer applications. We have responded proactively to these by better packaging, logistics & customer service, and product differentiation to help us retain and improve our market share.

Both within India and in our many overseas markets , Thirumalai Chemicals Limited is a respected and preferred supplier.

On the Trade front, the FTAs that India has signed in the last decade with ASEAN, Singapore, Thailand and South Korea have resulted in a ballooning of low priced imports of Phthalic Anhydride and many other products. Similarly over the past two years, our customers are faced by surging imports of their products - Plasticizers, Resins, Compounds. This is driven by desperate companies in countries having large surpluses - the result of slowdown of Chinese and Local demand. The Zero Duty on these products caused by the FTAs further supports them, at the expense of Indian manufacturing, jobs and deficits. India has become the natural dumping ground for surpluses at any price.

We are now working with the Government, with our Customers and Industry Associations to see how this can be addressed. The GOI has been very helpful and is deeply concerned.

Meanwhile, over the past few years we have made sustained efforts to improve competitiveness through a number of initiatives. Most of these have reached maturity. The steady improvement over the past few years and the positive results during the year is a result of these initiatives.

The Company is now far more resilient to fight competition, and to grow.

Phthalic Anhydride Business :

The business unit performed well.

We have had some growth in Phthalic Anhydride. But this was partly muted by the inverted duty structure between our Product and Raw material.

Largely due to active representations and work by us and our Industry, the Government in its recent Budget, reduced the import duty for our main feedstock to Zero from 2.5% ( this was earlier reduced from 5% to 2.5%). This has given us some relief. Your Company’s successes in efficiency improvement and management of cost, volatility, and supply chain helped us mitigate these structural negatives. We managed to maintain and improve operating margins and cash flows.

We have touched on our plans for technology change, manufacturing revamp and capacity additions, later in this report.

Food Ingredients and Fine Chemicals:

The Food Ingredients and Fine Chemicals businesses also did well.

A first Phase expansion of these units was completed recently, and has reached full capacity.

Further increases are under execution this year.

Domestic marketing for these products has been strengthened and we have started on a programme of product customization and product differentiation to add value. These initiatives involve working closely with the customers so that we can satisfy their new and changing functional requirements.

This enables us to improve our customer base in these products globally, and forms the basis for our growth plans.

Subsidiary - Optimistic Organic Sdn Bhd., Malaysia:

Our Subsidiary M/s Optimistic Organic Sdn, Bhd., (OOSB) has completed its Maleic Anhydride expansion. As this was built within a functioning petrochemical plant, the plant went through a number of shutdowns which caused production and sales losses during the expansion works and start-up. The ramp up to full capacity has also been slow, affecting their performance during the year. In spite of loss of volumes their cash flows during the past years were decent and largely funded the expansion and refurbishment programme.

We now expect better performance from them during FY-18. The subsidiary is diversifying into downstream derivatives and value added products, which will make it stronger. The location of OOSB provides strong advantages in raw materials, utilities and logistics.

These plans are designed to dovetail with our growth strategies.

Industrial Relations:

Industrial Relations during the year under review continued to be very cordial.

Financial and Operating Performance:

Your Company achieved a Net profit of Rs.754.6 Mn compared to Net profit of Rs.427.3 Mn in the previous year, a Gross Profit before Interest and Finance Charges and Depreciation of Rs.1,422.1 Mn (previous year Rs.957.70 Mn) and a Profit Before Depreciation and Tax of Rs.1,271.80 Mn (previous year Rs.748.0 Mn).

Finance

All taxes and statutory dues have been paid on time. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. Your Company has not collected any Fixed Deposit during the Financial Year. Contribution to the Exchequer:

The amounts paid to the Central and State Exchequer by way of Excise Duty, Sales Tax, Customs duties ( incl. paid to supplier), Income Tax , etc., is about Rs.1,571.5 Mn on Gross Sales of about Rs.8,614.7 Mn .

Contribution to the Exchequer is about 18 % of your Company’s Sales

Exports:

Calculated on FOB basis, Exports amounted to Rs.1,088.8 Mn (previous year Rs.1,023.8 Mn)

Particulars of loans, guarantees or investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Related Party Transactions

All transactions entered into with Related Parties (as defined under the Companies Act, 2013) during the financial year were in the ordinary course of business and on an Arm’s length pricing basis, and do not attract the provisions of Section 188 of the Companies Act, 2013 and were within the ambit of clause 23 of the SEBI (Listing Obligations And Disclosure Requirements) Regulations, 2015. There were no materially significant transactions with related parties during the financial year which were in conflict with the interests of the Company. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

The Board has approved a policy for related party transactions which has been uploaded on the Company’s website.

Directors’ Responsibility Statement:

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

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

ii) We have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period.

iii) We have taken proper and sufficient care to maintain 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) We have prepared the annual accounts on a going concern basis.

v) Proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

vi) Systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Business Risk Management

Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks. Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Business Risk Management Committee and the details of the Committee are as under:

Sl. No.

Name of member

Category

1

Mr. Dhruv Moondhra

Independent Director

2

Mr. R. Parthasarathy

Managing Director

3

Mrs. Ramya Bharathram

Executive Director

4

Mr. C.G.Sethuram

Chief Executive Officer

5

Mr. P.M.C. Nair

Executive Director

6

Mr. P.Krishnamoorthy

Chief Financial Officer

Vigil Mechanism / Whistle Blower Mechanism

The Company has a vigil mechanism to deal with instances of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

Corporate Social Responsibility (CSR) Committee

The Committee recommended continuing support for the Thirumalai Charity Trust’s Health and Rural development projects.

The composition of the Corporate Social Responsibility Committee is given below:

Sl.No.

Name of Director

Category

1

Mr. P. Shankar

Independent Director

2

Mr. Raj Kataria

Independent Director

3

Mr. R. Sampath

Director

A detailed note is given in the Corporate Governance report.

Total Expenditure on Corporate Social Responsibility (CSR) as percentage of profit after tax (%):

The Company’s total spending on CSR is 2.05 % of the average net profit in previous three financial years towards Health and Education Programmes.

Statement pursuant to Listing Agreement Your Company’s shares are listed with the National Stock Exchange of India Ltd. and the BSE Ltd. We have paid the annual listing fees and there are no arrears.

Report on Corporate Governance

A Report on Corporate governance is annexed herewith. The Auditors’ Report on the same is also annexed. An extract of annual return and Secretarial Audit report are attached as required u/s 134 of the Companies Act, 2013.

Performance Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board carries out the annual performance evaluation of its own performance, of the Directors individually as well as the evaluation of working of its various Committees. A structured questionnaire is prepared after taking into consideration the inputs received from Directors, covering various aspects of the Board’s functioning such as adequacy of the composition of the Board and its Committees, Board culture, Execution and Performance of specific duties, obligations and governance.

A separate exercise is carried out to evaluate the performance of individual Directors including the Chairman of the Board, who are evaluated on parameters such as level of engagement and contribution, independence of judgment, safeguarding the interests of the Company and of its minority shareholders etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Independent Directors is carried out by the Independent Directors who also review the performance of the Secretarial Department.

The Directors expressed their satisfaction with the evaluation process.

Appraisal of Board’s performance

It includes setting individual and collective roles and responsibilities of its Directors, creating awareness among Directors about their expected level of performance and thereby improving the effectiveness of the Board. Board evaluation contributes significantly to improved performance and aims at,

- Improving the performance of Board towards corporate goals and objectives.

- Assessing the balance of skills, knowledge and experience on the Board.

- Identifying the areas of concern and issues to be focused on for improvement.

- Identifying and creating awareness about the role of Directors individually and collectively as Board.

- Building Team work among Board members.

- Effective Coordination between Board and Management.

- Overall growth of the organization

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up by your Company to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Since the number of complaints filed during the year was Nil, the Committee prepared a Nil complaints report.

Statutory Auditors

M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013) were appointed as the statutory auditors of the Company for a period of five years at the Annual General Meeting (AGM) of the Company held on July 29, 2016, to hold office from the conclusion of the Forty Third AGM till conclusion of the Forty Eighth AGM to be held in the year 2021.

Internal Auditors

The Internal Auditors M/s. M.S. Krishnaswamy & Co have played an important role in strengthening the Systems and internal Controls within the Company. The Company’s System Auditors M/s. Aneja Associates also contributed significantly in improving the System Operating Procedures.

Cost Auditors

Mr. G. Sundaresan, Cost Accountant, was appointed as Cost Auditor to conduct cost audit of the cost records maintained by our Company in respect of products manufactured during the Financial Year 2016-17. The Cost Audit Report was filed with MCA, Government of India, by the Company on August 02,2016, well before September 30, 2016, the due date of filing for the Financial Year 2015-16.

Secretarial Audit

The Board appointed M/s. R.M. Mimani & Associates LLP, Company Secretaries, to conduct Secretarial Audit for the Financial Year 2016-17. The Secretarial Audit Report for the Financial Year ended March 31, 2017 is attached to this Report. The Secretarial Audit Report does not contain any qualification, or reservations or adverse remark.

Extract of Annual Return

Extract of Annual Return of the Company for the year ended March 31, 2017 is attached to this Report

Personnel

In terms of the provisions of section 197(12) of the of the Companies Act, 2013 read with the rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the names and other particulars of employees are set out in the Annexure A to the Directors’ report.

PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES OF THE COMPANIES ACT, 2013:

a) The ratio of the remuneration of each Director to the median employee’s remuneration for the financial year and such other details as prescribed is as given below:

Name of Director Ratio

1. Mr. R. Parthasarathy (Managing Director) 87.23 : 1

2. Mrs. Ramya Bharathram (Executive Director) 45.89 : 1

3. Mr. P. Mohana Chandran Nair (Executive Director) 12.76 : 1 For this purpose, Sitting fees paid to the Directors have not been considered as remuneration.

b) The percentage increase in remuneration of Managing

Director, Chief Financial Officer, Company Secretary or Manager, if any, in the financial year:

Mr. R. Parthasarathy (Managing Director) : NIL

Mr. P. Krishnamoorthy (Chief Financial Officer) : 44%

Mr. T. Rajagopalan (Company Secretary) : 28%

c) The percentage increase in the median remuneration of employees in the financial year : 9.38%

d) The number of permanent employees on the rolls of Company : 418

e) The explanation on the relationship between average increase in remuneration and Company performance:

The Company’s PAT has grown from Rs.427.3 Mn to Rs.754.6 Mn, an increase of 76% against which the average increase in remuneration is 10.23%; and this increase is aligned with the Compensation Policy of the Company.

f) Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company:

Name

Designation

Remuneration IN Rs.

% Increase In Remuneration

PAT Rs. in Mn

% Increase in PAT

Mr.R. Parthasarathy

Managing Director

27,703,527

NIL

740.4

76

Mr.P. Krishnamoorthy

Chief Financial Officer

4,790,600

44

Mr. T. Rajagopalan

Company Secretary

2,651,870

28

* It consists of Salary/Allowance & Benefits.

The remuneration of the Managing Director Mr. R. Parthasarathy includes the commission of Rs.10 Mn , which works out to approximately 1.33 % to the net profit for the Financial Year ended March 31, 2017.

It may be noted that the increase in the remuneration is mainly due to the significant increase in Net Profit, and commission as a result.

As per the Compensation Policy, the compensation of the key managerial personnel is based on various parameters including Internal Benchmarks, External Benchmarks, and Financial Performance of the Company.

g) Variations in the market capitalization of the Company, price earnings ratio as at the closing date of the current financial year and previous financial year and percentage increase or decrease in the market quotations of the shares of the Company in comparison to the rate at which the Company came out with the last public offer:

Date

Issued Capital (No. of Shares)

Closing Market Price per share Rs.

EPS in Rs.

PE Ratio

Market Capitalisation (Rs. in Mn)

31.03.2016

10,238,812

179.95

41.73

4.31

1,842.50

31.03.2017

10,238,812

883.35

73.71

11.98

9,044.50

Increase / (Decrease)

NA

703.40

31.98

7.67

7,202.00

% of Increase/ (Decrease)

NA

390.89

76.64

177.96

390.88

Issue Price of the share at the last Pubic Offer (IPO)

10

Increase in market price as on 31.03.2017 as compared to Issue Price of IPO

873.35

Increase in %

8,733.50

h) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and any exceptional circumstances for increase in the managerial remuneration:

Average increase in remuneration is 9.38 % for Employees other than Managerial Personnel & 37.98 % for Managerial Personnel (KMP and Senior Management)

i) The key parameters for any variable component of remuneration availed by the Directors:

Except for Mr. R. Parthasarathy (Managing Director), Mrs. Ramya Bharathram (Executive Director) and Mr. P. Mohana Chandran Nair, (Executive Director), no Directors have been paid any remuneration, as only sitting fees are paid to them. The said Directors have not been paid any variable remuneration. The Directors are eligible for a commission on Net Profits subject to the approval of the Shareholders at their meeting held on July 5, 2013.

j) The ratio of the remuneration of the highest paid Director to that of the employees who are not Directors but receive remuneration in excess of the highest paid Director during the year: Not Applicable k) If remuneration is as per the remuneration policy of the Company: Yes

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars required to be included in terms of Section 134(3)(m) of The Companies Act, 2013 read with Rule 8(3) of The Companies (Accounts) Rules, 2014 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-B.

Cautionary Statement

Company’s objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company’s operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation, plant breakdowns, industrial relations, etc.

Acknowledgements

The Directors would like to place on record our sincere appreciation for the continued support given by the Banks, Internal Auditors, Government Authorities, Customers, Vendors, Shareholders and Depositors during the period under review. The Directors also appreciate and value the contributions made by the employees of our Company at all levels.

For and on behalf of the Board of Directors

Chennai R. Parthasarathy R. Ravishankar

20th May 2017 Managing Director Director

(DIN:00092172) (DIN:01224361)


Mar 31, 2014

The Directors present the FORTY FIRST ANNUAL REPORT AND AUDITED STATEMENT OF ACCOUNTS of the Company for the year ended March 31, 2014.

(Rs. In Lakhs)

STANDALONE FINANCIAL RESULTS Year ended Year ended

31.03.2014 31.03.2013

Revenue from Operations 103,344 114,564

Income from Windmill Operation 137 192

Other Income 1584 816

105,065 115,572

Gross Profit / (Loss) before Interest and Finance charges and Depreciation 6,107 10,912

Interest and Finance charges 4,542 5,202

Profit / (Loss) before Depreciation and Tax 1,565 5,710

Depreciation 1,221 1,287

Profit / (Loss) before Tax 344 4,423

Provision for Current Tax 260 1,884

Profit / (Loss) after Current Tax 84 2,539

Provision for Deferred Tax 273 236

Profit / (Loss) after Tax 357 2,775

Balance in Profit & Loss Statement 5,621 4,041

5,978 6,816

APPROPRIATIONS

Dividend - 768

Tax on Dividend - 127

General Reserve - 300

Balance carried forward - 5621

5,978 6,816

On a Revenue from operation of Rs.103,344 Lakhs (Rs.114,564 Lakhs) including Export earning on FOB basis of Rs.7,187 lakhs (Rs.6,595 lakhs), Income from windmill operation of Rs.137 Lakhs (Rs.192 Lakhs) and Other Income of Rs.1584 lakhs (Rs.816 lakhs), the Gross Profit of the Company amounted to Rs. 6,107 lakhs (proft of Rs.10,912 lakhs in the previous year). After providing for Interest and Finance charges, Depreciation, the Profit after Tax is Rs.357 lakhs (Rs.2,775 lakhs in the previous year).

Dividend: Your Directors, intend to conserve the resource, have not recommended for any dividend for financial year 2013-14 (Previous Year total dividend – Rs.7.50 per share).

Subsidiaries : Tarderiv International Pte Ltd., Singapore is a wholly-owned subsidiary of your Company and it has two step-down subsidiaries viz., Cheminvest Pte Ltd, Singapore and Optimistic Organic Sdn. Bhd., Malaysia.

MANAGEMENT''S DISCUSSIONS AND ANALYSIS

The Performance, Plans and Prospects of your Company are given below.

1. Scenario overview

2013-14 was a difficult year for the region and for India. India''s growth in key sectors was fat, and in some sectors negative. This was aggravated by high inflation for the third year in a row, large public deficits and a sharp devaluation of the rupee and a mood of economic crisis.

2. Your Companies Businesses:

Phthalic Anhydride (PA)

The PA business was badly impacted by low volumes and margins, since the main customer segments viz., Construction, Plastics, Auto, and Paints suffered deeply. The situation was further affected by the Government''s Trade and Commerce policies, resulting in a food of low priced import from around the world – which increased by 100% in the last 6 - 8 months.

These resulted in capacity utilization falling sharply in the second half. Unit costs are very dependent on capacity utilization; these two factors lead to losses in the PA business.

The senior management team is actively working toward correcting the unfair trade situation at a policy level, and we are now hopeful of correction.

PA Derivatives

PA Derivatives business performed reasonably well; but demand was stagnant.

Both in our PA and Derivatives businesses, your company''s Business & Manufacturing teams are working on internal cost reduction projects aimed at reducing manufacturing and sales cost in various areas -- in energy, packing and logistics, finance and improving business efficiencies.

The Food Ingredients Businesses

These businesses were positive contributors; this despite the slowdown in the Indian market and in the export market in Europe.

These businesses continued to be profitable and to some extent mitigated the loss from the PA business.

Overseas Subsidiary : Optimistic Organic Sdn. Bhd., (OOSB), Malaysia

Maleic Anhydride (MA) is a very versatile intermediate that goes into many dozens of Specialty Applications in Foods, Polymers, Coatings, Pharma and Specialty Chemicals.

Your overseas subsidiary M/s. OOSB registered a turnover of USD 45.25 million, (prev year USD 51.22 million), a decrease of 11.66 % over the previous year, and a profit before tax of USD 2.46 million (prev year USD 3.61 million).

The profit was impacted by the shut downs, especially for plant refurbishments which are critical for the planned expansion.

The Subsidiary has witnessed a complete turnaround in the 2 years since we acquired it fully: the Subsidiary has not only become profitable, but has repaid a good part of its debt. The subsidiary has undertaken a 30% capacity expansion largely funded by internal cash flows.

Management Team and Human Resources

Mr. Dhanpat Raj Dhariwal retired as CEO in end of October 2013.

He has played a key role during his tenure in improving the business and manufacturing performance of the company.

He has been succeeded by Mr. C. G. Sethuram, a Chemical Engineer and Management Graduate with about 30 years of experience in various businesses within the Chemical industry.

Mr. P.M.C. Nair, a Chemical manufacturing veteran with more than 3 decades of experience, has joined as President- Manufacturing. Mr. Nair has extensive experience in the Chemicals and Fertilizers Industry, and last served as the Executive Director-Operations at RCF.

We are further strengthening the teams for the PA, MA and Food Ingredient businesses units.

At the Board level,

- Mr. Atul Agarwal, who has been a Director and Chairman of the Audit Committee of our company, and an active member of the Business review committee of the Company, stepped down after 10 years of contributions to our Company.

- Mr. Pradeep Rathi, Managing Director of Sudarshan Chemicals stepped down after a long association with the company.

- Mr. S. Sridhar stepped down after many decades with the company.

Your Board places on record their deep sense of gratitude for the contributions of Mr. Atul Agarwal, Mr. Pradeep Rathi and Mr. S. Sridhar.

Our new Directors include:

- Mr. Ravi Shankar, FCA and Diplomate from IIM-Ahmedabad, is a Finance Professional with extensive experience in Business Management, M&A and Strategic Consultancy. He was a senior partner with Ernst and Young; He is a member of the Audit Committee, Nomination & Remuneration Committee, Business Review Committee and Corporate Social Responsibility Committee.

- Mr. Raj Kataria is an experienced Investment Banker with over 20 years in Mergers and Acquisitions and Capital

Markets. He also has significant expertise in Company Law, and Corporate Structuring matters; He is a member of the Audit Committee, Nomination & Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee.

- Mr. Dhruv Moondra is an entrepreneur, and Director & Chief Executive Offcer of Arcelor Mittal Dhamm Processing Pvt Ltd. besides various other companies. He is a graduate in Economics from Cornell University.

Systems, Audits and Governance:

We now have regular audits of Systems, Policies & Risks, along with Transaction & Compliance audit, and Statutory Audit. All Auditors report to the Audit Committee of the Board, and to the full Board.

The Business Review Committee of the Board reviews the budgets plans and corrective actions on a regular basis with the management and operations team. The Business Review Committee had 4 meetings in the current year.

Social Responsibility:

Your company has since the very beginning been closely engaging with the communities and people that it operates in, in many ways. These activities are carried out through the Thirumalai Charity Trust (TCT) and the Akshaya Vidya Trust (AVT). The TCT has been active since 1982 in Vellore District, Tamil Nadu in the empowerment of women, development of micro businesses, supporting entrepreneurship, rural health care, alcoholism rehab, social and health education, and in aiding the disabled, in 300 villages.

The Thirumalai Mission Hospital provides Secondary and Specialised healthcare for the communities of Vellore district.

The Thirumalai Mission Hospital (TMH) and the Vedavalli Vidyalaya Schools operate with support from the Company. Now over 2500 children are educated through the 3 VV schools at 2 campuses.

RISKS AND CONCERNS

1. While the domestic market in India is growing, aggressive and cheap imports due to inverted duties and dumping are dampening domestic manufacturing and may continue until government policy is corrected.

2. In our PA business, we are dependent on a single raw material supplier. This could be a risk due to logistic constraints, and single source risks. Your Company is working on diversifying our sources.

3. For PA derivatives, Alcohol availability continues to be a concern, resulting in increased cost of alcohol – since for supply we have to compete with Liquor and Petrol blending.

Awards and Recognitions:

The Company has participated in various important Competitions and Programmes to benchmark and improve ourselves and motivate our employees. The Company is recognized for its performance in Energy and Water management, Ethical Business practices, Manufacturing Excellence and in CSR / Social initiatives.

We have received the following Awards and Recognitions over the last year: National Award Excellence in Energy Management, Ramakrishna Bajaj National Quality Award, and CSR Excellence & Leadership, to mention a few.

Employees:

Industrial relations with employees remained cordial during the year. We thank our employees, for their sustained effort and commitment to your Company.

Financial and Operating performance

Your Company achieved a Net Proft of Rs.357 lakhs compared to Net proft of Rs. 2,775 lakhs in the previous year.

Contribution to Exchequer

The amounts paid to the Central and State Exchequer by way of Excise Duty, Sales Tax, Customs duties (incl. paid to supplier), Income Tax, etc. is about Rs.13,415 Lakhs on Net Sales of about Rs.103,344 Lakhs. Contribution to the Exchequer is about 12.7% of your Company''s Sales.

Exports:

Calculated on FOB basis, Exports amounted to Rs.7,187 Lakhs (Rs. 6,595 lakhs).

Current Year Business

In the Phthalic Anhydride business, large volumes of imports have affected sales in the domestic market. The market situation continues to be challenging but your company is gearing itself to rise above these.

The International markets present a difficult trade situation given the volatility in prices of Raw material and in the finished product. The Management and Operating teams are working to address these.

Continuous improvement in cost and efficiency will continue to be a focus in the coming year.

In the Food Ingredients Business, the margins have improved, while reducing costs. Active efforts are being taken to expand the market.

The Focus for FY 2014-15

The Management team has set itself the following key tasks:- 1) Work towards early correction of the Inverted Duty, caused by various Trade Agreements

2) Improve gross margins on all products

3) Improve raw material supply chain and costs, to derive significant cost efficiencies

4) Drive down total cost -- manufacturing and post manufacturing, by eliminating activities, improved reliability and better management of working capital.

Cautionary Statement

The statements made in this report are based on considered assumptions and expectations. Actual results may differ in future. The Company assumes no responsibility with respect to forward looking statements that may be amended or modified later, on the basis of subsequent developments, information or events.

Directors Responsibility Statement

As required pursuant to the Companies (Amendment) Act, 2000, the Board of Directors confirms 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 directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period.

iii) the directors have taken proper and sufficient care to maintain 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 have prepared the annual accounts on a going concern basis.

Finance

All taxes and statutory dues are being paid on time. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. Your Company is also very regular in meeting its commitments to its depositors. Deposits aggregating Rs. 20.95 lakhs due for repayment on or before March 31, 2014 were not claimed by the depositors as on that date.

Statement pursuant to Listing Agreement

Your Companies shares are listed with the National Stock Exchange of India Ltd. and the BSE Ltd. We have paid the respective annual listing fees and there are no arrears.

Report on Corporate Governance

A Report on Corporate governance is annexed herewith. Auditors'' Report on the same is also annexed.

Industrial Relations Industrial Relations during the year under review continued to be cordial.

Auditors

M/s. CNK & Associates LLP, Chartered Accountants, Statutory Auditors of our Company hold office until the conclusion of the ensuing AGM. The notice convening the AGM is self-explanatory. Members are requested to appoint M/s. CNK & Associates LLP, Chartered Accountants, as Auditors for the Current Year.

Cost Auditors

Mr.G.Sundaresan, Cost Accountant, was appointed as Cost Auditor to conduct cost audit of the cost records maintained by our Company in respect of products manufactured during the financial year 2013-14. Cost Compliance and Cost Audit Reports were fled with MCA, Govt. of India, by the Cost Auditor on Sept.23, 2013 and Sept.25, 2013 respectively, well before Sept.30, 2013, the due date of fling for the financial year 2012-13.

Personnel

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure A to the directors'' report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars required to be included in terms of Section 217 (1)(e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure B.

Acknowledgements

The Directors would like to place on record our sincere appreciation for the continued support given by the Banks, Government Authorities, Customers, Vendors, Shareholders and Depositors during the period under review. The Directors also appreciate and value the contributions made by the employees of our Company at all levels.

For and on behalf of the Board of Directors

Mumbai R. Parthasarathy R. Ravi Shankar

12th May 2014 Managing Director Director


Mar 31, 2013

To The Members of Thirumalai Chemicals Ltd.

The Directors present the FORTIETH ANNUAL REPORT AND AUDITED STATEMENT OF ACCOUNTS of the Company for the year ended March 31, 2013.

(Rs. In lakhs)

STANDALONE FINANCIAL RESULTS Year ended Year ended 31.3.2013 31.3.2012

Revenue from operations 114,584 90,649

Income from Windmill Operation 192 138

Other Income 816 563

115,592 91,350

Gross Profit / (Loss) before Interest and Finance Charges and Depreciation 10,912 7,198

Interest and Finance charges 5,202 5,237

Profit / (Loss) before Depreciation and Tax 5,710 1,961

Depreciation 1,287 1,381

Profit / (Loss) before Tax 4,423 580

Provision for Current Tax 1,884 346

Profit / (Loss) after Current Tax 2,539 234

Provision for Deferred Tax 236 244

Profit / (Loss) after Tax 2,775 478

Balance in Profit & Loss Statement 4,041 3,563

Profit available for appropriation 6,816 4,041

APPROPRIATIONS

Dividend 768 -

Tax on Dividend 127 -

General Reserve 300 -

Balance carried forward 5,621 4,041

6,816 4,041

On a Revenue from operation of Rs.114,584 lakhs (Rs. 90,649 lakhs) including Export earning on FOB basis of Rs. 6,595 lakhs (Rs. 11,909 lakhs), Income from windmill operation of Rs. 192 lakhs (Rs. 138 lakhs) and Other Income of Rs. 816 lakhs (Rs. 563 lakhs), the Gross Profit of the Company amounted to Rs. 10,912 lakhs (Profit of Rs. 7,198 lakhs in the previous year). After providing for Interest and Finance charges, Depreciation, the Profit after Tax is Rs. 2,775 lakhs (Rs. 478 Lakhs) in the previous year.

Dividend: Your Company paid an interim dividend of Rs. 5.00/- per share (50% on the face value of Rs. 10/-) in February 2013. The directors are now pleased to recommend a final dividend of Rs. 2.50/- per share (25% on the face value of Rs. 10/-). This, together with the interim dividend, aggregates to a total dividend of Rs.7.50 per share (75% on the face value of Rs. 10/-) for the financial year ended 31st March 2013, on the paid-up capital of Rs. 10.24 cr. (Previous Year Dividend - Nil)

Subsidiaries: Tarderiv International Pte Ltd., Singapore is a wholly-owned subsidiary of your Company and it has two step-down subsidiaries viz. Cheminvest Pte Ltd., Singapore and Optimistic Organic Sdn. Bhd., Malaysia.

Directors'' Responsibility Statement

As required pursuant to the Companies (Amendment) Act, 2000, the Board of Directors confirms 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 directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period.

iii) the directors have taken proper and sufficient care to mainten 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 have prepared the annual accounts on a going concern basis.

Finance

All taxes and statutory dues are being paid on time. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. Your Company is also very regular in meeting its commitments to its depositors. Deposits aggregating Rs. 11.95 Lakhs due for repayment on or before March 31, 2013 were not claimed by the depositors as on that date.

Statement pursuant to Listing Agreement

Your Company''s shares are listed with The National Stock Exchange and The Bombay Stock Exchange Ltd. We have paid the respective annual listing fees and there are no arrears.

Report on Corporate Governance

A Report on Corporate governance is annexed herewith. Auditors'' Report on the same is also annexed.

Industrial Relations

Industrial Relations during the year under review continued to be cordial.

Directors

Mr. Dilip J Thakkar, Director, resigned from the Board with effect from May 25, 2012 The Board has placed on record its appreciation of the valuable contribution made to your Company by Mr Dilip J Thakkar.

Mr. K. V. Krishnamurhty, Director, expired on January 16, 2013. The Board has placed on record its appreciation of the valuable contribution made to your Company by Mr K.V.Krishnamurhty.

Mr. N. Subramanians was appointed as an Additional Director with effect from September 13, 2012 in accordance with Article 126 of the Articles of Association of the Company and Section 260 of the Companies Act, 1956. Mr N.Subramanian holds office only up to the date of the forthcoming Annual General Meeting (AGM) and a Notice under Section 257 of the Act has been received from a Member signifying his intention to propose Mr. N. Subramanian''s appointment as a Director.

Mr. Raj Kataria was appointed as an Additional Director with effect from January 28th, 2013 in accordance with Article 126 of the Articles of Association of the Company and Section 260 of the Companies Act, 1956. Mr Raj Kataria holds office only up to the date of the forthcoming Annual General Meeting (AGM) and a Notice under Section 257 of the Act has been received from a Member signifying his intention to propose Mr Raj Kataria''s appointment as a Director.

Dr. S. Rama Iyer, Mr. P. Shankar, and Mr. A. Janakiraman, Directors of your company, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

The Board recommends their aforesaid appointments / reappointments.

Auditors

M/s. Contractor, Nayak and Kishnadwala, Chartered Accountants, Statutory Auditors of your Company hold office until the conclusion of the ensuing AGM. The notice convening the AGM is self- explanatory. Members are requested to re-appoint M/s. Contractor, Nayak and Kishnadwala, Chartered Accountants, as Auditors for the Current Year.

Cost Auditors

Mr.G.Sunderesan, Cost Accountant, was appointed as Cost Auditor to conduct cost audit of the accounts maintained by your Company in respect of products manufactured for the financial year 2012-13.

Personnel

In terms of the provisions of Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are set out in the Annexure to the directors'' report.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars required to be included in terms of Section 217 (1)(e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure-1.

Acknowledgements

The Directors would like to place on record their sincere appreciation for the continued support given by the Banks, Government Authorities, Customers, Vendors, Shareholders and Depositors during the period under review. The Directors also appreciate and value the contributions made by the employees of your Company at all levels.

For and on behalf of the Board of Directors

Mumbai R.Parthasarathy

29th May 2013 Managing Director


Mar 31, 2011

The Directors present their THIRTY EIGHTH ANNUAL REPORT AND AUDITED STATEMENT OF ACCOUNTS of the Company for the year ended March 31, 2011.

(Rs. In lakhs)

STANDALONE FINANCIAL RESULTS Year ended Year ended 31.3.2011 31.3.2010

Sales 82,780 66,541

Income from Windmill Operation 146 195

Other Income 1,081 556

84,007 67,292

Gross Profit before Interest Finance Charges and Depreciation 5,727 7,033

Interest and Finance charges 1,751 1,994

Profit before Depreciation and Tax 3,976 5,039

Depreciation 1,339 1,236

Profit before Tax 2,637 3,803

Provision for Current Tax 30 25

Profit after Current Tax 2,607 3,778

Provision for Deferred Tax 710 1,203

Profit after Tax 1,897 2,575

Prior Year Adjustment (42) 11

Balance in Profit & Loss Account 1,708 19

Profit available for appropriation 3,563 2,605

APPROPRIATIONS

Dividend - 512

Tax on Dividend - 85

General Reserve - 300

Balance carried forward 3,563 1,708

3,563 2,605

On a Sales turnover of Rs. 82,780 lakhs (Rs. 66,541 lakhs) with Export Turnover at Rs. 8,888 lakhs (Rs. 6,822 lakhs) including Export earning on FOB basis of Rs. 8,665 lakhs (Rs. 6,417 lakhs), Income from windmill operation of Rs. 146 lakhs (Rs. 195 Lakhs) and Other Income of Rs. 1,081 lakhs (Rs. 556 lakhs), the Gross Profit of the Company amounted to Rs. 5,727 lakhs (Profit of Rs. 7,033 lakhs in the previous year). After providing for Interest and Finance charges, Depreciation, Current and Deferred taxation and some adjustments, the Net Profit amounted to Rs. 1,897 lakhs compared to Profit of (Rs. 2,575 lakhs) in the previous year. The performance during the year is explained below in Industry Developments.

Subsidiaries

During the year the Company has set up a subsidiary in Singapore -Tarderiv International Pte Ltd. and two step-down subsidiaries viz. Cheminvest Pte Ltd - Singapore and Optimistic Organic Sdn Bhd Malaysia.

As per Section 212 of the Companies Act, 1956, we are required to attach the Directors Report, Balance Sheet and Profit & Loss Account of our Subsidiary. The Ministry of Corporate Affairs, Government of India vide its general circular no.2/2011 dated February 8, 2011 has provided an exemption to Companies from complying with Section 212, provided such Companies publish the audited Consolidated financial statements in the Annual Report. Accordingly, the Annual Report does not contain the financial statements of our Subsidiary. The audited annual accounts and related information of our subsidiary, where applicable, will be made available, upon request.

Dividend

Your Directors intend to conserve the resources for long term benefits of the Shareholders and have decided not to recommend any dividend for 2010-2011. (Previous Year- Rs. 5 per share)

MANAGEMENTS DISCUSSIONS AND ANALYSIS

Mission and Business Strategy

The Company decided in the beginning of the Financial Year to do a thorough review of its businesses; the Opportunities available, our position in the Indian and International markets, Competitive capability and gaps the Changes and Resources needed to build on the opportunities. Based on these Studies and Reviews, the Company decided that to deliver Profitability and sustained Growth, it will focus on the specific goals viz.,

a) Transforming our commodity Chemical Business (Phthalic Anhydride) to be globally competitive in size & profitability.

b) Around of our existing Derivatives Businesses which serve the Food and Cosmetic and other Industries, building strong businesses of significant size in each area to deliver a broader range of products to these customers and growing these businesses significantly over the next few years.

c) Identifying and developing a New Business of good profitability and potential.

Industry Outlook and Your Companys Performance

Opportunities and Threats and our Reponses

Your company has the reasonable world scale capacity of 140,000 tonnes for its prime product, Phthalic Anhydride. Your Company has a good volume and market growth in India in a difficult year. Phthalic Anhydride is a key Industrial Raw Material and has great potential. Indian demand is growing steadily over 10% - 12% in line with growth in Construction, Coatings, Automotive, Printing & Packaging, etc.

The Phthalic Anhydride business is extremely competitive as a Commodity Business involving high material costs, large capacities in the Far East, very low tariff barriers etc. During the last few years, the Asian markets have been very cyclical, and there has been large scale dumping into India at marginal costs during 2010-11. During 2009-10 the Government of India had addressed this issue temporarily for one year through Safeguard Duties, which were withdrawn in early 2010.

While prices of inputs rose, Trading margins dropped significantly in Asia & India, resulting in severe pressure on our Phthalic Anhydride margins. While the production and sales are our highest ever, profits have been disappointing.

On the positive side, your Company has a good position, given the scale capacity, improvements in technology, reputation, sales and marketing networks, and experienced and committed employees.

The Company has decided that the only way to drive this Business to greater profitability is by becoming globally competitive, work actively to improve sales margins while we work to become the Least Cost Producer and scale up. As a part of these strategic efforts, the Company has also taken up improvements in Technology which will result in significant Operating advantages. These are expected to be completed during 2011-12 end. The Company is also actively working to improve its sales, distribution & supply chain for better margins.

Your Company remains optimistic about the bright future for its Phthalic Business. It will endeavor to build on its strengths for competitive advantage and profits.

The main market for our product Phthalic Anhydride is largely in Western India. The resultant Logistics and Working Capital costs have become increasingly important. The Company is therefore also reviewing all options to address its strategic positions in this regard.

1. The Food Ingredients and Fine Chemicals products of the Company have been identified as a Business area for focused and significant growth. These products of the Company directed towards the Food, Beverage, and Cosmetic Industries. The Company plans to grow these significantly over the next 5 years both in scale and in product / functional range. About 60% of our sale is in the International market, largely in the developed world. The growth of this Business will be useful also to de-risk the cyclicality of our Commodity Chemical Businesses and increase the Companys profitability.

Both in our Food Ingredients and in our Fine Chemicals/ Derivatives, the Company has achieved good growth in Production, Revenues, and Profits during the year. The task for the next few years will be to grow this Division significantly as it is extremely promising and the Company has a good position in Technology, both in the Indian and International markets.

2. The Company did not produce Maleic Anhydride due to the high cost of raw material Benzene. The Plant is mothballed, well maintained and in good condition. The Company is looking at options on how to derive Profit and Value from this Plant, which has been idle for nearly 3 years. The Company met a portion of the local demand through imports and distribution.

Managements Reply to qualification given in the Auditors Report

With regard to the qualification made by the Auditors in their report (Para 4) since Optimistic Organic Sdn. Bhd (OOSB) has acquired the liabilities and is continuing operation, the Board believes that the amounts referred to in Para 4 are recoverable.

Financial and Operating performance

Company achieved a Net Profit of Rs. 1,897 lakhs Compared to Net profit of Rs. 2,575 lakhs in the previous year.

Contribution to Exchequer

The amounts paid to the Central and State Exchequer by way of Excise Duty, Sales Tax, Customs duties (incl. paid to supplier), Income Tax, etc is about Rs. 9,497 Lakhs on Net Sales of about Rs. 76,707 Lakhs. That is, over 12 % of Companys Sales is contributions to the Exchequer.

Research and Development

The Companys in-house Research and Development facility is approved by the Government of India, Department of Science and Technology, and under Section 35 (2AB) of the Income Tax, 1961. It is focusing on developing and improving our Fine Chemicals, Food Ingredients and Derivatives businesses, both in terms of Grades, Applications and New products.

The Company has seen significant results from the efforts of the last 2 years in our Derivatives and Food Ingredients Businesses, where we are now selling to new Applications and at better margins in Exports and also in India than previously.

An amount of Rs. 237 lakhs (Rs. 209 Lakhs) has been spent during the year for these projects on which the Company avails a weighted deduction of 200 % (150 %)

Risks and concerns

Severe pressure on margins, high raw material prices, availability of substitutes, indiscriminate imports, foreign exchange fluctuations are some of the factors which could impact adversely.

Volatility in prices of the Raw Material as also the Companys end products are normal features in this line of business which can have bearing on the Companys operations.

Also, Dumping of Phthalic Anhydride into our Country at very low numbers from the Far East is a matter of concern.

Current Year

Demand growth is strong in all our products in India. There has been a steady surge in Raw Material prices. The end markets are still taking time to adjust to these higher levels. Our Food Ingredients and Derivatives Business has been doing well.

The Improvement Programmes started during the last year will start yielding results during this year. We hope to improve our Revenues and our Profitability. The Plants have been operating smoothly with regular Maintenance and Shutdowns for Catalyst changes and Technology upgradation during this year but these have not affected the Sales.

Outlook

Your Company remains optimistic about the bright future lying ahead. It will endeavor to grow its leadership by building on it strengths for competitive advantage. Towards this the Company has undertaken a business review process by appointing external consultants.

Cautionary Statement

The statements made in the report are based on assumptions and expectations. Actual results may differ in future. The Company assumes no responsibility in respect of forward looking statements that may be amended or modified on the basis of subsequent developments, information or events.

Exports

Calculated on FOB basis, Exports amounted to Rs. 8,665 lakhs (Rs. 6,417 Lakhs). The Company has been awarded the status

of One Star Export House in recognition of the Companys export performance. Your Company focuses on exports to achieve higher volumes year after year.

Directors Responsibility Statement

As required pursuant to the Companies (Amendment) Act, 2000, the Board of 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 directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period .

iii] the directors have taken proper and sufficient care of 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 have prepared the annual accounts on a going concern basis.

Finance

All taxes and statutory dues are being paid on time. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. The Company is also very regular in meeting its commitments to its depositors. Deposits aggregating Rs. 8.44 Lakhs due for repayment on or before March 31, 2011 were not claimed by the depositors as on that date.

Statement pursuant to Listing Agreement

The Companys shares are listed with the National Stock Exchange Ltd. and the Bombay Stock Exchange Ltd. Your Company has paid the respective annual listing fees up-to- date and there are no arrears.

Report on Corporate Governance

The Report on Corporate Governance as stipulated under clause 49 of the listing agreement forms part of the Annual Report and is annexed herewith.

As required by the Listing Agreement, Auditors Report on Corporate Governance and a declaration by the Chairman & Managing Director with regard to the Code of Conduct are attached to the said Report.

The Management Discussion and Analysis is given as a separate statement forming part of the Annual Report.

Further as required under Clause 49 of the Listing Agreement, a certificate duly signed by the Managing Director and the Chief Financial Officer on the Financial Statements of the Company for the year ended 31st March, 2011, was submitted to the Board of Directors at their meeting held on May 30, 2011

Personnel

Industrial Relations are extremely cordial. The Company has entered into a new 4-year Agreement with the Workmen. All the staff are being rigorously trained to upgrade themselves, while new manpower is also being inducted at different levels to strengthen the operations of the Company. The Directors wish to place on record their appreciation of the devoted services rendered by the employees.

Directors

Mr. Dilip Thakkar, Dr. S. Rama Iyer, Mr.K.V.Krishnamurthy, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

The Board commends the aforesaid reappointments.

Auditors

M/s. Contractor, Nayak and Kishnadwala, Chartered Accountants, Statutory Auditors of the Company hold office until the conclusion of the ensuing AGM. The notice convening the AGM is self explanatory. Members are requested to re-appoint M/s. Contractor, Nayak and Kishnadwala as Auditors for the Current Year.

Particulars of Employees

Information in accordance with the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of the Employees) Rules, 1975, as amended, forms part of the Directors 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 Shareholders of the Company, excluding the statement of particulars of employees under Section 217(2A) of the Companies Act, 1956. Any Shareholder interested in obtaining a copy of the said statement may write to the Company Secretary and the same will be sent by post.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars required to be included in terms of Section 217 (1)(e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure.

Acknowledgements

Your Directors would like to place on record their sincere appreciation for the continued support given by the Banks, Government Authorities, Customers, Vendors, Shareholders and Depositors during the year under review. Your Directors also appreciate and value the contributions made by its executives, staff and workers of the Company at all levels.

For and on behalf of the Board of Directors

R.Sampath Chairman

Mumbai 30th May, 2011.


Mar 31, 2010

The Directors present their THIRTY SEVENTH ANNUAL REPORT AND AUDITED STATEMENT OF ACCOUNTS of the Company for the year ended March 31, 2010.

(Rs. In lakhs)

FINANCIAL RESULTS Year ended Year ended 31.3.2010 31.3.2009

Sales 66.541 51,281

Income from Windmill Operation 195 98 * Other Income 556 712

67,292 52,091

Gross Profit / (Loss) before Interest and Finance Charges and Depreciation 7,033 (4,062)

Interest and Finance charges 1,994 1,703

Profit / (Loss) before Depreciation and Tax 5,039 (5,765)

Depreciation 1,236 1,222

Profit / (Loss) before Tax 3,803 (6,987)

Provision for Current Tax 25 12

Profit / (Loss) after Current Tax 3,778 (6,999)

Provision for Deferred Tax 1,203 (2,405)

Profit / (Loss) after Tax 2,575 (4,594)

Prior Year Adjustment 11 (6)

Balance in Profit & Loss Account 19 (4,619) Profit available for appropriation

2,605 19

APPROPRIATIONS

Dividend 512 -

Tax on Dividend 85 -

General Reserve 300 -

Balance carried forward 1,708 19

2,605 19

On a Sales turnover of Rs. 66,541 lakhs (Rs. 51,281 lakhs) with Export Turnover at Rs.6,822 lakhs (Rs. 11.205 lakhs) including Export earning on FOB basis of Rs. 6,417 lakhs (Rs. 10,990 lakhs), Income from windmill operation of Rs. 195 lakhs (Rs. 98 Lakhs) and Other Income of Rs.556 lakhs (Rs. 712 lakhs), the Gross Profit of the Company amounted to Rs. 7033 lakhs (Loss of Rs.4062 lakhs in the previous year). After providing for Interest and Finance charges, Depreciation. Current and Deferred taxation and some adjustments, the Net Profit amounted to Rs. 2575 lakhs compared to loss of (Rs.4594 lakhs) in the previous year. The performance during the year is explained below in Industry Developments.

Dividend

Your Directors are pleased to reeoir -nri p.iyment of Dividend @ Rs. 5 per share. The total cash outflow on account of this dividend payment including distribution tax will be Rs. 597 lakhs. The dividend after approval by (he shareholders at the forthcoming AGM will be paid to the eligible shareholders by 12" August 2010.

Exports

Calculated on FOB basis, Exports including Deemed Exports amounted to Rs. 10,241 lakhs (Rs. 17,005 LakhsJ.The Company has been awarded the status of One Star Export House in recognition of the Companys export performance. Your Company focuses on exports to achieve higher volumes year after year.

Status of TCL Industries (Malaysia) Sdn Bhd (TCLM)

The Companys investment of Rs. 1,828 lakhs was written down against the Securities Premium and other reserves as approved by the Honble High Court, Bombay.

The production during calendar year 2009 was more than 26000 Mts.

With respect to the qualification in the Auditors report. Note no.27 in Schedule 19 is self explanatory and therefore do not call for any further comments.

Directors Responsibility Statement

As required pursuant to the Companies (Amendment) Act, 2000, the Board of 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 directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit or loss of the company for that period .

iii] the directors have taken proper and sufficient care of 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 have prepared the annual accounts on a going concern basis.

Finance

All taxes and statutory dues are being paid on time. Payment of interest and installments to the Financial Institutions and Banks are being made as per schedule. The Company is also very regular in meeting its commitments to its depositors. Deposits aggregating Rs. 8.92 Lakhs due for repayment on or before March 31, 2010 were not claimed by the depositors as on that date.

Statement Pursuant to Listing Agreements

The Companys shares are listed with The National Stock Exchange and the Bombay Stock Exchange. Your Company has paid the respective annual listing fees up-to-date and there are no arrears.

Report on Corporate Governance

A Report on Corporate governance is annexed herewith. Auditors Report on the same is also annexed.

Personnel

Industrial relations continue to remain cordial. The Directors place on record their appreciation of the devoted services rendered by the employees.

Directors

Mr. Pradeep Rathi, Mr.A.Janakiraman and Mr.P.Shankar, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and are eligible for reappointment.

The Board commends the aforesaid reappointments.

Auditors

M/s. Contractor. Nayak and Kishnadwala. Chartered Accountants, the Statutory Auditors of the Company hold office until the conclusion of the ensuing AGM. The notice convening the AGM is self explanatory. Members are requested to re-appoint M/s. Contractor, Nayak and Kishnadwala as Auditors for the Current Year.

Particulars of Employees

The details of employees of the Company in receipt of remuneration in excess of the limits under Section 217(2A) of the Companies Act, 1956 is given in Annexure 1.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars required to be included in terms of Section 217 (l)(e) of the Companies Act, 1956 with regard to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure- 2.

Acknowledgement

TheBoard of Directors acknowledge and thank its employees at all levels, the Vendors, Customers, Service Providers, Government Agencies, Bankers, Members and Depositors for their continued support.

For and on behalf of the Board of Directors

S. Sridhar

Chairman & Managing Director

Mumbai

21st May, 2010

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