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Directors Report of Apcotex Industries Ltd.

Mar 31, 2017

The Directors have pleasure in presenting to you the Thirty First Annual Report of the Company and the Audited Financial Statement for the year ended 31st March 2017.

A. COMPANY PERFORMANCE

FINANCIAL HIGHLIGHTS

Particulars

2016-17 (Rs. In Lacs)

2015-16 (Rs. In Lacs)

Growth %

GROSS SALES

43,163.43

29,772.38

44.98

Gross Profit Before Depreciation,

3,718.04

4,479.20

(16.99)

Finance cost and Tax but after

prior years’ adjustments

Less: a) Depreciation

1,210.02

894.44

b) Finance Cost

286.31

242.01

Profit Before Tax

2,221.71

3,342.75

(33.54)

Less : a) Provision for Tax

517.59

966.13

b) MAT Credit Entitlement

(254.31)

-

c) Adjustment for Deferred Tax Liability

1,015.56

(90.48)

d) Prior Period Tax Expenses

(966.13)

-

Profit After Tax

1,909.00

2,467.10

(22.62)

Add: Balance brought forward

4,474.73

3,930.83

from the Previous Year

Disposable Profit

6,383.73

6,397.93

(0.22)

Recommended Appropriations: a) Dividend

933.21

933.21

b) Tax on Dividend

189.98

189.98

c) Transfer to General Reserve

400.00

800.00

Balance carried forward to

4,860.54

4,474.73

Balance Sheet

6,383.73

6,397.93

DIVIDEND

Your Directors have recommended a dividend @ Rs.4.50/-(Rupees Four and fifty paise) (Previous year Rs.4.50/- (Rupees Four and fifty paise) per Equity Share of Rs.5/- each for the financial year 2016-17. Dividend, if approved, will absorb a sum of Rs. 1123.19 lacs (including Dividend Distribution Tax of Rs.189 lacs) out of the net profits after tax, as above and will be paid to those shareholders whose names appear on the Register of Members on Thursday, 10th day of August 2017.

TRANSFER TO RESERVE

The appropriations for the year are:

Rs. in lacs

Particulars

Year ended 31st March 2017

Net Profit after tax for the year

1,909.00

Balance of Reserve at the beginning of the year

3,203.72

Transfer to General Reserve

400.00

Balance of Reserve at the end of the year

3,603.72

B. MANAGEMENT DISCUSSION AND ANALYSIS

The company manufactures and markets a range of Emulsion Polymers - Synthetic Latexes, Synthetic Rubber and Nitirle Rubber.

I. CURRENT SCENARIO

Your Company is one of the leading producers of emulsion polymer products namely, Synthetic Latexes (Vinyl Pyridine Latex, Carboxylated Styrene Butadiene Latex, Styrene Acrylic Latex, Nitrile Latex, etc.) and Synthetic Rubber (High Styrene Rubber, Nitrile Butadiene Rubber, NBR Powder, and Nitrile Polyblends) in India. The Company has one of the broadest ranges of products in the industrial segments and caters to a wide range of industries. Your Company’s Synthetic Latex products are used, among other applications, for tyre cord dipping, paper and paperboard coating, carpet backing, concrete modification/water proofing, non-wovens, textile finishing, paints, etc. Various grades of Synthetic Rubber find application in products such as footwear, automotive components, rice rolls, moulded items, v-belts, conveyor belts, hoses, etc.

The Company’s major raw materials are petrochemical products and its business could be vulnerable to high volatility in the prices of crude oil and its downstream products.

Over the years, a number of steps have been taken by the management to improve the operational efficiency of the Company in different functions like marketing, human resource development, production process, utilities etc.

Your Company’s plant at Taloja is recipient of Total Productive Maintenance (TPM) Excellence in Consistent TPM Commitment Award - Category A by the Japan Institute of Plant Maintenance (JIPM). TPM has helped the company significantly in improving efficiencies in the plant and in operations and rationalizing costs. The Taloja plant has successfully completed re-certification of the integrated ISO 9001, ISO 14001 and OHSAS 18001. It has also successfully completed recertification by Indian Chemical Council (ICC) to use the “Responsible Care” logo.

The above initiatives are also being implemented at the recently acquired plant at Valia, Ankleshwar, Gujarat.

II. OPERATIONS DURING THE FINANCIAL YEAR 2016-17.

After amalgamation of wholly owned subsidiary viz. Apcotex Solutions India Private Limited, which was made effective from 1st December 2016, the Company achieved Gross Value Sales of Rs. 43,163.43 lacs during the financial year, compared to Rs. 29,772.38 lacs in the preceding year on standalone basis. The company exported its products worth Rs. 4014 lacs during the financial year. The sales of Synthetic Latex products were lower during the financial year due to strike of unionized workmen at Taloja plant for almost 2 months and intermittent stoppages of production at one of our major customer’s plant.

There was a continuous thrust from the management to develop a strong research and development and technical service team to develop new products for export markets, explore new applications and understand better the changing customer needs.

Profits before tax were lower by 33% to Rs. 2221.71 lacs as compared to Rs 3,342.75 lacs during the previous year due to strike at Taloja Plant and intermittent stoppages of pro duction at one of our major customer’s plant. Due to the recently acquired company, there were some one time post-acquisition and merger expenses which also put some pressure on the bottom line. Your Company was also successful in turning around a loss-making asset in a very short period of time. In spite of the challenging year, EBITDA decreased by only 17% from Rs 4479.20 lacs in the previous year to Rs 3,718.04 lacs during the financial year 2016-17.

Profit after tax stood at Rs.1909.00 lacs as compared to Rs. 2,467.10 lacs in the previous year.

The Balance Sheet of the Company is also quite healthy with zero debt, reasonable working capital cycle and cash/liquid Investments valued at about Rs.35 crore based on NAV as on 31st March, 2017.

Your Directors consider Company’s performance as satisfactory.

NEW LOGO

Your Company is proud to inform that the management has adopted a new logo for the Company as a part of the ongoing evolution of business.

Over the last few years, your company has grown and changed dramatically and during FY 2015-16 your Company acquired Omnova Solutions India Pvt. Ltd., which immensely helped to expand the product basket. It was a perfect time to evaluate our company’s brand and logo to ensure it is in sync with who we are and where we are heading. After careful consideration, the Company chose a new logo the shape of which not onlyrepresents the letter "A” but also the upwardly mobile nature of the Company. At the same time, the curved stroke and colours used in gradient depict flexibility and adaptability which is essential for success. The colours green and blue symbolizes the importance of the eco-system and environment for our Company. We have also retained the same font and red colour of "apcotex” in the logo to ensure that we remember our roots and values.

III. MERGER

The Scheme of Amalgamation of wholly owned subsidiary viz. Apcotex Solutions India Private Limited with the Company was approved by the Honorable High Court, judicature at Bombay on 27th October 2016 and was made effective from 1st December 2016 with appointed date as 31st March 2016, by filing the High Court order with Ministry of Corporate Affairs (MCA).

The Board of Directors of your Company on 31st March 2017 has approved the Scheme of Amalgamation of Saldhar Investment and Trading Company Private Limited, the holding company of Apcotex Industries Limited (holding 51.10% paid-up share capital) with the Company from 31st March 2017. Your Company is in process of making an application to Stock exchanges for their consent, before filing petition before National Company Law Tribunal (NCLT), Mumbai Bench.

IV. OUTLOOK

In light of the acquisition of Omnova Solutions India Private Limited in Financial Year (FY) 2015-16 and subsequent merger in 2016-17, the Company expects FY 2017-18 to be an exciting year in spite of a few challenges. The Company will explore introducing new products and focusing on exports as short term future growth drivers for the Company. In the medium to long term the Company is exploring adding new capacities for current products, new adjacent businesses as well as opportunities for inorganic growth.

With the Company’s continuous endeavour to enhance efficiencies at all levels and functions, your Directors view the prospects for the financial year 2017-18 with cautious optimism.

V. RISKS AND CONCERNS

The Company has laid down a well-defined Risk Management Framework covering the risk, risk exposure, potential impact and risk mitigation process. Major risks identified by the business and functions are systematically addressed through mitigating actions on continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company.

The Company’s Risk Management Committee, periodically reviews the risks in the organization, identifies new risk areas, develops action plans and monitors and reports the compliance and effectiveness of the policy and procedure to the Audit Committee and Board.

The Audit Committee and Board review the risks and suggest steps to be taken to control and mitigate the same through a properly defined framework.

The Company’s Board of Directors perceives the following risks as current high risks areas:

1) Credit Risk:

The management has adopted the stringent credit policy due to which the bad debts written off is only Rs.36.22 lacs - 0.11% of Sales Turnover during past 3 years. The credit period and the exposure limits are reviewed regularly. Taking the credit report of new customers and for existing customers once in 2-3 years to understand their credit worthiness. The supplies are stopped once the overdue outstanding exceeds the set limit. Deposits / bank guarantees are obtained from the dealers / consignment agents wherever necessary. The overdue outstanding list is reviewed by the seni or S ales Managers and Managing Director on a weekly basis. One of the largest customer in paper/paperboard segment is facing financial problem and overdue outstanding is about Rs.11 crore.

2) Procurement Risk:

Presently the Company is procuring major quantity of Butadiene from IOCL, OPAL and on availability basis from RIL and Haldia. Butadiene availability in India is now fairly sufficient. Styrene is not manufactured in India, hence completely imported and our quantities are large. Acrylonitrile (ACN) is also not manufactured in India, hence is completely imported but our quantities are small so we should be able to get this material. To mitigate the risk of availability of material, same are sourced from multi sources viz, bulk suppliers, dealers and imports.

A system has been set to constantly monitor inventories and prices. The company has maintained relation with domestic and overseas suppliers for regular supplies of materials.

3) Safety Risk:

The Company has several safety measures in place. Consent to operate for Taloja plant is valid upto 30th March 2021. The Consent to operate Valia Plant is valid till 9th November 2019. The safety committee meets regularly and conducts the mock drills to check the preparedness in the organization to face any eventuality. To track the compliances in the organization implemented software called Total Compliance which helps to escalate the non-compliance to higher-ups.

The Company has taken adequate Insurance policies for covering the floods, earthquake, and terrorism for appropriate amount.

4) Strike Risk:

The unionised workmen at Taloja Plant were on strike for 51 days in Q4 of FY 2016-17. A new action plan is being prepared to mitigate the risks faced during the strike period. Even though the impact is high it has been somewhat reduced due to the second manufacturing plant which allowed the Company to make some products in our other facility. There is no insurance policy to cover the loss of profit on account of strike.

VI. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal checks and controls covering operations of the Company are in place and are constantly being improved upon. Adequate system exists to safeguard company’s assets through insurance on reinstatement basis and maintenance of proper records. The company has well defined procedures to execute financial transactions.

Internal audit is being conducted by an independent firm of Chartered Accountants. The internal auditor monitors and evaluates the efficiency and adequacy of internal control systems in the organization, its compliance with operating systems, accounting procedures and policies of the Company. Based on the observations of the internal auditor, the process owners undertake the corrective actions and improvements in their respective areas. Significant audit observations and corrective actions thereupon are presented to the Audit Committee.

The Partners of both, Statutory and Internal Auditor attend all the Audit Committee meetings.

VII. DEVELOPMENT OF HUMAN RESOURCE / INDUSTRIAL RELATIONS

The company continuously monitors its Human Resource requirement to ensure that it has adequate human skills commensurate with its needs.

Cordial relations exist between the employees at various levels and the management.

To upgrade human skills and improve their efficiencies, the company continuously organizes workshops on different management areas and also deputes employees to external workshops and seminars. CAUTIONARY STATEMENT

Statement in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward-looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include raw material availability and prices, cyclical demand, movements in company’s principal markets, changes in Government regulations, tax regimes, economic developments within and outside India and other incidental factors.

C. WIND POWER

The Wind Turbine Generator installed at Sadawaghapur, Taluka - Patan, District Satara, Maharashtra, has generated gross revenue of about Rs.135.00 lacs during the financial year (previous year Rs. 95.05 lacs), and same is netted-off against the power cost.

D. DISCLOSURES UNDER COMPANIES ACT, 2013

I. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Information sought under the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the Annexure I, forming part of this report.

II. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the annual return is enclosed in Annexure II.

III. CHANGES IN THE SHARE CAPITAL

The paid-up Equity Share Capital as on 31st March 2017 is Rs.1036.90 lacs, comprising of 2,07,37,984 equity shares of Rs.5/- each.

IV. NUMBER OF BOARD MEETINGS

The Board meets at regular intervals to discuss and decide on the Company / business policy and strategy apart from other Board business. During the financial year under review, the Board of Directors met 6 (six) times. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

The details of the Board meetings and the attendance of Directors are provided in the Corporate Governance Report.

V. COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises of Mr. M G Patel, Mr. Kamlesh Vikamsey, Mr. Girish Choksey, and Mrs. Priyamvada Bhumkar. Mr. M G Patel is the Chairman of the Committee. Mr. M G Patel, Mr. Kamlesh Vikamsey and Mrs. Priyamvada Bhumkar are the Non-Executive Independent Directors. More details on the committee are given in the Corporate Governance Report.

All the recommendations of the audit committee are accepted by the Board.

VI. BOARD INDEPENDENCE

The definition of Independence of Directors is derived from Regulation 16 (1) (b) of SEBI Listing Obligation and Disclosure Requirement (LODR) Regulations, 2015 and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Independent Directors under Section 149(7) of the Companies Act, 2013 and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of 16 (1) (b) of

SEBI (LODR) Regulations, 2015 and Section 149(6) of the Companies Act, 2013;

1. Mr. M G Patel

2. Dr. S. Sivaram

3. Mr. Shailesh Vaidya

4. Mr. Kamlesh Vikamsey

5. Mrs. Priyamvada Bhumkar

In compliance with Schedule IV of the Companies Act, 2013 and Rules thereunder, the Independent Directors met on 8th February 2017 and discussed issues as prescribed under the schedule IV of the Companies Act, 2013 and also discussed various other issues.

VII. ANNUAL EVALUATION BY THE BOARD

In compliance with the Companies Act, 2013 and Regulation 19 (4) read with Schedule II, Part - D of SEBI (LODR), Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Nomination & Remuneration Committee members, covering various aspects of the Board’s functioning such as adequacy of composition of Board and Committees, Board communication, timeliness and unbiased information of right length and quality of information, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as attendance and participation in the discussion and deliberation at the meeting, understanding role and responsibilities as board member, demonstration of knowledge, skill and experience that make him/her a valuable resource for the board.

The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Executive Directors was carried out by the Independent Directors, who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.

VIII. NOMINATION AND REMUNERATION POLICY

The Nomination and Remuneration policy of the Company for Directors, Key Managerial Personnel (KMP) and Senior Personnel of the Company is enclosed as Annexure III to this Report.

Disclosure pertaining to remuneration and other details as required under section 197 (12) of the act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure IV to this Report.

IX. COMMENTS ON AUDITORS REPORT

There are no qualifications, reservations or adverse remarks on disclaimers made by M/s. Kalyaniwalla & Mistry LLP, Chartered Accountant, Statutory Auditors, in their report and by Mr. Mahesh Hurgat, Company Secretary in Practice, in his Secretarial Audit report.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the year under review.

X. RELATED PARTY TRANSACTIONS

All the related party transactions are entered on arm’s length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. There are no materially significant related party transactions entered into by the Company with Promoters, Directors or Key Managerial Personnel etc., which may have potential conflict with the interest of the company at large.

All new related party transactions are first approved by the Audit Committee and thereafter placed before the Board for their consideration and approval. A statement of all related party transactions is presented before the Audit Committee meeting on quarterly basis, specifying the nature, value and terms and conditions of the transactions.

The particulars of Contracts or arrangements with related parties referred to in Section 188(1), read with Rule 15 of The Companies (Meetings of Board and Its Powers) Rules 2014 is appended to this report in prescribed Form AOC 2 as Annexure V .

The Related Party Transaction Policy as approved by the Board is uploaded on the company’s website at the following web link http://www.apcotex.com/policy/ Related Party Transaction Policy.pdf

XI. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

XII. VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and Employees to report their genuine concerns in compliance with provision of section 177 (10) of Companies Act 2013 and Regulation 22 of SEBI (LODR) 2015. The details of same are given in the Corporate Governance Report annexed to this Report.

XIII. CORPORATE GOVERNANCE

The Company has always strived to adopt appropriate standards for good Corporate Governance.

Detailed report on the Corporate Governance and Management Discussion Analysis, form part of this report. A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Regulation 34 (3) read with Schedule V of SEBI (LODR) Regulations, 2015 is annexed to the said Report.

E. CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee in compliance with Section 135 of the Companies Act, 2013. On the recommendation of the CSR committee, the Board has approved the CSR policy of the Company which is published on the Company’s website.

The Company has under taken projects in the areas of Healthcare, Education, and Vocational Training for village women and social projects around the area surrounding the factory.

CSR committee planned activities, which could not be completed due to following reason, which has resultant into short fall in CSR spend to the extent of Rs.31.97 lacs for the financial year 2016-17.

1. Delay in inauguration of St. Jude’s new Centre at Cotton Green, Mumbai which was scheduled to be operational during April/May 2016, started its operation during March 2017.

2. The CSR Team was diverted this year due to integration of newly acquired company viz. Omnova Solutions India Private Limited, the ensuring merger process as well as the strike at the Taloja Plant

The details of CSR activities as required under Section 135 of the Companies Act, 2013, are provided in CSR Report which is annexed herewith as Annexure VI.

F. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The company conducts the Familiarisation program when new Director(s) is/are appointed during the year. The Program aims to provide insights into the Company to enable the Independent Directors to understand its business in depth, to familiarize them with the process, business and functionaries of the Company and to assist them in performing their role as Independent Directors of the Company. The Company’s Policy of conducting the Familiarisation Program has been disclosed on the website of the Company at http://www.apcotex.com/ policy/Familiarisation Programme Independent.pdf

G. CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with the requirement of the SEBI (Prohibition of Insider Trading) Regulations, 2015. The insider trading policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with the shares of the Company. The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and maintain the highest ethical standards of dealing in Company securities.

H. INTERNAL FINANCIAL CONTROLS

The Company has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detention of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial disclosures. These are reviewed periodically and made part of work instructions or process in the company.

The Company periodically conducts physical verification of inventory, fixed assets and cash on hand and matches them with the books of account. Explanations are sought for any variance noticed from the respective functional heads.

I. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm:

I. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

II. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

III. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

IV. That they have prepared the annual accounts on a going concern basis;

V. That they, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

VI. That they have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

J. DISCLOSURE IN TERMS OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company takes all necessary measures to ensure a harassment free workplace and has instituted an Internal Complaints Committee for redressal of complaints and to prevent sexual harassment. No complaints relating to sexual harassment were received during the year.

K. FIXED DEPOSITS MATURED BUT NOT CLAIMED

Company has no Fixed Deposits at the end of the financial year. The Central Bureau of Investigation (CBI) has instructed the Company, not to repay the proceeds of four fixed deposits amounting to Rs.48,000/- and accrued interest of Rs.22,491/- thereon. These deposits matured during the first week of December 2002 and continue to remain with the Company.

L. INSURANCE

All insurable assets of the Company including inventories, buildings, plant and machinery etc., as also liability under legislative enactments, are insured on reinstatement basis after due valuation of assets by an external agency. The Company also holds a Loss of Profit Policy for the financial year 2017-18.

M. ECOLOGY AND SAFETY

Company ensures safe, healthy and eco-friendly environment at its plant and surrounding area. Company continually works towards identification and reduction of risks and prevention of pollution at its plant and its surroundings.

Members of the Safety Committees of the Company’s Taloja Plant and Valia Plant, have been regularly reviewing the safety measures and their implementation to ensure adequate safety in material handling and processing, control of pollution caused by liquid effluents, dust and emissions from chimney etc. Samples are periodically drawn and the reports submitted to the Pollution Control Board indicating compliance with the standards.

Consent has been obtained from Maharashtra Pollution Control Board, to operate the plant at Taloja till 30th March 2021.

N. PERSONNEL

The information required under Section 197 of the Companies Act, 2013 and read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, are given in Annexure IV.

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5(2) & 5(3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, in respect of employees of your company is available for inspection by the members at registered office of the company during business hour on working days up to the date of the ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the company secretary, whereupon a copy would be sent.

O. DIRECTORS & KEY MANAGERIAL PERSONNEL Retirement by Rotation:

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 and Articles of Association of the Company Mr. Girish Choksey (DIN 00246196) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer himself for reappointment. The Board recommends his reappointment.

The background of the Director(s) proposed for appointment / re-appointment is given under the Corporate Governance section of the Annual Report.

P. AUDITORS

I. Pursuant to provisions of Section 139(1) of the Companies Act, 2013, M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants (Firm Registration no. 104607W/W100166), were appointed as Statutory Auditors of the Company to hold the office till the conclusion of the Annual General Meeting during the year 2018, subject to ratification at every Annual General Meeting.

The Company has received letter from the Statutory Auditors to the effect that their appointment, if made, would be within the prescribed limit under Section 141 (3) (g) of the Companies Act, 2013 and that they are not disqualified from the appointment.

Your Board recommends the ratification of appointment of M/s. Kalyaniwalla & Mistry LLP, Chartered Accountants (Firm Registration no. 104607W/W100166), Mumbai, as Statutory Auditors of the Company for the financial year 2017-18 and to hold the office till the conclusion of the next Annual General Meeting during the year 2018.

II. Pursuant to provisions of Section 204 of the Companies Act, 2013 the Board of Directors have appointed Mr. Mahesh Hurgat, Practicing Company Secretary to conduct the Secretarial audit and his Report on the Company’s Secretarial Audit is appended to this Report as Annexure VII.

Q. CEO & CFO CERTIFICATION

Certificate from Managing Director and Chief Financial Officer of the Company, pursuant to the Regulation 17 (8) read with Schedule II of SEBI (LODR) Regulations, 2015, for the financial year 2016-17 under review was placed before the Board of Directors of the Company at its meeting held on 5th May 2017.

R. ACKNOWLEDGEMENT

Your Directors take this opportunity to express their deep sense of gratitude to State Bank of India, Standard Chartered Bank, Citi Bank various departments of State / Central Government and local authorities for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Apcotex family. To all shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

The accompanying Annexure I to VII are an integral part of this Director Report.

FOR AND ON BEHALF OF THE BOARD

ATUL C CHOKSEY

CHAIRMAN

DIN:00002102

Mumbai: 5th May 2017


Mar 31, 2015

DEAR MEMBERS

The Directors have pleasure in presenting to you the Twenty-Ninth Annual Report of the Company and the audited Statements of Accounts for the year ended 31st March 2015.

A. COMPANY PERFORMANCE

FINANCIAL HIGHLIGHTS

Particulars 2014-15 2013-14 Growth % (Rs. In Lacs) (Rs. In Lacs)

GROSS SALES 39114.46 33035.43 18.40

Gross Profit Before Depreciation, Finance cost and Tax but after prior years' adjustments 4704.83 2756.42 70.69

Less: a) Depreciation 897.71 676.81

b) Finance Cost 324.25 414.49

Profit Before Tax 3482.85 1665.12 109.16

Less: a) Provision for Tax 1018.50 371.00

b) Adjustment for Deferred Tax Liability (3.71) (20.21)

Profit After Tax 2468.06 1314.32 87.78

Add: Balance brought forward from the Previous Year 3136.36 2560.11

Disposable Profit 5604.42 3874.43 44.65

Recommended Appropriations:

a) Dividend 725.83 518.45 40.00

b) Tax on Dividend 147.77 88.11 67.70

c) Transfer to General Reserve 800.00 131.50

Balance carried forward to Balance Sheet 3930.82 3136.37

5604.42 3874.43

DIVIDEND

Your Directors have recommended a dividend @ Rs. 7.00 (Rupees Seven) (Previous year Rs. 5/- (Rupees Five)) per Equity Share of Rs. 5.00/- each, for the financial year 2014- 15. Dividend, if approved, will absorb a sum of Rs. 873.59 lacs (including Dividend Distribution Tax of Rs. 147.76 lacs) out of the net profits after tax, as above and will be paid to those shareholders whose names appear on the Register of Members on Friday 24th July 2015.

TRANSFER TO RESERVE

The appropriations for the year are:

(Rupees in lacs)

Particulars Year ended 31st March 2015

Net Profit after tax for the year 2468.06

Balance of Reserve at the 1603.72 beginning of the year

Transfer to General Reserve 800.00

Balance of Reserve at the end 2403.72 of the year

C. WIND POWER

The Wind Turbine Generator installed at Sadawaghapur, Taluka - Patan, District Satara, Maharashtra, has generated gross revenue of about Rs. 102.13 lacs during the financial year (previous year Rs. 119.45 lacs), and same is netted-off against the power cost.

D. DISCLOSURES UNDER COMPANIES ACT, 2013

I. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

information sought under the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the Annexure i, forming part of this report.

II. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the annual return is enclosed in Annexure ii.

III. CHANGES IN THE SHARE CAPITAL

The paid-up Equity Share Capital as on 31st March 2015 was Rs. 518.45 lacs, comprising of 1,03,68,992 equity shares of Rs. 5/- each. During the year under review, the Company has not issued any shares or convertible instruments.

IV. NUMBER OF BOARD MEETINGS

The Board meets at regular intervals to discuss and decide on the Company business policy and strategy apart from other Board business. During the financial year under review, the Board of Directors met 5 (five) times. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

The details of the Board meetings and the attendance of Directors are provided in the Corporate Governance Report.

V. COMPOSITION OF AUDIT COMMITTEE

The Audit Committee comprises of Mr. M. G. Patel, Mr. Kamlesh Vikamsey, Mr. Girish Choksey, Mr. Bipin Jhaveri (upto 10/10/2014) and Mrs. Priyamvada Bhumkar (w.e.f. 31/10/2014). Mr. M. G. Patel is the Chairman of the Committee. Mr. M. G. Patel, Mr. Kamlesh Vikamsey and Mrs. Priyamvada Bhumkar are the Non-Executive independent Directors. More details on the committee are given in the Corporate Governance Report.

All the recommendations of the audit committee are accepted by the Board.

VI. BOARD INDEPENDENCE

The definition of independence of Directors is derived from Clause 49 of the Listing Agreement entered into with the Stock Exchanges and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are independent in terms of Clause 49 of the Listing Agreement and Section 149(6) of the Companies Act, 2013;

1. Mr. M. G. Patel

2. Dr. S. Sivaram

3. Mr. Shailesh Vaidya

4. Mr. Kamlesh Vikamsey

5. Mrs. Priyamvada Bhumkar

In compliance with Schedule IV of the Companies Act, 2013 and Rules thereunder, the independent Directors met on 20th March 2015 and discussed issues as prescribed under the schedule IV of the Companies Act, 2013 and also discussed various other issues.

VII. ANNUAL EVALUATION BY THE BOARD

in compliance with the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Nomination & Remuneration Committee members, covering various aspects of the Board's functioning such as adequacy of composition of Board and Committees, Board communication, timeliness and unbiased information of right length and quality of information, Board culture, execution and performance of specific duties, obligations and governance.

A separate exercise was carried out to evaluate the performance of individual Directors including the Chairman of the Board, who were evaluated on parameters such as attendance, participation in the discussion, deliberation at the meeting, understanding role and responsibilities as board member, demonstration of knowledge, skill and experience that make him/her a valuable resource for the board.

The performance evaluation of the independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non-Executive Directors was carried out by the independent Directors, who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process.

VIII. NOMINATION AND REMUNERATION POLICY

The Nomination and Remuneration policy of the Company for Directors, KMP's and Senior Personnel of the Company is enclosed as Annexure iii to this Report.

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure IV (A) to this Report.

IX. COMMENTS ON AUDITORS REPORT

There are no qualifications, reservations or adverse remarks on disclaimers made by M/s. Kalyaniwalla & Mistry, Statutory Auditors, in their report and by Mr. Mahesh Hurgat, Company Secretary in Practice, in his secretarial audit report.

The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company during the year under review.

X. RELATED PARTY TRANSACTIONS

All the related party transactions are entered on arm's length basis and are in compliance with the applicable provisions of the Companies Act, 2013 and the Listing Agreement. There are no materially significant related party transactions entered into by the Company with Promoters, Directors or Key Managerial Personnel etc., which may have potential conflict with the interest of the company at large.

All new related party transactions are first approved by the Audit Committee and thereafter placed before the Board for their consideration and approval. A statement of all related party transactions is presented before the Audit Committee meeting on quarterly basis, specifying the nature, value and terms and conditions of the transactions.

The particulars of Contracts or arrangements with related parties referred to in Section 188(1), read with Rule 15 of The Companies (Meetings of Board and its Powers) Rules 2014 is appended to this report in prescribed Form AOC 2 as Annexure V .

The Related Party Transaction Policy as approved by the Board is uploaded on the company's website at the following web link.

http://apcotex.com/policies/Related_Party_ Transaction_Policy.pdf

XI. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

XII. VIGIL MECHANISM

The Company has established a vigil mechanism for Directors and Employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

XIII. CORPORATE GOVERNANCE

The Company has always strived to adopt appropriate standards for good Corporate Governance.

Detailed report on the Corporate Governance and Management Discussion Analysis, form part of this report. A certificate from the Practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed to the said Report.

E. CORPORATE SOCIAL RESPONSIBILITY

The Company has constituted a Corporate Social Responsibility (CSR) Committee in compliance with Section 135 of the Companies Act, 2013. The CSR committee was constituted by the Board of Directors of the Company at its meeting held on 26th April 2014. On the recommendation of the CSR committee, the Board has approved the CSR policy of the Company which is published on the Company's website.

The Company has under taken projects in the areas of Healthcare, Education, and Vocational Training for village women and social projects around the area surrounding the factory.

CSR committee planned health check-up camp, distance education kits for remotely located schools in Adivasi settlements etc., around the plant area, which could not be completed as planned during the financial year 2014- 15 resulting into shortfall in CSR spent to the extent of Rs. 3.37 lacs.

The details of CSR activities as required under Section 135 of the Companies Act, 2013, are provided in CSR Report which is annexed herewith as Annexure VI.

F. FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

The company has conducted the Familiarisation program for Independent Directors appointed during the year. The Program aims to provide insights into the Company to enable the Independent Directors to understand its business in depth, to familiarize them with the process, business and functionaries of the Company and to assist them in performing their role as Independent Directors of the Company. The Company's Policy of conducting the Familiarisation Program has been disclosed on the website of the Company at http://apcotex.com/policies/ Familiarisation_Programme_Independent.pdf

G. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm:

I. That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

II. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

III. That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

IV. That they have prepared the annual accounts on a going concern basis;

V. That they, have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

VI. That they have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

H. DISCLOSURE IN TERMS OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company takes all necessary measures to ensure a harassment free workplace and has instituted an Internal Complaints Committee for redressal of complaints and to prevent sexual harassment. No complaints relating to sexual harassment were received during the year.

I. FIXED DEPOSITS MATURED BUT NOT CLAIMED

Company has no Fixed Deposits at the end of the financial year. The Central Bureau of Investigation (CBI) has instructed the Company, not to repay the proceeds of four fixed deposits amounting to Rs. 48,000/- and accrued interest of Rs. 22,491/- thereon. These deposits matured during the first week of December 2002 and continue to remain with the Company.

J. INSURANCE

All insurable assets of the Company including inventories, buildings, plant and machinery etc., as also liability under legislative enactments, are insured on reinstatement basis after due valuation of assets by an external agency. The Company also holds a Loss of Profit Policy for the financial year 2014-15.

K. ECOLOGY AND SAFETY

Company ensures safe, healthy and eco-friendly environment at its plant and surrounding area. Company continually works towards identification and reduction of risks and prevention of pollution at its plant and its surroundings.

Members of the Safety Committee of the Company's Taloja Plant, have been regularly reviewing the safety measures and their implementation to ensure adequate safety in material handling and processing, control of pollution caused by liquid effluents, dust and emissions from chimney etc. Samples are periodically drawn and the reports submitted to the Pollution Control Board indicating compliance with the standards.

Necessary application for renewal of consent to operate the plant at Taloja has been made to Maharashtra Pollution Control Board, consent of which is awaited.

L. PERSONNEL

The information required under Section 197 of the Companies Act, 2013 and read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, are given in Annexure IV (B).

M. DIRECTORS & KEY MANAGERIAL PERSONNEL

I. Appointment:

Mrs. Priyamvada Bhumkar was appointed as additional director of the Company by Board of Directors at their meeting held on 31st October 2014. She would therefore hold office upto the conclusion of the ensuing Annual General Meeting.

Mrs. Priyamvada Bhumkar qualifies to be an Independent Director and her appointment has been recommended by the Nomination and Remuneration Committee. Accordingly, it is proposed to appoint Mrs. Priyamvada Bhumkar as an Independent Director for a term of 5 (Five) consecutive years upto 31st October 2019.

Pursuant to declaration made under Section 149 of the Companies Act, 2013, Mrs. Priyamvada Bhumkar meets all the criteria of Independence, as prescribed under the Companies Act, 2013 and Clause 49 of the Listing Agreement. She possess the appropriate skills, experience and knowledge inter alia in the field of finance, business strategy etc.

The background of the Director(s) proposed for appointment / reappointment is given under the Corporate Governance section of the Annual Report.

In compliance with provisions of Section 203 of the Companies Act, 2013, Mr. Rohit R. Mahakal, was re- designated as Chief Financial Officer of the Company with effect from 1st April 2015 in the Board meeting held on 20th March 2015 on the recommendation of the Audit Committee.

II. Retirement by Rotation:

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 and Articles of Association of the Company Mr. Amit Choksey (DIN 00001470) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offer himself for reappointment. The Board recommends his reappointment.

III. Cessation:

Mr. Bipin Jhaveri, Director of the Company expired on 10th October 2014. Mr. Bipin Jhaveri served on the Board of the Company for more than two decades. Your Directors wish to place on record their appreciation for his service and valuable contribution made during the tenure of Mr. Bipin Jhaveri as Director of the Company.

The background of the Director(s) proposed for

appointment / re-appointment is given under the Corporate Governance section of the Annual Report.

N. AUDITORS

I. Pursuant to provisions of Section 1 39(1 ) of the Companies Act, 2013, M/s. Kalyaniwalla & Mistry, Chartered Accountants (Firm Registration no. 104607W), were appointed as Statutory Auditors of the Company to hold the office till the conclusion of the Annual General Meeting during the year 2018, subject to ratification at every Annual General Meeting.

The Company has received letter from the Statutory Auditors to the effect that ratification of their appointment, if made, would be within the prescribed limit under Section 141 (3) (g) of the Companies Act, 2013 and that they are not disqualified from the appointment.

Your Board recommends the ratification of appointment of M/s. Kalyaniwalla & Mistry, Chartered Accountants (Firm Registration no. 104607W), Mumbai, as Statutory Auditors of the Company for the financial year 2015-16 and to hold the office till the conclusion of the next Annual General Meeting during the year 2016.

II. Pursuant to provisions of Section 204 of the Companies Act, 2013 the Board of Directors have appointed Mr. Mahesh Hurgat, Practicing Company Secretary to conduct the Secretarial Audit and his Report on the Company's Secretarial Audit is appended to this Report as Annexure VII.

O. CEO & CFO CERTIFICATION

Certificate from Managing Director and Chief Financial Officer of the Company, pursuant to the provisions of Clause 49(IX) of the Listing Agreement, for the financial year under review was placed before the Board of Directors of the Company at its meeting held on 8th May 2015.

P. ACKNOWLEDGEMENT

Your Directors take this opportunity to express their deep sense of gratitude to State Bank of India, Standard Chartered Bank, various departments of State / Central Government and local authorities for their continued guidance and support.

We would also like to place on record our sincere appreciation for the commitment, dedication and hard work put in by every member of the Apcotex family. To all shareholders, we are deeply grateful for the confidence and faith that you have always reposed in us.

The accompanying Annexure I to VII are an integral part of this Directors' Report.

FOR AND ON BEHALF OF THE BOARD

ATUL C CHOKSEY CHAIRMAN Mumbai: 8th May 2015


Mar 31, 2013

TO THE MEMBERS

The Directors have pleasure in presenting to you the Twenty-Seventh Annual Report of the Company and the audited Statements of Accounts for the year ended 31st March 2013.

COMPANY PERFORMANCE FINANCIAL HIGHLIGHTS

Particulars 2012-13 2011-12 (Rs. In Lacs) (Rs. In Lacs)

GROSS SALES 30262.47 27789.77

Gross Profit Before Depreciation, Finance Cost and Tax but after prior years adjustments 2350.26 2275.89

Less: a) Depreciation 311.30 278.64

b) Finance Cost 234.81 366.05

Profit Before Tax 1804.15 1631.20

Less: a) Provision for Tax 414.00 464.00

b) Adjustment for Deferred Tax Liability 109.63 20.82

Profit After Tax 1280.52 1146.38

Add: Balance brought forward from the Previous Year 1953.53 1403.83

Disposable Profit 3234.05 2550.21

Recommended

Appropriations:

a) Dividend 466.60 414.76

b) Tax on Dividend 79.30 67.28

c) Transfer to General Reserve 128.05 114.64

Balance carried forward to Balance Sheet 2560.10 1953.53

3234.05 2550.21

1. DIVIDEND

Your Directors have recommended a dividend @ Rs. 9.00 (Rupees Nine) per Equity Share of Rs.10/- each, for the financial year 2012-13. Dividend, if approved, will absorb a sum of Rs. 545.90 lacs (including Dividend Distribution Tax of Rs. 79.30 lacs) out of the net profits after tax, as above and will be paid to those shareholders whose names appear on the Register of Members on 21st June 2013.

2. WIND POWER

The Wind Turbine Generator installed at Sadawaghapur, Taluka - Patan, District Satara, Maharashtra, has generated gross revenue of about Rs.119 lacs during the financial year (previous year Rs.112 lacs), and is shown under Other Income.

3. STATUTORY DISCLOSURES

A. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Information sought under the provisions of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the Annexure, forming part of this report.

B. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm:

i. That in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

ii. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period;

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

iv. That they have prepared the annual accounts on a going concern basis.

C. CORPORATE GOVERNANCE

Your Company has always strived to adopt appropriate standards for good Corporate Governance.

Detailed reports on the Corporate Governance and Management Discussion Analysis, form part of this report. A certificate from the Company''s Auditors regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed to the said Report.

4. FIXED DEPOSITS MATURED BUT NOT CLAIMED

Company had no Fixed Deposits at the end of the financial year. The Central Bureau of Investigation (CBI) has instructed the Company, not to repay the proceeds of four fixed deposits amounting to Rs.48,000/- and accrued interest of Rs.22,491/- thereon. These deposits matured during the first week of December 2002 and continue to remain with the Company.

5. INSURANCE

All insurable assets of the Company including inventories, buildings, plant and machinery etc., as also liability under legislative enactments, are insured on reinstatement basis after due valuation by an external agency.

6. ECOLOGY AND SAFETY

Company always ensures safety, healthy, and eco-friendly environment. Company continually works towards identification and reduction of risks and prevention of pollution at its plants and surroundings.

Members of the Safety Committee of the Company''s Taloja Plant, have been regularly reviewing the safety measures and their implementation to ensure adequate safety in material handling and processing, control of pollution caused by liquid effluents, dust and emissions from chimney etc. Samples are periodically drawn and the reports submitted to the Pollution Control Board as required, ensuring compliance with the standards.

Consent has been obtained from Maharashtra Pollution Control Board to operate the plant at Taloja till 31st December 2014.

7. PERSONNEL

Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, is not applicable to the Company as there are no employees drawing remuneration exceeding the prescribed limits.

The Board would like to place on record their appreciation of the contribution made by all employees of the Company during the year.

The industrial relations with the employees were cordial.

8. BANKS

Your Directors wish to place on record their appreciation of the support received from the Company''s Bankers, State Bank of India and Standard Chartered Bank.

9. DIRECTORS

Mr. Atul Choksey, Mr. T.N.V. Ayyar and Dr. S Sivaram retire by rotation and being eligible, offer themselves for reappointment.

Shri Kamlesh S Vikamsey was appointed as additional director of the Company during the financial year, to hold the office of Director till the conclusion of the ensuing Annual General Meeting.

The background of the Director(s) proposed for appointment / reappointment is given under the Corporate Governance Section of the Annual Report.

10. AUDITORS

The Company''s Statutory Auditors, M/s. Shah & Co., Chartered Accountants, have advised the Company of their unwillingness to be appointed as Statutory Auditors of the Company for the financial 2013-14. Your Board recommend the appointment of the firm of M/s. Kalyaniwala & Mistry, Chartered Accountants, Mumbai, be appointed as Statutory Auditors of the Company for the financial year 2013-14.

FOR AND ON BEHALF OF THE BOARD ATUL C CHOKSEY

Mumbai: 25th April 2013 CHAIRMAN


Mar 31, 2011

TO THE MEMBERS

The Directors have pleasure in presenting to you the Twenty-Fifth Annual Report of the Company and the audited Statements of Accounts for the year ended 31st March 2011.

COMPANY PERFORMANCE

FINANCIAL HIGHLIGHTS

Particulars 2010-11 2009-10 (Rs.. In Lacs) (Rs.. In Lacs)

GROSS SALES 22165.76 15681.96

Gross profit Before Depreciation,

Interest and Tax after prior year adjustments 1980.55 1504.68

Less: Depreciation 264.76 198.95

Interest 208.97 48.47

Provision for Tax 320.00 295.50

Adjustment for Deferred Tax Liability 114.46 128.97

profit/ (Loss) for the Year 1072.36 832.79

Add: Balance brought forward from Previous year 863.24 418.73

Disposable profit (Loss) 1935.60 1251.52

The Directors recommend Appropriation of the Disposable profit as under:

Dividend on Equity Shares 362.91 259.22 Tax on Dividend 60.28 44.06

Transfer to General Reserve 110.00 85.00

Balance carried to Balance Sheet 1402.43 863.24

1935.60 1251.52

1. DIVIDEND

Your Directors have recommended a dividend @ Rs. 7.00 (Rupees Seven) per Equity Share of Rs. 10/- each. The Equity Dividend, if approved, will absorb a sum of Rs. 423.19 lacs (including the dividend tax of Rs. 60.28 lacs) out of net profit as above and will be paid to those shareholders whose names appear on the Register of Members on 22nd July 2011.

3. WIND POWER

The Company has commissioned its Wind Turbine Generators with a capacity of 1.25 MW, at village Sadawaghapur, Tal - Patan, Dist. Satara, Maharashtra on 31st March 2010, for captive consumption at a cost of Rs. 650 lacs. The Wind Turbine Generator has generated net revenue of aboutRs. 70 lacs during the financial year, and is shown under Other Income.

4. STATUTORY DISCLOSURES

A. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Information sought under the provisions of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the Annexure, forming part of this report

B. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confrm:

i. That in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

ii. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period;

iii. That they have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. That they have prepared the annual accounts on a going concern basis.

C. CORPORATE GOVERNANCE

Your Company has always strived to imbibe appropriate standards for good Corporate Governance.

Detailed reports on the Corporate Governance and Management Discussion Analysis, forms part of this report. A certifcate from the Company's Auditors regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed to the said Report.

5. FIXED DEPOSITS MATURED BUT NOT CLAIMED

Company had no Fixed Deposits at the end of the financial year. The Central Bureau of Investigation (CBI) has instructed the Company, not to repay the proceeds of four fixed deposits amounting to Rs. 48,000/- and accrued interest of Rs. 22,491/- thereon. These deposits matured during the frst week of December 2002 and continue to remain with the Company.

One fixed deposit worth Rs. 5,000/- matured, with accrued interest of Rs. 224/- has not been claimed by the concerned depositor despite reminders.

6. INSURANCE

All insurable assets of the Company including inventories, buildings, plant and machinery etc., as also liability under legislative enactments, are insured at current market values.

7. ECOLOGY AND SAFETY

Apcotex ensures a safe, healthy, and eco-friendly environment. Apcotex continually work towards identification and reduction of risk and prevention of pollution at its plants & surroundings.

We practice Total Productive Maintenance (TPM) where one of the objectives is zero accidents and zero wastages. TPM has helped us design our equipments and processes to ensure high standards for health, safety and the environment. We are also pursuing ISO 14001 and OHSAS 18001 which are global standards for Environment and Safety respectively. We expect to obtain the certifcation in FY 2011-12.

In addition, members of the Safety Committee of the Company's Taloja Plant, have been regularly reviewing the safety measures and their implementation, to ensure adequate safety in material handling, control of pollution caused by liquid effuents, dust and emissions from chimney etc. Samples were periodically drawn and the reports submitted to the Pollution Control Board as required, ensuring compliance with the standards.

Consent has been obtained from Maharashtra Pollution Control Board to operate the plant at Taloja till 31st December 2014.

8. PERSONNEL

Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, is not applicable to the Company as there are no employees drawing remuneration exceeding the prescribed limits.

The Board would like to place on record their appreciation of the contribution made by all employees during the year.

The industrial relations with the employees were cordial.

9. BANKS

Your Directors wish to place on record their appreciation of the support received from the Company's Bankers', State Bank of India.

10. DIRECTORS

Mr. TNV Ayyar and Mr. Girish Choksey, retire by rotation and being eligible, offer themselves for reappointment.

Dr. S. Rengachary, Director, who retires by rotation and eligible, has conveyed his desire not to seek re-appointment. Dr. S. Rengachary is associated with the company for more than three decades in various capacities and is associated with the Company as Independent Director since April 2005.

Shri. S.K. Lahiri, Director & CEO of the Company retired from the L service of the Company as on 03rd June 2010, after 27 years of association with the Company.

The Board places on record their appreciation for their services and contribution made.

The background of the Director proposed for reappointment is given under the Corporate Governance section of the Annual Report.

11. AUDITORS

The Company's Auditors, M/s. Shah & Co., Chartered Accountants, retires at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

FOR AND ON BEHALF OF THE BOARD

ATUL C CHOKSEY CHAIRMAN

Mumbai: 30th April 2011


Mar 31, 2010

The Directors have pleasure in presenting to you the Twenty-Fourth Annual Report of the Company and the audited Statements of Accounts for the year ended 31st March 2010.

COMPANY PERFORMANCE

FINANCIAL HIGHLIGHTS

Particulars 2009-10 2008-09 ( Rs. In Lacs) (Rs. In Lacs)

GROSS SALES 15681.96 11410.11

Gross Proft Before Depreciation, Interest and Tax after prior year adjustments 1504.68 948.49

Less: Depreciation 198.95 219.91

Interest 48.47 14.84

Provision for Tax 295.50 253.25

Adjustment for Deferred Tax Liability 128.97 12.10

Proft/ (Loss) for the Year 832.79 448.39

Add: Balance brought forward from Previous year 418.73 274.01

Disposable Proft (Loss) 1251.52 722.40

The Directors recommend the appropriation of the disposable proft as under:

Dividend on Equity Shares 259.22 221.09

Tax on Dividend 44.06 37.57

Transfer to General Reserve 85.00 45.00

Balance carried to Balance Sheet 863.24 418.74

1251.52 722.40

1. DIVIDEND

Your Directors have recommended a dividend of Rs.5.00 (Rupees Five) per Equity Share of Rs.10/- each (@50%). The Equity Dividend, if approved, will absorb a sum of Rs.259.22 lacs (excluding the dividend tax of Rs.44.06 lacs) out of net proft as above and will be paid to those shareholders whose names appear on the Register of Members on 16th July 2010.

2. MANAGEMENT DISCUSSION AND ANALYSIS

The company manufactures and markets Styrene Butadiene Rubber and Synthetic Rubber Latices.

I. CURRENT SCENARIO.

Your Company is one of the leading producers of polymer products namely Synthetic Latices (VP Latex, XSB latex, Nitrile Latex) and Synthetic Rubber (HSR, SBR) in India. The Company has one of the broadest range of products based on Styrene - Butadiene chemistry available in the market today and cater mainly to the industrial segment. Our range of Synthetic Latices is used among other applications, for tyre cord dipping, paper and paperboard coating, carpet backing, concrete modifcation/water proofng and textile

fnishing. The various grades of Synthetic Rubber fnd application in products such as footwear, automotive components, v-belts, conveyor belts and hoses.

The company’s major raw materials are petrochemicals and hence the business is vulnerable to high volatility of crude oil and its downstream product prices. Even though margins were under pressure, overall business climate improved during the year.

The company’s performance was satisfactory due to appropriate price increases to offset the increased cost of raw materials, addition of new value added products to our current range particularly for the Paper Board Coating Industry and better operational effciency.

The technology was developed and is being continuously upgraded through in-house Research and Development efforts to meet the changing needs of customers. Competition remains intense across most of the products.

The company manufactures and markets a range of polymer products viz. Styrene Butadiene Rubber, Synthetic Rubber Latices and Acrylic based Latices and over the next few years we expect good domestic growth in most of the industries we cater to - tyre cord dipping, paper and paperboard coating, carpet backing, concrete modifcation/ water proofing, textile fnishing and paint industries. We also envision good export prospects for some of our products.

II. OPERATIONS DURING THE YEAR.

During the year the Company achieved Gross Value Sales of Rs.15681.96 lacs and volume sale of 23428 MT, registering a growth of 37.44% and 66.32% respectively compared to that of the preceding fnancial year.

The prices of major raw materials Styrene and Butadiene softened during the beginning of the fnancial year and started firming up during the end of the fnancial year. V Packaging materials also registered signifcant increase.

During the financial year the company exported goods worth Rs.908 lacs compared to exports of Rs.355 lacs during the previous fnancial year.

There was a continuous thrust from the management to develop a strong R&D and technical service team to better understand the changing customer needs, improve product quality, productivity and process controls through technology up-gradation.

Operating profts before tax and depreciation during the year has increased by 77% to Rs.1160 Lacs from Rs. 649 Lacs during the previous fnancial year.

Other income, which includes dividend received on investments, export benefts and interest was at Rs.97 Lacs as compared to Rs.65 Lacs during previous fnancial year.

The proft after tax stood at Rs.833 Lacs as compared to Rs.448 Lacs in the previous fnancial year.

Your Directors consider Company’s performance as satisfactory.

III. OUTLOOK

From overall perspective, we expect 2010-11 to remain challenging in terms of volatilities in prices of major Inputs. However with overall growth of the economy, it will augur well for the Company.

The company will endeavour its best to bring in effciencies at all levels to mitigate any adverse situation. Accordingly your Director view the prospect for the year 2010-11 with cautious optimism.

IV. RISK AND CONCERNS.

Some of the major raw materials are directly imported or have USD based pricing. If the INR weakens against the USD or becomes highly volatile the currency effect is expected to be adverse.

Rising infation within the country will seriously affect disposable income levels of all consumers - both rural and urban. Uncertain consumer demand can also have an effect on the growth prospects of your company.

V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY.

The company has successfully implemented an ERP system suitable to the needs of the company. Internal checks and controls based on this system is in place and constantly being improved upon. Adequate system exists to safeguard company’s assets through insurance and maintenance of proper records. The company has well defned procedures to execute financial transactions. The company is constantly improving its internal audit areas in the light of all encompassing ERP system introduced as mentioned above.

VI. DEVELOPMENT OF HUMAN RESOURCE / INDUSTRIAL RELATIONS.

The company continuously monitors its Human Resource requirement to ensure that it has adequate human skills commensurate with its needs. I

Cordial relations exist between the employees at various levels and the management.

To upgrade Human skills and improve their competency the company continuously organizes and deputes employees to Seminars, Workshops.

CAUTIONARY STATEMENT.

Statement in this Management Discussion and Analysis describing the Company’s objectives, projections, estimates, expectations or predictions may be “forward- looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the company’s operations include raw material availability and prices, cyclical demand, movements in company’s principal markets, changes in Government regulations, tax regimes, economic developments within and outside India and other incidental factors.

3. BUYBACK OF SHARES

The Board of Directors in their meeting held on 16th October 2009 approved the scheme of buyback of shares through market operation, which commenced from 21st December 2009, for buyback of minimum 2,50,000 and maximum 4,00,000 equity shares at a price not exceeding Rs.90/- per share aggregating to Rs.360 Lacs. The Company had purchased and extinguished 3,42,856 shares, comprising of 85.71% of maximum buyback offer size before the end of the fnancial year 2009-10,at a weighted average price of Rs.88.75 per equity share.

The share price of company’s equity are traded well above the maximum price at which buyback offer was approved by Board of Directors i.e. Rs.90/- per share, since last couple of months. In view of this, the Board of Directors in their meeting held on 27th April 2010 have decided to pre-close the offer of buyback of shares since company has already bought more than minimum number of shares to be bought back as per buyback offer.

4. WIND POWER

The Company has commissioned its Wind Turbine Generators with a capacity of 1.25 MW, at village Sadawaghapur, Tal - Patan, Dist. Satara, Maharashtra on 31st March 2010, for captive consumption. The cost of project is Rs.650 lacs. The Wind Turbine Generator is expected to generate about 24,00,000 units per annum.

The electricity generated by Wind Turbine Generator will be used for captive consumption at Company’s Plant at Taloja, Maharashtra.

5. STATUTORY DISCLOSURES

A. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

Information sought under the provisions of Section 217(1) (e) of the Companies Act, 1956, read with the Companies (Disclosures of Particulars in the Report of the Board of Directors) Rules, 1988 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo are given in the Annexure, forming part of this report.

B. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confrm:

i. That in the preparation of the annual accounts, the applicable accounting standards have been followed and that no material departures have been made from the same;

ii. That they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fnancial year and of the profts of the Company for that period;

iii. That they have taken proper and suffcient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. That they have prepared the annual accounts on a going concern basis.

C. CORPORATE GOVERNANCE

Your Company has always strived to imbibe appropriate standards for good Corporate Governance.

Detailed reports on the Corporate Governance and Management Discussion Analysis, forms part of this report. A certifcate from the Company’s Auditors regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement is annexed to the said Report.

6. FIXED DEPOSITS MATURED BUT NOT CLAIMED

Company had no Fixed Deposits at the end of the fnancial year. The Central Bureau of Investigation (CBI) has instructed the Company, not to repay the proceeds of four fxed deposits amounting to Rs.48,000/- and accrued interest of Rs.22,491/- thereon. These deposits matured during the frst week of December 2002.

One fxed deposits worth Rs.5,000/- matured, with accrued interest of Rs.224/- but were not claimed by the concerned depositors despite reminders.

7. INSURANCE

All insurable assets of the Company including inventories, buildings, plant and machinery etc., as also liability under legislative enactments, are insured. I

8. ECOLOGY AND SAFETY

Members of the Safety Committee of the Company’s Taloja Plant, have been regularly reviewing the safety measures and their implementation, to ensure adequate safety in material handling, control of pollution caused by liquid effluents, dust and emissions from chimney etc. Samples were periodically drawn and the reports submitted to the Pollution Control Board as required, ensuring compliance with the standards. Necessary application had been made to Maharashtra Pollution Control Board to operate the plant at Taloja till 31st December 2014. The Certifcate is awaited.

9. PERSONNEL

Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules 1975, as amended, is not applicable to the Company as there are no employees drawing remuneration exceeding the prescribed limits.

The Board would like to place on record their appreciation of the contribution made by all employees during the year.

The industrial relations with the employees were cordial.

10. BANKS

Your Directors wish to place on record their appreciation of the support received from the Company’s Bankers, State Bank of India.

11. DIRECTORS

Shri. S.K.Lahiri, Director & CEO of the Company retires from the service of the Company as on 03rd June 2010, after 27 years of association with the Company. Your Directors wish to place on record their appreciation for his service and contribution made.

Mr. Atul Choksey, Mr. Amit Choksey and Dr. S. Sivaram, retire by rotation and being eligible, offer themselves for reappointment.

12. AUDITORS

The Company’s Auditors, M/s. Shah & Co., Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

FOR AND ON BEHALF OF THE BOARD

ATUL C CHOKSEY CHAIRMAN

Mumbai: 27th April 2010

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