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Directors Report of Sudarshan Chemical Industries Ltd.

Mar 31, 2017

The Directors are pleased to present the 66thAnnual Report together with the Audited Statement of Accounts of the Company for the year ended 31stMarch, 2017.

1. FINANCIAL HIGHLIGHTS:

The Company''s financial performance for the year ended 31st March, 2017 is summarized below:

Particulars

2016-17

2015-16

(Rupees in

(Rupees in

Millions)

Millions)

Total Revenue

13,155.87

12,201.38

Earnings Before Interest, Tax, Depreciation and

1,961.99

1,686.28

Amortization (EBITDA)

Less : Interest

245.03

263.50

Less : Depreciation

498.78

437.91

Less : Provision for Taxation

324.08

268.58

Profit After Tax

894.10

716.29

Add :Surplus brought forward

1,309.24

942.92

Net Profit available for appropriation

2,203.34

1,659.21

Appropriations

1. General Reserve

150.00

100.00

2. Interim Dividend @ 125% (Rs. 2.50 per equity share)

173.07

173.07

3. Final Dividend (Proposed) @ 50%

-

34.61

(Previous Year dividend paid @ Rs.0.50 per share)

4. Tax on Dividend

35.24

42.29

TOTAL

358.31

349.97

Surplus to be carried forward

1,845.03

1,309.24

2. THE YEAR IN RETROSPECT:

During the year under review, subdued business sentiments, demonetization of the Indian Rupee, combined with difficult market conditions and slowdown in global demand, posed challenges. As a result Company could post only nominal sales growth. The Directors are pleased to inform that in spite of not so favorable conditions, your Company has registered much better performance in terms of growth in profits as compared to the previous year.

(A) FINANCIALS:

Total Revenue from operations for the year ended 31st March, 2017 aggregated to Rs. 13,156 million as against Rs. 12,201 million achieved during the previous year. Profit after tax for the year ended 31st March, 2017 was Rs. 894 million as against Rs. 716 million earned during the previous year.

Pigment sales increased from Rs. 10,656 million in the previous year to Rs. 11,001 million in the year under review. Profits for the Pigment Division for the year under review amounted to Rs. 1,803 million as compared to Rs. 1,637 million of the previous year.

Agro Sales for the year ended 31st March, 2017 amounted to Rs. 1,445 million as against Rs. 1,163 million achieved during the previous year. Profits for the Agro Division for the year under review amounted to Rs. 84 million, as against Rs. 63 million for the previous year.

The Company''s Indian Subsidiaries have performed well. Prescient Color Limited continues to register good growth. RIECO Industries Limited has registered an improvement in the performance as compared to the preceding Financial Year. The Company''s overseas subsidiaries in the Netherlands, and North America continue to record improved performance.

On a Consolidated basis, your Company''s Total Revenues for the year ended 31st March 2017 stood at Rs. 15,450 Million, up by 9 % as compared to Rs. 14,234 Million in Financial Year 2015-16. Net

Profit Before Tax after consolidation grew by 38% to Rs. 1,362 Million in Financial Year 2016-17 as compared to Rs. 990 Million in Financial Year2015-16.

(B) EXPORTS:

The Company''s overseas subsidiaries in The Netherlands and North America set up with the objective of marketing and selling Pigments, continue to record improved performance. Both the overseas subsidiaries have entered a consolidation phase and will play a crucial role in positioning the Company as a dominant player in the Global Pigment Industry. Revenue from exports for the year ended 31st March, 2017 amounted to Rs. 5,079 million as against Rs. 5,176 million for the previous year.

3. DIVIDEND:

During the year, your Company had declared and paid an Interim Dividend of Rs. 2.50 (@ 125%) per Equity share (of Rs. 2.00 each). Your directors are pleased to recommend a Final Dividend of Rs. 1.00 (@50%) per Equity share (of Rs. 2.00 each) for the Financial Year 2016-17. The Interim Dividend along with recommended Final Dividend aggregates to a total Dividend of Rs. 3.50 (@ 175%) per Equity share (of Rs. 2.00 each) for the Financial Year 2016-17 as compared to the total Dividend of Rs. 3.00 (@ 150 %) per Equity share (of Rs. 2.00 each) for the Financial Year 2015-16. The total amount of Dividend pay-out for the year would be Rs.291.63 Million (Previous Year: Rs. 249.97 Million).

4. FIXED DEPOSITS:

The Company did not accept any fixed deposit during the year under review. Unclaimed deposits to the extent of Rs. 0.67 Million were outstanding as on 31st March, 2017.

5. INCORPORATION OF STEP-DOWN SUBSIDIARY (SDS) IN MEXICO:

During the year, the Company has incorporated through its direct subsidiary in The Netherlands viz. Sudarshan Europe B.V. a step-down subsidiary (SDS) in Mexico, by name Sudarshan Mexico on 25thJanuary, 2017 for marketing and selling pigments manufactured by Sudarshan, India. Further, the SDS will also be in a position to keep stocks of finished products and do invoicing. This will also enable the Company to service key customers in regions around U.S.A.

6. DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with Section 134 of the Companies Act, 2013 the Directors based on the representation received from the management, confirm that:

i. in the preparation of accounts for the Financial Year ended 31st March, 2017, the applicable accounting standards have been followed, with no 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 a true and fair view of the state of affairs of the Company at the end of Financial Year and of the Statement of Profit and Loss of the Company for that period;

Hi. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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;

v. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

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

7. CORPORATE GOVERNANCE:

Members are aware that the Company has always strived to maintain applicable standards of good corporate governance and the commitment to good corporate governance is embodied in its vision, mission and corporate values. As a means to realize its goal of sustainable value creation, the Company has adopted performance excellence as part of its culture and its corporate values to foster a shared and common set of behavior amongst all the employees.

Members will be pleased to note that the Company has complied with the mandatory requirements of Corporate Governance set out under the SEBI (Listing Obligations and Disclosure Requirements),

Regulations, 2015.

A detailed report on Corporate Governance, duly certified by the Statutory Auditors of the Company, B.K. Khare &Co., Chartered Accountants, Mumbai is appearing separately in the Annual Report.

8. MANAGEMENT DISCUSSION AND ANALYSIS:

A Management Discussion and Analysis covering a wide range of issues relating to industry trends, Company Performance, Business and Operations is given separately in the Annual Report.

9. BUSINESS RESPONSIBILITY REPORT:

In terms of SEBI Listing Regulations, 2015, top 500 Companies in terms of market capitalization are mandatory required to include Business Responsibility Report as part of the Annual Report. The Company''s name has been included in the list of top 500 companies in terms of market capitalization. Accordingly, Business Responsibility Report for the year ended 31st March, 2017 is separately provided.

10. CONTRACTS ANDARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered into during the Financial Year 2016-17 were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions entered into by the Company with Promoters, Independent Directors, Key Managerial Personnel .Senior Management and /or their relatives which may have potential conflict with the interests of the Company at large.

All related party transactions are presented to the Audit Committee for their prior approval. Subsequent modifications of related party transactions are also placed before the Audit Committee for its approval. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. Statement of all related party transactions is presented before the Audit Committee on quarterly basis, specifying the nature, value and terms and conditions of the transactions.

The related party transactions policy is uploaded on the Company''s website www.sudarshan.com.

The particulars of contracts or arrangements made with related parties pursuant to Section 188 is covered in Notes to the Financial Statements and material contracts / arrangements made with related parties is given in Form AOC-2 which is attached as Annexure VI to this report.

11. CORPORATE SOCIAL RESPONSIBILITY:

The Corporate Social Responsibility (CSR) activities of the Company are in accordance with Schedule VII to the Companies Act, 2013. All CSR activities of the Company are carried out under the aegis of “SUDHA” (Sudarshan''s Holistic Aspiration). As a responsible corporate citizen, the Company continues its efforts to meet, among others, the Environmental, Health and Safety expectations of society at large.

SUDHA is envisaged as a movement to involve the Company and the community in which it operates to create better living standards and safeguard the environment. As a part of Corporate Social Responsibility, SUDHA has been engaged in various social projects, embracing the people that live in the vicinity of its manufacturing and other facilities.

The Company''s grand vision is “Growing together” with all its stakeholders in a manner that is spiritually fulfilling, socially just and environmentally sustainable. SUDHA contributes to this vision by ensuring that all its initiatives are driven with this perspective in mind. SUDHA''s vision is ''Aspiring wholesome sustainable growth for women and children of communities around the Company''s plants'' and Mission is ''Reach out to communities by engaging in projects related to Livelihood, Health, Education and Community Development''.

Various projects that SUDHA is working on are Livelihood enhancement Project; Employment Enhancing Vocational Skill Project; Health Improvement Project; Promotion of Education; Community Development Project; Environment Sustainability Project etc. Through all these initiatives, SUDHA continues to touch the lives of thousands of people around the Company''s facilities.

As a testimony to its ongoing CSR activities, The Institute of Directors has conferred the Company as the Winner of ''Special Commendation'' for ''Golden Peacock Award for Corporate Social Responsibility'' for the year 2016. This Award for Corporate Social Responsibility has been instituted to encourage initiatives in Corporate Social Responsibility and promoting sustainable development.

The Board is pleased to inform that during the year the Company has spent an aggregate amount of Rs.14.31 Million.

The Annual Report on CSR activities are annexed as Annexure IV to this report.

12. RISK MANAGEMENT AND INTERNAL CONTROLS:

Your Company has an elaborate Risk Management procedure, which is based on three pillars: Business Risk Assessment, Operational Controls Assessment and Policy Compliance processes. Your Company has set up a Risk Management Committee to monitor the risks and their mitigating actions. The key risks and mitigating actions are also placed before the Audit Committee of the Company. The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditor and coverall offices, factories and key business areas. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company''s internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Company''s risk management policies and systems.

13. REMUNERATION POLICY:

The Remuneration policy of the Company covering the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided separately as Annexure III.

14. SUCCESSION POLICY:

The Company has a Succession Policy approved by the Board of Directors with the main objective to ensure the orderly identification and selection of new Directors, Working Directors and Senior Management in the event of any vacancy, whether such vacancy exists by reason of an anticipated retirement, re-organization, unanticipated departure, or otherwise. For full details, members are requested to refer to the Company''s web site www.sudarshan.com

15. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. A. B. Rathi was inducted as a Non-Executive, Non-Independent Director on the Board of Directors of the Company w.e.f. 11th November, 2016. Mr. A. B. Rathi, is B.Tech, from University of Madras, M. S. Chemical Engg.from University of Detroit, U.S.A. and MBAfrom U.S.A.

Mr. A. B. Rathi is the Managing Director of RIECO Industries Limited (RIECO), a Wholly Owned Subsidiary of the Company. RIECO manufactures Air Pollution Control Equipments, Size Reduction Equipments and Pneumatic Conveying Systems. Mr. A. B. Rathi is also heading the Industrial Mixing Solutions Business of the Company which manufactures Industrial Mixers.

In terms of Section 152 and 161 of the Companies Act, 2013 and Article 116 of the Articles of Association of the Company, Mr.A.B.Rathi, Non-Executive, Non-Independent Director holds the Office up to the date of this Annual General. Board recommends the appointment of Mr. A.B.Rathi, as a Non-Executive, Non Independent Director of the Company liable to retire by rotation.

In terms of Section 152 of the Companies Act, 2013 and Article 116 of the Articles of Association of the Company, Mr. K.L.Rathi, Non-Executive, Non-Independent Director will retire at the 66th Annual General Meeting and being eligible offers himself for reappointment. The Board of Directors recommend the reappointment of Mr. K.L.Rathi, as a Non-Executive, Non Independent Director of the Company liable to retire by rotation.

Key Managerial Personnel

In accordance with the provisions of Section 203 of the Companies Act, 2013, the following are Key Managerial Personnel of the Company:

a. Mr. P. R. Rathi, Chairman and Managing Director

b. Mr. R. B. Rathi, Dy. Managing Director

c. Mr. V. V. Thakur, Dy. General Manager (Acting CFO)

d. Mr. P. S. Raghavan, Company Secretary

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013.

Annual Evaluation of Board of Directors, its Committees and Individual Directors

At a separate meeting of the Independent Directors held on 27th March, 2017, the performance evaluation of the Chairman, Non-Independent Directors and the Board of Directors was carried out by the Independent Directors who also reviewed the adequacy and flow of information between the Company Management and the Board. The evaluation of the Independent Directors was carried out by the entire Board.

The Directors were satisfied with the evaluation results, which reflected the overall commitment and sense of duty.

The Board has also adopted a Board Diversity Policy. The policies of Board diversity and performance evaluation of the Directors of the Company can be accessed from the Company''s website www.sudarshan.com

16. GREEN INITIATIVE:

Members are aware that the Company had started a sustainability initiative with the aim of going green and minimizing impact on the environment. This year also, electronic copies of the Annual Report for FY 2016-17 and Notice of the 66th AGM are being sent to all Members whose email addresses are registered with the Company / Depository Participant(s). For Members who have not registered their email addresses, physical copies of the Annual Report 2016-17 and the Notice of the 66th AGM are sent in the permitted mode. Members requiring physical copies can send a request to the Company Secretary.

The Company is providing remote e-voting facility to all Members to enable them to cast their votes electronically on all resolutions set forth in the Notice of the AGM. This is pursuant to Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2015 read with Regulation 44 of the SEBI Listing Regulations, 2015. The instructions for remote e-voting are provided in the Notice of the AGM.

17. INDUSTRIAL RELATIONS:

Industrial relations continue to remain cordial at Roha and Mahad plants, GHO Pune and at R & D Laboratory situated at Ambadvet (Sutarwadi), Dist. Pune. The Board of Directors record its appreciation of the commitment and support of employees at all levels.

18. HUMAN RESOURCES:

Human resources continue to be an invaluable and intangible asset and key success factor for the Company to grow and sustain its market position in a highly competitive and challenging environment. Company firmly believes that people are the pivotal force behind the growth and excellence in business operations. The overall performance and the market position the Company enjoys are the result of the combined strength of its people. The Company during the year, paid special attention to developmental activities comprising of sharpening of skills and abilities, developing academic and professional knowledge and cultivating appropriate behavioural skill sets, such as improving interpersonal relations, team building abilities, effective communication and presentation skills. Focus on developing leadership skills and building talent for the future and the process of improving organizational and human capability through competency mapping of managerial positions in all areas of the Company''s operations, continued as a major initiative

During the year under review several human capital enhancing measures were undertaken:

1. To meet organizational challenges, Company has initiated measures aimed at building capabilities at the Leadership Levels 1 and 2 and have also taken up an initiative of Leadership Intervention for them for a period of 18 months. For both Level 1 and 2 leaders, the process has started and the reports have been generated based on data collected from various sources. Also Individual Development Plans have been made and Coaching sessions have started.

2. Communication of Company performance and objectives to employees at all levels by the top management have become a culture at the Company with SUDA CONNECT being celebrated for the fourth year in succession. The event also provided an opportunity to reward exemplary performances at individual level based on meritocracy. Employees with long services in the Company were also felicitated during this occasion. Employees demonstrated their talents through various cultural programmes. The meet demonstrated a perfect blend of communication, team bonding and celebrations.

3. Like last year, “Fit Sudarshan” continued to be one of the most appreciated initiatives. This year Roha Half Marathon (21Km) was organized. This event was enjoyed by all employees, their spouses and children. Sudarshan Marathon is not just organized to promote fitness among employees and their families, but also, its major focus is on spreading awareness on ''Clean Roha, Healthy Roha'' .which is one of the focus areas of our CSR activities. Cleanliness Drive was also organized post the run, where everyone from the Dy. MD level to the children of the employees participated in cleaning the nearby areas of our Roha facility.

4. Under Training and Development, Company initiated Supervisory Assessment and Development program for L4-L5 grade employees who are working on shop floor. This was a huge success and the high potential people were identified to take higher responsibilities and for appropriate grooming .

5. All the Human Resource processes and initiatives launched in the last four years have been further reinforced and strengthened by taking them to the next level. As an endorsement of these efforts, the Company received certification on global platform from Great Place to Work institute.

6. Last year we made it to the list of TOP 50 “Dream Companies to work” at World HRD Congress. This year as well we have been recognized as Dream Company to work for in Chemical Sector, which is another feather in the cap.

This year was very fruitful and encouraging considering our various talent management initiatives, and Company''s efforts were recognized for our Talent Management initiatives at World HRD Congress 2017.

These global awards have reinforced Company''s belief of realizing Company''s vision of becoming one amongst the top four pigment producers in the World.

19. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The Company has an ongoing familiarization Programme for Independent Directors with regard to their role, rights, responsibilities in the Company, nature of the industry in which the Company operates, the business model of the Company etc. The Company also has an ongoing programme where Directors in the course of meetings of the Board of Directors are given information about the operational and functional areas of the Company, business model as also developments in legal and regulatory areas which impact the working of the Company so as to enable them to discharge their roles, rights and responsibilities in the Company effectively. Details of the same are available on the website of the Companywww.sudarshan.com.

20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL)ACT, 2013:

Your Company has Zero tolerance towards any action on the part of any one which may fall under the ambit of "Sexual Harassment" at work place, and is fully committed to uphold and maintain the dignity of every woman working with the Company. The Policy framed by the Company in this regard provides for protection against sexual harassment of women at the workplace and for prevention and redressal of such complaints within the framework of law. Details of the same are available on the website of the Company www.sudarshan.com.

No case of sexual harassment has been reported during the year under review.

21. AUDITORS:

In line with the provisions of Section 139 (2) (b) of the Companies Act, 2013, B.K.Khare & Co. Statutory Auditors hold office as Statutory Auditors of the Company up to the conclusion of the 66th Annual General Meeting i.e. 10th August, 2017.

The Board of Directors on the recommendation of the Audit Committee have approved the appointment of B S R& Associates, LLP, Chartered Accountants as the Statutory Auditors of the Company for a period of 5 years from the conclusion of the ensuing 66th AGM up to the conclusion of the 71stAGM.

The Board recommends the appointment of B S R & Associates, LLP, Chartered Accountants as the Statutory Auditors of the Company.

22. COST AUDITOR:

As per Section 148 of the Companies Act, 2013, the Company is required to have its cost records audited by a Cost Accountant in practice. The Board of Directors of the Company has, on recommendation of the Audit Committee, approved the appointment of Parkhi Limaye & Co., Cost Accountants, Pune as the Cost Auditor of the Company to conduct cost audits of “Agro Chemicals” and “Industrial Mixers” and cost records maintained by the Company for the year ending on 31st March, 2018. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking ratification of the Members for the remuneration payable to Parkhi Limaye & Co., Cost Accountants, Pune is included at Item No. 6 of the notice convening the Annual General Meeting.

23. SECRETARIAL AUDITOR:

The Board of Directors had appointed Mr. Rajesh Karunakaran, Practicing Company Secretary, to conduct Secretarial Audit for the year under review.

The Secretarial Audit Report issued by Mr. Rajesh Karunakaran, Practicing Company Secretary for the year ended 31st March, 2017 as required under Section 204 of the Companies Act, 2013 and Rules there under appears as Annexure VIII to the Directors'' Report. The Secretarial Audit Report for the year under review does not contain any qualification, reservation or adverse remark.

24. SUCCESSFUL COMMISSIONING OF COGEN PLANT AT ROHA:

Board takes immense pleasure in informing you that the Company has successfully commissioned the COGEN plant of 8.24 megawatt capacity at its Roha site. This will make the Company self-reliant in power as far as requirements of Roha factory is concerned .This is the biggest Cogen plant in the Konkan Industrial Belt.

The Board takes this opportunity to congratulate the entire team involved in the commissioning of this project within a record time of 12 months.

25. SUDHAMANTHAN PROJECT:

The Company has engaged the services of Renoir Consulting for a 30 week project in Operations function. Renoir is a worldwide leading Change Implementation Specialist who delivers operational and financial outcomes that are measurable and sustainable. The coverage of the project includes both the Roha and Mahad Plants as well as the Supply Chain and Purchase departments. The main purpose of the project is to develop and implement solutions, processes and industry best practices to improve operational efficiencies and foster a culture that can sustain these improvements over a longer period of time.

26. ENVIRONMENT, HEALTH, SAFETY(EHS) AND POLLUTION:

Environment, Health and Safety continues to be a major focus area for our Company in all its operations across the organization. As in earlier years, the Company maintains “Zero lost time accident at the workplace” as its long term strategic goal. There was no major accident during the year across the Organization. There was also no occupational health illness cases or major emergencies across the Organization. This has been achieved through highest commitment from the top management, supported by all levels of workforce across the Organization. Behavior Based Safety, Safety training, Process Safety Management, Hazard Identification and Rectification, Near miss reporting, Contractor Safety and Process Safety were the key focus areas. During the year in all the sites model “EHS” systems and practices were implemented by instilling various global safety practices including HAZOP, Risk Assessment, Layer of Protection Analysis (LOPA), Process Safety Management, Visual management, pre-start-up reviews and rigorous training to all employees and contract workers.

During the year, the Company continued to focus on Environment management by further strengthening the effluent treatment facility at Roha and Mahad. The Company is in the process of installing new technologies and facility in effluent treatment to further strengthen the Pollution abatement plan.

Utility management and energy conservation initiatives have been given renewed focus in all manufacturing units.

All units of our Company are certified for OHSAS-18001 and ISO-14001 and awarded Five Star rating from British Safety Council. Standards are regularly reviewed at various levels and systems aligned with the Company''s Process Management.

Product stewardship, transportation and warehouse safety continued to be strengthened by providing resources, standardization to match benchmark practices, training to drivers and warehouse workers for safe transportation, storage and loading / unloading and emergency plan for road accidents. As part of the same, Company has become member of “NICER GLOBE” an ICC initiative in coordination with major chemical industries.

The Company''s efforts and performance in the area of “EHS” have been recognized across the manufacturing units, through receipt of several awards.

Mahad unit has been able to sustain zero lost time accident free days for more than 1,000 days, which has been an major milestone achievement in the Company''s history.

27. RESEARCH AND DEVELOPMENT:

The Company recognizes the need to have well equipped R & D Facilities to meet customer requirements and developing cutting edge products. Members are aware that the Company has renovated its R & D facilities at Ambadvet (Sutarwadi), Pune and Roha, Dist. Raigad to match global standards.

The formal inauguration of the renovated R & D Centre was done on 18th March, 2017 by Dr. R. A. Mashelkar

- Renowned Scientist and Padma Vibhushan and Dr. Abul Iqbal - Scientific Advisor, Technical Mentor of DPP Pigment. The Guest of Honour was Mr. Sunil Ramanand, Joint Police Commissioner, Pune.

The Company has spent approx. Rs. 163 million during the year under report on Research and Development. The Ministry of Science and Technology, New Delhi, on behalf of Government of India vide letter dated 1st April, 2016 has recognized our in house R& D facilities for a further period of 3 years i.e. upto 31st March,2019.

28. DISCLOSURES:

Indian Accounting Standards (IndAS)-IFRS Converged Standards:

The Ministry of Corporate Affairs vide its notification dated 16th February, 2015 has notified the Companies (Indian Accounting Standard) Rules, 2015. Companies having a net worth of less than Rs. 500 Crores (as per the standalone financial statements as on 31st March, 2014) are required to comply with Ind AS (Accounting standards converged with the International Financial Reporting Standards - IFRS) in the preparation of their financial statements for accounting periods beginning on or after 1st April, 2017, with the comparatives for the periods ending 31st March, 2017, or thereafter. In pursuance of the above notification, the Company and its subsidiaries will adopt Ind AS with effect from 1st April, 2017. The implementation of Ind AS is a major change process for which the Company has established a project team and is dedicating considerable resources. The impact of the change on adoption of Ind AS on Company''s financials is being assessed.

Material changes and commitments if any, affecting the financial position of the Company:

There are no adverse material changes or commitments occurring after 31st March, 2017 which may affect the financial position of the Company or may require disclosure.

Annual Accounts of Subsidiary Companies:

The Annual Accounts of the Subsidiary Companies for the year ended 31st March, 2017 will be made available to any shareholder of the Company on request and will also be available for inspection at the Registered Office of the Company during working hours till the date of the Annual General Meeting. The Annual Accounts of the aforesaid subsidiary companies and the related information will also be made available to the investors seeking such information at any point of time. The salient features of Financial Statements of Subsidiary Companies is given in Annexure VII of this report.

The Company as of now does not have a material subsidiary. In conformity with the provisions of Listing Regulations, 2015, the Board has formulated a policy for determining “material subsidiaries”. The Policy can be accessed from the Company''s website www.sudarshan.com.

Consolidated Financial Statements:

In accordance with the requirements of Accounting Standard (AS) 21, the Consolidated Financial Statements of the Company and its subsidiaries is provided separately and forms part of the Annual Report.

Vigil Mechanism / Whistle Blower Policy:

Pursuant to the provisions of Section 177 (9) and (10) of the Companies Act, 2013 read with Rule 7 of the Company (Meetings of the Board and its powers) Rules, 2014 as amended, a vigil mechanism for directors and employees to report genuine concerns has been established. The policy on vigil mechanism and whistle blower policy can be accessed from the Company''s website www.sudarshan.com. The Company affirms that no Director or Employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

Policies under SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015.

New Policies mandated under SEBI Listing Regulations 2015 have been adopted by the Board and can be accessed from the Company''s website - www.sudarshan.com. Some of the existing policies have also been revised on account of the changes imposed under SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015.

Annual Return:

The extract of the Annual Return of the Company in Form No. MGT -9 as on 31st March, 2017 as prescribed under Companies (Management and Administration) Rules, 2014 is given in Annexure V to this report.

Meetings of the Board:

During the Financial Year 2016-17, five Board Meetings were held, the details of which are given under the Corporate Governance Report.

Particulars of loans, guarantees or investments under Section 186:

The particulars of loans advanced, guarantees given or investments made under Section 186 form part of the Notes to the Financial Statements provided in the Annual Report. All such loans, guarantees or investments made during the Financial Year 2016-17, with requisite approvals, wherever applicable, were entered into in the ordinary course of business and comply with arm''s length principle.

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

Information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 and Rule 8 of the Companies (Accounts) Rules, 2014 is attached to this Report.

Particulars of Employees and Related Disclosures:

The requisite information pursuant to Section 197(12) and Rule 5(2)(i)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 with regard to the details of employees drawing remuneration of Rs. 0.85 Million per month or Rs. 10.20 Million per annum is attached as Annexure II to this report.

Significant and Material Orders passed by the Regulators or Courts:

There are no significant material orders passed by the regulators or courts which would impact the going concern status of the Company and its future operations.

29. RECOGNITION:

A. The Board of Directors is pleased to announce that the Company has been selected for the following awards from Dyestuffs Manufacturers'' Association of India (DMAI) during the year 2016-17 as detailed below:

a. Award in recognition of excellent performance in the field of exports of Pigments by a Large Scale Unit.

b. Second Award for the outstanding performance in Domestic Market by a Large Scale Unit.

c. First Award in recognition of excellent performance in Pollution Control by a Large Scale Unit.

d. Second Award in recognition of excellent performance in Safety & Hazards Control by a Large Scale Unit.

These awards signify Company''s commitment towards Environment, Health, Safety and significant contribution in Exports.

B. The Board of Directors is also pleased to announced the receipt of following awards from WORLD HRD Congress for

a. Great Place to Work - We are glad to inform that we have been declared as a Great Place to Work.

b. Last year we made it to the list of TOP 50 “Dream Companies to work” at World HRD Congress. This year as well we have been recognized as Dream Company to work for in Chemical Sector, which is another feather in the cap.

c. This year Company has also been recognized for best Talent Management initiatives at World HRD Congress, held at Taj Land Ends, Mumbai in February 2017.

30. OUTLOOK FOR THE FUTURE:

The global economic climate continues to be volatile, uncertain and prone to geo-political risks. Weak consumer sentiment and low commodity prices are expected to affect global growth adversely. For India, 2017-18 will be a key year for consolidating its recovery and accelerating its growth. Despite challenging global headwinds, a stable macro performance will help India to remain an attractive investment destination. However, execution of the reforms agenda and commencing the investment cycle will be key determinants of India''s economic performance on a long term basis. While currently inflation is expected to be volatile, upside pressures on inflation exist from the vagaries of monsoon or due to competitive devaluation of currencies. Roll out of Goods and Services Tax regime from July 2017 is a key need of the hour to remove cascading incidence of tax, simplifying tax compliance environment and enhancing ease of doing business.

The Company''s overseas subsidiaries in The Netherlands and North America are fully geared up and will play a major role in achieving quantum growth in Sales and Profitability. The setting up of the China and Mexico subsidiaries will also help the Company consolidate its position further as a reliable global player in the Pigments market.

The Company aims to closely associate with its Customers and increase operational and technical excellence, while pruning costs. Research and Development will also play a bigger role in improving the competitiveness through innovations.

Agro Chemicals Division is also expected to do well. However, much depends on the monsoon which has played truant in the past. As per IMD reports published by the Central Government. The monsoon is expected to be moderate.

Barring any unforeseen circumstances, the current year''s prospects look favourable.

31. APPRECIATION:

Your Directors place on record their gratitude to Bank of Maharashtra, State Bank of India, Bank of Baroda, ICICI Bank Limited, HDFC Bank Limited, HSBC Limited, Export Import Bank of India, State Bank of India, Dubai and IDFC Bank Limited for their co-operation and assistance. Your Directors also place on record their appreciation of the services rendered by BMGI and Pragati Leadership. The Board is also grateful to the Members, Customers, Suppliers, Business Associates and Employees of the Company for their continued co-operation and support.

For and on behalf of the Board of Directors

For SUDARSHAN CHEMICAL INDUSTRIES LIMITED

P.R.RATHI

Pune : 26th May, 2017 CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2016

The Directors are pleased to present the 65th Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2016.

1. FINANCIAL HIGHLIGHTS:

The Company''s financial performance for the year ended 31st March, 2016 is summarized below:

Particulars 2015-16 2014-15 (Rupees in (Rupees in Million) Million)

Total Revenue 12,201.38 11,131.77

Earnings Before Interest, Tax, Depreciation and 1,686.28 1,340.41 Amortization (EBITDA)

Less: Interest 263.50 346.67

Less: Depreciation 437.91 397.53

Less: Provision for Taxation 268.58 172.14

Profit After Tax 716.29 424.07

Add: Surplus brought forward 942.92 724.67

Net Profit available for appropriation 1,659.21 1,148.74 Appropriations

1. General Reserve 100.00 60.00

2. Interim Dividend 125% (Rs.2.50 per equity share) 173.07 -

3. Final Dividend (Proposed) 25% (Rs.0.50 per equity share) 34.61 121.15

(Previous Year dividend paid @ Rs.1.75 per share on a face value of Rs. 21- per share i.e. 87.50%)

4. Tax on Dividend 42.29 24.67

TOTAL 349.97 205.82

Surplus to be carried forward 1,309.24 942.92

2. THE YEAR IN RETROSPECT:

During the year under review, subdued business sentiments, combined with difficult market conditions and slowdown in global demand, posed challenges. The Directors are pleased to inform that in spite of unfavourable conditions, the Company has registered better performance in terms of growth in sales and much better performance in terms of growth in profits as compared to the previous year.

(A) FINANCIALS:

Total Revenue from operations for the year ended 31st March, 2016 aggregated to Rs. 12,201 million as against Rs. 11,132 million achieved during the previous year. Profit after tax for the year ended 31st March, 2016 was Rs. 716 million as against Rs. 424 million earned during the previous year.

Pigment sales increased from Rs. 9,578 million in the previous year to Rs. 10,656 million in the year under review. Profits for the Pigment Division for the year under review amounted to Rs. 1,637 million as compared to Rs. 1,167 million of the previous year.

Agro Sales for the year ended 31st March, 2016 amounted to Rs. 1,163 million as against Rs. 1,155 million achieved during the previous year. Profits for the Agro Division for the year under review amounted to Rs. 63 million, as against Rs.77 million for the previous year.

Sales from other operations for the year ended 31st March, 2016, include sales generated from the Industrial Mixing business of the Company. As compared to the previous year, current year''s operating margins have improved.

The Company''s Indian Subsidiaries have performed well. RIECO Industries Ltd. has registered an improvement in the performance as compared to the preceding financial year. Prescient Color Ltd. continues to register good growth. The Company''s overseas subsidiaries in the Netherlands and

North America continue to record improved performance.

On a Consolidated basis, the Company''s Total Revenues for the year ended 31st March, 2016 stood at Rs. 14,234 Million, up by 15% as compared to Rs. 12,418 Million in Financial Year 2014-15. Net Profit Before Tax after consolidation grew by 38% to Rs. 990 Million in Financial Year 2015-16 as compared to Rs. 716 Million in Financial Year2014-15.

(B) EXPORTS:

The Company''s overseas subsidiaries have entered a consolidation phase and will play a crucial role in positioning the Company as a dominant player in the Global Pigment Industry. Revenue from Pigment exports for the year ended 31st March, 2016 amounted to Rs. 5,176 million as against Rs. 4,612 million for the previous year thereby recording a growth of 12%.

3. DIVIDEND:

During the year, the Company had declared and paid an Interim Dividend of Rs. 2.50 (125%) per Equity share (of Rs. 2 each). Your directors are pleased to recommend a Final Dividend of Rs. 0.50 paise (25%) per Equity share (of Rs. 2 each) for the Financial Year 2015-16. The Interim Dividend along with recommended Final Dividend aggregates to a total Dividend of Rs. 3.00 (150%) per Equity share (of Rs. 2 each) for the Financial Year 2015-16 as compared to the total Dividend of Rs. 1.75 (87.50 %) per Equity share (of Rs. 2 each) for the Financial Year 2014-15. The total amount of Dividend pay-out for the year would be Rs. 249.97 Million (Previous Year: Rs. 145.81 Million).

4. FIXED DEPOSITS:

The Company has accepted fixed deposits during the year under review. For details, please refer to Annexure I. Unclaimed deposits to the extent of Rs. 0.67 Million were outstanding as on 31st March, 2016.

5. INCORPORATION OF WHOLLY OWNED SUBSIDIARY (WOS) IN CHINA:

The Company is in the process of incorporating a Wholly Owned Subsidiary (WOS) in China primarily for sourcing raw materials locally at competitive prices. Further, the WOS will also be in a position to keep stocks of finished products and raise the invoices. The WOS will also enable the Company to service key customers in the Asia Pacific region.

6. DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with Section 134 of the Companies Act, 2013 the Directors based on the representation received from the Management, confirm that:

i. in the preparation of accounts for the Financial Year ended 31st March, 2016, the applicable accounting standards have been followed, with no 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 a true and fair view of the state of affairs of the Company at the end of Financial Year and of the Statement of Profit and Loss of the Company for that period;

iii. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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;

v. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

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

7. CORPORATE GOVERNANCE:

Members are aware that the Company has always strived to maintain applicable standards of good corporate governance and the commitment to good corporate governance is embodied in its vision, mission and corporate values. As a means to realise its goal of sustainable value creation, the Company has adopted performance excellence as part of its culture and its corporate values to foster a shared and common set of behaviour amongst all the employees.

Members will be pleased to note that the Company has complied with the mandatory requirements of Corporate Governance set out under the SEBI (Listing Obligations and Disclosure Requirements),

Regulations, 2015 which has superseded the requirements of Corporate Governance laid down in erstwhile Clause 49 of the Listing Agreement.

A detailed report on Corporate Governance, duly certified by the Statutory Auditors of the Company, B. K. Khare &Co., Chartered Accountants, Mumbai is appearing separately in the Annual Report.

8. MANAGEMENT DISCUSSION AND ANALYSIS:

A Management Discussion and Analysis covering a wide range of issues relating to industry trends, Company Performance, Business and Operations is given separately in the Annual Report.

9. CONTRACTS ANDARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered into during the Financial Year 2015-16 were on an arm''s length basis and were in the ordinary course of the business. Apart from the Promoters interest in the continuing appointment of the four Rathi Brothers Companies as selling agents of the Company, which were prior approved by the members in terms of Regulation 23oftheSEBI Listing Regulations, 2015, there are no other materially significant related party transactions entered into by the Company with Promoters or Independent Directors, Key Managerial Personnel, Senior Management and / or their relatives which may have potential conflict with the interests of the Company at large.

All related party transactions are presented to the Audit Committee for their prior approval. Subsequent modifications of related party transactions are also placed before the Audit Committee for its approval. Omnibus approval is obtained for the transactions which can be foreseen and repetitive in nature. A statement of all related party transactions is placed before the Audit Committee on quarterly basis, specifying the nature, value and terms and conditions.

The related party transactions policy is uploaded on the Company''s website-www.sudarshan.com.

The particulars of contracts or arrangements made with related parties pursuant to Section 188 is covered in Notes to the Financial Statements and material contracts / arrangements made with related parties is given in Form AOC-2 which is attached as Annexure VI to this report.

10. CORPORATE SOCIAL RESPONSIBILITY:

The Corporate Social Responsibility (CSR) activities of the Company are in accordance with Schedule VII to the Companies Act, 2013. All CSR activities of the Company are carried out under the aegis of "SUDHA" (Sudarshan''s Holistic Aspiration). As a responsible corporate citizen, the Company continues its efforts to meet, among others, the Environmental, Health & Safety expectations of the society at large.

SUDHA is envisaged as a movement to involve the Company and the community in which it operates to create better living standards and safeguard the environment. As a part of CSR, SUDHA has been engaged in various social projects, embracing the people that live in the vicinity of its manufacturing and other facilities.

The Company''s grand vision is "Growing together" with all its stakeholders in a manner that is spiritually fulfilling, socially just and environmentally sustainable. SUDHA contributes to this vision by ensuring that all its initiatives are driven with this perspective in mind. SUDHA''s vision is ''Aspiring wholesome sustainable growth for women and children of communities around the Company''s plants'' and Mission is ''Reach out to communities by engaging in projects related to Livelihood, Health, Education & Community Development''.

Various projects that SUDHA is working on are Livelihood enhancement Project; Employment Enhancing Vocational Skill Project; Health Improvement Project; Promotion of Education; Community Development Project; Environment Sustainability Project etc. Through all these initiatives, SUDHA has touched the lives of thousands of people living around the Company''s facilities.

The Board is pleased to inform that during the year the Company has spent an aggregate amount of Rs.132 Lacs which includes mandatory spend for the year under review and an unspent amount of Rs. 35 Lacs carried forward from the previous Financial Year 2014-15.

The Annual Report on CSR activities are annexed as Annexure IV to this report.

11. RISK MANAGEMENT:

The Company''s approach to Risk Management is designed to clarify risk levels and encourage entrepreneurial behaviour throughout the organisation. The Company''s risk management policy broadly covers measures to safeguard the Company''s property, interests, and interest of all stakeholders; laying down a framework for identification, measurement, evaluation, mitigation & reporting of various risks; evolving culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects, which the business and operations of the Company are exposed to; balance between the cost of managing risk and the anticipated benefits; creating awareness among the employees to assess risks on a continuous basis and develop risk mitigation plans in the interest of the Company and not the least to provide a system for setting up priorities when there are competing demands on limited resources

Adequate measures have been adopted by the Company to combat various risks including business risks (competition, consumer preferences, technology changes), financial risks (cost, credit, liquidity, foreign exchange) hazard risks (environment, safety and health), operational risks (system, process, people) and regulatory and compliance risks. The Company has adopted a focused approach towards risk management in the form of a corporate insurance program which has the goal of optimizing the financing of insurable risks by using a combination of risk retention and risk transfer techniques.

12. REMUNERATION POLICY:

The Remuneration policy of the Company covering the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided separately as Annexure III.

13. SUCCESSION POLICY:

The Company has a Succession Policy approved by the Board of Directors with the main objective to ensure the orderly identification and selection of new Directors, Working Directors or Senior Management in the event of any vacancy, whether such vacancy exists by reason of an anticipated retirement, re-organization, unanticipated departure, the expansion of the size of the Company, or otherwise. For full details, members are requested to refer to the Company''s website-www.sudarshan.com

14. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Mr. P. P. Chhabria, Independent Director on the Board of Directors of the Company expired on 5th May, 2016 at Pune. The Board expresses its heartfelt condolences to the members of the bereaved family.

Mr. P. P. Chhabria, joined the Board of Directors of the Company on 15th March, 1997. He was also the Chairman of the Stakeholders Relationship Committee and Nomination and Remuneration Committee. He had a long association with the Company. The Board places on record its appreciation of the invaluable guidance and advise given by him during his tenure as Director of the Company.

Mr. P. P. Chhabria, was the Founder of the Finolex Group of Companies. He was a great visionary and has left a tremendous legacy behind him. He also contributed immensely in the field of education and philanthropy.

In terms of Section 152 of the Companies Act, 2013 and Article 116 of the Articles of Association of the Company, Mr. N. J. Rathi, Director will retire at the 65th Annual General Meeting and being eligible offers himself for reappointment. The Board of Directors recommend the reappointment of Mr. N. J. Rathi, as a Director of the Company liable to retire by rotation.

Mr. R. B. Rathi , Deputy Managing Director of the Company is proposed to be appointed as a Director not liable to retire by rotation. The Board of Directors recommend the reappointment of Mr. R. B. Rathi, Deputy Managing Director as a Director of the Company not liable to retire by rotation.

Key Managerial Personnel

In accordance with the provisions of Section 203 of the Companies Act, 2013, the following are Key Managerial Personnel of the Company:

a. Mr. P. R. Rathi, Chairman and Managing Director

b. Mr. R. B. Rathi, Dy. Managing Director

c. Mr. V. V. Thakur, Dy. General Manager (Acting CFO)

d. Mr. P. S. Raghavan, Company Secretary Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149 (6) of the Companies Act, 2013 and Regulation16oftheSEBI Listing Regulations, 2015.

Annual Evaluation of Board of Directors, its Committees and Individual Directors

During the year, the Board has made an evaluation of its own performance and that of its Committees and individual Directors, including the Chairman of the Board. At a separate meeting of the Independent Directors held on 28th March, 2016, the performance evaluation of the Chairman, Non-independent Directors and the Board of Directors was carried out by the Independent Directors who also reviewed the adequacy and flow of information between the Company Management and the Board. The evaluation of the Independent Directors was carried out by the entire Board and that of the Chairman and Non-Independent Directors was carried out by the Independent Directors.

The Directors were satisfied with the evaluation results, which reflected the overall commitment and sense of duty.

The Board has also adopted a Board Diversity Policy. The policies of Board diversity and performance evaluation of Directors of the Company can be accessed from the Company''s website www.sudarshan.com

15. GREEN INITIATIVE:

Members are aware that the Company had started a sustainability initiative with the aim of going green and minimizing impact on the environment. Like the previous year, Electronic copies of the Annual Report 2015- 16 and Notice of the 65th AGM are being sent to all Members whose email addresses are registered with the Company / Depository Participant(s). For Members who have not registered their email addresses, physical copies of the Annual Report 2015-16 and the Notice of the 65th AGM are sent in the permitted mode. Members requiring physical copies can send a request to the Company Secretary.

The Company is providing remote e-voting facility to all Members to enable them to cast their votes electronically on all resolutions set forth in the Notice of the AGM. This is pursuant to Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2015 read with Regulation 44 of the SEBI Listing Regulations, 2015. The instructions for remote e-voting are provided in the Notice of the AGM.

16. INDUSTRIAL RELATIONS:

Industrial relations continue to remain cordial at all the plants, GHO Pune and at R&D Laboratory situated at Ambadvet (Sutarwadi), Dist. Pune. The Board of Directors record its appreciation of the commitment and support of employees at all levels.

17. HUMAN RESOURCES:

Human resources continue to bean invaluable and intangible asset and key success factor for the Company to grow and sustain it''s market position in a highly competitive and challenging environment. The Company firmly believes that people are the pivotal force behind the growth and excellence in business operations. The overall performance and the market position the Company enjoys are the result of the combined strength of it''s people. The Company during the year, paid special attention to developmental activities comprising of sharpening of skills and abilities, developing academic and professional knowledge and cultivating appropriate behavioural skill sets, such as improving interpersonal relations, team building abilities, effective communication and presentation skills. Focus on developing leadership skills and building talent for the future and the process of improving organizational and human capability through competency mapping of managerial positions in all areas of the Company''s operations, continued as a major initiative

During the year under review several human capital enhancing measures were undertaken:

1. An Organisation Development intervention was taken up called ''Living Sudarshan Culture''which was a Vision, Mission, Values cascade within the organisation. Workshops were conducted for the same for Employees in English and for Workers in Marathi. Value stories are being shared on how people are living the organisation values at work. Also the Leadership level 1 and 2 went through a 360 degree feedback on values, planned on half yearly basis, on how well they are adopting these values at work. Based on the feedback received Company also rewarded the employees scoring the highest on each of the values at the Annual Communication Meet held at Roha on 8th April 2016.

2. To meet organisational challenges, Company is looking at building capabilities at the Leadership Levels 1 & 2 and have taken up an initiative of Leadership Intervention for them for a period of 18 months. For Level 1 leaders the process has started and the reports have been generated based on data collected from various sources. Also Individual Development Plans have been made and Coaching sessions have started. For L2 level leadership intervention initiatives will be taken forward this year onwards.

3. Communication of Company performance and objectives to employees at all levels by the top management has become a culture at the Company with SUDA CONNECT being celebrated for the third year in succession. The event also provided an opportunity to reward exemplary performances at individual levels based on meritocracy. Employees with long services in the Company were also felicitated during this occasion. Employees demonstrated their talents through a cultural programme. The meet established a perfect blend of communication and also celebrations.

4. Company also took out ''Fit Sudarshan'' initiative to the next level by adding ''Run Sudarshan'' program to it. For this Company tied up with professional coach from Run India Run for training in running marathon. Company organised ''Roha Minithon 2015'' on 1st November, 2015, which was a 10km run at Roha. for all employees and their spouses and children. It was a one of its kind event in Roha, which saw participation from employees all over the globe. This initiative was very well appreciated by everyone and the event was a grand success.

5. Under Training & Development, the Company has initiated two innovative programs during the year. One was the Business English Communication through the British Council, which was for the Technical Service team members interfacing with customers regularly. The other one was Basic Business Management Skills (BBMS) by The Strategy Academy with an objective of improving decision making skills among members in operations, from a business perspective.

6. All the Human Resource processes and initiatives launched in the last four years are being reinforced and strengthened by taking them to the next level. As an endorsement of these efforts, the Company received four accolades at "World HRD Congress 2016" as detailed below:

1. TOP 50 "Dream Companies to work" and was the only one selected from the Chemical Industry;

2. "Managing Health at Work" for our Fit Sudarshan initiative;

3. "Best Organisation Development Programme (OD)" for Living Sudarshan Culture initiative;

4. "Best Strategy inline with Business" for our Performance Management System;

These global awards have reinforced Company''s belief of realizing it''s vision to be amongst the top four pigment producers in the World.

18. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The Company has an ongoing familiarisation programme for Independent Directors with regard to their role, rights, responsibilities in the Company, nature of the industry in which the Company operates, the business models of the Company etc. The Company also has an ongoing programme where Directors in the course of meetings of the Board of Directors are given information about the operations and functional areas of the Company, business model and also developments in legal and regulatory areas which impact the working of the Company so as to enable them to discharge their roles, rights and responsibilities in the Company effectively. Details of the same are available on the website of the Company-www.sudarshan.com.

19. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has zero tolerance towards any action on the part of any one which may fall under the ambit of "Sexual Harassment" at work place and is fully committed to uphold and maintain the dignity of every woman working with the Company. The Policy framed by the Company in this regard provides for protection against sexual harassment of women at workplace and for prevention and redressal of such complaints within the framework of law. Details of the same are available on the website of the Company-www.sudarshan.com.

No cases of sexual harassment have been reported during the year under review.

20. AUDITORS:

B.K. Khare & Co., Statutory Auditors of the Company are due to retire at the ensuing 65th Annual General Meeting and are eligible for reappointment. Members are requested to consider reappointing them and to authorise the Board of Directors to fix their remuneration. The Company has received confirmation regarding their consent and eligibility under Section 141 of the Companies Act, 2013 for reappointment as Statutory Auditors of the Company.

21. COST AUDITOR:

As per Section 148 of the Companies Act, 2013, the Company is required to have its cost records audited by a Cost Accountant in practice. The Board of Directors of the Company has, on recommendation of the Audit Committee, approved the appointment of Parkhi Limaye &Co., Cost Accountants, Pune, as the Cost Auditor of the Company to conduct cost audit of''Specified Products'' and cost records maintained by the Company for the year ending on 31st March, 2017. As required under the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking ratification of the Members for the remuneration payable to Parkhi Limaye & Co., Cost Accountants, Pune is included at Item No. 6 of the notice convening the Annual General Meeting.

22. SECRETARIAL AUDITOR:

The Board of Directors had appointed Mr. Rajesh Karunakaran, Practicing Company Secretary, to conduct Secretarial Audit for the year under review.

The Secretarial Audit Report issued by Mr. Rajesh Karunakaran, Practicing Company Secretary for the year ended 31st March, 2016, as required under Section 204 of the Companies Act, 2013 and Rules there under appears as Annexure VIII to the Directors'' Report. The Secretarial Audit Report for the year under review does not contain any qualification, reservation or adverse remark.

23. ENVIRONMENT, HEALTH, SAFETY (EHS)AND POLLUTION:

Environment, Health and Safety continues to be a major focus area for our Company in all its operations across the organization. As in earlier years, the Company maintains "Zero lost time accident at the workplace" as its long term strategic goal. The Company strives and is able to maintain zero major incident, emergencies, occupational health illness cases during the year across the organization. This has been achieved through highest commitment from the top management, supported by all levels of workforce across the Organization. Behaviour Based Safety, Safety training, Process Safety Management, Hazard Identification and Rectification, Near miss reporting and Contractor Safety were the key focus areas. During the year in all the sites model "EHS" systems and practices were implemented including HAZOP, Risk Assessment, Layer of Protection Analysis (LOPA), Process Safety Management, Visual management, pre- start-up reviews and rigorous training to all employees and contract workers on regular basis.

During the year, the Company continued to focus on Environment management by further strengthening the pollution control facilities at Roha and Mahad. The Company always believes in exploring new technologies in effluent treatment, environment management to further strengthen the Pollution abatement Plan. The focus is always to go beyond the statutory requirement and conserve the natural resources and environment. Utility management and energy conservation initiatives have been given renewed focus in all manufacturing units.

All units of the Company are certified for OHSAS-18001 and ISO-14001 and awarded rating of five star from British Safety Council. Standards are regularly reviewed at various levels and systems are aligned with the Company''s Process Management.

Product stewardship, transportation and warehouse safety continued to be strengthened by providing resources, standardization to match benchmark practices, training to drivers and warehouse workers for safe transportation, storage and loading / unloading and emergency plan for road accidents. As part of the same, Company is associated with "NICER GLOBE" an ICC initiative in coordination with major chemical industries.

The Company''s efforts and performance in the area of "EHS" have been recognized across the manufacturing units, through receipt of several awards.

24. RESEARCH AND DEVELOPMENT:

The Company recognizes the need to have well equipped R & D Facilities to meet customer requirements and developing cutting edge products. Members are aware that the Company has spruced up its R & D facilities at Ambadvet (Sutarwadi), Taluka Mulshi, Dist. Pune and Roha, Dist. Raigad. The Company has spent approx. Rs. 99 million during the year under report on research and development. The Ministry of Science and Technology, New Delhi, on behalf of Government of India vide letter dated 1st April, 2016 has recognized our in house R & D facilities for a further period of 3 years i.e. upto 31st March, 2019.

25. DISCLOSURES:

Annual Accounts of Subsidiary Companies:

The Annual Accounts of the Subsidiary Companies for the year ended 31st March, 2016 will be made available to any shareholder of the Company on request and will also be available for inspection at the registered office of the Company during working hours till the date of the Annual General Meeting. The Annual Accounts of the aforesaid subsidiary companies and the related information will also be made available to the investors seeking such information at any point of time. The salient features of Financial Statements of Subsidiary Companies is given in Annexure VII of this report.

The Company as of now does not have a material subsidiary . In conformity with the provisions of SEBI Listing Regulations, 2015,the Board has formulated a policy for determining "material subsidiaries". The Policy can be accessed from the Company''s website-www.sudarshan.com.

Consolidated Financial Statements:

In accordance with the requirements of Accounting Standard (AS) 21, the Consolidated Financial Statements of the Company and its subsidiaries is provided separately and forms part of the Annual Report.

Vigil Mechanism / Whistle Blower Policy:

Pursuant to the provisions of Section 177 (9) and (10) of the Companies Act, 2013, read with rule 7 of the Companies (Meetings of the Board and its powers) Rules, 2014 as amended, a vigil mechanism for directors and employees to report genuine concerns has been established. The policy on vigil mechanism and whistle blower policy can be accessed from the Company''s website - www.sudarshan.com. The Company affirms that no Director or Employee has been denied access to the Chairman of the Audit Committee and that no complaints were received during the year.

Policies under SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015.

New Policies mandated under SEBI Listing Regulations 2015 have been adopted by the Board and can be accessed from the Company''s website - www.sudarshan.com. Some of the existing policies have also been revised on account of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015.

Annual Return:

The extract of the Annual Return of the Company in Form No. MGT - 9 as on 31st March, 2016 as prescribed under Companies (Management & Administration) Rules, 2014 is given in Annexure V to this report.

Meetings of the Board:

During the Financial Year 2015-16, eight Board Meetings were held, the details of which are detailed under the Corporate Governance Report.

Particulars of loans, guarantees or investments under Section 186:

The particulars of loans advanced, guarantees given or investments made under Section 186 form part of the Notes to Financial Statements provided in the Annual Report. All such Loans, guarantees or investments made during the Financial Year 2015-16 with requisite approvals wherever applicable were entered into in the ordinary course of business and comply with the arm''s length principle.

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

Information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 and Rule 8 of the Companies (Accounts) Rules, 2014 is attached to this Report.

Particulars of Employees and Related Disclosures:

The requisite information pursuant to Section 197(12) and Rule 5(2)(i) Of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 with regard to the details of employees drawing remuneration of Rs. 0.5 million per month or Rs. 6.0 million per annum is attached as Annexure II to this report.

Significant and Material Orders passed by the Regulators or Courts:

There are no significant material orders passed by the regulators or courts which would impact the going concern status of the Company and its future operations.

26. RECOGNITION:

The Board of Directors is pleased to announce that the Company has received the following awards during the year under review:

A. Dyestuffs Manufacturers''Association of India (DMAI) award for the Financial Year 2014- 2015for-

a. Excellent performance in pollution control for large Scale Unit

b. Excellent performance in Safety & Hazards control (Second Award for large scale unit)

c. Excellent performance in exports of Pigments (Award for large scale Unit)

These awards signify Company''s commitment towards Environment, Health, Safety and significant contribution in Exports.

B. WORLD HRD

Congress for-

1. Dream Company to Work for - This is a very prestigious award. About 400 companies had participated and the Company is listed as one among the top 50 companies in India More so Sudarshan is the only Chemical company on the top 50 list.

2. Global Excellence award - Managing Health at Work-For Fit Sudarshan initiative.

3. Best Organisational Development Programme - Living Sudarshan Culture - For Training and Development Congress for our strategic initiative this year on the Vision Mission Values Cascade which was towards creating unique Sudarshan Culture

4. Best HR strategy in line with Business - Appreciative Conversation - Performance Management System - For delivering towards business objective where Company showcased the Performance Management System where the base philosophy is of Appreciative Conversations.

27. OUTLOOK FORTHE FUTURE:

The Financial Year 2016-17 is expected to be another challenging year. Indications are that the global economy will grow as compared to the Previous Year. With the changed business scenario and promising signs of revival in demand and growth, the Indian Economy is expected to do better. The Company''s overseas subsidiaries in The Netherlands and North America are fully geared up and will play a major role in achieving quantum growth in Sales and Profitability. The setting up ofthe China subsidiary will also enable the Company to achieve economies of direct sourcing of raw material as well as invoicing of finished products to customers in the Asia Pacific region.

The Company aims to closely associate with its Customers and increase operational and technical excellence, while pruning costs. Research and Development will also play a bigger role in improving the competitiveness through innovations.

Agro Chemicals Division is also expected to do well. However, much depends on the monsoon which has played truant in the past. As per IMD reports published by the Central Govt, the monsoon is expected to be good during F.Y. 2016-17.

Barring any unforeseen circumstances, the current year''s prospects Look favourable.

29. APPRECIATION:

Your Directors place on record their gratitude to Bank of Maharashtra, State Bank of India, Bank of Baroda, ICICI Bank Limited, HDFC Bank Limited, HSBC Limited, Export Import Bank of India and State Bank of India, Dubai for their co-operation and assistance. Your Directors also place on record their appreciation of the services rendered by BMGI and Pragati Leadership. The Board is also grateful to the Members, Customers, Suppliers, Business Associates and Employees of the Company for their continued co-operation and support.

For and on behalf of the Board of Directors

For SUDARSHAN CHEMICAL INDUSTRIES LIMITED





P.R.RATHI

Pune : 27th May, 2016 CHAIRMAN AND MANAGING DIRECTOR


Mar 31, 2015

Dear Members,

The Directors are pleased to present the 64th Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2015.

1. FINANCIAL HIGHLIGHTS:

The Company''s financial performance for the year ended March 31, 2015 is summarized below:

Particulars 2014-2015 2013-2014 (Rupees in (Rupees in million) million)

Total Revenue 11,113.23 10,313.79

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA ) 1,321.87 1,277.76

Less : Interest 328.13 375.97

Less : Depreciation 397.53 353.51

Less : Provision for Taxation 172.14 204.10

Profit after Tax 424.07 344.18

Add : Surplus brought forward 724.67 561.98

Net Profit available for appropriation 1,148.74 906.16

Appropriations

(1) General Reserve 60.00 60.00

(2) Dividend proposed @ 1.75 per share on the face value of Rs 2 per 121.15 103.84 equity share ( 87.50 % ) (previous year dividend paid @ 150 % on the face value of Rs. 10 per equity share)

(3) Tax on Dividend 24.67 17.65

Total 205.82 181.49

Surplus to be carried forward 942.92 724.67

2. THE YEAR IN RETROSPECT:

(A) SALES:

Total Revenue from operations for the year ended 31st March, 2015 aggregated to Rs. 11,113 million as against Rs. 10,314 million achieved during the previous year. Profit after tax for the year ended 31st March, 2015 was Rs.424 million as against Rs. 344 million earned during the previous year.

Pigment sales increased from Rs. 9,125 million in the previous year to Rs. 9,578 million in the year under review. Profits for the Pigment Division for the year under review amounted to Rs. 1,167 million as compared to Rs. 1,058 million of the previous year.

Agro Sales for the year ended 31st March, 2015 amounted to Rs. 1,155 million as against Rs. 1,100 million achieved during the previous year. Profits for the Agro Division for the year under review amounted to Rs. 77 million, which when compared, remained the same as in the previous year.

The results of the Company for the year under review viewed in the background of adverse macro economic conditions and negative business sentiments are nevertheless considered satisfactory.

(B) EXPORTS:

The Company''s overseas subsidiaries in Netherlands and North America set up with the objective of marketing and selling Pigments continue to record improved performance. Revenue from pigment exports for the year ended 31st March, 2015 amounted to Rs. 4,602 million as against Rs. 4,380 million for the previous year.

3. SUB DIVISION OF EQUITY SHARES AND ISSUE OF BONUS SHARES:

As a means to reward its Members, the Board of Directors in its meeting held on 9th August, 2014 recommended the sub division of Equity Shares of the Company from Rs. 10 each to Rs. 2 each along with issue of Bonus Shares in the ratio of 1:1. Post sub division of the equity shares and issue of bonus shares, the paid-up capital has increased to Rs. 138,454,500 consisting of 69,227,250 equity shares of Rs. 2 each.

4. DIVIDEND:

Considering the overall performance of the Company, the Directors recommend, subject to approval of the Members, a dividend of Rs. 1.75 per share on a face value of Rs. 2 (87.50 % ) for the year ended 31st March, 2015. The total outgo on account of dividend @ 87.50% and dividend distribution tax @ 20.36% will be Rs. 145.81 million for the year under review.

The dividend will be paid to Members whose names appear in the Register of Members as on 14th August, 2015 and in respect of shares held in dematerialized form, it will be paid to Members whose names are furnished by the National Securities Depository Limited and Central Depository (Services) India Limited, as beneficial owners as on that date.

5. FIXED DEPOSITS:

Your Company has accepted Fixed Deposits from Members and Public deposits after complying with relevant provisions of the Companies Act, 2013 . All prior deposits accepted from Members and Public under the erstwhile provisions of the Companies Act , 1956 have been repaid before the statutory deadline of 31st March, 2015.For more information on Deposits , please refer to the Annexure I of the Directors Report.

6. NEW BUSINESS OPPORTUNITIES :

(A) PURCHASE OF INDUSTRIAL MIXING SOLUTIONS BUSINESS OF RATHI VESSELS AND SYSTEMS PRIVATE LIMITED

Members may be aware that the Company has been using Mixers since inception for mixing of various Pigment preparations. These Mixers were sourced from Rathi Mixers Private Limited and thereafter from Rathi Vessels and Systems Private Limited. Considering the fact that there is synergy in terms of managerial resources, common customers and good potential of scale up, the Board of Directors have given their consent to purchase the Industrial Mixing Solutions Business of Rathi Vessels and Systems Private Limited. The purchase is effective from 1st October, 2014 and the transaction was completed on 30th March, 2015. Presently, the business integration process is going on and barring unforeseen circumstances, the expected benefits will be reflected in the results of the ensuing years.

(B) PURCHASE OF SHARES CONSISTING OF THE ENTIRE PAID UP SHARE CAPITAL OF RIECO INDUSTRIES LIMITED :

RIECO Industries Limited is, among others, into the manufacturing of size reduction equipments, pollution control equipment. Considering the fact that there is synergy in terms of managerial resources and good potential of scale up, the Board of Directors based on an assessment of the business potential of RIECO Industries Limited, have given their consent to purchase shares consisting of the entire paid-up share capital of the Company. The transaction was closed on 10th February, 2015, effectively making RIECO Industries Limited a Wholly-Owned Subsidiary of the Company.

It is expected that the strategic purchases or investments made by the Company will enhance stakeholders'' value in the long run.

7. DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with Section 134 of the Companies Act, 2013 the Directors based on the representation received from the management, confirm that:

(i) in the preparation of accounts for the Financial Year ended 31st March, 2015, 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 a true and fair view of the state of affairs of the Company at the end of Financial Year and of the Statement of Profit and Loss of the Company for that period;

(iii) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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;

(v) the directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively;

(vi) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

8. CORPORATE GOVERNANCE:

Your Company is committed to maintain high standards of Corporate Governance keeping in mind the requirements and the aspirations of various stakeholders. It is the endeavour of the Board of Directors and the executive management of your Company to ensure that actions are always based on principles of responsible corporate management. The Board of Directors is pleased to inform its Members that it has complied with the mandatory requirements of corporate governance set out by the Securities and Exchange Board of India.

A detailed report on Corporate Governance , duly certified by the Statutory Auditors of the Company B.K. Khare & Co., Chartered Accountants, Mumbai is appearing separately in the Annual Report.

9. MANAGEMENT DISCUSSION AND ANALYSIS:

A Management Discussion and Analysis covering a wide range of issues relating to industry trends, Company Performance, Business and Operations is given separately in the Annual Report.

10. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:

The particulars of contracts or arrangements made with related parties pursuant to Section 188 is covered in notes to the Financial Statements and material contracts / arrangements made with related parties is given in Form AOC-2 which is attached as Annexure VI to this report. All related party transactions entered into during the Financial Year 2014-15 were in the ordinary course of business of the Company and on arm''s length basis. Further all such transactions were scrutinized by the Audit Committee to ensure that they are in the overall interests of the Company. The above contracts and arrangements also includes transactions of Non Executive Directors with the Company.

The policy on related party transactions as approved by the Board of Directors can be accessed from the Company''s website -www.sudarshan.com

11. CORPORATE SOCIAL RESPONSIBILITY:

As per the Companies Act, 2013, all companies having a net worth of Rs. 500 Crore or more, or a turnover of Rs. 1,000 Crore or more or a net profit of Rs. 5 Crore or more during any Financial Year will be required to constitute a Corporate Social Responsibility Committee (''CSR Committee'') of the Board of Directors comprising three or more directors, at least one of whom shall be an independent director.

Accordingly, Board has constituted a CSR Committee comprising Mrs. Rati F.Forbes, Independent Director as the Chairperson with Mr.P.R.Rathi and Mr.R.B.Rathi, Directors as its Members. The CSR Committee is responsible for formulating and monitoring the CSR policy of the Company. The CSR Committee has adopted a policy that intends to :

- Strive for economic development that positively impacts the society;

- Be responsible for the corporation''s actions and encourage a positive impact through its activities on the environment, communities and stakeholders.

Corporate Social Responsibility (''CSR'') activities as per the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014, can be undertaken by the Company through a registered trust or a registered society. The Company has, accordingly, set up Sudarshan CSR Foundation (''the Foundation'') as a non-profit company and the same has been incorporated on 3rd March, 2015. The Foundation will work closely with and support the Board of Directors and the Committee in CSR activities. The Foundation will assist the CSR Committee in identifying the areas of CSR activities, programs and execution of initiatives as per pre-defined guidelines. The Foundation will also assist the Board of Directors and the CSR Committee in reporting progress of deployed initiatives and in making appropriate disclosures (internal / external) on a periodic basis.

The CSR activities of the Company are largely in accordance with Schedule VII to the Companies Act, 2013. All CSR activities of the Company are carried out under the aegis of "SUDHA" (Sudarshan''s Holistic Aspiration). As a

responsible corporate citizen, the Company continues its efforts to meet the Environmental, Health & Safety expectations of society at large.

The Company''s grand vision is "Growing together" with all its stakeholders in a manner that is Spiritually fulfilling, Socially just and Environmentally sustainable. SUDHA contributes to this vision by ensuring that all its initiatives are driven with this perspective in mind. SUDHA''s vision is ''Aspiring wholesome sustainable growth for women and children of communities around the Company''s plants'' and Mission is ''Reach out to communities by engaging in projects related to Livelihood, Health, Education & Community Development''.

SUDHA was envisaged as a movement to involve the company and the community in which it operates to create better living standards and safeguard the environment. As a part of Corporate Sustainability, SUDHA has been engaged in various social projects, embracing the people that live in the vicinity of its manufacturing and other facilities.

Various projects that SUDHA is working on are Livelihood project where Paper Bag project is the Flagship project. Approximately 150 ladies are directly associated with this project and are earning a livelihood of Rs. 2,000 to Rs. 3,000 per month on an average. SUDHA is also working on vocational enhancing skill projects like Stitching and Paper craft. Health being a very important aspect, SUDHA is also working on improving the health of village ladies. Initiatives taken during the last year include setting up Health check up camps, follow ups for 554 ladies and medication given to the ladies for low HB.

Education and Environment focus is another important area where SUDHA has been involved. Through all these initiatives, SUDHA has touched the lives of thousands of people around the Company''s facilities.

Out of the total entitlement of Rs.87.69 Lacs which the Company was required to spend for designated CSR activities as mandated under Section 135 of the Companies Act, 2013, the Company could spend an amount of Rs.52.67 Lacs. Prime reason for the shortfall in CSR spending were delays in identifying and finalising tie -ups with NGOs for discharging the CSR Obligations. The balance unspent CSR amount of Rs. 35.02 Lacs is being carried over and will be spent on CSR activities in the current year.

The Corporate Sustainability Policy and Annual Report on CSR activities are annexed as Annexure IV to this report.

12. RISK MANAGEMENT:

Risks are events, situations or circumstances which may negatively impact the Company''s business. The Company is adopting a formal approach to risk management in such a way that key risks are managed within a unitary framework.

In a dynamic and volatile environment, all companies face uncertainty, and the challenge for your Company is to determine how much uncertainty to accept as it strives to grow stakeholder value. The Board of Directors on the recommendation of the Risk Management Committee has approved a Risk Management Policy providing guidelines to effectively identify and deal with risks contributing to uncertainty, balancing risk and opportunity and enhancing the capacity to build stakeholders'' value.

The Risk Management Committee has identified specific risks which may critically impact the operations of the Company and has recommended suitable measures to counter them so that the impact is minimized. The Company also has insurance policies in place to reduce adverse impact of any untoward incidents which are critical in nature.

13. REMUNERATION POLICY:

The Remuneration policy of the Company covering the appointment and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters has been provided separately as Annexure III.

14. SUCCESSION POLICY:

The Company has a Succession Policy approved by the Board of Directors with the main objective to ensure the orderly identification and selection of new Directors, Working Directors or Senior Management in the event of any vacancy, whether such vacancy exists by reason of an anticipated retirement, re-organization, unanticipated departure, the expansion of the size of the Company, or otherwise. For full details, members are requested to refer to the Company''s web site www.sudarshan.com

15. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In terms of Section 152 of the Companies Act, 2013 and Article 116 of the Articles of Association of the Company, Mr. K.L.Rathi, Director will retire at the 64th Annual General Meeting and will be eligible for reappointment. The Board of Directors recommend the reappointment of Mr. K.L.Rathi, as a Director of the Company. Further Mr. K.L.Rathi has expressed his desire to step down as Chairman at the conclusion of the ensuing 64th Annual General Meeting. The Board of Directors record its appreciation for the services rendered by Mr. K.L.Rathi as Chairman of the Board of Directors.

Mr. Naresh T. Raisinghani has joined the Board of Directors of the Company w.e.f. 13th February, 2015 as a Non-Independent Director and holds office upto the conclusion of the ensuing 64th Annual General Meeting. A brief profile of Mr. Naresh T. Raisinghani is detailed in the Report of Corporate Governance as also in the Notice of the 64th Annual General Meeting. Members are requested to consider appointing Mr. Naresh T. Raisinghani as a Non- Independent Director. The Board of Directors recommend his appointment as a Non-Independent Director.

Mrs. Shubhalakshmi A. Panse was co-opted as an Independent Director of the Company w.e.f. 27th May, 2015 and holds office upto the conclusion of the ensuing 64th Annual General Meeting. A brief profile of Mrs. Shubhalakshmi A. Panse is detailed in the Report of Corporate Governance as also in the Notice of the 64th Annual General Meeting. Members are requested to consider appointing Mrs. Shubhalaxmi A. Panse as an Independent Director for a period of 5 years. The Board of Directors recommend her appointment as an Independent Director.

Key Managerial Personnel

In accordance with the provisions of Section 203 of the Companies Act, 2013, the following are Key Managerial Personnel:

a. Mr. P.R. Rathi, Vice Chairman and Managing Director

b. Mr. R.B. Rathi, Dy. Managing Director

c. Mr. V.V. Thakur, Dy. General Manager (Acting CFO)

d. Mr. P.S. Raghavan, Company Secretary Declaration by an Independent Director

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

Annual Evaluation of Board of Directors, its Committees and Individual Directors

The Nomination and Remuneration Committee has devised a criteria for performance evaluation of independent directors, Board, Committees of the Board of Directors and other individual directors which includes criteria for performance evaluation of the Non-executive Directors and Executive Directors.

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board of Directors have carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. A separate exercise was carried out to evaluate the performance of individual directors including the Chairman of the Board of Directors. The performance evaluation of the Independent directors was carried out by the entire Board of Directors.

At a separate meeting of the Independent directors, the performance evaluation of the Chairman, Non-independent directors and the Board of Directors was carried out by the Independent directors who also reviewed the adequacy and flow of information to the Board of Directors. The Directors expressed their satisfaction with the evaluation process.

The policies of Board diversity and performance evaluation of Directors of the Company can be accessed from the Company''s website www.sudarshan.com

16. GREEN INITIATIVE:

Members are aware that the Company had started a sustainability initiative with the aim of going green and minimizing impact on the environment. Like the previous year, Electronic copies of the Annual Report 2014-15 and Notice of the 64th AGM are being sent to all Members whose email addresses are registered with the Company / Depository Participant(s). For Members who have not registered their email addresses, physical copies of the Annual Report 2014-15 and the Notice of the 64th AGM are sent in the permitted mode. Members requiring physical copies can send a request to the Company Secretary.

The Company is providing remote e-voting facility to all Members to enable them to cast their votes electronically on all resolutions set forth in the Notice of the AGM. This is pursuant to Section 108 of the Companies Act, 2013 and Rule 20 of the Companies (Management and Administration) Rules, 2015. The instructions for remote e-voting is provided in the Notice of the AGM.

17. INDUSTRIAL RELATIONS:

Industrial relations continue to remain cordial at Roha and Mahad plants, GHO Pune and at R & D Laboratory situated at Ambadvet (Sutarwadi), Dist. Pune. The Board of Directors record its appreciation of the commitment and support of employees at all levels.

18. HUMAN RESOURCES :

During the year under review several human capital enhancing measures were undertaken:

- In order to improve the productivity and ability of the organization to meet future challenges, a manpower restructuring and organization structure augmentation project was initiated and successfully completed. The process started with a scientific study with support by a professional partner using various methodologies to arrive at the right size and skills required. The surplus manpower thus identified were either out placed with a professionally designed outplacement programme or were allowed to separate with best in industry severance packages.

- Communication of Company performance and objectives to employees at all levels by the top management has become a culture at the Company with SUDA CONNECT being celebrated for the second year in succession. The event also provided an opportunity to reward exemplary performances at individual level based on meritocracy. Employees with long services in the Company were also felicitated during this occasion. The culture of transparency was demonstrated through a question answer session where employee questions were responded by leadership team of the Company. Employees demonstrated their talents through a cultural programme where the organisation''s new Mission and Values were launched. The meet established a perfect blend of communication and celebrations.

- The Performance Management System got a shot in the arm with the introduction of cloud based IT system which is SAP based.

- All the Human Resource processes and initiatives launched in the last three years are being reinforced and strengthened. As an endorsement of these efforts, the company received two accolades at "World HRD Congress 2015" as described below:

1. "Organisations with Innovative HR Practices" for our Spiritually Fulfilling Life at Sudarshan initiative;

2. "Best Leadership Development Programme for Middle management" for our Wholesome Leadership Development Program (WLDP) initiative

These global awards have reinforced our belief of realizing Company''s vision of becoming one among the top four pigment producers in the World.

19. FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The Company has formulated an induction programme designed to acclimatize new Directors joining the Board of Directors of the Company. Further, the Company also has an ongoing programme where Directors in the course of meetings of the Board of Directors are given information about the operations / functional areas of the Company, business model as also developments in legal and regulatory areas which impact the working of the Company so as to enable them to discharge their roles, rights and responsibilities in the Company effectively.

Members are requested to refer to the website of the Company www.sudarshan.com for more details about the familiarization program.

20. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has a Policy for prevention, prohibition and redressal of sexual harassment at work place and also has constituted an Internal Committee. No cases of sexual harassment have been reported during the year under review.

21. AUDITORS:

B.K. Khare & Co., Statutory Auditors of the Company are due to retire at the ensuing 64th Annual General Meeting and are eligible for reappointment. Members are requested to consider reappointing them and to authorise the Board of Directors to fix their remuneration.

22. COST AUDITOR:

The Board of Directors, in pursuance of an order issued under Section 148 of the Companies Act, 2013, issued by the Central Government, have appointed Parkhi Limaye & Co., Cost Accountants, Pune as Cost Auditors to audit the Pigment Products and Insecticides Products cost records maintained by the Company for the year under review.

23. SECRETARIAL AUDITOR:

The Board of Directors had appointed Mr. Rajesh Karunakaran, Practicing Company Secretary, to conduct Secretarial Audit for the year under review.

The Secretarial Audit Report issued by Mr. Rajesh Karunakaran, Practicing Company Secretary for the year ended 31st March, 2015 as required under Section 204 of the Companies Act, 2013 and Rules thereunder appears as Annexure VIII to the Directors'' Report. The Secretarial Audit Report for the year under review does not contain any qualification, reservation or adverse remark.

24. ENVIRONMENT, HEALTH, SAFETY (EHS) AND POLLUTION:

Environment, Health and Safety continues to be a major focus area for our Company in all its operations across the organization. As in earlier years, the Company maintains "Zero lost time accident at the workplace" as its long term strategic goal. There was no reportable accident during the year across the organization. There was also no occupational health illness cases or major emergencies across the Organization. This has been achieved through highest commitment from the top management, supported by all levels of workforce across the Organization. Behaviour Based Safety, Safety training, Process Safety Management, Hazard Identification and Rectification Near mis identification & analysis and Contractor Safety were the key focus areas. During the year in all the sites model "EHS" systems and practices were implemented by instilling various global safety practices including HAZOP, Risk Assessment, Layer of Protection Analysis (LOPA), Process Safety Management, Visual management, pre-start-up reviews and rigorous training to employees and contract workers. To showcase our good work to all our internal as well as external stake holders we have started "EHS Magazine" and published first Edition of our quarterly Magazine this year with a strong belief that facing the challenges together yield better and sustainable results.

During the year, the Company continued to focus on Environment management by further strengthening the effluent treatment facility at Roha and Mahad. The Company is in the process of exploring few more technologies in effluent treatment to further strengthen the Pollution abatement Plan.

Utility management and energy conservation initiatives have been given renewed focus in all manufacturing units. This has helped in improving the "Greening Index" of the Company.

All units of our Company are certified for OHSAS-18001 and ISO-14001,and awarded rating of five star from British Safety Council. Standards are regularly reviewed at various levels and systems aligned with the Company''s Process Management. As a strategic long term goal we have planned to implement ''''Responsible Care initiatives'''' and preparing for certification audits in year 2015-16.

Product stewardship, transportation and warehouse safety continued to be strengthened by providing resources, standardization to match benchmark practices, training to drivers and warehouse workers for safe transportation, storage and loading / unloading and emergency plan for road accidents. As part of the same, Company has become member of NICER GLOBE a ICC initiative in coordination with major chemical industries.

The Company''s efforts and performance in the area of "EHS" have been recognized across the manufacturing units, through receipt of several awards. These awards include :

- National Safety Council - Maharashtra Chapter Safety Award for Roha unit.

- DMAI Award for Excellent Performance in the field of Pollution Control by a Large Scale Unit.

- DMAI Second for Excellent Performance in the field of Safety & Hazards Control by a Large Scale Unit.

- "Certificate of Appreciation" from National Safety Council in Nation Safety Award in manufacturing sector: "Group B".

25. RESEARCH AND DEVELOPMENT :

The Company recognizes the need to have well equipped R & D Facilities to meet customer requirements and developing cutting edge products. Members are aware that the Company has spruced up its R & D facilities at Ambadvet (Sutarwadi), Pune and Roha, Dist. Raigad. The Company has spent approx. Rs. 177 million during the year under report on research and development .The Ministry of Science and Technology, New Delhi, on behalf of Government of India vide letter dated 2nd April, 2012 has recognized our in house R & D facilities for a period of 4 years

i.e. upto 31st March, 2016.

26. DISCLOSURES:

Annual Accounts of Subsidiary Companies:

The Annual Accounts of the Subsidiary Companies for the year ended 31st March, 2015 will be made available to any shareholder of the Company on request and will also be available for inspection at the Registered Office of the Company during working hours till the date of the Annual General Meeting. The Annual Accounts of the aforesaid subsidiary companies and the related information will also be made available to the investors seeking such information at any point of time. The salient features of Financial Statements of Subsidiary Companies is given in Annexure VII of this report.

The Company as of now does not have a material subsidiary . In conformity with the provisions of Clause 49 of the Listing Agreement, the Board has formulated a policy for determining "material subsidiaries". Members are requested to refer to the website of the Company www.sudarshan.com for more details.

Consolidated Financial Statements:

In accordance with the requirements of Accounting Standard (AS) 21, the Consolidated Financial Statements of the Company and its subsidiaries is provided separately and forms part of the Annual Report .

Vigil Mechanism / Whistle Blower Policy:

Pursuant to the provisions of Section 177 (9) and (10) of the Companies Act, 2013, a vigil mechanism for directors and employees to report genuine concerns has been established. The policy on vigil mechanism and whistle blower policy can be accessed from the Company''s website www.sudarshan.com

Annual Return:

The extract of the Annual Return of the Company in Form No. MGT - 9 as on 31st March, 2015 as prescribed under Companies (Management & Administration) Rules, 2014 is given in Annexure V to this report.

Meetings of the Board:

During the Financial Year 2014-15, five Board Meetings were held, the details of which are covered under the Corporate Governance Report .

Particulars of loans, guarantees or investments under Section 186:

The particulars of loans advanced, guarantees given or investments made under Section 186 form part of the notes to Financial Statements provided in the Annual Report. All such Loans, guarantees or investments made during the Financial Year 2014-15 were in the ordinary course of business and comply with arm''s length principle.

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

Information regarding conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 and Rule 8 of the Companies (Accounts) Rules, 2014 is attached to this Report.

Particulars of Employees and Related Disclosures:

The requisite information pursuant to Section 197(12) and Rule 5(2)(i) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 with regard to the details of employees drawing remuneration of Rs. 0.5 million per month or Rs. 6.0 million per annum is attached as Annexure II to this report.

Significant and Material Orders passed by the Regulators or Courts:

There are no significant material orders passed by the regulators or courts which would impact the going concern status of the Company and its future operations.

27. RECOGNITION:

The Board of Directors is pleased to announce that the Company has received the following awards during the year under review :

1. Dyestuffs Manufacturers'' Association of India (DMAI) award for the Financial Year 2013- 2014 for -

1. Excellent performance in pollution control for large Scale Unit

2. Excellent performance in Safety & Hazards control (Second Award for large scale unit )

3. Excellent performance in exports of Pigments (Award for large scale Unit)

These awards signify Company''s commitment towards Environment, Health, Safety and significant contribution in Exports.

2. WORLD HRD Congress for -

1. "Organisations with Innovative HR Practices" for spiritually fulfilling life @Sudarshan.

2. "Best Leadership Development Programme for Middle management" for initiatives with regard to Wholesome Leadership Development Program.

28. OUTLOOK FOR THE FUTURE:

The Financial Year 2015-16 is expected to be another challenging year. Indications are that the global economy will grow as compared to the previous Year. With the changed political scenario and promising signs of revival in demand and growth, the Indian Economy is expected to do better. The Company''s overseas subsidiaries in Netherlands and North America are fully geared up and will play a major role in achieving quantum growth in Sales and Profitability.

The Company aims to closely associate with its Customers and increase operational and technical excellence, while pruning costs. Research and Development will also play a bigger role in improving the competitiveness through innovations.

Agro Chemicals Division is also expected to do well. However, much depends on the monsoon which has played truant in the past.

Barring any unforeseen circumstances, the current year''s prospects look favourable.

29. APPRECIATION:

Your Directors place on record their gratitude to Bank of Maharashtra, State Bank of India, Bank of Baroda, ICICI Bank Limited, HDFC Bank Limited, HSBC Limited and Export Import Bank of India for their co-operation and assistance. Your Directors also place on record their appreciation of the services rendered by BMGI and Pragati Leadership. The Board is also grateful to the Members, Customers, Suppliers, Business Associates and Employees of the Company for their continued co-operation and support.

For and on behalf of the Board of Directors For SUDARSHAN CHEMICAL INDUSTRIES LIMITED

K.L.RATHI Pune : 27th May, 2015 CHAIRMAN


Mar 31, 2013

The Directors are pleased to present the 62nd Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2013.

1. FINANCIAL HIGHLIGHTS:

Particulars 2012-2013 2011-2012 (Rupees in (Rupees in millions) millions)

Total Revenue 7967.54 7522.18

Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) 812.66 886.43

Less: Interest 311.79 213.10

Less : Provision for Taxation 39.95 140.34

Less : Depreciation 250.37 171.48

Profit after Tax 210.55 361.51

Add : Surplus in the Statement of Profit & Loss as per last Balance Sheet 482.67 421.73

Net Profit available for appropriation 693.22 783.24

Appropriations

(1) Dividend proposed @ Rs.12.50 per share on the face value 86.53 86.53 of Rs 10/- (125 %) (previous year dividend paid @ 125%)

(2) Tax on Dividend 14.71 14.04

(3) General Reserve 30.00 200.00

Total 131.24 300.57

Balance to be carried forward 561.98 482.67



2. THE YEAR IN RETROSPECT:

BACKGROUND:

Overall the business sentiment during the year under review remained extremely challenging on account of steep rise in input prices coupled with a slowdown in demand and also delay in commissioning capacities installed as a part of the on going capital expenditure.

The Global Business recessionary conditions continued with Europe and America showing no signs of a major recovery, impacting exports as well as realizations. A direct fallout of this on the Company was a major build up in inventory and export receivables. Interest costs also went up significantly on account of major capital expenditure undertaken in the last few years. All these factors had an impact on the Sales and Profitability. Overall it has been a difficult year for the Company.

Given the difficult operating conditions, the results achieved for the year ended 31st March, 2013 are considered to be satisfactory.

(A) SALES:

Total Revenue for the year ended 31st March, 2013 amounted to Rs. 7967 million as against Rs. 7522 million achieved during the previous year. Profit after tax for the year ended 31s1 March, 2013 was Rs. 211 million as against Rs. 361 million earned during the previous year.

Pigment sales rose from Rs. 6647 million in the previous year to Rs. 6966 million in the year under review recording a nominal growth of 5%. Profits for the Pigment Division for the year under review amounted to Rs. 772 million as compared to Rs. 869 million of the previous year.

Pesticides Sales for the year ended 31st March, 2013 amounted to Rs. 885 million as against Rs. 795 million achieved during the previous year recording growth of 11%. Profits for the Agro Division for the year under review amounted to Rs. 45.30 million as compared to Rs. 34.58 million of the previous year.

(B) EXPORTS:

The Company''s subsidiaries in The Netherlands and North America continue to make aggressive efforts to tap new markets and key customers by offering, among others, customized products at competitive prices. The China Representative Office has been reorganized keeping in mind the market requirements and customer preferences in the Asia Pacific Region.

The acquisition of the natural mica based pearlescent business for cosmetics sold under the brand "Prestige" and "Flonac C" from Eckart, GmbH and its Affiliates has been well integrated in the Cosmetic Pigment Products Portfolio and has added more value to the Exports.

The Company is continuing with the process of staffing and building an efficient sales and distribution network, tapping key customers and appointment of key personnel to increase export penetration. All these measures are expected to give a boost to exports.

Revenue from exports for the year ended 31st March, 2013 amounted to Rs. 3015 million as against Rs. 2746 million for the previous year registering a growth of 10 % over the previous year.

3. DIVIDEND:

While the results for the year under Report have seen a down-turn, the Board believes that the results for the coming years will reflect the beneficial effect of the substantial capital expenditure incurred by the Company till now and having regard thereto, recommend maintaining the rate of dividend @ 125% (Rs. 12.50 per share on a face value of Rs. 10) for the year ended 31st March, 2013 subject to approval of the members. The total outgo on account of dividend @ 125% and dividend distribution tax @16.99 % will be Rs. 101.24 million for the year under review.

4. DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 read with the Articles of Association of the Company, Mr. S. N. Inamdar and Mr. S. Padmanabhan, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

Details of aforesaid Directors seeking re-appointment are provided in the Notice of the 62nd Annual General Meeting as required under Clause 49 of the Listing Agreement with Stock Exchanges.

5. DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to the Directors'' Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of accounts for the Financial Year ended 31st March, 2013, 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 a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the Statement of Profit and Loss of the Company for the year under review;

(iii) the Directors 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) the Directors have prepared the Annual Accounts for the year under review on a going concern basis.

6. SUBSIDIARY COMPANIES:

During the year under review, the Company''s overseas subsidiaries, Sudarshan Europe B.V. and Sudarshan North America, Inc. have shown better performance in sales and profitability. With key focus on improving market share the subsidiaries are expected to record better performance.

The other Indian Wholly Owned Subsidiary, Prescient Color Ltd., has recorded good financial performance with good growth in Sales and Profit. The domestic slowdown notwithstanding, indications point to a better performance in the current year.

7. EXEMPTION UNDER SECTION 212 (8) OF THE COMPANIES ACT, 1956 :

Government of India, Ministry of Corporate Affairs, New Delhi vide Press Note No. 3/2011 dated 8.2.2011, has exempted and directed all Companies under Section 212 of the Companies Act, 1956 from attaching the Balance Sheet and the Statement of Profit and Loss of the Subsidiary Company with the Annual Report of the Holding Company, subject to fulfillment of certain terms and conditions. The Company complies with all the terms and conditions.

The Annual Accounts of the aforesaid Subsidiary Companies for the year ended 31st March, 2013 will be made available to any shareholder of the Company on request and will also be available for inspection at the Registered Office of the Company during working hours till the date of the Annual General Meeting. The Annual Accounts of the aforesaid Subsidiary Companies and the related detailed information will also be made available to the investors seeking such information at any point of time.

8. CONSOLIDATED FINANCIAL STATEMENTS :

In accordance with the requirements of Accounting Standard - 21, the Consolidated Financial Statements of the Company and its subsidiaries is annexed and forms part of the Annual Report.

9. CORPORATE GOVERNANCE:

Your Company has always focused on improving standards of good Corporate Governance keeping in mind the regulatory requirements and meeting the aspirations of stakeholders. The Board is pleased to inform that the Company has complied with the mandatory requirements of the Corporate Governance as detailed in Clause 49 of the Listing Agreement.

A separate statement on Management Discussion and Analysis and Corporate Governance is enclosed as a part of the Annual Report along with the certificate of the Statutory Auditors, B. K. Khare & Co., Chartered Accountants, Mumbai confirming compliance of the code of Corporate Governance.

10. COST AUDIT:

The Board of Directors in pursuance of an order under Section 233B of the Companies Act, 1956 issued by the Central Government, has appointed Parkhi Limaye & Co., Cost Accountants, Pune as Cost Auditors to audit the cost accounts maintained by the Company in respect of Pigments and Insecticides.

11. COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988:

Information in accordance with Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the annexure and forms part of this report.

12. INDUSTRIAL RELATIONS:

Industrial relations continue to remain cordial at Roha and Mahad plants, Dist. Raigad and at R & D Laboratory situated at Ambadvet, Amralevadi, Tal. Mulshi, Dist. Pune. The Board records its appreciation of the commitment and support of employees at all levels.

Details of employees drawing remuneration of Rs. 0.5 million per month or Rs. 6.0 million per annum are given in the annexure and they form part of this report.

13. HUMAN RESOURCES :

The Company believes that people are its core assets to build a "Soaring Global" culture towards achieving its vision to be - the 4th largest pigment player by the year 2015.

During the year the Company organized developmental activities such as team building, improving skills and

building talent and improving organizational and human capability through competency mapping of managerial positions. The Company has put in place structures aiding career aligned roles, best practices people policies, world class HR practices and a culture of "Fun@work". It is with a sense of pride that we inform that the Company has won "Fun@work" Award at the World HRD Congress-2013. This is the first Global HR Award in recognition of our Best in Class practices of HR across Industries.

The Company has also launched a performance management system branded as "Appreciative Conversations" which has helped to build a vibrant work culture through alignment of organization goals with individual performance. Campus hiring from management and engineering schools have helped in infusing young blood in the organization and building long-term managerial and leadership talent pipeline.

The Company continues to put great emphasis on the Six Sigma process to identify further opportunities of cost savings and process improvements. The Company is committed to provide the right environment to its employees to work and to inculcate a sense of ownership and pride.

14. FIXED DEPOSITS:

The Company''s amended Fixed Deposit Scheme which opened during mid February, 2013 had a very good response both from the general public as well as shareholders. The Board of Directors thank the investing public and the shareholders for their support to the Fixed Deposit mobilization of the Company.

During the year under review, the Company accepted deposits amounting to Rs. 269.78 million. The total amount of deposits at the end of 31st March, 2013 stood at Rs. 319.04 million.

In respects of deposits accepted, deposits amounting to Rs. 0.145 million from 4 Depositors, which fell due for repayment, but which remained unclaimed before 31st March, 2013, still remain unclaimed as on the date of this report.

15. AUDITORS:

B. K. Khare & Co., Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and to authorise the Board of Directors to fix their remuneration.

16. ENVIRONMENT, HEALTH AND SAFETY (EHS):

Sudarshan''s Environment, Health and Safety Programme primarily focuses on "Health" which essentially means ensuring the well being of our employees. The Company is committed to providing its employees a safe workplace and offering programs that promote and improve their health and well being. Systems are in place to identify and reduce any potential injuries and occupational illnesses that could arise out of the workplace as a result of exposure to physical, chemical, biological or ergonomic factors. Emergency Management System is put in place to quickly respond and minimize the consequences of any negative impact. Towards this end the Company conducts continuous risk assessment and implementation of the best safety practices and periodic medical examination. Systems are also in place to ensure that all our products are safe and environmentally compatible from the research and development phase through the production and distribution phase.

The Company''s relentless efforts in conserving the environment and promoting Health and Safety have been appreciated and recognized by several government and safety regulating bodies.

17. CORPORATE SOCIAL RESPONSIBILITY:

Societal well being is a part of Sudarshan''s business strategy. Initiatives are monitored on monthly basis to ensure no negative impact on society. Members are aware that the Company has started SUDHA, a movement to involve its people and the community around to create better living standards. SUDHA is mainly driven by women power within the Company to reach out to women, children and the under privileged sections of the society. This movement is an off shoot of the Company''s aspirations to create holistic awareness and impact the lives of people in a positive way. The Company''s pet social projects - JAGRUTI aimed at creating awareness of the importance of health, hygiene, nutrition and societal balance for creating a better life, PHULORA aimed at blossoming of lives by encouraging use of organic food items through organic farming, JEEVIKA aimed at empowering under privileged ladies by giving them sustainable livelihood sources and UDAAN aimed at improving lives of children today for a better of tomorrow have all taken off successfully.

18. RESEARCH AND DEVELOPMENT:

The Company has upgraded its R & D Facilities at Amralevadi, Tal. Mulshi, Dist. Pune and Roha, Dist. Raigad to meet customer requirements and for developing cutting edge products. The Company has spent approximately Rs. 128 million during the year under report on Research and Development. The Board is pleased to inform that The Ministry of Science and Technology, New Delhi, on behalf of Govt, of India vide letter dated 2nd April, 2012 has recognized our in house R&D facilities for a further period of 4 years i.e. upto 31st March, 2016 .

19. RECOGNITION:

The Board is pleased to announce that the Company has received the following awards :

1. The Company''s Roha unit has been awarded in 2012 by National Safety Council - Maharashtra Chapter for achieving -

(a) Longest Accident Free period in 2011

(b) Lowest Accident Frequency Rate in 2011

2. Receipt of 5 Star award - Sword of Honour from the British Safety Council for Health & Safety Management Audit.

3. Receipt of Awards from the Dyestuffs Manufacturers Association of India (DMAI) for the year 2012-13 for: i. Excellent performance in Pollution Control.

ii. Excellent performance in Safety and Hazards Control.

iii. Excellent performance in respect of Export of Pigments of a Large Scale Unit.

4. Conferring of the Business Leader of the Year for Environment, Leadership & Excellence in 2013 by CHEMTECH.

5. SAP ACE Award for Customer Excellence, 2012 in the category of "Best Run Award in Supply Chain in the Indian Subcontinent".

6. EDGE Award for Roha plant (Enterprise Driving Growth and Excellence Through IT - SAP-WMS (Warehouse Management System)).

20. OUTLOOK FOR THE FUTURE :

The year 2013-14 is expected to be another challenging year. Indications are that the global economy will grow slightly faster than in the previous year. The Indian economy is also expected to do better with promising signs of revival in demand and growth.

The Company aims to harness its efforts to align more closely with its customers and increase operational and technological excellence, while reining in costs. Research and Development will also play a key role in improving competitiveness through Innovations. The Company''s overseas subsidiaries are also fully geared up and are expected to play a key role in achieving organizational objectives.

Barring any unforeseen circumstances, the current year''s prospects look to be good.

21. ACKNOWLEDGEMENT:

The Board of Directors place on record its sincere appreciation for the dedicated efforts put in by all employees and their commitment and contribution in the operations of the Company. Your Directors place on record their gratitude to Bank of Maharashtra, State Bank of India, Bank of Baroda, ICICI Bank Limited, HDFC Bank Limited and Export - Import Bank of India for their co-operation and assistance. Your Directors are also grateful for the support and co-operation that your Company has received from the customers, suppliers, business associates whom your Company regards as partners in progress. Your Directors thank the members for their confidence in the Company.

For and on behalf of the Board of Directors

For SUDARSHAN CHEMICAL INDUSTRIES LIMITED

K.LRATHI

Pune, 30th May, 2013 EXECUTIVE CHAIRMAN


Mar 31, 2012

The Directors are pleased to present the 61st Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2012.

1. FINANCIAL HIGHLIGHTS : Particulars 2011-2012 2010-2011

(Rupees in (Rupees in million) million)

Sales and Other Income 7522.18 7120.11

Gross Profit 673.33 924.07

Less : Depreciation 171.48 132.14

Profit before Tax and Contingencies Written Back 501.85 791.93

Less : Provision for Taxation 140.34 233.82

Profit after Tax 361.51 558.11

Add : Surplus in Profit & Loss Account as per last Balance Sheet 421.73 364.19

Net Profit available for appropriation 783.24 922.30

Appropriations

(1) Dividend proposed @ 12.50 per share on the face value 86.53 86.53 of Rs. 10/- (125 %) (previous year dividend paid @ 125%)

(2) Tax on Dividend 14.04 14.04

(3) General Reserve 200.00 400.00

Total 300.57 500.57

Balance to be carried forward 482.67 421.73

2. THE YEAR IN RETROSPECT : BACKGROUND :

The domestic business environment was challenging. Slowdown in demand coupled with high inflation led to higher input costs affecting growth and profitability. The global Pigment market continued to be under pressure resulting in a slump in demand which led to a reduction in exports and profits.

Given the challenging economic conditions, the results achieved for the year ended 31st March, 2012 are considered satisfactory.

(A) SALES :

Gross Revenue for the year ended 31st March, 2012 amounted to Rs. 7522 million as against Rs. 7120 million achieved during the previous year. Profit after tax for the year ended 31st March, 2012 was Rs. 361 million as against Rs. 558 million earned during the previous year. Profitability was under pressure on account of higher interests costs owing to the ongoing capital expenditure programme and on account of rising input costs, part of which had to be absorbed by the Company.

Pigment sales rose from Rs. 6237 million in the previous year to Rs. 6647 million in the year under review. Profits from the Pigment Division for the year under review amounted to Rs. 869 million as compared to Rs. 950 million of the previous year.

Agro Sales for the year ended 31st March, 2012 amounted to Rs. 795 million as against Rs. 834 million achieved during the previous year. Profits from the Agro Division for the year under review amounted to Rs. 34.58 million as compared to Rs. 64 million of the previous year.

(B) EXPORTS :

The Company's subsidiaries in The Netherlands and North America continue to make aggressive efforts to tap new markets and key customers. The Company has also recently set up a Representative Office in China to tap new markets in the Asia Pacific region and also provide better service to key customers.

Members are aware that the Company has acquired from Eckart, GmbH and its Affiliates the natural mica based pearlescent business for cosmetics sold under the brand "Prestige" and "Flonac C" giving a boost to the cosmetic products portfolio.

All these measures are expected to give a fillip to the Company's efforts to further consolidate its position in the export market.

Revenue from exports for the year ended 31st March, 2012 amounted to Rs. 2746 million as against Rs. 2667 million for the previous year registering a marginal growth.

3. DIVIDEND :

Considering the overall performance of the Company, the Directors recommend maintaining, subject to approval of the members, a dividend of Rs. 12.50 per share on the face value of Rs. 10/- (125%) for the year ended 31st March, 2012. The total outgo on account of dividend @ 125% and dividend distribution tax @ 16.22% will be Rs. 100.57 million for the year under review.

4. DIRECTORS :

Mr.D.N.Damania and Mr.S.K.Asher, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

5. DIRECTORS' RESPONSIBILITY STATEMENT :

In accordance with the requirement under section 217 (2AA) of the Companies Act, 1956 with respect to the Directors' Responsibility Statement, it is hereby confirmed that:

(i) in the preparation of accounts for the Financial Year ended 31st March, 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) the Directors have selected such accounting policies and have applied them consistently, 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 Financial Year and of the Profit of the Company for the year under review ;

(iii) the Directors 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) the Directors have prepared the Annual Accounts for the year under review on a going concern basis.

6. SUBSIDIARY COMPANIES :

During the year under review, the Company's overseas subsidiaries have shown an improved performance in sales. With continued focus on staffing, building an efficient sales and distribution network and tapping key customers, the subsidiaries are expected to record better performance.

The other Wholly Owned Indian Subsidiary, Prescient Color Ltd., has recorded improved financial performance with good growth in Sales and Profit. The present scenario looks encouraging with indications of Prescient Color Limited recording a better performance in the current year.

7. EXEMPTION UNDER SECTION 212 (8) OF THE COMPANIES ACT, 1956 :

Government of India, Ministry of Corporate Affairs, New Delhi vide General Circular No. 2/2011 dated 8.2.2011, has exempted and directed all Companies under Section 212 of the Companies Act, 1956 with regard to not attaching the Balance sheet and profit and loss account of the Subsidiary Company with the Annual Report of the Holding Company, subject to fulfillment of certain terms and conditions. The Company complies with all the terms and conditions.

The Annual Accounts of the aforesaid Subsidiary Companies for the year ended 31st March, 2012 will be made available to shareholders of the Company on request and will also be available for inspection at the Registered Office of the Company during working hours till the date of the Annual General Meeting. The Annual Accounts of the aforesaid Subsidiary Companies and the related detailed information will also be made available to the investors seeking such information at any point of time.

8. CONSOLIDATED FINANCIAL STATEMENTS :

In accordance with the requirements of Accounting Standard AS-21, the Consolidated Financial Statements of the Company and it's Subsidiaries are annexed and forms part of the Annual Report.

9. CORPORATE GOVERNANCE :

Your Company has always endeavoured to set up appropriate standards of Corporate Governance keeping in mind the requirements of the statute. The Board is pleased to inform you that the Company has complied with the mandatory requirements of Corporate Governance as detailed in Clause 49 of the Listing Agreement.

A separate statement on Management Discussion and Analysis and Corporate Governance is enclosed as a part of the Annual Report along with the certificate of the Statutory Auditors, B.K. Khare & Co., Chartered Accountants, Mumbai confirming compliance of the code of Corporate Governance.

10. COST AUDIT :

The Board of Directors in pursuance of an order under section 233 B of the Companies Act, 1956 issued by the Central Government, has appointed Parkhi Limaye & Co., Cost Accountants, Pune as cost auditors to audit the cost accounts maintained by the Company for Pigments and Insecticides.

11. COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 :

Information in accordance with Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the annexure and forms part of this report.

12. INDUSTRIAL RELATIONS :

Industrial relations continue to remain cordial at Roha and Mahad plants and R & D Laboratory situated at Sutarwadi, Ambadvet, Dist. Pune. The Board records its appreciation of the commitment and support of employees at all levels.

Details of employees drawing remuneration of Rs. 0.5 million per month or Rs. 6.0 million per annum are given in the annexure and they form part of this report.

13. HUMAN RESOURCES :

The key to the success of the Company lies in its people whose skills, expertise and talent help the Company to achieve and sustain its market position. The Company involves its employees at all levels in personal development programmes and provides requisite training at regular intervals. The process of improving organizational and human capability continues through competency mapping, development of leadership skills and building of talent for the future. HR systems were also improved, refined and upgraded to align with organizational objectives.

14. FIXED DEPOSITS :

During the year under review, the Company accepted deposits amounting to Rs. 4.75 million from the public. The total amount of deposits at the end of 31st March, 2012 stood at Rs. 175.25 million.

Out of the deposits an amount of Rs. 0.01 million from 1 Depositor, which fell due for repayment, but which remained unclaimed before 31st March 2012, still remains unclaimed as on date of this report.

15. AUDITORS :

B.K. Khare & Co., Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and to authorise the Board of Directors to fix their remuneration.

16. ENVIRONMENT, HEALTH , SAFETY (EHS) AND POLLUTION :

The Company attaches the highest priority to the safety of employees, independent contractors who work within Company premises and above all, the safety of the neighbouring community. The Company believes that protection of the environment is of utmost importance and has made environmental protection initiatives an integral part of it's corporate culture.

In order to uphold commitments to the Environment, Health & Safety (EHS) of employees and the community around the factory, the Company has upgraded and implemented EHS standards. These standards have been used to support the implementation of EHS Policy and the Responsible Care Management System (RCMS).

The Board is pleased to inform you that Roha & Mahad sites have achieved successful up-gradation and implementation of Safety Management Systems as per the British Safety Council's guidelines, as well as, OHSAS 18001:2007 & ISO 14001:2004 standards.

In order to continuously improve EHS related activities, internal audits are regularly carried out at the plants for effecting improvements and initiating new measures.

During the year, the Company has further consolidated its position through compliance of recommendations arising out of various national & international safety audits conducted in the financial year. Safety audits by BVC, BMG & other statutory bodies were also conducted. This has further strengthened the existing safety management system at the plants.

A three-year EHS Improvement Plan has been formulated by EHS Leadership Team in consultation with senior business leaders. The highlights of this plan are integrated into the business plan and are an essential part of specific business goals. The EHS Improvement Plan and business goals are reviewed annually and upgraded in order to achieve continuous improvement.

17. CORPORATE SOCIAL RESPONSIBILITY :

As a responsible corporate citizen, the Company continues its efforts to meet the Environmental, Health & Safety expectations of its neighbours. Tree plantation, waste management (vermiculture), self employment development, emergency preparedness & response plan & environment control initiatives continue to be an integral part in the overall objective to make the neighbourhood and the community a better place to live.

Another initiative in this direction is the SUDHA movement started by the Company to involve its people and the community around, to create better living conditions. SUDHA is mainly driven by woman power within the Company aimed at reaching out to women, children and the under privileged sections of society. The initiative was launched in August, 2011. Around 150 spouses of employees from Roha participated in the official launch on August 11, 2011. A team of dedicated volunteers have been enrolled in four different projects viz. Jagruti, Udaan, Phulora and Jivika. All these projects have taken off successfully.

18. RESEARCH AND DEVELOPMENT :

The Company recognizes the need to have well equipped R & D Facilities to meet customer requirements and to develop cutting edge products. Members are aware that the Company has spruced up its R & D facilities at Sutarwadi, Dist. Pune and Roha, Dist. Raigad. The Company has spent Rs. 101.48 million during the year under report on research and development. The Ministry of Science and Technology, New Delhi, on behalf of Govt. of India vide letter dated 2nd April, 2012 has recognized our in house R & D facilities at Roha, Dist. Raigad and Ambadvet, Amralevadi, Tal. Mulshi, Dist. Pune for a further period of 4 years i.e. upto 31st March, 2016.

19. RECOGNITION :

The Board is pleased to announce that the Company has received the following awards :

1. Roha unit has been recognized by the Federation of Indian Chambers of Commerce & Industry (FICCI) for its excellent performance in Safety by awarding the Silver prize in the large scale category - 'Safety Excellence Award 2011'.

2. Roha unit has also been recognized by the National Safety Council - Maharashtra Chapter for meritorious performance in industrial safety for the year 2010.

3. The Five Star Safety Award for the Company's Roha and Mahad plants from the British Safety Council, U.K.

4. Receipt of Awards from the Dyestuffs Manufacturers Association of India (DMAI) for the year 2011-12 for :

i. Excellent performance in Pollution Control for Large Scale Unit.

ii. Excellent performance in Safety and Hazards Control (2nd Award for Large Scale Unit).

iii. Excellent performance in respect of Export of Pigments of a Large Scale Unit.

20. OUTLOOK FOR THE FUTURE :

The domestic demand for Pigments continues to be sluggish and the rising input costs on account of inflationary conditions, coupled with the adverse foreign currency situation does not augur well for the Company. The Pigment export market even though still reeling under sluggish demand prevailing in the US and European markets looks promising as the Company's overseas subsidiaries and the China Representative Office are fully geared up to overcome the market complexities by tapping into new markets.

Barring any unforeseen circumstances, the current year's prospects look good.

21. APPRECIATION :

Your Directors place on record their gratitude to Bank of Maharashtra, State Bank of India, Bank of Baroda, ICICI Bank Limited , HDFC Bank Limited and EXIM Bank for their co-operation and assistance . Your Directors are also grateful to the shareholders, customers, suppliers, business associates and employees of the Company for their continued co-operation and support.

For and on behalf of the Board of Directors

For SUDARSHAN CHEMICAL INDUSTRIES LIMITED

K.L.RATHI

Pune, 25th May, 2012 EXECUTIVE CHAIRMAN


Mar 31, 2011

The Directors are pleased to present the 60th Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2011.

1. FINANCIAL HIGHLIGHTS :

Particulars 2010-2011 2009-2010

(Rupees in (Rupees in million) million)

Gross Sales and Other Income 7120.11 5770.50

Gross Profit 924.07 791.97

Less : Depreciation 132.14 134.05

Profit before Tax and contingencies written back 791.93 657.92

Less : Provision for Taxation 233.82 198.83

Profit after Tax 558.11 459.09

Add : Surplus in Profit & Loss Account as per last Balance Sheet 364.19 206.00

Net Profit available for appropriation 922.30 665.09

Appropriations

(1) Dividend proposed @ Rs.12.50 per share on the face value 86.53 86.53 of Rs 10/- ( 125 % ) ( previous year dividend paid @ 125% )

(2) Dividend Distribution Tax 14.04 14.37

(3) General Reserve 400.00 200.00

Total 500.57 300.90

Balance to be carried forward 421.73 364.19

2. THE YEAR IN RETROSPECT :

BACKGROUND :

The domestic Pigment market has been buoyant as a result of rising incomes and increase in per capita spending. This backed by efficient cost management has enabled the Company to post all round growth in sale of Pigments for the year under review . Pigment Products catering to different segments recorded good growth. The macro environment prevailing in the western and European markets were challenging post recessionary conditions which had set in early 2008 . The Company with its High Performance Pigments were in a position to compete with global majors resulting in higher Pigment exports .

Agro Chemicals also fared reasonable well considering the constraints. Lower pest formation, change in product mix, unseasonal and unfavourable monsoon were some of the factors that impeded growth.

Overall the growth has been good and Sudarshan is fully geared up for exploiting and consolidating the opportunities ahead.

(A) SALES :

Gross Revenue for the year ended 31st March, 2011 amounted to Rs. 7120 million as against Rs. 5771 million achieved during the previous year, registering a growth of 23%. Profit after tax recorded excellent growth as compared to the previous year. Profit after tax for the year ended 31st March, 2011 aggregated to Rs. 558 million as against Rs. 459 million earned during the previous year recording a growth of 22%.

During the current year, the Pigment Division has performed well. Pigment sales rose from Rs. 4905 million in the previous year to Rs. 6213 million in the year under review, registering an impressive growth of 27%. Profits for the Pigment Division for the year under review amounted to Rs. 950 million as compared to Rs. 860 million of the previous year recording a growth of 10% .

Agro Sales for the year ended 31st March, 2011 amounted to Rs. 834 million as against Rs. 775 million achieved during the previous year recording a growth of 8%. Profits for the Agro Division for the year under review amounted to Rs. 64 million as compared to Rs. 73 million of the previous year.

(B) EXPORTS :

Members are aware that the Company has set up subsidiaries in Netherlands and North America. The Company also has set up Sales and distribution channels in Latin America and other Asian Countries. This has enabled Sudarshan to further consolidate its position in the international Pigment market.

Revenue from exports for the year ended 31st March, 2011 amounted to Rs. 2667 million as against Rs. 1879 million for the previous year registering an excellent growth of 42% over the previous year. More than 97% of the exports were accounted by Pigments Division.

3. DIVIDEND :

Notwithstanding the good performance, the Directors feel the need to conserve resources for the on going capex programme and hence recommend maintaining, subject to approval of the members, dividend of Rs. 12.50 per share on a face value of Rs. 10/- (125%) for the year ended 31st March, 2011. The total outgo on account of dividend @ 125% and dividend distribution tax @ 16.22% will be Rs. 100.57 million for the year under review.

4. DIRECTORS :

Mr.B.S.Mehta and Mr.P.P.Chhabria, Directors, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

5. DIRECTORS RESPONSIBILITY STATEMENT :

In accordance with the requirement under section 217 (2AA) of the Companies Act, 1956 with respect to the Directors Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of accounts for the Financial Year ended 31st March, 2011, 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 a true and fair view of the state of affairs of the Company at the end of Financial Year and of the Profit and Loss account of the Company for the year under review;

(iii) the Directors 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) the Directors have prepared the Annual Accounts for the year under review on a going concern basis.

6. SUBSIDIARY COMPANIES :

During the year under review, the Companys overseas subsidiaries have shown improved sales performance. The initial teething troubles witnessed is a thing of the past and with appropriate staffing and efficient Sales and distribution channels to back, the subsidiaries are poised to consolidate.

The other Indian Wholly Owned Subsidiary, Prescient Color Ltd., continues to augment and validate its product range especially for textile and specialty plastics segment. The operations of Prescient Color Limited has also improved in the year under review by posting a modest profit of Rs.3.65 million. The current scenario looks stable and encouraging.

7. EXEMPTION UNDER SECTION 212 (8) OF THE COMPANIES ACT, 1956 :

Government of India, Ministry of Corporate Affairs, New Delhi vide General Circular No. 2/2011 dated 8.2.2011, has exempted and directed all Companies under Section 212 of the Companies Act, 1956 with regard to not attaching the Balance Sheet and Profit and Loss account of the Subsidiary company/s with the Annual Report of the Holding Company, subject to fulfillment of certain terms and conditions. The Company complies with all the terms and conditions.

The Annual Accounts of the aforesaid Subsidiary Companies for the year ended 31st March, 2011 will be made available to any shareholder of the Company on request and will also be available for inspection at the Registered Office of the Company during working hours till the date of the Annual General Meeting. The Annual Accounts of the aforesaid subsidiary companies and the related detailed information will also be made available to the investors seeking such information at any point of time.

8. CONSOLIDATED FINANCIAL STATEMENTS :

In accordance with the requirements of Accounting Standard AS-21, the Consolidated Financial Statements of the Company and its subsidiaries is annexed herewith and form part of the Annual Report.

9. CORPORATE GOVERNANCE :

The Board is pleased to inform that the Company has complied with the mandatory requirements of the Corporate Governance as detailed in Clause 49 of the Listing Agreement.

A separate statement on Management Discussion and Analysis and Corporate Governance is enclosed as a part of the Annual Report along with the certificate of the Statutory Auditors, B.K. Khare & Co., Chartered Accountants, Mumbai confirming compliance of the code of Corporate Governance.

10. COST AUDIT :

The Board of Directors in pursuance of an order under section 233 B of the Companies Act, 1956 issued by the Central Government, has appointed Parkhi Limaye & Co., Cost Accountants, Pune as cost auditors to audit the cost accounts maintained by the Company in respect of Insecticides.

11. COMPANIES ( DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS ) RULES, 1988 :

Information in accordance with Section 217 (1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given in the annexure and forms part of this report.

12. SUDARSHAN BUSINESS EXCELLENCE MODEL :

Sudarshan Business Excellence Model (SBEM) recognizes many approaches to achieving sustainable excellence in all aspects of performance. Policies and programs, are designed in partnership with stakeholders, to provide sustainable economic growth in a dynamic business environment.

The Company strives for an innovative culture, which would encourage sustainable growth by developing a system that drives knowledge creation, cutting edge science and research based technology , international competitiveness and increased productivity.

13. UPGRADATION OF ROHA MANUFACTURING FACILITY :

As part of its globalization strategy, the Company has embarked on upgrading its manufacturing facility at Roha with an initial investment of Rs. 100 Crores. The facilities include setting up of :

- A state of the art ultra modern warehouse, spread over 1,20,000 sq ft. This will have ground plus 8 stacking levels with a total of 5,121 pallet positions having a storage capacity of 1,600 MT. The warehouse will be operated by "Very Narrow Aisle, (VNA)" trucks and online stock updation with help of SAP Warehouse Management System.

- High Performance Pigment plant to cater to automotive coatings and high end plastic industry. These plants will have a high level of automation and instrumentation for better process control.

- New plant for Effect Pigments to cater to the automotive coatings and cosmetic industry and for recycling 1000 cubic meters of water per day.

- A Cogeneration plant with a high efficiency boiler incorporating Reverse Osmosis (RO) and Electro Static Precipitator (ESP) is installed in an area of 12,200 sq.ft. to reduce effluent load and Suspended Particulate Matter (SPM) levels, impacting the environment in a positive way.

- An Ultra-modern employee facility.

It is expected that the investment in facilities as indicated apart from benefitting the customers and other stake holders will also benefit the local communities in Roha and Mahad.

14. INDUSTRIAL RELATIONS :

Industrial relations continue to remain cordial at Roha and Mahad plants and at R & D Laboratory situated at Sutarwadi, Ambadvet, Dist. Pune. The Board records its appreciation of the commitment and support of employees at all levels.

Details of employees drawing remuneration of Rs. 0.5 million per month or Rs. 6.0 million per annum are given in the annexure and they form part of this report.

15. FIXED DEPOSITS :

During the year under review, the Company accepted deposits amounting to Rs. 24.77 million from the public. The total amount of deposits at the end of 31st March, 2011 stood at Rs. 198.02 million.

Out of the total deposits a sum amounting to Rs. 0.56 million from 4 Depositors, which fell due for repayment but which remained unclaimed before 31st March, 2011 is still remaining unclaimed as on date of this report.

16. AUDITORS :

B.K. Khare & Co., Statutory Auditors of the Company are due to retire at the ensuing Annual General Meeting. Members are requested to consider reappointing them and to authorise the Board of Directors to fix their remuneration.

17. ENVIRONMENT, HEALTH, SAFETY (EHS) AND POLLUTION :

The Company is committed to achieving greater levels in environmental excellence, employee safety & improvement in the human conditions. The Company focuses on the Global EHS standards as the foundation to achieve Environmental, Health & Safety (EHS) excellence. The motto is to strive for continuous improvement in EHS and Pollution. The Company recognizes and believes that sustainable development keeping in mind preservation of the environment is one of the most important and critical issues facing the Industrial community & initiatives are being undertaken to implement EHS and Pollution control as an integral part of our corporate values. The Company is committed to conserving resources & acting as responsible stewards of the Environment.

The companys Environment, Health & Safety (EHS) policy provide the guiding principles that ensure high standards are achieved at all sites & and offer means of promoting continuous improvement based on careful risk assessment & comprehensive EHS management systems. The EHS policy is formally reviewed at regular intervals by the EHS Committee. The EHS committee meets every month to review & monitor EHS performance which includes key policy as well as operational issues. To ensure effective monitoring of EHS performance, Environment, Health & Safety index is complied monthly. Environmental & resource efficiency information within the Company is monitored & analyzed annually & actions are incorporated accordingly. Effluents from the Plants are continuously monitored to ensure compliance to standards.

Environment management system conforming to ISO 14001:2004, occupational health & safety assessment series conforming to OHSAS 18001:2007, have been successfully established & implemented at all sites. Behaviour Based Safety System has also been implemented to focus on human factor to increase safe behavior of employees at work place.

EHS compliance audits are an integral part of EHS management system. During the year 4 in-depth EHS audits were conducted across our operations in Roha & Mahad. No major non conformances were observed. A feature of the year has been the high level of capital investment in our existing businesses. This has led to many Environmental & Safety improvements that have given us opportunities to design & operate process that are inherently safer & resource efficient.

18. CORPORATE SOCIAL RESPONSIBILITY :

As a responsible corporate citizen, the Company is committed to meeting the Environmental, Health & Safety expectations of our neighbours, where we operate. As a part of community awareness, we have adopted village Barsoli located near our factory at Roha. The Company has undertaken tree plantation, waste management (vermiculture) self employment development, emergency preparedness & response plan & environment control measures. To support community development, activities such as village meetings, social functions, paper bags making, cloth stitching, construction of bus shelters and safety equipment exhibitions have been held.

19. RESEARCH AND DEVELOPMENT :

The Company has a modern R & D facility with over 100 technicians working at three different locations. All the laboratories are ISO 17025: 2001 certified by National Accreditation Board for Testing and Calibration Laboratories, NABL, Government of India. The Company recognizes that R & D Facilities have to be adequately equipped to keep pace with technological advances relevant to be a dominant player in the global pigment industry. The Company has spent approx. Rs. 66 million during the year under report on research and development.

20. RECOGNITION :

The Board is pleased to announce that the Company has received SAP ACE Award 2010, given by SAP India for customer excellence in the category – "Best Run Award in Medium Enterprises – Manufacturing."

The Dyestuffs Manufacturers Association of India (DMAI) has recognized the efforts of the Company for the Financial Year 2009-2010 in the following categories.

a) Excellent performance in the field of Safety & Hazards Control.

b) Excellent performance in the field of Pollution Control.

The DMAI has selected the Company for an award in recognition of excellent performance in respect of export of Pigments of a large scale unit in 2010-2011.

The Companys Roha unit has also been recognized by National Safety Council - Maharashtra Chapter, for achieving lowest accident frequency rate for 2009, & our Mahad unit received certificate of merit for meritorious performance in Industrial Safety during the year 2009.

The Board is also pleased to announce that the Company has received a trophy from Export Credit Guarantee Corporation, Pune for being a major and loyal exporter during the year 2010, amongst various exporters from Maharashtra.

21. VISION 2014 :

The Company has outlined a vision to be amongst the top four pigment players in the world by the year 2014. The key initiatives include becoming a world class color solution provider; Focusing on exceptional and sustainable results, Value creation for stakeholders and providing an exciting, vibrant and performance driven environment. The catchword is "growing together" in a manner which is spiritually fulfilling, socially just and environmentally sustainable.

The Company has drawn a road map to spruce up manufacturing and R & D facilities, developing cutting edge technologies, staffing and implementation of global practices and systems.

22. OUTLOOK FOR THE FUTURE :

The domestic demand for Pigments continues to be robust and holds promise for the Companys Pigment Products. The export market even though still reeling under sluggish demand prevailing in the US and European markets holds promise as the Companys overseas subsidiaries are strategically placed to take advantage of the local conditions.

Agro Chemicals business also is expected to perform reasonably well. However excessive and unseasonal rains can play truant.

Barring any unforeseen circumstances, the current years prospects look to be good.

23. APPRECIATION :

Your Directors place on record their gratitude to Bank of Maharashtra, State Bank of India, Bank of Baroda, ICICI Bank Limited, HDFC Bank Limited and EXIM Bank for their co-operation and assistance. Your Directors are also grateful to the shareholders, customers, suppliers, business associates and employees of the Company for their continued co-operation and support.

For and on behalf of the Board of Directors

For SUDARSHAN CHEMICAL INDUSTRIES LIMITED

K.L.RATHI

Pune, 27th May, 2011 EXECUTIVE CHAIRMAN

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