Rhodia Specialty Chemicals India Ltd Merged Directors Report

Dear Members,

We present our report together with the audited accounts of the Company for the financial year ended on 31^st March 2016:

1. OVERVIEW OF FINANCIAL RESULTS

Highlights of Companys performance during the financial year 2015-16 are as under:

		(Rs. In Lacs)
	2015-16	2014-15
Net Sales & Processing charges	23,214	27,218
Other Operating Income	100	104
Other Income	1,419	709
Total Income	24,733	28,031
Profit / Loss before Depreciation, Exceptional item and Tax	(1,132)	(1,111)
Depreciation	1,084	939
(Loss) before exceptional items and Tax	(2,216)	(2,050)
(Loss) for the year	(2,216)	(2,050)

Total Income

Income from sales, processing charges and other income during the year amounted to Rs. 23,214 Lacs. The same was Rs. 27,218 Lacs for the previous period.

Performance

The Company made a loss of Rs. 2,216 Lacs as against a loss of Rs. 2,050 Lacs during the previous period. The current years loss was mainly contributed by increase in finance cost and legal and professional expenses.

2. DIVIDEND

In view of losses, the Board of Directors does not recommend any dividend for the year ended 31^st March 2016.

3. SHARE CAPITAL

The paid up Equity Share Capital as on 31^st March, 2016 was Rs. 3.37 Crore. During the year under review, the Company has not issued new shares. Please see point no. 20 of Annual Report for more information.

4. BOARD MEETINGS

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other Board business.

The Board met four times in the financial year 2015-16 i.e. on 10^th June 2015, 26^th August 2015, 11^th December 2015 and 13^th January 2016.

5. BOARD COMMITTEES

There are currently five Committees of the Board, as follows:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Relationship Committee (upto 11^th December 2015) ?

• Corporate Social Responsibility Committee ?

Committee for Issue of Duplicate Share Certificates

6. DIRECTORS RESPONSIBILITY STATEMENT

In pursuance of section 134 (5) of the Companies Act, 2013, the Directors hereby confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

7. FRAUD REPORTING BY AUDITORS

As required under Section 134(3) (ca) of the Companies Act, 2013, there are no instances of Fraud being reported by the Auditors.

8. DECLARATION FROM INDEPENDENT DIRECTORS ON ANNUAL BASIS

The Company has received necessary declaration from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 that the Independent Directors of the Company meet with the criteria of their Independence laid down in Section 149(6).

9. DIRECTORS

In accordance with the provision of the Companies Act, 2013 Mr. Ian Brown, Director of the Company, retire by rotation and being eligible, offer himself, for re-appointment. The profile of the Director seeking re-appointment form part of the Annexure to the Notice.

During the Mr. Pieree Franck Valentin ceased to be Director of the Company w.e.f. 29^th February 2016. Subsequent to Mr. Valentin cessation, Mr. Pu alternate director to him ceased to be director of the Company from the above date.

The Board of Directors appointed Mr. Ajit Shah and Ms. Valdirene Licht as Additional Directors with effect from 4^th November 2015 and 15^th March 2016 respectively.

Mr. Shah and Ms. Licht hold office of Director upto the date of the forthcoming Annual general meeting of the Company. The Company has received a notice in writing from a member along with the deposit of requisite amount under Section 160 of the Act proposing the candidature each of Mr. Shah and Ms. Licht for the office of Director of the Company.

Details of the proposal for appointment of Mr. Shah and Ms. Licht are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the Notice of the 50^th Annual General Meeting.

None of the Directors is disqualified from being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013.

The provisions of Section 203 of the Companies Act 2013 and rules made thereunder relating to appointment of Key Managerial Personnel are not applicable to the Company.

10. COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

In accordance with Section 178 of the Companies Act, 2013 the Nomination and Remuneration Committee has formulated Remuneration Policy ("the policy").

The objective of the policy is to ensure that Executive Directors and other employees are sufficiently compensated for their performance. The Policy seeks to provide criteria for determining qualifications, positive attributes and independence of a director.

Remuneration Policy

Objective

The objective of the policy is to ensure that Executive Directors and other employees are sufficiently compensated for their performance. The Policy seeks to provide criteria for determining qualifications, positive attributes and independence of a director.

a) Directors

Nomination and Remuneration Committee shall recommend the remuneration, including the commission based on the net profits of the Company for the Non-Executive Directors and Managing Director and other Executive Directors. This will be then approved by the Board and shareholders. Prior approval of shareholders will be obtained wherever applicable in case of remuneration to non-executive directors.

The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and variable pay to Managing Director. Salary is paid within the range approved by the Shareholders. Annual increments effective 1^st January each year, as recommended by the Nomination and Remuneration Committee, and is approved by the Board. Within the prescribed ceiling, the perquisites package is approved by the Remuneration Committee.

The remuneration paid to Executive Directors is determined keeping in view the industry benchmark and the relative performance of the Company to the industry performance. Perquisites and retirement benefits are paid according to the Company policy as applicable to all employees.

Independent Non-Executive Directors are appointed for their professional expertise in their individual capacity as independent professionals / Business Executives. Independent Non-Executive Directors receive sitting fees for attending the meeting of the Board and Board Committees and commission as approved by the Board and shareholders.

The remuneration by way of commission paid to the Independent Non-Executive directors is determined periodically & reviewed based on the industry benchmarks.

b) Other Employees

The remuneration of employees largely consists of basic salary, perquisites, allowances and performance incentives. Perquisites and retirement benefits are paid according to the Company policy, subject to prescribed statutory ceiling.

The components of the total remuneration vary for different grades and are governed by the industry pattern, qualification & experience / merits, performance of each employee. The Company while deciding the remuneration package takes into consideration current employment scenario and remuneration package of the industry.

The annual variable pay of managers is linked to the performance of the Company in general and their individual performance for the relevant year measured against Companys objectives fixed in the beginning of the year.

Criteria for Board Membership

Director

The Company shall take into account following points:

• Director must have relevant experience in Finance/ Law/ Management/ Sales/ Marketing/ Administration/ Research/ Corporate Governance/ Technical Operations or the other disciplines related to companys business.

• Director should possess the highest personal and professional ethics, integrity and values.

• Director must be willing to devote sufficient time and energy in carrying out their duties and responsibilities.

Independent Director

Independent Director is a director who has no direct or indirect material relationship with the Company or any of its officers, other than as a director or shareholder of the Company.

Independent Director shall meet all criteria specified in Section 149(6) of the Companies Act, 2013 and rules made thereunder.

11. RISK MANAGEMENT POLICY AND INTERNAL CONTROL ADEQUACY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The Companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

12. VIGIL MECHANISM

The Company has established a vigil mechanism named as Whistle Blower Policy within the Company. The policy of such mechanism has been circulated to all employees within the Company, which provides a framework to the employees for guided & proper utilization of the mechanism. The Whistle Blower Policy has been published on the Companys website http://www.solvayindia.in/en/solvay-in/rhodia-specialty-chemicals-india-ltd. There have been no instances of any personnel seeking access to the Audit Committee.

13. AUDITORS

Statutory Auditors

The Statutory Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, hold office for a term of Five (5) years subject to ratification by members at every Annual General Meeting. Accordingly, a Resolution seeking Members ratification for the appointment of M/s. Deloitte Haskins & Sells is included at Item No. 3 of the Notice convening the Annual General Meeting. The Auditors have issued necessary certificate as required under Section 141 of the Companies Act, 2013 during the first year of their appointment.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the Company has appointed M/s. Kishore Bhatia & Associates, Cost Accountant as the Cost Auditor of the Company for the financial year 2015-16.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Alwyn DSouza & Co., Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure A. The Report does not contain any qualification, reservation or adverse remark.

Internal Audit

M/s. Nikhil Narkar & Associates, Chartered Accountants has been engaged as Internal Auditor of the Company.

14. COMMENTS ON AUDITORS REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by Deloitte Haskins & Sells, Statutory Auditors, in their report and by Mr. Alwyn Dsouza, Company Secretary in Practice, in his secretarial audit report.

15. EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure B.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has not provided any loans, Guarantees or made investments under Section 186 of the Companies Act, 2013

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

During the financial year 2015-16, Company has entered into transactions with related parties, which were in the ordinary course of business and on arms length basis and in accordance with the provisions of the Companies Act, 2013, Rules issued thereunder. During the financial year 2015-16, there were no transactions with related parties which qualify as material transactions under the Companies Act, 2013.

The details of the related party transactions as required under Accounting Standard - 18 are set out in Note 38 to the financial statements forming part of this Annual Report.

The Form AOC- 2 pursuant to Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure C.

18. CORPORATE SOCIAL RESPONSIBILITY

In view of Losses for three financial years, the provision under Section 135 of Companies Act, 2013 relating to spending of Corporate Social Responsibility (CSR) is not applicable.

19. FIXED DEPOSITS

The Company has not accepted any fixed deposits during the year.

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

The Company subsequent to approval of Shareholders of on 26^th February 2016 and confirmation by Honble High Court on 20^th April 2016 reduced existing issued, scubscribed and paid up Equity Share Capital by Rs. 5,56,810/- consisting of 55,681 Equity Shares of Rs. 10/- each. Accordingly as on the date of Directors Report, the paid Equity Share Capital of the Company is Rs. 3,31,99,190 Crore consisting of 33,19,919 Equity Shares of Rs. 10/- each. Subsequent to reduction entire paid Equity Share capital of the Company is now held by Promoters namely Solvay SA, Solvay Participations France SAS and Solvay Solvay Solutions UK Limited.

21. EMPLOYEES

As at 31^st March 2016, the Company had 206 employees.

We place on record our high appreciation of the contribution of employees at all levels for their co-operation and for reduction of cost of operations, wherever possible.

In terms of the provisions of Section 134 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended, the names and other particulars of the employees are set out in the Annexure D to the Directors Report.

22. SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The status of complaints received from female employees with regard to sexual harassment during the year is as under:

Number of Complaints of sexual harassment received during the period April 2015 to March 2016	Number of complaints disposed off during the period April 2015 to March 2016	Nature of action taken by the employer
NIL	Not applicable	Not applicable

23. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

As required by Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, relevant data pertaining to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo, is annexed herewith as Annexure E to this Report.

24. ENVIRONMENT, HEALTH AND SAFETY

Your Company recognizes importance of Health and Safety of its employees and its neighborhood. Regular Safety Audits are being conducted. Your Company has adopted a Health, Safety and Environment (HSE) Policy, which applies to all employees and activities.

25. APPRECIATION

Your Directors place on record their sincere appreciation of the wholehearted support extended by the Companys bankers, business associates, employees union, shareholders, auditors and various statutory authorities, both, central and state Government.

	For and On Behalf of the Board of Directors
	Manoj Khullar
Mumbai, 26th September 2016	Chairman & Managing Director

Annexure C Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

1. Details of contracts or arrangements or transactions not at arms length basis

a Name(s) of the related party and nature of relationship
b Nature of contracts/arrangements/transactions
c Duration of the contracts / arrangements/transactions
d Salient terms of the contracts or arrangements or transactions including the value, if any	NA
e Justification for entering into such contracts or arrangements or transactions
f date(s) of approval by the Board
g Amount paid as advances, if any:
h Date on which the special resolution was passed in general meeting as required under first proviso to section 188

2. Details of material contracts or arrangement or transactions at arms length basis

a Name(s) of the related party and nature of relationship	Solvay Specialty Chemicals Asia Pacific Pte. Ltd.
b Nature of contracts/arrangements/transactions	Purchase of goods
c Duration of the contracts / arrangements/transactions	April 2015 to March 2016
d Salient terms of the contracts or arrangements or transactions	As per invoices raised from time to time
e including the value, if any date(s) of approval by the Board	Not applicable as transactions are in ordinary course of business
f Amount paid as advances, if any:	Not applicable

Note:

There were no transactions with related parties which qualify as material transactions under the provisions of Companies Act 2013. The details of the related party transactions for the financial year 2015-16 are set out in Note 38 to the financial statements forming part of this Annual Report.

	For and On Behalf of the Board of Directors
	Manoj Khullar
Mumbai, 26th September 2016	Chairman & Managing Director

Annexure D

Statement Pursuant to Section 134 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended, for the period ended 31^st March 2016.

Name	Designation	Qualification	Age (Yrs)	Experience (No of Years)	Date of Commence ment of Employment	Remuneration Rs.	Previous Employment	% of Shareholding in the Company	Relative working in the Company
(a) Employed for the full year
Manoj Khullar	Managing Director	B.E. (Chemicals), MBA	45	22	23.04.2012	1,61,65,407/- p.a	Jubilant Life Sciences	NIL	NIL
(b) Employed for part of the year
NA	NA	NA	NA	NA	NA	NA	NA

Notes:

1. Appointment is contractual.

2. Terms and conditions are as per contract with the Company.

3. Mr. Manoj Khullar is not related to any Director of the Company.

4. Mr. Manoj Khullar is not holding any shares in the Company.

Annexure E

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as prescribed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014

CONSERVATION OF ENERGY:

The Company has always been conscious of the need to conserve energy. The Company is continuously identifying areas where energy can be saved and appropriate measures have been taken for optimizing energy conservation.

a) The steps taken or impact on conservation of energy:

1. Energy saving on process air blower in Chemithon plant by controlling excess venting air with installation of Variable frequency drive.(~Saving 07 KW/hr)

2. Replacement of High wattage lamps by LED lamps.(~Saving 5 KW/Hr)

3. Energy saving by replacing low efficiency motors by energy efficient motors in Spray dryer plant (~ Saving 43 KW/hr)

b) The steps taken by the Company for utilising alternate sources of energy:

1. Used of steam from steam generated by waste heat boiler of neighbor industry to minimize use of our oil fired boiler.

c) The capital investment on energy conservation equipment:

1. Energy Efficient Motors = 426KINR

2. Variable Frequency drive = 200 KINR

TECHNOLOGY ABSORPTION:

1. Efforts, in brief, made towards technology absorption, adaptation and innovation: Technology taken from mother plant to produce following product locally

a. Betains

b. Miranols

c. Phosphate Esters

d. Sulfate ester

e. Sulfo Succinates

f. Rhodapon BOS-TEX

A new waste water treatment plant installed based on biological treatment followed by tertiary treatment to treat effluent from our plants. Technology was adapted from China

2. Benefits derived as a result of the above efforts: e.g. product improvement, cost reduction, product development, import substitution, etc.:

Successfully substituted above imported products by locally manufactured product.

Reduction in chemical cost & disposal cost of solid sludge generated in old waste water treatment unit, which was only based chemical treatment.

3. In case of imported technology (imported during the last 5 years reckoned from the beginning of the financial year), following information may be furnished :

a) Technology imported	To manufacture Betains, Miranols, Phosphate esters, Sulfate Ester, sulfo succinate. Rhodapon BOS TEX Biological treatment unit in WWTU
b) Year of Import	2015
c) Has the technology been fully absorbed?	Yes
d) If not fully absorbed, areas where this has not taken place, reason there of, and future plans of action.

4. Expenditure on R & D :( In Rs.)

a) Capital	Nil
b) Recurring
c) Total
d) Total R & D Expenditure as percentage of turnover

FOREIGN EXCHANGE EARNINGS AND OUTGO:

Please refer to Notes 34 & 35 to the Financial Statements.