DIRECTORS' REPORT

The Members,

Ashok Alco-Chem Limited

Your Directors present their 23rd Annual Report together with the Audited Financial Statements of your Company for the year ended March 31, 2015.

RESULTS OF OPERATIONS ANDTHE STATE OF COMPANY'S AFFAIRS

The rise in the profits is due to huge demand for bauxite in the overseas market for the trading division and improved efficiency of the manufacturing vertical. Moreover in addition the chemical division also performed substantially better vis-a-vis compared to previous year 2013-14. The fall in the crude prices didn't deter the profitability of you r Company.

Your Company has been very successful and consistent during the financial year 2014-15. Your Company was able to capitalize on the market conditions through its operational excellence, higher efficiency and well executed strategies around product placement in niche market overseas as well in the domestic sector. The capital expenditure was Rs 151 lacs mainly on account of ongoing expansion projects in the chemical division. Your Company has set up its own R&D centre and has successfully tested new products to be launched in the near future. Your Company has been consistent in the manufacturing segment wherein the capacity utilization also increased by 36% mainly on account of huge expenditure on automization and recovery processes. Your Company in order to improve the efficiency has envisaged in the installation of a new Boiler with a higher capacity to cater to existing as well as new products. The Capex cost is Rs 250 lacs which has been arranged through internal accruals.

No material changes and commitments have occurred after the close of the financial year till the date of this report which affects the financial position of your Company.

DIVIDEND

Considering the performance of your Company during the year under review, your Directors are pleased to recommend a dividend of Re. 1/- (i.e. 10%) per equity share of Rs. 10/- each for the financial year ended March 31, 2015. If the proposed dividend is approved by the Members at the ensuing Annual General Meeting, the total dividend payout will be Rs. 46,00,343/-. The tax on dividend payout borne by the Company will be Rs. 9,36,519/-.

TRANSFER TO GENERAL RESERVES

Your Company proposes to transfer Rs. 5,00,00,000/- to the general reserves of the Company.

SHARE CAPITAL

Pursuant to special resolution passed by the shareholders through Postal Ballot on February 17, 2014 [in compliance with Companies (passing of the Resolution by Postal Ballot) Rules, 2011], the Board of Directors of the Company at its Meeting held on March 26, 2014, had, inter alia, allotted 4,50,000 convertible Warrants of face value of Rs 30/- to Aura Alkalies and Chemicals Private Limited, a Promoter Group Company, on a preferential basis. The said issue and allotment was made pursuant to Section 81 (1A) of the Companies Act, 1956 and SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, as amended from time to time.

During the year under review, Aura Alkalies and Chemicals Private Limited expressed its willingness to convert warrants into equity shares and submitted Warrant Exercise Application Form along with the balance 75% consideration. Accordingly, the Board of Directors of the Company at its Meeting held on March 25, 2015 approved the conversion of 4,50,000 Warrants into Equity Shares and allotted 4,50,000 Equity Shares of Rs 10/-each at a premium of Rs 20/- each.

The balance consideration received from Aura Alkalies and Chemicals Private Limited had been utilized for the purpose for which they have been raised i.e. for augment of working capital or enhancement of Net Worth of the Company or enhancement of Company's ability to raise institutional finance in future.

Accordingly, during the year under review, the Issued, Subscribed and Paid-Up Equity Share Capital of the Company has increased from Rs. 415,03,430/- divided into 41,50,343 Equity Shares of Rs. 10/- each to Rs. 460,03,430/- divided into 46,00,343 Equity Shares of Rs. 10/- each.

However, the Authorized Share Capital of the Company remain unchanged at Rs.7,00,00,000/- divided into 50,00,000 Equity Shares of Rs 10/- each and 20,00,000 11 % Preference Shares of Rs 10/- each.

Holding Company

Consequent to conversion of warrants into Equity Shares, Aura Alkalies and Chemicals Private Limited becomes Holding Company of your Company and its shareholding stands increased to 54.75% at the end of the year.

Subsidiary / Associate Company

Your Company does not have any subsidiary and/or associate company and hence, the details relating thereto is not applicable.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 149 of the Act, which came into effect from April 1, 2014, Mr. Manoj Ganatra and Dr. Umesh Kulkarni were appointed as an Independent Directors at the Annual General Meeting of the Company held on September 26, 2014. The terms and conditions of appointment of I ndependent Directors are as per Schedule IV of the Act. The said Independent Directors are not liable to retire by rotation. The Company has received declarations from the said Independent Directors of the Company confirming that they meet the criteria of Independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Mr. Sridhar Chari retires by rotation and being eligible has offered himself for re-appointment.

During the year under review, in compliance with the provisions of second proviso to section 149(1) of the Companies Act, 2013 and the Listing Agreement, the Board of Directors had at its Meeting held on March 30, 2015 appointed Ms. Neeta Shah as an Additional Director of the Company w.e.f. April 1, 2015 who ceases to hold office at the ensuing annual general meeting. Your Directors propose appointment of Ms. Neeta Shah as Director of the Company.

During the year under review, pursuant to the provisions of Section 203 of the Act, which came into effect from April 1, 2014, the Company designated Mr. Sridhar Chari, Whole Time Director and Mr. V. Shashidharan, AGM -Finance & Accounts, as Key Managerial Personnel (KMP) and appointed Ms. Seema Gangawat as Company Secretary, Key Managerial Personnel, w.e.f. April 1, 2014.

Subsequent to the year under review, Mr. V. Shashidharan was appointed as Chief Financial Officer of the Company w.e.f. July 30, 2015.

PERFORMANCE EVALUATION

In terms of the provisions of the Companies Act, 2013 read with Rules made there under and Clause 49 of the Listing Agreement, the Board of Directors have evaluated the performance of each independent director for the financial year 2014-15.

The evaluation framework for assessing the performance of Directors, inter alia, comprises of the following key areas:

i. Expertise;

ii. Objectivity and Independence

iii. Guidance and support in context of the Company's operations;

iv. Understanding of the Company's business;

v. Understanding and commitment to duties and responsibilities;

vi. Willingness to devote the time needed for effective contribution to Company;

vii. Participation in discussions in effective and constructive manner at the Meetings;

viii. Responsiveness in approach;

ix. Ability to encourage and motivate the Management for continued performance and success.

In a separate meeting of the Independent Directors, performance of non-independent directors, performance of the board as a whole was evaluated.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as per "Annexure A".

The Company is not required to provide statement containing particulars of employees as required under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as no employee covered under the said Rule 5(2), during the year under review.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirements of section 134(5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, it is hereby stated that:

a. in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. 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 as at March 31, 2015 and the profit of the Company for the year ended on that date;

c. the directors have 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 have prepared the annual accounts on a going concern basis;

e. 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; and

f. 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.

MANAGEMENT DISCUSSION AND ANALYSIS

Operationally, the business continued its strong performance during the financial year ended March 31, 2015 reflecting a growth of 59% and production reaching record levels at 36% and your Company envisages to utilize its production capacity at consistent levels in continuation. Exports grew at alarming record by 43.90% mainly tapping niche markets on the global front.

Industry Scenario

The Chemical industry overall seems to be fairly favorable environment for players focusing on broadening customer base in the near future. The chemical industry comprises of large players as well as small players from unorganized sector resulting stiff competition compelling your Company to focus its margins thereon. Overall the fall in the crude prices and economy downtrend of few Asian countries has resulted stagnant exports due to unviability. At the global front and domestic segment the Management continued its endeavor in increasing its customer base. The strategic efforts of the Management have been successful in consistent and repeated order intake for your Company.

Outlook

Inconsistent pricing of Raw material and the fluctuating exchange rates have become the main challenges in the near future. In order to overcome these challenges, your Company envisages to achieve the same by strategic sourcing of raw materials and enhanced sales distribution network.

Your Company expects to continue its strategy of seeking niche markets, broad customer base overseas and domestically yielding better margins with enhanced volume growth. The global metal industry, to which your Company's Trading Division caters to, has been experiencing a reasonable growth rates over the last few quarters in terms of capacity addition wherein the existing demand there from is expected to be fairly resilient. The new R&D setup is endeavoring in addition of new products and has been successful in testing the outcome. Your Company is also in the process of modifying its idle capacity to cater to the new product expansion.

Segment-wise Performance

The increased demand for minerals in the overseas market pegged the growth of the Trading Division at 40%. The profits before interest and tax improved, as your Company had focused only on customers yielding better margins.

Your Company's overall profit after tax for FY 2014-15 was Rs. 1451 Lacs against Rs. 482 Lacs in FY 2013-14.

Your Company's Chemicals division has shown sustained increased capacity utilization throughout the year because strategic decisions were taken by the Management to improve the efficiency of the manufacturing facilities despite existence of challenging market conditions.

Opportunities, Threats, Risks and Concerns:

The optimization of capacity of the Chemical Division expects to cater significantly to broaden its Customer base overseas by increased volumes and ascertained margins. The major threat and risk to reckon with is the highly volatile pricing of raw materials, import as well as domestic. Also the commodity orientation for your Company, part of the highly volatile Chemical Industry faces certain threats and risks.

Financial Performance

Financial performance achieved by your Company during the year under review, are shown above under the head

Internal Control Systems and Adequacy

Your Company has in place adequate internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Material Developments in Human Resource / Industrial Relation front, including number of people employed

a. The number of employees for the year under review was 80.

b. There were no material developments as regards human resources / industrial relations front during the period under review.

Credit Rating

Your Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agency ICRA. Your Company has been assigned first time long-term rating of BBB- and short-term rating of A3. The outlook assigned on the long-term rating is stable.

AUDITORS AND AUDITORS REPORT

Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and the Rules framed thereunder, M/s R.A. Kuvadia & Co., Chartered Accountants, were appointed as Statutory Auditors of the Company from the conclusion of the twenty second Annual General Meeting (AGM) of the Company held on September 26, 2014 till the conclusion of the twenty fifth AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. Your Directors propose ratification of appointment of M/s R. A. Kuvadia & Co., Chartered Accountants, as statutory auditor for the year ended March 31, 2016.

The Auditors Report does not contain any qualification, reservation or adverse remarks.

Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 M/s N. Ritesh & Co., Cost Accountants, having Registration No. 100675, were appointed as the Cost Auditors of the Company to conduct the audit of Cost accounting records maintained by the Company relating to "Chemicals" for the Financial Year ended March 31, 2015.

The Board of Directors at its Meeting held on July 30, 2015 has, on the recommendation of the Audit Committee, appointed M/s V. J. Talati & Co., Cost Accountants, having Firm Registration No. R00213, as the Cost Auditors of the Company to conduct the audit of Cost accounting records maintained by the Company relating to "Chemicals" for the Financial Year 2015-16 on a remuneration of Rs. 50,000/- plus applicable taxes and out-of-pocket expenses payable at actual. The said remuneration is subject to the ratification by the Members of the Company in terms of Section 148 of the Companies Act 2013 read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time. The payment of remuneration to M/s V. J. Talati & Co., approved by the Board is accordingly placed for ratification.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules made there under, the Company had appointed M/s. Makarand M. Joshi & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2014-15. The Secretarial Audit Report for financial year 2014-15, has been appended as "Annexure B" to this Report.

The Secretarial Auditors contained following qualification, reservation or adverse remarks:

(i) Pursuant to the provisions of Section 149 of the Act, Company has not appointed woman director till March 31, 2015, whereas the Board of Directors of the Company had passed the resolution at its Meeting held on March 30, 2015 for appointment of Woman director effective from April 1, 2015.

ii) Pursuant to the provisions of Clause 31 of the Listing Agreement, six copies of the Statutory and Directors' Annual Reports along with 'Form A', Balance Sheets and Profit and Loss Accounts for the financial year ended March 31, 2014 was submitted with a delay of one day to the Stock Exchange.

Board's Explanation / Comments on above remarks

With regards to point no (i) mentioned above, the directors state that the Board of Directors of the Company at its Meeting held on March 30, 2015 had considered appointment of Ms. Neeta Shah as an Additional Director (Category- Non-Executive Director) on the Board of the Company. However, due to her pre occupancy, she was appointed as director w.e.f. April 1, 2015. The Company had promptly intimated the Stock Exchange regarding appointment of Ms. Neeta Shah after the conclusion of aforementioned board meeting.

With regards to point no (ii) mentioned above, the directors state that due to non-availability of the signatory on Form A, which is required to submit along with six copies of the Statutory Report, Directors Report and Balance Sheet and Profit and Loss Accounts for the financial year ended March 31, 2014, there was a delay of one day in submission of Annual Reports for the FY 2013-14 with Stock Exchange. The Company has paid the penalty for delayed submission.

The Board of the Directors at their Meeting held on July 30, 2015 has appointed M/s. Jay Mehta & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the financial year 2015­16.

BOARD COMMITTEES

Detailed composition of mandatory Board Committees viz Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee, number of meetings held during the year under review and other related details are set out in the Corporate Governance Report which forms a part of this Report.

VIGIL MECHANISM

The Company has formulated and published a Whistle Blower Policy to provide Vigil Mechanism for employees including directors of the Company to report genuine concerns about unethical behavior. The provisions of this policy are in line with the provisions of Section 177(9) of the Companies Act, 2013 and revised Clause 49 of the Listing Agreement with Stock Exchange.

LOANS AND INVESTMENT

During the year under review, the Company has not given any loans, made any investment and provided any guarantee and securities except investment made in liquid funds which were redeemed before March 31, 2015.

TRANSACTIONS WITH RELATED PARTY

The Company has not entered into any transactions with related party; hence information on transactions with related parties to be provided in Form AOC-2, pursuant to Section 134(3) (h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is not applicable to the Company.

CORPORATE SOCIAL RESPONSIBILITY

Your Company embraces responsibility for impact of its operations and actions on all stakeholders including society and community at large. As per the requirements of the Companies Act, 2013, the Company had duly constituted Corporate Social Responsibility Committee. The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiative undertaken by the Company on CSR activities during the year under review are set out in "Annexure C" of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For further details of CSR Committee, please refer Corporate Governance Report.

RISK MANAGEMENT POLICY

Risks can be internal and external and are inherent in all administrative and business activities. Formal and systematic risks have evolved and they are now regarded as good management practice also called Risk Management. During the year, your Directors have been entrusted with the responsibility to assist the Board in overseeing and approving the Company's enterprise wide risk management framework, overseeing all the risks that the organization faces and also identify and assess adequacy of risk management infrastructure. The Company's management systems, organizational structures, processes, standards, code of conduct and behaviors together govern and conducts the business of the Company and manages associated risks. The Company has introduced several improvements and processes to drive a common integrated view of risks, optimal risk mitigation, responses and efficient management of internal control and assurance activities. This integration is introduced several improvements and processes to drive a common integrated view of risks, optimal risk mitigation, responses and efficient management of internal control and assurance activities. This integration is enabled by all three being fully aligned across Group wise Risk Management, Internal Control and Internal Audit methodologies and processes.

EXTRACT OF THE ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure D" to this Report.

CORPORATE GOVERNANCE

As per the Listing Agreement with the Bombay Stock Exchange Limited, your Company has complied with the requirements of Corporate Governance and Report thereon forms part of this Report as "Annexure- E".

PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS

There are no significant/material orders passed by the Regulators or Courts or Tribunals impacting the going concern status of your Company and its operations in future.

DISCLOSURES UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

The Company has set up an Internal Complaints Committee to redress complaints received regarding sexual harassment in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rule made there under.

During the year under review, the Company did not receive any complaint.

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

I n terms of Rule 8 (3) of the Companies (Accounts) Rules, 2014, the required details are as below: Conservation of energy

(i) The steps taken or impact on conservation of energy

Energy Conservation dictates how efficiently a Company can conduct its operations. Your Company has recognized the importance of energy conservation in decreasing the deleterious effects of global warming and climate change. Your Company has undertaken various energy efficient practices and has strengthened your company's commitment towards becoming an environment friendly organization. Your Company conducts periodic energy audits to improve energy performance and benchmark.

(ii) The steps taken by the Company for utilising alternate sources of energy

Major energy conservation initiatives taken for steam saving which has helped us to reduce the Coal consumption that has reduced emission of CO2 in atmosphere, which helps in global warming. Harmonic Audit is done at the plant to identify the losses in the plant and rectify the same, the power factor is maintained as per the rules and we receive subsidy for the same.

(iii) The capital investment on energy conservation equipment

Your Company has revamped the process for energy conservations by stoppage of wastage of live steam and installation of Proper System for removal of water from the steam. All the damage insulation has been replaced to control the heat loss.

Your Company has invested almost Rs. 70 Lacs for the conservation of energy during the financial year.

Technology absorption

The Company's integrated new research and technology unit helps create superior value by harnessing internal research and development skills and competencies and by innovating in emerging technology domains related to various business.

The Company's focuses on new product, process modification to support existing business and create breakthrough technologies for new business, support to capital projects, and profit and reliability improvements in manufacturing plant.

Foreign exchange earnings and outgo

Total Foreign Exchange earned and used.

ACKNOWLEDGMENT

The Board acknowledges with thanks the contributions and support received from the Government, Local Authorities, Financial Institutions and Banks, Creditors and Suppliers, Valued Customers, Employees and the Shareholders of your Company.

For and on behalf of the Board

Sridhar Chari  

Whole Time Director

Manoj Ganatra

Director

Place: Mumbai

Date: July 30, 2015