DIRECTORS' REPORT

To,

The Members,

ISHAN DYES AND CHEMICALS LIMITED

1. Your Directors have pleasure in presenting 22nd Annual Report together with the Audited Financial Statement for the financial year ended 31st March, 2015.

2. STATE OF COMPANY'S AFFAIRS AND FINANCIAL PERFORMANCE:

The Company has achieved total revenue of Rs. 5048.97 Lacs and EBITDA (pre exceptional and extraordinary item) of Rs. 302.56 Lacs as against that of Rs. 7532.80 Lacs and Rs. 964.66 Lacs respectively for the previous year. Year under review has witnessed multiple challenges which has affected the operations of the Company and has resulted in lowering of turnover and profit too. Setting up and alignment of expansion plant, pollution treatment constraints and weak international demand etc. factors has adversely affected the production of the Company for few months which in turn resulted in reduction of turnover besides that fall in finished goods prices due to market sentiments has also further supported reduction in sales realization and thereby turnover. On other hand increased key raw material prices, increase in general overheads on account of inflationary pressure and lower absorption of overheads due to lower plant utilization has impacted adversely to increase overall cost of operations and thereby has resulted lowering of profit during year ended as compared with last year.

For the year ended the Company has recorded net profit of Rs. 2.16 Cr as against Rs. 6.40 Cr for the previous financial year ended.

3. PROSPECTS & DEVELOPMENTS:

Your management is pleased to mention that plant capacity of the Company has been expanded as well as the systematic and focused approach adopted by the management over a period of last couple of years has helped to improve overall efficiencies of the operations to reduce cost and optimize production together with introduction of new ranges of the products. These factors will benefit the Company over coming years and the management is confident of delivering consistently improved results during coming years.

The business segment of the Company is full of challenges with multiple variables affecting the operations and business of the Company. Key such variables are ecology and allied regulatory compliances, commodity and petro-products price volatility, foreign currency fluctuations, inflationary pressure on operational costs, large working capital need, skilled manpower availability etc. The management of the Company is working with a proactive approach to meet challenges and cater opportunities with an aim to enhance stakeholder's value. The coming year looks challenging mainly on demand front, availability of manpower as well as compliance for stringent pollution norms. However, the management has charted out systematic plan to overcome all such challenges. Also the management is of the view that falling commodity and crude oil prices will reduce cost of production, fall in overall prices which in turn will boost the demand for the products of the Company such as to benefit to the Company for delivering better performance. Your Company is working to develop a strong export market and also broaden the customer base.

The completed expansion and up gradation project will benefit the Company by increase in production volume due to debottlenecking its plant together with process improvements which will over a period of time further yield better margins. Barring unforeseen circumstances the management is confident to position the Company as a preferred quality producer and exporter of Phthalocyanine blue pigments.

4. CHANGE IN NATURE OF BUSINESS, IF ANY:

During the Financial Year 2014-15, the company has not changed its nature of business.

5. DIVIDEND:

In view of future growth plans, recently completed expansion project and also with a view to conserve the resources, your Directors' regret their inability to recommend any Dividend for the financial year 2014-15.

6. FINANCE

Recently, your Company has successfully raised working capital facilities of Rs. 5 Cr in total and term finance of Rs. 1.50 Cr from The Kalupur Commercial Co. Op. Bank Ltd. There are outstanding private loans and vehicle loans which will be repaid as per schedule in due course.

7. TRANSFER TO RESERVES:

In view of no dividend for the financial year 2014-15, there is no requirement to transfer any amount to reserves.

8. EXPORTS

The Export is the thrust area for the growth of the Company and during the year ended recorded gross export turnover of 23.55 Cr which is almost 60% growth over previous year exports of Rs. 14.73 Cr

9. SHARE CAPITAL:

During the year under review, the Company has not issued any Shares with or without differential rights or Debentures or any other securities by way of Public offer, Private Placement, Preferential allotment, Rights issue, Bonus Issue, Sweat Equity Shares, and Employee Stock Option Scheme or in any such other manners.

10. SEGMENT WISE PERFORMANCE:

The Company has only one reportable segment of activity i.e. "Chemicals", in accordance with the definition of "Segment" as per the Accounting Standard 17 issued by the Institute of Chartered Accountants of India. The performance of the Company is discussed separately in this Report.

11. SUBSIDIARIES, JOINT VENTURES & ASSOCIATES:

During the year under review, your Company doesn't have any Subsidiaries, Joint Ventures and Associates.

12. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis as set out in this report forms an integral part of this Report and provides overview of the business and operations of the Company.

13. PUBLIC DEPOSITS:

There were no public deposits accepted during the financial year or any amount of principal or interest thereof was outstanding in terms of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, for the financial year ended.

14. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT:

There are no material changes and commitments, which has affected the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

15. CORPORATE GOVERNANCE:

In compliance with the Clause 49 of the Listing Agreement with the Stock Exchange, a separate report on Corporate Governance along with a certificate from the Auditors on its compliance as set out in this report is forming part of this report.

Revised Clause 49 of the Listing Agreement is not mandatory to the Company hence Auditors Certification has not been obtained. However, as good governance the Company has voluntary disclosed the Compliance to the best extent possible and accordingly the Management Discussion and Analysis and the Corporate Governance Report on compliance are attached and forming integral part of Annual Report.

16. INDUSTRIAL RELATIONS

Employee relations during the year were cordial. We appreciate for committed contribution made by employees of the Company at all the levels to sustain during the challenging business scenario.

17. POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENT OF THE COMPANY:

The Board of Directors at their meeting held on 13th August, 2014 formulated the Nomination and Remuneration Policy of your Company on the basis of recommendations made by the Nomination and Remuneration Committee. The salient aspects covered in the Nomination and Remuneration Policy, covering the policy on appointment and remuneration of Directors including criteria for determining qualifications, positive attributes, independence of a director and other matters have been outlined in the Corporate Governance Report which forms part of this Report.

The information required pursuant to Section 197 read with rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request.

In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered office of the company during business hours on working days of the company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the company in advance.

18. PARTICULARS OF EMPLOYEES:

No employee of the Company was in receipt of remuneration more than the limits specified under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, during the financial year ended 31st March 2015.

19. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Appointments:

No Director was appointments during the financial year ended on 31st March, 2015. However, Shri Ronak Y Desai has been re-categorized as an Independent Director from Non Independent Director. Accordingly, the Board has approved re-categorization of Shri Ronak Y. Desai as an Independent Director at their meeting held on 10th August, 2015 and also proposed appointment of Shri Ronak Y. Desai as an Independent Director in the ensuing Annual General Meeting.

Further, in compliance with the provisions of Sections 149, 152, Schedule IV and other applicable provisions, if any, of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014, Shri Roopin A. Patel, Shri Mayankkumar H. Patel and Shri Yatin G. Patel were appointed as Independent Directors of your Company at the 21st AGM held on 23rd September, 2014 to hold office up to 5 (five) consecutive years up to the 26th AGM to be held in the year 2019.

Re-appointments:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company, Shri Marut D. Patel, Non-Executive Director of the Company is liable to retire by rotation at the ensuing AGM and being eligible offered himself for reappointment.

Appropriate resolution for his re-appointment is being placed for your approval at the ensuing AGM. The brief resume of Shri Marut D. Patel and other related information has been detailed in the Corporate Governance Report.

Your Directors recommend his re-appointment as Non-Executive Director of your Company.

None of the independent directors are due for re-appointment.

Resignations along with facts of resignation:

During the financial year 2014-15, no Director has been resigned from the office of Directorship of the Company.

Key Managerial Personnel:

During the year under review, the Company has appointed the following persons as the Key Managerial Personnel of your Company in accordance with the provisions of Sections 2(51), 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Annual Evaluation of Board's Performance:

The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the corporate governance report section in this Annual Report.

Declaration of Independence:

Your Company has received declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence as prescribed under Section 149(6) of Companies Act, 2013 read with the Schedules and Rules issued thereunder as well as Clause 49 of the Listing Agreement.

20. COMMITTEES OF THE BOARD

As on 31st March, 2015, the Board has following committees:

a. Audit committee,

b. Nomination and Remuneration committee,

c. Stakeholder's relationship committee

d. Corporate Social Responsibility Committee

A detailed note on the Board and its committees is provided under the corporate governance report section in this Annual Report.

21. NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE MEETINGS:

The details of the number of Board meetings and Audit Committee Meeting of your Company are set out in the Corporate Governance Report which forms part of this Report. The time gap between the two meetings was in accordance with the requirements. All the information required to be furnished to the Board was made available along with detailed Agenda.

22. DIRECTORS' RESPONSIBILITY STATEMENT:

As required under Section 134(3) (c) of the Companies Act, 2013, the Directors hereby confirm that:

(a) in the preparation of the annual accounts for the financial year ended 31st March, 2015, the applicable accounting standards and Schedule III of the Companies Act, 2013, have been followed and there are no material departures from the same;

(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 your Company as at 31st March, 2015 and of the profit and loss statement of the Company for the financial year ended 31st March, 2015;

(c) proper and sufficient care has been taken 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;

(d) the annual accounts have been prepared on a 'going concern' basis;

(e) proper internal financial controls laid down by the Directors were followed by the Company and that such internal financial controls are adequate and were operating effectively; and

(f) proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively.

23. EXTRACT OF 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 [A]" and form an integral part to this Report.

24. RELATED PARTY TRANSACTIONS

During the financial year 2014-15, all transactions entered into with the Related Parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014 and Clause 49 of the Listing Agreement were in the ordinary course of business and on arm's length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the financial year 2014-15, there were no transactions with related parties which can be qualified as material transactions under the Listing Agreement.

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 set out as "Annexure [B]" to this Report.

25. LOANS AND INVESTMENTS:

Details of Loans, guarantees/securities and investments as covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements.

26. RISK MANAGEMENT:

At present the company has not identified any element of risk which may threaten the existence of the company. All the properties and insurable interest of the Company are adequately insured.

27. VIGIL MECHANISM AND WHISTLE BLOWER POLICY:

The Board of Directors has formulated a Whistle Blower Policy which is in compliance with the provisions of Section 177 (10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The policy provides for a framework and process whereby concerns can be raised by its employees against any kind of discrimination, harassment, victimization or any other unfair practice being adopted against them.

28. CORPORATE SOCIAL RESPONSIBILITY:

Your Company has constituted the Corporate Social Responsibility (CSR) Committee as per the requirement of the Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 as amended time to time. Shri Piyush N. Patel is the Chairman of the Committee and two other members namely Shri Roopin A. Patel and Shri Mayankkumar H. Patel are the members of said Committee. The Committee has framed the Corporate Social Responsibility Policy of the Company. The philosophy for CSR activity of the Company is mainly focused in the various areas of rural infrastructure development, social upliftment, education, promotion of healthcare and sanitation, ensuring environmental sustainability and promoting rural sports.

During the year under review the Company has not spent any amount on CSR activities due to lack of satisfactory opportunity for such spending. However, the Committee in consultation with the Management of the Company is working out plan for CSR spending in a phased manner over a period of time.

29. AUDITORS AND AUDITORS' REPORT:

Statutory Auditors:

At the 21st Annual General Meeting held on 23rd September, 2014, M/s. G. S. Mathur & Co Chartered Accountants were appointed as statutory auditors of the Company to hold office till the conclusion of the 26th Annual General Meeting to be held in the calendar year 2019. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. G. S. Mathur & Co, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

Cost Auditor:

The Board of Directors had appointed Mr. Manish B. Analkat, Cost Accountant, as the Cost Auditors of your Company for the financial year 2014-15 to conduct the audit of the cost records of your Company and subsequently at the 21st Annual General Meeting, shareholders has ratified his remuneration in relation with the cost audit for the financial year ended on 31st March, 2015.

Further, in terms of notification of Ministry of Corporate Affairs dated 31st December, 2014, your Company does not falls under the Companies engaged in the production of goods or services specified in Table given in under Rule 3 and Rule 4 of the Companies (Cost Records and Audit) Amendment Rules, 2014. Therefore, requirement of maintaining of Cost records and Cost Audit are not applicable to the Company from Financial Year 2015-16

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed Mr. Kunal Sharma, Practicing Company Secretary to conduct the Secretarial Audit of your Company. The Secretarial Audit Report is annexed herewith as "Annexure - [C]" to this Report.

30. EXPLANATION ON AUDITORS REPORT:

The notes to the accounts referred to in the Auditors Report are self explanatory and therefore do not call for any separate or further comments or explanations.

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

The information required under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 with respect to the information on conservation of energy, technology absorption and foreign exchange earnings and outgo is given in "Annexure - [D]" appended hereto and forms part of this Report.

32. INTERNAL FINANCIAL CONTROLS:

The Company has adequate internal controls and checks in commensurate with its business activities. The Company has appointed Internal Auditor with adequate scope of work to carry out internal audit of books of accounts of the Company. The

Board has in consultation with the Internal Auditor and Audit Committee has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

33. SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS:

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

34. ACKNOWLEDGEMENT:

Your Directors wish to place on record their appreciation for the continued support received from stakeholders, employees at all levels, vendors, customers, bankers, consultants and all associates of the Company.

By order of the Board of Directors

For ISHAN DYES & CHEMICALS LIMITED

Piyush N. Patel

Chairman & Managing Director

10th August, 2015

Ahmedabad