48 th ANNUAL REPORT

Transcription

1 RHODIA SPECIALTY CHEMICALS INDIA LIMITED 48 th ANNUAL REPORT

2 THE LAST TEN YEARS (` In Lakhs) (15 months) Share Capital Reserves & Surplus Shareholders Fund Debt Debt Equity Ratio Net Fixed Assets Investment Net Current Assets Net Turnover Profit/(Loss) Before Tax (676.66) (566.61) (368.58) ( ) (365.66) Profit/(Loss) After Tax (676.66) (566.61) (368.58) ( ) (445.35) Dividend Tax on Dividend Retained Earnings Earnings Per Share (`) (20.05) (16.79) (10.92) (60.94) (12.79) Dividend Per Share (`) Book Value Per Share (`)

3 Annual Report DIRECTORS D D Chopra Suresh Talwar Michel Ybert Ian Brown Sanjeev Mukerjee Ranjit Pandit Yogesh Thar Pierre-Franck Valentin Prakash Raman Manoj Khullar Chairman Emeritus Chairman (Alt. Guo Lin) (Alt. Ms. Quitterie Dupontreue De Pelleport) (Alt. Chen Pu) Managing AUDIT COMMITTEE Yogesh Thar Chairman Sanjeev Mukerjee Suresh Talwar w.e.f. 21 st January 2014 Manoj Khullar LEGAL MANAGER & COMPANY SECRETARY Niranjan Ketkar AUDITORS Delloitte Haskins & Sells SOLICITORS Crawford Bayley & Co. BANKERS State Bank of India Corporation Bank BNP Paribas REGISTERED OFFICE Phoenix House, A Wing, 4 th Floor 462, Senapati Bapat Marg Lower Parel (West) Mumbai Tel. No.: REGISTRARS & SHARE TRANSFER AGENTS Link Intime India Private Limited C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West) Mumbai Tel. No.: WORKS ROHA Dist. Raigad, Maharashtra CIN L24110MH1965PLC CONTENTS Notice 3 s Report 9 Corporate Governance Disclosures 13 Independent Auditors Report 23 Balance Sheet 26 Statement of Profit and Loss 27 Cash Flow Statement 28 Notes to financial statements 30 Annual Report

4 Rhodia Specialty Chemicals India Limited ( ` Lakhs) NET INCOME ( ` Lakhs) 8000 NET WORTH ( ` Lakhs) 4500 PROFIT BEFORE TAX ( ` Lakhs) 4500 PROFIT AFTER TAX () ` 120 EARNINGS PER SHARE (%) 60 RATE OF DIVIDEND BSE SENSEX MONTHLY AVERAGE OF BSE SENSEX AND SHARE PRICES BSE SENSEX SHARE PRICE Apr. 13 May 13 Jun. 13 Jul. 13 Aug. 13 Sep. 13 Oct. 13 Nov. 13 Dec. 13 Jan14 Feb 14 Mar SHARE PRICES (in ` ) 2 Annual Report

5 NOTICE NOTICE is hereby given that the Forty Eighth Annual General Meeting of the Members of Rhodia Specialty Chemicals India Limited will be held on Wednesday, 10 th September 2014 at noon at Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai to transact the following business: ORDINARY BUSINESS: 1. To consider and adopt the audited financial statement of the Company for the financial year ended 31 st March 2014, the Reports of the Board of s and Auditors thereon. 2. To appoint a in place of Mr. Ian Brown (DIN ), who retires by rotation and, being eligible, offers himself for re-appointment. 3. To appoint a in place of Mr. Michel Ybert (DIN ), who retires by rotation and, being eligible, offers himself for re-appointment. SPECIAL BUSINESS: 4. To consider and if thought fit, to pass with or without modification, as an Ordinary Resolution, the following: RESOLVED THAT subject to the provisions of Sections 139 and 142 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Deloitte Haskins & Sells, Chartered Accountants (Firm registration number W) be and are hereby appointed as Statutory Auditors to hold office for a term of Five (5) years subject to ratification by members at every Annual General Meeting from the conclusion of this Annual General Meeting until the conclusion of the Fifty Third Annual General Meeting, at such remuneration as may be determined by Board of s of the Company from time to time. 5. To consider and if thought fit, to pass with or without modification(s), as an Ordinary Resolution the following: RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Companies Act, 2013, Mr. Suresh Talwar (DIN ), be and is hereby appointed as an Independent of the Company to hold office for five consecutive years for a term up to 31 st March To consider and if thought fit, to pass with or without modification(s), the following Resolution as an Ordinary Resolution: RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Companies Act, 2013, Mr. Yogesh Thar (DIN ), be and is hereby appointed as an Independent of the Company to hold office for five consecutive years for a term up to 31 st March To consider and if thought fit, to pass with or without modification(s), the following Resolution as an Ordinary Resolution: RESOLVED THAT pursuant to the provisions of Sections 149, 150, 152 and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Schedule IV to the Companies Act, 2013, Mr. Sanjeev Mukerjee (DIN ), be and is hereby appointed as an Independent of the Company to hold office for five consecutive years for a term up to 31 st March To consider and if thought fit, to pass with or without modification(s), the following Resolution as an Ordinary Resolution: RESOLVED THAT pursuant to the provisions of Section 148 and all other applicable provisions of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), the Cost Auditors appointed by the Board of s of the Company, to conduct the audit of the cost records of the Company for the financial year ending Annual Report

6 Rhodia Specialty Chemicals India Limited 4 31 st March 2015, be paid the remuneration as set out in the Statement annexed to the Notice convening this Meeting; RESOLVED FURTHER THAT the Board of s of the Company be and is hereby authorised to do all acts and take all such steps as may be necessary, proper or expedient to give effect to this resolution. 9. To consider and if thought fit, to pass with or without modification(s), the following Resolution as a Special Resolution: RESOLVED THAT pursuant to the provisions of Section 14 and all other applicable provisions of the Companies Act, 2013 read with Companies (Incorporation) Rules, 2014 (including any statutory modification(s) or re-enactment thereof, for the time being in force), the draft regulations contained in the Articles of Association be and are hereby approved and adopted in substitution, and to the entire exclusion, of the regulations contained in the existing Articles of Association of the Company. RESOLVED FURTHER THAT the Board be authorised to do all acts and take all such steps as may be necessary, proper or expedient to give effect to this resolution. By order of the Board For RHODIA SPECIALTY CHEMICALS INDIA LIMITED Mumbai, 24 th July 2014 Niranjan Ketkar Legal Manager & Company Secretary NOTES: 1. A member entitled to attend and vote is entitled to appoint a proxy to attend and vote on poll only instead of himself and a proxy need not be a member. The instrument appointing the proxy, in order to be effective, must be deposited at the Company s Registered Office, duly completed and signed, not less than forty-eight hours before the meeting. Proxies submitted on behalf of limited companies, societies, etc., must be supported by appropriate resolutions/authority, as applicable. A person can act as proxy on behalf of Members not exceeding fifty (50) and holding in the aggregate not more than 10% of the total share capital of the Company. In case a proxy is proposed to be appointed by a Member holding more than 10% of the total share capital of the Company carrying voting rights, then such proxy shall not act as a proxy for any other person or shareholder. 2. The register of members and the share transfer books of the Company will remain closed from 29 th August 2014 to 5 th September 2014 (both days inclusive). 3. Shareholders are requested to notify change of address, if any, and details of their bank account to the Registrar/Depository Participants. 4. For the convenience of shareholders, attendance slip is annexed to the proxy form. Shareholders are requested to affix their signatures at the space provided therefore and hand over the attendance slip at the entrance of the place of meeting. Proxy/ Representative of a shareholder should mark on the attendance slip as Proxy or Representative as the case may be. Shareholders are also requested not to bring with them any person who is not a shareholder. 5. As a measure of economy, copies of the annual report will not be distributed at the annual general meeting. Shareholders are, therefore, requested to bring their copies of the annual report at the meeting. 6. To facilitate easy and cheap transactions in its shares, the Company has dematerialised its shares. Majority of the shareholders have already availed of this facility and de-materialised their shareholdings. Shareholders who have not yet de-materialised their shareholdings are requested to avail of this facility and de-materialise their shareholdings at the earliest. In case any assistance is needed, shareholders are requested to get in touch with the Secretarial Department of the Company. 7. The Notice of the Annual General Meeting (AGM) along with the Annual Report is being sent by electronic mode to those Members whose addresses are registered with the Company/ Depositories, unless any Member has requested for a physical copy of the same. For Members who have not registered their addresses, physical copies are being sent by the permitted mode. 8. To support the Green Initiative, the Members who have not registered their addresses are requested to register the same with Registrar/ Depositories. Annual Report

7 ANNEXURE TO NOTICE I. Explanatory Statement under Section 102 of the Companies Act, 2013 Item No. 4 The Company s Auditors M/s. Deloitte Haskins & Sells (Firm registration number W) have already completed one year as Statutory Auditors of the Company. In accordance with provisions of Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, they can continue as Auditors for a further period of five years after commencement of Companies Act, 2013 i.e. upto 31 st March It is proposed to appoint them from conclusion of this Annual General Meeting till the conclusion of Fifty Third Annual General Meeting. The s recommend the Resolution for approval of the shareholders. None of the s is interested or concerned in the resolution. Item No. 5 Mr. Suresh Talwar is a Non-Executive Independent of the Company. He joined the Board of s of the Company as an Independent on 23 rd August Mr. Talwar is member of the Audit Committee, and Nomination and Remuneration Committee, of the Board of s of the Company. Mr. Talwar is a Bachelor of Commerce and Bachelor of Law. He is a solicitor and an Advocate by profession. Mr. Talwar was a partner in Crawford Bayley & Co., till 31 st March 2006 and was a special advisor till 31 st December He was a partner in Talwar Thakore & Associates, Mumbai till 31 st March Mr. Talwar specializes in various facets of Corporate Law, Corporate Tax, Foreign Exchange Laws, Competition Act, International Issue of Securities by Indian Companies, commercial documents and contracts, etc. Mr. Talwar is holding directorship in the following Indian Companies: Sr. No. Name of Company 1 FCI OEN Connectors Limited 2 PZ Cussons India Private Limited 3 Transwarranty Finance Limited 4 Johnson and Johnson Limited 5 Uhde India Private Limited 6 Armstrong World Industries (India) Private Limited Position Held Alternate Alternate Alternate Alternate Alternate Committee Membership Audit Committee Chairman Nil Compensation Committee Nil 7 Merck Limited Audit Committee Chairman 8 Sunshield Chemicals Limited 9 Samson Maritime Limited 10 Sidham Finance & Investments Private Limited Chairman Nil Nil Audit Committee Remuneration Committee Remuneration Committee Chairman Nil 11 Biocon Limited Audit Committee 12 Blue Star Infotech Limited Audit Committee Remuneration Committee Compensation Committee 13 Chowgule and Nil Company Private Limited 14 Chowgule Ports Nil & Infrastructure Private Limited 15 Decagon Nil Investments Private Limited 16 Elantas Beck India Audit Committee Limited 17 Epitome Global Services Private Limited Nil 18 ESAB India Limited 19 India Value Fund Trustee Company Private Limited 20 IVF Trustee Company Private Limited Nomination-cum Compensation Committee Nil Nil Annual Report

8 Rhodia Specialty Chemicals India Limited Sr. No. 6 Name of Company 21 L&T Metro Rail (Hyderabad) Limited 22 Larsen and Toubro Limited 23 Morgan Stanley India Capital Private Limited 24 Philip Finance and Investment Services India Private Limited 25 Rediffusion Dentsu Young and Rubicam Private Limited 26 Sandvik Asia Private Limited 27 Shrenuj and Company Limited 28 Snowcem Paints Private Limited 29 Sonata Software Limited 30 Swiss Re-shared Services (India) Private Limited 31 Vidal Health TPA Private Limited 32 Warner Bros Pictures (India) Private Limited 33 Phillips Capital India Private Limited Position Held Committee Membership Nomination-cum Compensation Committee Nomination-cum Compensation Committee Audit Committee Audit Committee Nil Audit Committee - Chairman Nil Nil Remuneration Committee Nil Mr. Talwar does not hold by himself or for any other person on a beneficial basis, any shares in the Company. As per the Companies Act, 2013, the Independent need not retire by rotation. Mr. Talwar is a director whose period of office is liable to determination by retirement of directors by rotation under the erstwhile applicable provisions of the Companies Act, The aforesaid provision no longer applies as per the provisions of the Companies Act, Hence, the appointment envisaged hereunder is like an extension of his term. In view of the above, it is not a case of appointment of new Independent and deposit of ` 1,00,000/- is not required to be paid. Nil Nil Nil In the opinion of the Board, Mr. Suresh Talwar fulfills the conditions specified in the Companies Act, 2013 and rules made thereunder for his appointment as an Independent of the Company and is independent of the management. Copy of the draft letter for appointment of Mr. Suresh Talwar as an Independent would be available for inspection without any fee by the members at the Registered Office of the Company during normal business hours on any working day, excluding Saturday. The Company will be vastly benefited from the professional capabilities and varied experience of Mr. Suresh Talwar. The Board, therefore, recommends his appointment as a of the Company. Except Mr. Suresh Talwar, being an appointee, none of the s of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No. 5. Item No. 6 Mr. Yogesh Thar is a Non-Executive Independent of the Company. He joined the Board of s of the Company on 9 th June 2009 as an Independent. Mr. Thar is the Chairman of the Audit Committee, and member of Nomination and Remuneration Committee and Stakeholders Relationship Committee of the Board of s of the Company. Mr. Thar is a Chartered Accountant and Tax Consultant. He is advising various Corporates on tax matters. He is holding directorship in the following Indian Companies : Sr. No. Name of Company Position Held 1. Lil Investment Limited Nil 2. Kewal Kiran Clothing Nil Limited 3. Sunshield Chemicals Limited Committee Membership Audit Committee Chairman Remuneration Committee Chairman Mr. Thar does not hold by himself or for any other person on a beneficial basis, any shares in the Company. Mr. Thar is a director whose period of office is liable to determination by retirement of directors by rotation under the erstwhile applicable provisions of Annual Report

9 the Companies Act, The aforesaid provision no longer applies as per the provisions of the Companies Act, Hence, the appointment envisaged hereunder is like an extension of his term. In view of the above, it is not a case of appointment of new Independent and deposit of ` 1,00,000/- is not required to be paid. In the opinion of the Board, Mr. Thar fulfills the conditions specified in the Companies Act, 2013 and rules made thereunder for his appointment as an Independent of the Company and is independent of the management. Copy of the draft letter for appointment of Mr. Thar as an Independent would be available for inspection without any fee by the members at the Registered Office of the Company during normal business hours on any working day, excluding Saturday. The Company will be vastly benefited from the professional capabilities and varied experience of Mr. Thar. The Board therefore recommends his appointment as a of the Company. Except Mr. Thar, being an appointee, none of the s of the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No. 6. Item No. 7 Mr. Sanjeev Mukerjee is a Non-Executive Independent of the Company. He joined the Board of s of the Company on 15 th July Mr. Mukerjee is Chairman of Stakeholders Relationship Committee and member of the Audit Committee, and Nomination and Remuneration Committee of the Board of s of the Company. Mr. Mukerjee has done B.A. Engineering from Cambridge University UK and is a Chartered Engineer UK Member-Institution of Production Engineers. Mr. Mukerjee is holding directorship in the following Indian Companies: Sr. Name of Company No. 1 Heritage and Environment Protection Association 2 Magic Eye Private Limited Position Held Committee Membership Nil Nil 3 Partap Pandit Limited Nil Sr. Name of Company No. 4 Sunshield Chemicals Limited 5 The Industrial Leather Company Private Limited Position Held Committee Membership Audit Committee Investors Grievances Committee Chairman Remuneration Committee Nil Mr. Mukerjee holds 15 equity shares in the Company. Mr. Mukerjee is a director whose period of office is liable to determination by retirement of directors by rotation under the erstwhile applicable provisions of the Companies Act, The aforesaid provision no longer applies as per the provisions of the Companies Act, Hence, the appointment envisaged hereunder is like an extension of his term. In view of the above, it is not a case of appointment of new Independent and deposit of ` 1,00,000/- is not required to be paid. In the opinion of the Board, Mr. Mukerjee fulfills the conditions specified in the Companies Act, 2013 and rules made thereunder for his appointment as an Independent of the Company and is independent of the management. Copy of the draft letter for appointment of Mr. Mukerjee as an Independent would be available for inspection without any fee by the members at the Registered Office of the Company during normal business hours on any working day, excluding Saturday. The Company will be vastly benefited from the professional capabilities and varied experience of Mr. Mukerjee. The Board, therefore, recommends his appointment as a of the Company. Except Mr. Mukerjee, being an appointee, none of the s the Company and their relatives is concerned or interested, financial or otherwise, in the resolution set out at Item No. 7. Item No. 8 The Board, on the recommendation of the Audit Committee, has approved the appointment of M/s Kishore Bhatia & Associates, Cost Auditor to conduct the audit of the cost records of the Company for the financial year ending 31 st March 2015 on a remuneration of ` 1,25,000/-. Annual Report

10 Rhodia Specialty Chemicals India Limited In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditor has to be ratified by the shareholders of the Company. Accordingly, consent of the members is sought for passing an Ordinary Resolution for ratification of the remuneration payable to the Cost Auditor for the financial year ending 31 st March None of the s of the Company/their relatives is, in any way, concerned or interested, financially or otherwise, in the resolution set out at Item No. 8 of the Notice. The new AOA to be substituted in place of the existing AOA are based on Table F (Articles of Association meant for a Company limited by shares) of the Act. The proposed new draft AOA is being uploaded on the Company s website for perusal by the shareholders. None of the s is, in any way, concerned or interested, in the Special Resolution set out at Item No. 9 of the Notice. The Board commends the Special Resolution set out at Item No. 9 of the Notice for approval by the shareholders. Item No. 9 The Articles of Association ( AOA ) of the Company as presently in force was amended from time to time since incorporation of the Company. With the coming into force of the Companies Act, 2013 ( the Act ) several regulations of the existing AOA of the Company require alteration or deletions in several articles. Given this position, it is considered expedient to wholly replace the existing AOA by a new set of Articles. By Order of the Board of s For RHODIA SPECIALTY CHEMICALS INDIA LIMITED Mumbai 24 th July 2014 Niranjan Ketkar Legal Manager & Company Secretary Profile of the s being re-appointed Particulars Mr. Ian Brown Mr. Michel Ybert Date of Birth Date of Appointment Qualifications ACMA HEC Graduate Experience in specific functional area He is working as Finance Vice President of Solvay Asia Pacific. He is in charge of Asia Pacific Operations of Solvay. ships held in other public companies (excluding foreign companies and Section 25 company) Memberships/ Chairmanships of committees of other public companies and Shareholders/ Investors Grievance Committee Number of shares held in the Company NIL He has over 22 years of industrial experience. He has been working with Solvay Group of Companies in various capacities since Sunshield Chemicals Limited Hindustan Gum and Chemicals Limited (Alternate ) NIL He has 38 years of industrial experience. He is working with Solvay Group since He has wide experience in areas of operations, marketing, finance and legal. Sunshield Chemicals Limited Hindustan Gum and Chemicals Limited NIL NIL 8 Annual Report

11 DIRECTORS REPORT We present our report together with the audited accounts of the Company for the financial year ended on 31 st March (A) Financial Highlights* (` in Lakhs) * Net Sales & Processing charges 26,572 28,097 Other Operating Income Other Income Total Income 27,111 28,988 Profit before Depreciation, Exceptional item and Tax 917 1,095 Depreciation 923 1,031 Profit/ (Loss) before exceptional items and Tax (6) 64 Add: Profit on Transfer of rights to the land NIL 3,622 Less: Customs duty (671) NIL Net Profit/(Loss) after Tax (677) 3,686 Add : Balance brought forward from previous year 3,068 (263) Profit available for appropriation 2,391 3,423 Less: Appropriations Proposed ` 2/- per share ( ) NIL 68 Tax on Proposed Dividend ( ) NIL 11 Transfer to General Reserve ( ) NIL 276 Balance carried to balance sheet 2,391 3,068 * Figures stated above are not comparable as financial statements for the year and period were prepared for 12 months and 15 months respectively. Total Income Income from sales, processing charges and other income during the year amounted to ` 26,572 lakhs. The same was ` 28,097 lakhs for the previous period. Performance The Company made a loss before exceptional item of ` 6 lakhs as against a profit of ` 64 lakhs during the previous period. Previous period s profit was mainly attributable to exceptional item of transfer of leasehold rights of Ambernath land. The situation during the current year was further worsened due to differential customs duty of ` 671 lakhs paid for the current year and previous periods. Dividend Considering the loss incurred by the Company, the s are not in a position to declare any dividend for the financial year Reserves and Surplus In view of loss incurred by the Company no amount is transferred to General Reserve. B) Management Discussion and Analysis i) Industry structure and developments The Company operates in the business segment of consumer chemicals. The Company manufactures specialized formulations to serve its customers who in turn further manufacture consumer goods for Home and Personal Care, Decorative Paints, Agrochemicals and various industrial formulations. With the projected growth rate of India GDP in 2013 by various global and Indian economic agencies, the business climate in India has become more challenging for The slowdown in infrastructure, has added to the overall slowdown in various sectors of economy. The Company is putting in its best efforts to overcome the slowdown, by means of increasing efficiencies across supply chain, and hence target higher capacity utilization at Roha. The Company is also planning to import and trade specialty formulations in the Indian market to differentiate its product offerings from the commodity market. ii) Operating and Financial Performance of the Company During the current year of April 2013 to March 2014, the sales amounted to ` 26,572 lakhs. The Company is making efforts to increase the number of products whereby the Company will be in a position to increase the margin on sales. Annual Report

12 Rhodia Specialty Chemicals India Limited 10 Analysis of Operating Performance* (` in Lakhs) Net sales/income from operations 26,572 28, Total operating income 26,729 28, Total operating expense 26,939 28, Operating (Loss)/profit (210) (22) 5. Operating (Loss)/Profit (%) (0.79) (0.08) 6. Operating (Loss)/Profit to capital employed (%) (4.01) (0.38) 7. Inventory Turnover (Times) Current ratio Debt : Equity ratio Production (MT) 66,034 79, Overall capacity utilization (%) Value of sales per employee Cash Flow Analysis* (` in Lakhs) Sources of Funds: Cash Flow from operations Non-operation Cash Flows Increase in Bank Borrowings Fixed deposits matured Sale of Fixed Assets Utilisation of Funds: Capital Expenditure (including plant under construction) Interest Paid Dividend (Including dividend tax) Net change in working capital Net Increase/(decrease) in cash (158.84) (461.29) and cash equivalents Decrease in Bank Borrowings Income tax payment Non-operating cash flow includes interest income received on deposits with government utility companies. * Figures stated above are not comparable as financial statements for the year and period were prepared for 12 months and 15 months respectively. iii) Internal control systems and their adequacy During the year, no significant internal control issue was identified. Internal checks and controls appropriate to the growing size of the Company s business are being introduced. An independent firm of Chartered Accountant is entrusted with the Internal Audit of the Company. iv) Risks and concerns Slowdown in world economies may result in reduction in demand. v) Future Outlook The Company continues its efforts to increase the utilization of its installed capacities, which will be crucial to achieve an improvement in the operational results. Priority is given to capitalize on the quality of its products and services as well as to optimise its industrial operations and to assure a competitive supply of raw materials. The Company is also taking efforts to increase the product line whereby the Company will be in a position to increase the margin on sales. C) s (The statement in this report including Management s Discussions & Analysis Report reflects Company s projections, estimates, expectations or predictions. These may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied, since the Company s operations are influenced by many external and internal factors beyond the control of the Company.) During the year, Mr. Ian Brown and Mr. Michel Ybert will retire by rotation at the ensuing Annual General Meeting. Resolutions are being proposed for their reappointment. Mr. Suresh Talwar, Mr. Sanjeev Mukerjee and Mr. Yogesh Thar are being proposed to be appointed as Independent s of the Company as per the provisions of the Companies Act, Annual Report

13 D) s Responsibility Statement To the best of our knowledge and belief and according to the information and explanations obtained by us, we make the following statement in terms of Section 217(2AA) of the Companies Act, 1956: 1. that in the preparation of the annual accounts for the year ended 31 st March 2014; the applicable accounting standards have been followed along with proper explanations relating to material departures, if any; 2. that the s had selected such accounting policies and applied them consistently and made judgements 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 31 st March 2014 and of the profit of the Company for the year on that date; 3. that the s had 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; 4. that the s had prepared the annual accounts on a going concern basis. E) Corporate Governance As required under Clause 49 of the Listing Agreement, disclosures on the points relating to Corporate Governance are given in Annexure I to this report. F) Energy Conservation, Technology Absorption and Foreign Exchange Earnings/Outgo The information required under the Companies (Disclosure of Particulars in the Report of the Board of s) Rules, 1988, is given in the annexure to this report, marked Annexure II. G) Health, Safety & Environment The Company recognises importance of health and safety of its employees and its neighbourhood. Regular safety audits are being conducted by internal teams as well as external experts. Safety and environmental impact standards are periodically reviewed and upgraded based on these studies. The Company is committed in ensuring a clean environment and makes efforts to ensure that not only its premises but also the neighbourhood is not affected adversely by its operations. H) Employees As at 31 st March 2014, the Company had 296 employees. We place on record our high appreciation of the contribution of employees at all levels for their cooperation and for reduction of cost of operations, wherever possible. In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended, the names and other particulars of the employees are set out in the annexure to the s Report. Having regard to the provisions of Section 219(1) (b)(iv) of the said Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company. 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 December 2013 to March 2014 Number of complaints disposed off during the period December 2013 to March 2014 Nature of action taken by the employer NIL Not applicable Not applicable I) Auditors Deloitte Haskins & Sells, Chartered Accountants, Auditors of the Company, will retire at the conclusion of the 48 th Annual General Meeting. They are eligible for reappointment and a resolution is being proposed for their re-appointment for approval of the members. Annual Report

14 Rhodia Specialty Chemicals India Limited J) Cost Audit Cost Audit Report for the financial year was filed with the Ministry of Corporate Affairs on 15 th August 2013 in XBRL format. M/s. Kishore Bhatia & Associates, Cost Accountants, has been appointed as the Cost Auditor of the Company under Section 233B of the Companies Act, 1956 for the financial year Cost Audit Report for the year shall be submitted with the Ministry of Corporate Affairs within six months from the closure of the financial year i.e. on or before 30 th September K) Delisting of Equity Shares The equity shares of the Company will be delisted from BSE records w. e. f. Wednesday, 28 th May Exit Option will be kept open by the Acquirer-Solvay SA to the remaining public shareholders for a period of one year from the date of delisting at the rate of ` 1,200 /- (Rupees One Thousand Two Hundred only) per equity share, being the exit price determined. L) Acknowledgement We acknowledge the support of our shareholders, suppliers, customers and banks enjoyed by the Company and look forward to their continuing patronage. For and on behalf of the Board of s Mumbai S. N. Talwar 23 rd May 2014 Chairman 12 Annual Report

15 Annexure I CORPORATE GOVERNANCE DISCLOSURES In terms of the Clause No. 49 of the Listing Agreement ( the said Clause ) on Corporate Governance, the Company has been complying with the requirements of the said Clause to the extent and in the manner stated hereunder; (A) (B) Company s Philosophy on Corporate Governance: The Company s philosophy on Corporate Governance envisages the attainment of transparency, accountability and equity in all facets of its operations, and in all its interactions with its stakeholders. Board of s: The Board of s comprises of nine s (excluding Alternate s). Out of nine directors, four directors are non-executive directors namely Mr. Suresh Talwar, Chairman, Mr. Sanjeev Mukerjee, Mr. Ranjit Pandit and Mr. Yogesh Thar. Mr. Ranjit Pandit who was originally appointed as a Promoter was categorised as an Independent w.e.f. 31 st October On implementation of the Companies Act, 2013 Mr. Pandit was re-categorised as non-executive director w.e.f. 23 rd May The Board met five times during on the following dates and there was less than four months gap between any two meetings: 27 th May 2013, 9 th August 2013, 31 st October 2013, 9 th November 2013 and 31 st January The Composition of the Board of s and related information as at 31 st March 2014: Name of the Category No. of Board meetings attended Attendance at last AGM No. of Membership in Boards of other Companies* No. of Membership in Board Committees** Mr. Suresh Talwar Mr. Michel Ybert Mr. Ian Brown Mr. Ranjit Pandit Independent Non-Executive Non-Executive Non-Executive Non-Executive Mr. Sanjeev Mukerjee Independent Non-Executive Mr. Yogesh Thar Independent Non-Executive 5 Yes 14 9 (includes 3 Chairmanships) Nil No 2 Nil 1 No 2 Nil 3 Yes 1 Nil 4 Yes Yes 3 2 Mr. Manoj Khullar Managing 4 No 1 2 Annual Report

16 Rhodia Specialty Chemicals India Limited Name of the Category No. of Board meetings attended Attendance at last AGM No. of Membership in Boards of other Companies* No. of Membership in Board Committees** Mr. Pierre-Franck Valentin Mr. Prakash Raman Mr. Chen Pu Ms. Quitterie Dupontreue de Pelleport Mr. Guo Lin Non-Executive Non-Executive Alternate to Pierre- Franck Valentin Alternate to Mr. Ian Brown Alternate of Mr. Michel Ybert Nil No 2 Nil 2 No Nil Nil Nil No 1 Nil Nil No Nil Nil Nil No Nil Nil * excludes ships in Private Limited Companies, Foreign Companies and Companies under Section 25 of the Companies Act, 1956 and Alternate ships. ** includes chairmanship/membership of only Audit Committees and Shareholders / Investors Grievance Committees constituted under Clause 49 of the Listing Agreement with the Stock Exchange. Key information such as annual operating plans, budgets (capital and revenue), monthly and quarterly working results, minutes of Audit Committee and other committees are made available to the s. The Board is informed of all material financial and commercial decisions in which any has personal interest or where there is any potential conflict of interest. (C) 14 Audit Committee: At present the Committee comprises of four members viz. Mr. Yogesh Thar, Mr. Sanjeev Mukerjee, Mr. Manoj Khullar and Mr. Suresh Talwar. It has three independent directors viz. Mr. Yogesh Thar, Mr. Sanjeev Mukerjee and Mr. Suresh Talwar as members. Mr. Yogesh Thar is the Chairman of the Committee. Mr. Yogesh Thar being a Practicing Chartered Accountant has extensive financial and accounting knowledge. The other members of the Audit Committee also have long experience in business and are well-conversant with business and finance. The Legal Manager & Company Secretary acts as the Secretary of the Committee. SBS Country Accounting Manager, Solvay Group, along with the Statutory Auditors and the Internal Auditors are invitees to the meetings of the Committee. The quorum for a committee meeting is two s. Mr. Suresh Talwar, Chairman of the Company, was appointed as a member of the Audit Committee w.e.f. 21 st January The Committee held four meetings 27 th May 2013, 9 th August 2013, 31 st October 2013 and 31 st January The Committee s powers and role are as stipulated under Clause 49 of the Listing Agreement. The Company has complied with all the applicable Accounting Standards in the preparation and presentation of its annual accounts as prescribed under Companies (Accounting Standards) Rules, A Certificate to this effect by the Managing and Chief of Finance is submitted to the Audit Committee and the Board at the time of consideration of the accounts. Annual Report

17 (D) Remuneration Committee: The Company has a Remuneration Committee which consists of three Independent s viz. Mr. Yogesh Thar, Mr. Sanjeev Mukerjee, and Mr. Suresh Talwar. The Committee held one meeting on 27 th May 2013 and the meeting was attended by all the members. s Remuneration for the year ended 31 st March 2014: Mr. Manoj Khullar Managing Particulars Amount (` in lakhs) Salary Value of perquisites 0.45 Total Remuneration Non-Executive Indian s: Name Sitting Fees (`) Mr. Sanjeev Mukerjee 1,80,000 Mr. Yogesh Thar 1,80,000 Mr. Suresh Talwar 1,40,000 Mr. Ranjit Pandit 60,000 Total 5,60,000 Shareholding by s: Name of No. of shares held Mr. Sanjeev Mukerjee 15 Other than whatever stated above, none of the other s hold any shares in the Company. Mr. Manoj Khullar, Managing has a service contract of three years from 1 st January 2013, with a notice period of three months by either party. The Company has no Stock Option Scheme for any of its s. (E) (F) Code of Conduct: The Company has adopted a Code of Conduct for its s and Senior Management Personnel. All of them have affirmed their compliance with the Code during the year The Managing s declaration to this effect is given as Appendix 1 to this report. Shareholders /Investors Grievance Committee: Mr. Sanjeev Mukerjee, Non-Executive, and Mr. Manoj Khullar, Managing are the members of the Committee. The Legal Manager & Company Secretary is the Compliance Officer appointed by the Board of s. The Committee held one meeting during the year on 27 th May 2013 and was attended by all the members of the Committee. Annual Report

18 Rhodia Specialty Chemicals India Limited (G) General Meetings: Particulars of General Meetings held are given below: Date of previous Annual General Meetings Timing of Annual General Meetings Venue a.m. The Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai a.m. The Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai a.m. The Convention Hall, Y. B. Chavan Centre, Gen. Jagannath Bhosale Marg, Nariman Point, Mumbai All the resolutions set out in the respective notices were passed by the members. Special resolution related to revision of salary of Mr. Manoj Khullar w. e. f. 1 st January 2013 was passed by requisite majority in the last Annual General Meeting. Resolutions passed through Postal Ballot during : On 19 th December 2013, members passed special resolution approving the proposed delisting of the Equity Shares from the BSE Limited in accordance with the provisions of the Companies Act, 1956 and the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, (H) Disclosures: (1) Related party transactions: Transactions with related parties, as per requirement of Accounting Standard-18, are disclosed elsewhere in the Annual Report. (2) Statutory Compliance: The Company has complied with the requisite regulations relating to capital markets. There were no penalties or strictures imposed on the Company by Stock Exchange or SEBI or any statutory authority, on any matter related to capital markets, during the last three years. (I) Means of Communication: Quarterly Financial Results are taken on record by the Board of s and submitted to the Stock Exchange in terms of the requirements of Clause 41 of the Listing Agreement. Quarterly Financial Results are normally published in Free Press Journal and Nav Shakti. The Company does not send quarterly/half-yearly results to the members. The Company has its website viz. The Company regularly updates the website with details of quarterly results, shareholding patterns and Annual Report etc. The Company has not made any presentations to institutional investors or to the analysts. As regards Management Discussion and Analysis, please refer to the relevant paragraph on the subject in the s Report. (J) General Information: (1) Annual General Meeting Date and Time: 10 th September 2014 at 12:00 noon. 16 Annual Report

19 (2) Venue: Convention Hall Y. B. Chavan Centre Gen. Jagannath Bhosale Marg Nariman Point Mumbai (3) Financial Calendar The results for every quarter are declared as per the provisions of the listing agreement. (4) Date of Book Closure 29 th August 2014 to 5 th September 2014 (both days inclusive) (5) Listing on stock exchanges The Company's equity shares are listed on BSE. Following the successful closure of delisting offer, the shares will be de-listed from BSE w.e.f. 28 th May (6) Stock code (7) Market price data (High/Low) Company s Share Price during each month in the financial year and performance in comparison to the BSE Sensex. Share Price Vs Sensex for Share Price BSE Sensex Month High Low Variation % High Low Variation % April, May June July August September October November December January, February March (8) Registrar & Share Transfer Agents Link Intime India Pvt. Ltd. C-13, Pannalal Silk Mills Compound LBS Marg, Bhandup (West) Mumbai Tel: Fax: / rnt.helpdesk@linkintime.co.in (9) Share Transfer System Physical transfer of shares is processed by the Share Transfer Agents. Transfer of shares is effected and the share certificates are sent to the transferees within 30 days from the date of receipt, provided the relevant documents are complete in all respects. Annual Report

20 Rhodia Specialty Chemicals India Limited (10) Insider Trading Regulations The Company has established procedures for prohibition and regulation of insider trading in its shares, in accordance with the directions of the Securities & Exchange Board of India. Mr. Niranjan Ketkar, Legal Manager & Company Secretary is the Compliance Officer for the purpose. The Company has complied with the requirements in this regard. (11) Distribution of Shareholding as on 31 st March 2014 Shareholding Level No. of Shareholders No. of shares held % of Shareholding Up to to to to to to to Above TOTAL (12) Shareholding Pattern as on 31 st March 2014 Category code Category of shareholder Number of shareholders Total number of shares Percentage of shareholding (A) Shareholding of Promoter and Promoter Group (1) Indian (a) Individuals/Hindu Undivided Family Sub-Total (A)(1) (2) Foreign (a) Bodies Corporate Sub-Total (A)(2) Total Shareholding of Promoter and Promoter Group (A) = (A)(1)+(A)(2) (B) Public shareholding (1) Institutions (a) Financial Institutions/Mutual Funds/Banks Annual Report

21 Category code Category of shareholder Number of shareholders Total number of shares Percentage of shareholding (b) Foreign Venture Capital Investors Sub-Total (B)(1) (2) Non-institutions (a) Bodies Corporate (b) Individuals i. Individual shareholders holding nominal share capital up to ` 1 lakh ii. Individual shareholders holding nominal share capital in excess of ` 1 lakh iii. Clearing Members iv. Non Resident Indians (Repat) v. Non Resident Indians (Non Repat) vi. Foreign Companies vii. s & Relatives of s viii. Escrow Account Sub-Total (B)(2) Total Public Shareholding (B)=(B)(1)+(B)(2) TOTAL (A)+(B) (13) Dematerialization of shares and liquidity: Based on SEBI directive, Company s shares are traded in dematerialized form. About 98.75% of total Equity Capital is held in dematerialized form with NSDL and CDSL as on 31 st March (14) There are no outstanding GDRs/ADRs/Warrants or any convertible instruments. (15) Plant Location: Roha Plant: MIDC Industrial Estate, Dhatav, Dist. Raigad, Maharashtra, PIN (16) Address for Correspondence: Shareholders correspondence should be addressed to the Company s Registrars & Transfer Agents at the address mentioned herein above at Sr. No. 8. Shareholders may also contact the Legal Manager & Company Secretary at the Registered Office of the Company at the address mentioned below: Rhodia Specialty Chemicals India Limited Phoenix House, A Wing, 4 th Floor 462, Senapati Bapat Marg, Lower Parel (West) Mumbai Tel: Fax: (17) Whistle-blower Policy: The Company has not adopted the whistle-blower policy. (18) Certificate of compliance of mandatory stipulations of Corporate Governance: The certificate issued by Messrs Alwyn D souza & Co, Company Secretaries, regarding compliance of mandatory stipulations of corporate governance in terms of the listing agreement with the Stock Exchange is attached as Appendix 2 to this report. (19) The Company has presently not adopted the non-mandatory requirements set out in Annexure-1D to the Corporate Governance Code. Annual Report

22 Rhodia Specialty Chemicals India Limited Appendix 1 to Corporate Governance Disclosures for the year The Company has adopted a Code of Conduct for all its s and Senior Management Personnel, in compliance of the provisions of Clause 49 of the Listing Agreement. All the s and Senior Management Personnel have affirmed their compliance with the aforesaid Code of Conduct during the year Mumbai Manoj Khullar 23 rd May 2014 Managing Appendix 2 to Corporate Governance Disclosures for the year CORPORATE GOVERNANCE COMPLIANCE CERTIFICATE To The Members Rhodia Specialty Chemicals India Limited Mumbai We have examined all relevant records of Rhodia Specialty Chemicals India Limited (the Company) for the purpose of certifying compliance of the conditions of Corporate Governance under Clause 49 of the Listing Agreement with BSE Limited for the financial year ended 31 st March We have obtained all the information and explanations to the best of our knowledge and belief were necessary for the purpose of this certification. The compliance of the conditions of Corporate Governance is the responsibility of the management. Our examination was limited to the procedure and implementation thereof. This certificate is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company. On the basis of our examinations of the records produced explanations and information furnished, we certify that: (a) the Company has complied with all the mandatory conditions of the said Clause 49 of the Listing Agreement and; (b) has not complied with the non-mandatory requirements of the said Clause 49 of the Listing Agreement. Place: Mumbai Date: Office Address: Annex-103, Dimple Arcade Asha Nagar, Kandivli (E), Mumbai Alwyn D souza & Co. Company Secretaries (Alwyn D souza FCS 5559) (Proprietor) Certificate of Practice No Annual Report

23 ANNEXURE II Conservation of Energy & Technology Absorption A. CONSERVATION OF ENERGY: Energy conservation measures include de-bottlenecking to enhance plant capacity; planned production at optimum levels; regular monitoring of electricity and fuel consumption and corrective steps where required; utilization of by-product steam; and wet scrubbers to recover heat. Form A Disclosure of particulars with respect to Conservation of Energy Power and Fuel Consumption Electricity: (a) Purchased unit in 000 KWH Total Amount ` in Lakhs Rate/Unit (`) (b) Own Generation through Diesel Generator Units in KWH units per Litre of diesel oil Cost/Unit (`) Furnace Oil etc. (a) Quantity (K Litres) Total Amount ` in Lakhs Average Rate `/K Litre 42,680 41,506 C9/Kerosene/Slop Oil etc. (b) Quantity (M.T.) Total Amount ` in Lakhs Average Rate `/K Litre 45,224 40,442 Consumption per unit of production Electricity KWH/MT Fuel (Ltrs./MT) Products 1. Sulphuric Acid # Linear Alkyl Benzene Sulphonic Acid Surfactants 215* #Increased due to frequent shutdowns. *Reduced due to increase in production and product mix. B. TECHNOLOGY ABSORPTION: RESEARCH AND DEVELOPMENT (R&D) 1. Specific Areas in which R&D carried out by the Company: 2. Benefits derived as a result of above R&D: 3. Future Plan of Action: Continual improvement in quality, cleaner environment and new product development based on corporate strategy, reduce waste generation. Being part of Solvay Group, the Company has access to Solvay s technical assistance. Annual Report

24 Rhodia Specialty Chemicals India Limited 4. Expenditure on R&D (` in Lakhs): i ii iii Capital Recurring Total iv Total R&D Expenditure as a percentage of total turnover TECHNOLOGY ABSORPTION AND INNOVATION: As part of Solvay s global operation, the Company has access to Solvay s technical support in its research efforts. This is adapted to suit local operations for product and process development as well as qualify improvement. C. FOREIGN EXCHANGE EARNINGS AND OUTGO: Please refer Notes 34 & 35 to the Accounts. 22 Annual Report

25 Independent Auditors Report TO THE MEMBERS OF RHODIA SPECIALTY CHEMICALS INDIA LIMITED Report on the Financial Statements I. We have audited the accompanying financial statements of RHODIA SPECIALTY CHEMICALS INDIA LIMITED ( the Company ), which comprise the Balance Sheet as at 31 st March, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information. Management's Responsibility for the Financial Statements 2. The Company's Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 ( the Act ) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15 / 2013 dated 13 th September, 2013 of the Ministry of Corporate Affairs) and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor's Responsibility 3. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. 4. An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion 5. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at 31 st March, 2014; (ii) in the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and (iii) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. Report on Other Legal and Regulatory Requirements 6. As required by the Companies (Auditor's Report) Order, 2003 ( the Order ) issued by the Central Government in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order. (i) As required by Section 227(3) of the Act, we report that: (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books. (c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account. (d) In our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Act (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15 / 2013 dated 13 th September, 2013 of the Ministry of Corporate Affairs). (e) On the basis of the written representations received from the directors as on 31 st March, 2014 taken on record by the Board of s, none of the directors is disqualified as on 31 st March, 2014 from being appointed as a director in terms of Section 274(1)(g) of the Act. For DELOITTE HASKINS & SELLS Chartered Accountants (Firm's Registration No.: W) Ketan Vora Mumbai Partner 23 rd May, 2014 (Membership No.: ) Annual Report

26 Rhodia Specialty Chemicals India Limited Annexure to the Independent Auditors Report (Referred to in paragraph 6 under Report on Other Legal and Regulatory Requirements' section of our report of even date) (i) (ii) (iii) (iv) (v) In our opinion and according to the information and explanations given to us, the nature of the Company's business / activities during the year are such that clauses (xiii), (xiv) and (xvi) of paragraph 4 of the Order, are not applicable to the Company. In respect of the other clauses, we report as under: In respect of its fixed assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets. (b) The Company has a program of verification of fixed assets to cover all the items in a phased manner over a period of two years which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. Pursuant to the program, certain fixed assets were physically verified by the Management during the year. According to the information and explanations given to us, no material discrepancies were noticed on such verification. (c) The fixed assets disposed off during the year, in our opinion, do not constitute a substantial part of the fixed assets of the Company and such disposal has, in our opinion, not affected the going concern status of the Company. In respect of its inventories: (a) As explained to us, the inventories except goods in transit and stock lying with third parties were physically verified during the year by the Management at reasonable intervals. For stock lying with third parties at the year end, confirmations have been obtained by the Company. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the Management were reasonable and adequate in relation to the size of the Company and the nature of its business. (c) In our opinion and according to the information and explanations given to us, the Company has maintained proper records of its inventories and no material discrepancies were noticed on physical verification. The Company has neither granted nor taken any loans, secured or unsecured, to / from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, In our opinion and according to the information and explanations given to us, having regard to the explanations that some of the items purchased are of special nature and suitable alternative sources are not readily available for obtaining comparable quotations, there is an adequate internal control system commensurate with the size of the Company and the nature of its business with regard to purchases of inventory and fixed assets and the sale of goods and services. During the course of our audit, we have not observed any major weakness in such internal control system. (vi) In respect of contracts or arrangements entered in the Register maintained in pursuance of Section 301 of the Companies Act, 1956, to the best of our knowledge and belief and according to the information and explanations given to us: (a) The particulars of contracts or arrangements referred to in Section 301 that needed to be entered in the Register maintained under the said Section have been so entered. (b) Where each of such is in excess of ` 5 Iakhs in respect of any party, having regard to our comments in paragraph (v) above, the transactions have been made at prices which are prima facie reasonable having regard to the prevailing market prices at the relevant time, other than certain purchases which are of a special nature for which comparable quotations are not available and in respect of which we are, therefore, unable to comment if the transactions have been carried out at prices having regard to the prevailing market prices at the relevant time. (vii) According to the information and explanations given to us, the Company has not accepted any deposit from the public during the year. (viii) In our opinion, the internal audit functions carried out during the year by a firm of Chartered Accountants appointed by the Management have been commensurate with the size of the Company and the nature of its business. (ix) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that, prima facie, the prescribed cost records have been maintained and are being made up. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete. (x) According to the information and explanations given to us, in respect of statutory dues: (a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues applicable to it with the appropriate authorities. 24 Annual Report

27 Annexure to the Independent Auditors Report (Continued) (Referred to in paragraph 6 under Report on Other Legal and Regulatory Requirements' section of our report of even date) (b) There were no undisputed amounts payable in respect of Provident Fund, Employees' State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Cess and other material statutory dues in arrears as at 31 st March, 2014 for a period of more than six months from the date they became payable. (c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess which have not been deposited as on 31 st March, 2014 on account of disputes are given below: Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount Involved (` in 000) The Income Tax Act, 1961 Income Tax Commissioner of Income Tax (Appeals) ,219 The Central Excise Act, 1944 Excise Duty Central Excise and Service Tax Appellate Tribunal ,016 Commissioner of Central Excise (Appeals) ,508 Additional Commissioner of Central Excise ,761 Assistant Commissioner of Central Excise ,640 The Custom Act, 1962 Custom Duty Commissioner of Customs (Appeals) ,317 Assistant Commissioner of Customs ,984 The Finance Act, 1994 Service Tax Central Excise and Service Tax Appellate Tribunal Madhya Pradesh Sales Tax Act, 1994 Central Excise and Service Tax Appellate Tribunal Assistant Commissioner of Central Excise Assistant Commissioner of Central Excise Sales Tax Deputy Commissioner of Sales Tax (Appeals) (xi) (xii) (xiii) (xiv) (xv) The Company does not have any accumulated losses at the end of the financial year and the Company has not incurred cash losses during the financial year covered by our audit and in the immediately preceding financial period. In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of dues to banks. The Company did not have any loan from any financial institutions and has not issued any debentures. In our opinion, the Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures and other securities. According to the information and explanations given to us, the Company has not given guarantees for loans taken by others from banks and financial institutions. In our opinion and according to the information and explanations given to us, and on an overall examination of the Balance Sheet of the Company, we report that funds raised on short-term basis have, prima facie, not been used during the year for long-term investment. (xvi) During the year, the Company has not made any preferential allotment of shares to parties and companies covered in the Register maintained under Section 301 of the Act. (xvii) The Company has not issued any debentures and hence, the question of creation of security does not arise. (xviii) The Company has not raised any money by public issue during the year. (xix) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no material fraud on the Company has been noticed or reported during the year. For DELOITTE HASKINS & SELLS Chartered Accountants (Firm's Registration No.: W) Ketan Vora Mumbai Partner 23 rd May, 2014 (Membership No.: ) Annual Report

28 Rhodia Specialty Chemicals India Limited Balance Sheet as at 31 March 2014 (Currency Rupees thousands) Note No. As at 31 March 2014 As at 31 March 2013 I. Equity and Liabilities (1) Shareholders funds (a) Share capital 3 33,756 33,756 (b) Reserves and surplus 4 647, , , ,351 (2) Non-current liabilities (a) Other long-term liabilities (b) Long-term provisions 6 18,690 17,360 18,895 17,612 (3) Current liabilities (a) Short-term borrowings 7 403, ,623 (b) Trade payables 8 537, ,850 (c) Other current liabilities 9 54,491 55,108 (d) Short-term provisions 10 11,714 17,185 1,007, ,766 Total 1,707,750 1,426,729 II. Assets (1) Non-current assets (a) Fixed assets 11 Tangible fixed assets 492, ,872 Capital work-in-progress 19,403 25, , ,960 (b) Non-current investments (c) Deferred tax assets (net) 13 (d) Long-term loans and advances , , , ,603 (2) Current assets (a) Inventories , ,289 (b) Trade receivables , ,857 (c) Cash and cash equivalents ,692 (d) Short-term loans and advances ,903 91,546 (e) Other current assets ,742 1,038, ,126 Total 1,707,750 1,426,729 See accompanying notes to the financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of s S. N. Talwar Yogesh Thar Chairman Ketan Vora Manoj Khullar Niranjan Ketkar Partner Managing Legal Manager & Company Secretary Mumbai Mumbai Date: 23 rd May 2014 Date: 23 rd May Annual Report

29 Statement of Profit and Loss for the year ended 31 March 2014 Note No. For the year ended 31 March 2014 (Currency Rupees thousands) For the period 1 January 2012 to 31 March 2013 Income Revenue from operations Sale of products (gross) 20(a) 2,865,524 3,013,559 Less: Excise duty 222, ,236 Sale of products (net) 2,643,478 2,787,323 Processing charges [net of excise duty ` 17,126(000), Previous Period ` 6,985(000)] 20(b) 13,749 22,395 Other operating income 21 15,667 34,437 2,672,894 2,844,155 Other income 22 38,228 54,642 Total revenue 2,711,122 2,898,797 Expenses Cost of materials consumed 23(a) 1,637,340 1,668,123 Purchases of stock-in-trade 23(b) 458, ,872 Change in inventories of finished goods, work-in-progress and stock-in-trade 23(c) (40,088) 48,945 Employee benefits expense , ,189 Finance costs 25 17,774 49,441 Depreciation and amortisation expense 11 92, ,098 Other expenses , ,684 Total expenses 2,711,686 2,892,352 Profit / (Loss) before exceptional items and tax (564) 6,445 Exceptional Items: Customs duty 44 (67,102) Profit on transfer of lease rights of land (net of expenses) 362,185 Profit / (Loss) after tax (67,666) 368,630 Loss from continuing operations before tax (67,666) (10,770) Less: Income tax expense Loss from continuing operations after tax (67,666) (10,770) Profit from discontinuing operations before tax 379,400 Less: Income tax expense Current tax : MAT for the year / period 71,000 MAT credit entitlement (71,000) Deferred tax (net) 13 Profit from discontinuing operations after tax 379,400 Profit / (Loss) after tax (67,666) 368,630 Earnings per equity share from total operations [nominal value of share 40 ` 10 (Previous period ` 10)] Basic and diluted (20.05) Earnings per equity share from continuing operations [nominal value of 40 share ` 10 (Previous period ` 10)] Basic and diluted (20.05) (3.19) See accompanying notes to the financial statements In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of s S. N. Talwar Yogesh Thar Chairman Ketan Vora Manoj Khullar Niranjan Ketkar Partner Managing Legal Manager & Company Secretary Mumbai Mumbai Date: 23 rd May 2014 Date: 23 rd May 2014 Annual Report

30 Rhodia Specialty Chemicals India Limited Cash Flow Statement for the year ended March 31, 2014 (Contd.) Year ended 31 March 2014 (Currency Rupees thousands) Period ended 31 March 2013 Cash flow from operating activities Net Profit /(Loss) before tax (67,666) 368,630 Adjustments for non-cash items / items required to be disclosed separately: Depreciation and amortisation expense 92, ,098 Interest expenses 17,774 49,441 (Profit) on sale / write off of fixed assets (net) (1,664) (368,176) Unrealised foreign exchange gain (net) (15,065) (1,018) Write back of provision for doubtful debts (3,841) Liabilities / provisions no longer required written back (3,409) (30,015) Interest income (1,143) (1,393) 88,755 (251,904) Operating profit before changes in working capital 21, ,726 Adjustments for changes in Working Capital and Provisions: Adjustments for (increase)/ decrease in operating assets: Trade receivables and other receivables (234,023) (9,212) Inventories (104,680) 88,644 (338,703) 79,432 Adjustments for increase /(decrease) in operating liabilities: Trade and other payables 245,814 (200,037) Short and long term provisions 4,044 5, ,858 (194,872) (88,845) (115,440) Cash generated / (used in) operations (67,756) 1,286 Income-tax paid (net of refunds) (4,840) (70,985) A. Net cash used in operating activities (72,596) (69,699) Cash flow from investing activities Capital expenditure on fixed assets, including capital advances (53,440) (103,811) Proceeds from sale of fixed assets 1, ,163 Earmarked balances 45 Fixed deposits matured 1,961 29,999 Interest received 1,419 1,066 B. Net cash (used in) / from investing activities (48,351) 298, Annual Report

31 Cash Flow Statement for the year ended March 31, 2014 (Contd.) Year ended 31 March 2014 Cash flow from financing activities Increase /(Decrease) in short term borrowings 131,013 (226,349) Interest paid (18,006) (48,569) Dividend paid (6,796) (98) Dividend tax paid (1,148) (Currency Rupees thousands) Period ended 31 March 2013 C. Net cash from / (used in) financial activities 105,063 (275,016) Net decrease in cash and cash equivalents (A+B+C) (15,884) (46,298) Cash and cash Equivalents at the beginning of the year / period 16,412 62,710 Cash and cash Equivalents at the end of the year / period ,412 Notes: (1) The above cash flow statement has been prepared under the Indirect Method'. As at March 31, 2014 As at March 31, 2013 (2) Reconciliation of cash and cash equivalents with the Balance Sheet Cash and cash equivalents (Refer note 17) ,412 Add: Effect of exchange differences on reinstatement of foreign currency cash and cash equivalents 7 Net cash and cash equivalents (as defined in AS 3 Cash Flow Statements) included in note ,412 In terms of our report attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board of s S. N. Talwar Yogesh Thar Chairman Ketan Vora Manoj Khullar Niranjan Ketkar Partner Managing Legal Manager & Company Secretary Mumbai Mumbai Date: 23 rd May 2014 Date: 23 rd May 2014 Annual Report

32 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 1. Company Overview Rhodia Specialty Chemicals India Ltd is a Public Limited Company incorporated under the Companies Act, It is a subsidiary of Rhodia UK Ltd (holding 72.93%). The Company is primarily engaged in manufacturing surfactants for serving markets in home, personal care and agrochemical markets. It also manufactures chemicals used in industrial formulations, paints and coatings as well as for oil fields. It also sources some trading products from overseas group companies and markets in India. 2. Significant accounting policies (a) Basis of preparation of financial statements The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 ( the 1956 Act ) (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 ( the 2013 Act ) in terms of General Circular 15 / 2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the 1956 Act / 2013 Act, as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous period. (b) Use of estimates The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognized in the periods in which the results are known / materialize. (c) Fixed assets Tangible Assets Fixed assets are carried at cost of acquisition or construction less accumulated depreciation. Cost includes all inward freight, duties, taxes and incidental expenses, any directly attributable expenditure on making the asset ready for its intended use. Borrowing costs directly attributable to acquisition or construction of those fixed assets which necessarily take a substantial period of time to get ready for their intended use are capitalised. (d) Depreciation and Amortization Lease hold land is amortised over the period of lease. Depreciation on other fixed assets is provided pro-rata for the period of use, on Straight Line Method (SLM). The estimated useful lives of the assets are: Particulars Building and Roads Factory 10 Years Building and Roads Other than Factory 20 Years Plant and Machinery 10 years / 8 years / 6.67 years Computers 3 Years Furniture and Fittings 10 Years Vehicles 5 Years Assets individually costing ` 5,000 or less are depreciated fully in the year when the assets are put to use. 30 Annual Report

33 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 2. Significant Accounting Policies (Continued) (e) Impairment of Assets Management periodically assesses using external and internal sources whether there is an indication that an asset may be impaired. Impairment occurs where the carrying value exceeds the recoverable amount. The impairment loss to be expensed is determined as the excess of the carrying amount over the higher of the assets net selling price or present value of future cash flows expected to arise from the continuing use of the assets and its eventual disposal. (f) Inventories Inventories are valued at lower of cost and net realisable value except for by-products which are valued at net realisable value. Cost is determined on the moving / monthly moving weighted average basis except that of goods in transit which is ascertained on specific identification basis, and includes where applicable, appropriate manufacturing overheads. The cost in the case of work-in-process comprises direct material cost and finished goods comprise direct materials, labour, utilities and appropriate cost of conversion. The cost of traded finished goods is determined on moving weighted average basis. Raw materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realisable value. Non inclusive method of accounting is consistently followed for Cenvat under the Central Excise Act, 1944, with regard to inventories, purchases and consumption. (g) Employee benefits (i) Short Term Employee Benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. These benefits include compensated absences such as paid annual leave and sickness leave. The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees is recognized during the period. (ii) Post Employment Benefits: a. Defined Contribution Plans The Company's liability for superannuation scheme, which is a defined contribution scheme, is funded through a scheme administered by Life Insurance Corporation of India (LIC). Contributions payable under this scheme are charged to Statement of Profit and Loss as incurred. Contributions to the recognized statutory Provident Fund, which is a defined contribution scheme, are charged to the Statement of Profit and Loss in the period in which the liability is incurred and when services are rendered by the employees. b. Defined Benefit Plans Provision for gratuity, which is a defined benefit plan, is made on the basis of an actuarial valuation carried out by an independent actuary at the balance sheet date and is funded through a scheme administered by the LIC. The actuarial valuation is performed annually by a qualified actuary using the Project Unit Credit Method'. The discount rates used for determining the present value of the defined benefit obligation, are based on the market yields on Government securities as at the balance date. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. Annual Report

34 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 2. Significant Accounting Policies (Continued) (iii) Other Long-term employment benefits Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related services are recognized as a liability at the present value of the defined benefit obligation at the balance sheet date. The obligation is measured on the basis of independent actuarial valuation using the Project Unit Credit Method'. The discount rates used for determining the present value of the defined benefit obligation are based on the market yields on Government securities as at the balance sheet date. Actuarial gains and losses are recognized immediately in the Statement of Profit and Loss. (h) Revenue recognition Revenue from sale of goods and processing charges is recognised on transfer of all significant risks and rewards of ownership to the buyer which generally coincides with the despatch of goods. The amount recognized as sales is exclusive of sales tax / value added tax and trade discounts. Indenting commission is accounted for on receipt of intimation of supply from foreign suppliers. Dividend income is recognised when the right to receive payment is established. Interest income is recognised on a time proportion basis. (i) Foreign exchange transactions Transactions denominated in foreign currency are recorded at exchange rate prevailing on the date of transaction. Exchange differences arising on foreign exchange transactions settled during the year are recognized in the Statement of Profit and Loss. Monetary assets and liabilities denominated in foreign currencies as at the balance sheet date are translated at the closing exchange rate on that date and the resultant exchange differences are recognised in the Statement of Profit and Loss. In respect of transactions covered by forward exchange contracts which are not intended for trading or speculation purposes, premiums or discounts are amortised as expense or income over the life of the contracts. Exchange differences on such contracts are recognised as expense or as income in the Statement of Profit and Loss in the year in which the exchange rates change. Profit or loss arising on cancellation or renewal of such forward exchange contracts are recognised as income or as expense for the year. (j) Leases Lease rentals in respect of assets acquired under operating lease are charged off to the Statement of Profit and Loss as incurred. (k) Taxation Income-tax expense comprises current tax (i.e. amount of tax for the period determined in accordance with income tax laws) and deferred tax charge or credit (reflecting the tax effect of timing differences between accounting income and taxable income for the year). The deferred tax charge or credit and the corresponding deferred tax liabilities or assets are recognised using the tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets are recognized only to the extent that there is reasonable certainty that the assets can be realized in future; however when there is unabsorbed depreciation or carry forward loss under taxation laws, deferred tax assets are recognised only if there is virtual certainty of realisation of such assets. Deferred tax assets are reviewed as at each balance sheet date and written down or written up to reflect the amount that is reasonably / virtually certain (as the case may be) to be realised. 32 Annual Report

35 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 2. Significant Accounting Policies (Continued) Minimum Alternate Tax In accordance with the Guidance Note issued by the Institute of Chartered Accountants of India ( lcal') on accounting for credit available in respect of Minimum Alternate Tax (MAT) under the Income Tax Act, 1961, the Company recognises MAT credit as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set off against the normal tax liability. MAT credit recognized as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists. (l) Earnings per share Basic and diluted earnings per share are computed by dividing the net profit /(loss) attributable to equity shareholders for the year by the weighted average number of equity shares outstanding during the year. (m) Provisions and contingencies The Company creates a provision where there is present obligation as a result of past events that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation as a result of past events that may, but probably will not, require an outflow of resources and the amount can be reasonably estimated. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made. (n) Operating cycle Based on the nature of products / activities of the Company and the normal time between acquisition of assets and their realisation in cash or cash equivalents, the Company has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current. Annual Report

36 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements as at 31 March 2014 As at 31 March 2014 (Currency Rupees thousands) As at 31 March Share capital Authorised: 4,000,000 (Previous period: 4,000,000) equity shares of ` 10/- each 40,000 40,000 1,000,000 (Previous period: 1,000,000) unclassified shares of ` 10/- each 10,000 10,000 50,000 50,000 Issued, Subscribed and Paid-up 3,375,600 (Previous period: 3,375,600) equity shares of ` 10/- each fully paid-up 33,756 33,756 (a) Reconciliation of the number of shares outstanding at the beginning and at the end of the year / period Equity shares As at 31 March 2014 As at 31 March 2013 No. of shares in ` 000 No. of shares in ` '000 Opening Balance 3,375,600 33,756 3,375,600 33,756 Add: Fresh issue during the year / period Closing Balance 3,375,600 33,756 3,375,600 33,756 (b) Terms / Rights attached to equity shares The Company has only one class of shares referred to as equity shares having a par value of ` 10 per share. Accordingly, all equity shares rank equally with regard to dividend and share in the Company's residual assets. The equity shareholders are entitled to receive dividend as declared from time to time. Each holder of equity share is entitled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive remaining assets of the Company after distribution of all the preferential amounts. The distribution will be in proportion to the number of equity shares held by the shareholders. During the year, the amount of per share dividend recognised as distributable to equity share holder is ` Nil (Previous period ` 2 per share). (c) Shares held by the Holding / ultimate Holding Company and / or their Subsidiaries at the end of the year / period As at 31 March 2014 As at 31 March 2013 No. of shares No. of shares Rhodia UK Limited (Holding Company) 2,461,974 2,461,974 Solvay Participations, France (Subsidiary of the ultimate Holding Company Solvay SA, France) 620,852 (d) Shareholders holding more than 5% equity shares in the Company as at the end of the year / period As at 31 March 2014 As at 31 March 2013 Name of the shareholder No. of shares % holding No. of shares % holding 1. Rhodia UK Limited 2,461, % 2,461, % 2. Taj Performance Fund (Mauritius) Limited 225, % 3. Solvay Participations, France 620, % 34 Annual Report

37 Notes forming part of the financial statements as at 31 March 2014 (Contd.) (e) BSE Limited (BSE) vide its letter dated 15 May 2014 has informed the Company that the equity shares of the Company will be delisted from BSE records w.e.f. Wednesday, May 28, Exit Option will be kept open by the Acquirer-Solvay SA to the remaining public shareholders for a period of one year from the date of delisting at the rate of ` 1,200/- (Rupees One Thousand Two Hundred only) per equity share, being the exit price determined. (Currency Rupees thousands) As at 31 March 2014 As at 31 March Reserves and surplus Capital reserve Subsidy under the special capital incentive scheme 2,500 2,500 Profit on reissue of forfeited shares Securities premium account At the commencement and end of the 31,658 31,658 year / period General reserve At the commencement of the year / period 374, ,001 Amount transferred from Surplus in Statement of Profit and Loss 374,649 27, ,649 Surplus / (Deficit) in statement of profit and loss At the commencement of the year / period 306,777 (26,306) Profit /(Loss) after tax for the year / period (67,666) 368,630 Less: Proposed equity dividend [` Nil per share (Previous period ` 2 per share)] 6,751 Tax on proposed equity dividend 1,148 Transfer to general reserve 27,648 Balance as at the end of the year / period 239, , , ,595 5 Other long-term liabilities Deposits received from customers Long-term provisions Provision for employee benefits Compensated absences 15,344 14,164 Gratuity 3,346 3,196 18,690 17,360 7 Short-term borrowings Secured Repayable on demand from banks From Banks (Refer note 7A) 7,406 Unsecured From Banks (Refer note 7B) 303, ,217 Loans and advances from related party (Refer note 7C) 100, , , ,623 Annual Report

38 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements as at 31 March 2014 (Contd.) A. As at 31 March 2013, secured by hypothecation of inventories including raw materials, semi finished goods, stock in process, finished goods, book debts, bills receivable and all other recoverable, both present and future. Cash credit and overdraft facilities from bank carry interest ranging between 2.7% p.a. and 15.2% p.a. B. Secured by a corporate guarantee from Rhodia SA France, a subsidiary of the ultimate holding company and carries interest rate ranging between 2.13% p.a. and 11.5% p.a. C. Carries an interest rate ranging from 9.25% p.a. to 10.25% p.a. (Currency Rupees thousands) As at 31 March 2014 As at 31 March Trade payables Total outstanding dues of micro and small enterprises (Refer note 29) 10, Total outstanding dues other than micro and small enterprises 526, , , ,850 9 Other current liabilities Interest accrued but not due on borrowings Unclaimed dividend (*) Advance from customers 3,871 5,581 Other payables: Statutory dues payable TDS payable 6,666 5,532 Service tax payable WCT payable Excise liability on closing stock of finished goods 17,129 11,958 Payables on purchase of fixed assets 13,173 16,930 Employee Liability 10,368 10,585 Others 2,140 2,994 54,491 55,108 * There is no amount due and outstanding to be paid to the Investor Education and Protection Fund as at the year / period end. These amounts shall be paid to the fund as and when they become due. 10 Short-term provisions Provision for employee benefits Compensated absences 3,077 3,363 Provision for gratuity 3,000 Other provisions Proposed equity dividend 6,751 Tax on proposed equity dividend 1,148 Provision for current tax 5,637 5,923 [Net of advance tax ` 109,062(000) Previous period ` 108,776(000)] 11,714 17, Annual Report

39 Notes forming part of the financial statements as at 31 March 2014 (Contd.) 11 Fixed Assets Description As at 1 April 2013 Gross Block (At cost) Depreciation / Amortisation Net Block Additions Disposals As at As at For the Deductions As at As at 31 March 1 April year 31 March 31 March Tangible fixed assets Freehold Land (570) (570) (570) Leasehold Land 3,815 3, ,904 (4,616) (801) (3,815) (1,341) (67) (544) (864) (2,951) Buildings 194,162 2, ,658 93,448 16, ,896 86,762 (194,092) (13,502) (13,432) (194,162) (85,344) (19,346) (11,242) (93,448) (100,714) Plant and equipment 860,660 52, , ,814 72, , ,564 (808,509) (65,415) (13,264) (860,660) (391,115) (80,610) (12,911) (458,814) (401,846) Office equipments 13,308 4, ,571 5,561 1, ,331 10,240 (9,445) (7,456) (3,593) (13,308) (7,979) (1,022) (3,440) (5,561) (7,747) Furniture and fixtures 14, ,768 2,767 1,400 4,167 10,601 (2,299) (12,361) (374) (14,286) (1,418) (1,689) (340) (2,767) (11,519) Vehicles 2,411 2,411 1, , (2,812) (401) (2,411) (1,923) (364) (401) (1,886) (525) Total 1,089,212 59, ,147, ,340 92, , ,930 Previous year (1,022,343) (98,734) (31,865) (1,089,212) (489,120) (103,098) (28,878) (563,340) (525,872) Previous period figures are in brackets (Currency Rupees thousands) As at 31 March 2014 As at 31 March Non-current investments (At cost) Non-trade investment : unquoted Investment in equity instruments 3 3 Investment in 100 equity shares (Previous period 100 equity shares) of ` 25 each fully paid up in Roha Industries Association's Sahakari Grahak Bhandar 3 3 Aggregate book value of unquoted non-current investment Deferred tax assets (net) Deferred tax liability On difference between book balance and tax 31,126 33,495 balance of fixed assets Deferred tax assets Provision for compensated absences 5,977 5,687 Provision for Gratuity 2,059 1,037 Disallowance under section 43 (B) of Income Tax 2,382 1,891 Act 1961 Voluntary retirement compensation 2,080 Brought forward unabsorbed Business losses 21,747 21,383 Unabsorbed depreciation carried forward 34,122 10,055 Restricted to 66,287 31,126 42,133 33,495 The Company has recognised deferred tax asset on unabsorbed depreciation to the extent of the corresponding deferred tax liability on the difference between the book balance and the written down value of fixed assets under Income Tax net off of other balances constituting deferred tax asset. Annual Report

40 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements as at 31 March 2014 (Contd.) 14 Long-term loans and advances Secured, considered good (Currency Rupees thousands) As at 31 March 2014 As at 31 March 2013 Vehicle loans to employees 2,895 2,582 Unsecured, considered good Capital advances 1,645 5,597 Security deposits 24,878 23,917 Advance income-tax [net of provision of ` 153,327(000) Previous period ` 153,327(000)] 41,437 36,882 MAT credit entitlement 71,000 71,000 Balances with Government authorities VAT refund receivable 15,080 13,146 Custom authorities 6, , , Inventories (Valued at lower of cost and net realisable value) Raw materials 100,545 60,552 Raw materials in transit 26, ,573 1,508 62,060 Packing materials 4,932 2,957 Work-in-progress (Sulphur) 2, Finished goods 167, ,009 Stock-in-trade (includes goods in transit ` 20,734(000) [Previous period ` 18,979(000)] 48,509 66,785 Stores and spares 34,898 36, , , Trade receivables Trade receivables outstanding for a period exceeding six months from the date they were due for payment Unsecured, considered good 369 3,346 Considered doubtful Less: Provision for doubtful trade receivables 369 3,346 Other trade receivables Secured, considered good Unsecured, considered good 536, , , , , , Annual Report

41 Notes forming part of the financial statements as at 31 March 2014 (Contd.) (Currency Rupees thousands) As at 31 March 2014 As at 31 March Cash and cash equivalents Cash and cash equivalents Cash on hand Cheques, drafts on hand 16,233 Balances with banks On current account In other deposit accounts # ,111 18,523 In earmarked account Unpaid dividends ,692 Of the above, the balances that meet the definition of Cash and cash equivalents as per AS 3 Cash Flow Statements ,412 # Balance with banks include ` 150(000) [Previous period ` 1,099(000)] deposit against lien with government authorities having maturity within 12 months from the balance sheet date. 18 Short-term loans and advances Current portion of long-term loans and advances Secured, considered good Vehicle loan 1,338 1,090 Other short-term loans and advances Unsecured, considered good Advance to suppliers for goods and services 25,231 11,497 Loans and advances to employees Security deposits Prepaid expenses 8,205 6,647 Balance with government authorities Cenvat credit receivable 970 1,955 Service tax credit receivable 2,955 3,162 Excise duty receivable 56,979 49,547 Custom authorities 5,807 Others 11,977 16, ,903 91, Other current assets Accruals Interest accrued on deposits Others Export incentive receivable ,742 Annual Report

42 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March (a) Sale of Products Finished goods 2,260,787 2,367,494 Traded goods 604, ,065 Sale of products (gross) 2,865,524 3,013,559 Less: Excise duty 222, ,236 Sale of products (net) (Refer note 32) 2,643,478 2,787,323 20(b) Sale of services Processing charges (gross) 30,875 29,380 Less: Excise duty 17,126 6,985 Processing charges (net) 13,749 22,395 2,657,227 2,809, Other operating income Indenting commission 7,779 10,619 Export incentives 4,413 7,968 Scrap sales [net of excise duty ` 163(000), (Previous period: ` 359(000))] 2,300 4,989 Sales tax refunds 619 Write back of provision for doubtful debts 3,841 Cash discount 1,006 Insurance claim 169 6,401 15,667 34, Other income Interest on deposits (on term deposits with banks and deposits with government authorities) 1,143 1,393 Service fees 29,730 22,514 Net Profit on Foreign currency transactions and translation 629 Profit on sale of fixed assets (net) 1,664 Liabilities / provisions no longer required written back 3,409 30,015 Miscellaneous income 1, ,228 54, Annual Report

43 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March (a) Cost of materials consumed Raw materials consumed (Refer note 30) Opening stock of raw materials 62, ,723 Add: Purchases 1,619,707 1,547,036 1,681,767 1,658,759 Less: Closing stock of raw materials 126,573 62,060 Raw materials consumed 1,555,194 1,596,699 Packing materials consumed Opening stock of packing materials 2,957 3,220 Add: Purchases 84,121 71,161 87,078 74,381 Less: Closing stock of packing materials 4,932 2,957 Packing materials consumed 82,146 71,424 1,637,340 1,668,123 23(b) Purchases of stock-in-trade (Refer note 31) 458, ,872 23(c) Change in inventories of finished goods, work-in-progress and Stock-in-trade Finished goods Opening stock 111, ,251 Less: Closing stock 167, ,009 (56,734) 7,242 Stock-in-trade Opening stock 66, ,397 Less: Closing stock 48,509 66,785 18,276 39,612 Work-in-progress Opening stock 684 2,775 Less: Closing stock 2, (1,630) 2,091 (40,088) 48, Employee benefits Salaries, wages 150, ,639 Contribution to provident and other funds (Refer note 39) 13,817 12,974 Staff welfare expenses 9,667 12, , ,189 Annual Report

44 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March Finance cost Interest expense on Borrowings 1,829 45,835 Trade Payable (Refer note 29) 73 Others 13, Other borrowing costs 2,216 3,441 17,774 49, Other expenses Consumption of stores and spare parts 25,495 32,132 Power and fuel 98, ,176 Rent [net of recovery ` 117,83(000), Previous period ` 9,281(000)] (Refer note 37) 25,389 33,595 Repairs and maintenance Buildings 2,888 10,047 Plant and machinery 19,076 29,700 Others 3,205 25,169 10,059 49,806 Insurance 5,832 5,627 Rates and taxes 6,054 5,770 Excise duty (Refer note 41) 4,912 (848) Sub-contract charges 16,671 18,072 Water charges 4,188 4,514 Travelling and conveyance 20,235 18,108 Legal and professional fees 28,278 18,757 Communication 6,559 5,874 Printing and stationery 2,379 2,538 Computer maintenance and software 43,809 3,566 s' sitting fees Payment to statutory auditors (Net of service tax)* As Auditors 800 1,100 Other services (includes ` 300(000) paid to previous auditors) Out of pocket expenses (includes ` 31(000) paid to previous auditors) 31 1, ,444 Bank charges 4,539 13,153 Sales commission 784 1,325 Freight and forwarding expenses (net) 28,975 30,437 Advertising and sales promotion 506 1,821 Recruitment expenses 2, Loss on sale / write off of fixed assets (net) 1,568 Bad Debts written off 1 Net loss on Foreign currency transactions and translation 1,559 Miscellaneous Expenses 19,920 21, , ,684 * Previous period column is fees paid to earlier auditor. Current year column is for payment to current auditor and previous auditor for Q1 Limited review and certification work. 42 Annual Report

45 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) As at 31 March 2014 (Currency Rupees thousands) As at 31 March 2013 ` 000 ` ' Contingent Liabilities not provided for in respect of: A. Claims against the Company not acknowledged as debt: (a) Excise matters in respect of : Matters relating to undervaluation of assessable value 17,508 17,508 Non payment of duty on clearance of goods meant for 5,815 5,815 export by the customer Availment of modvat credit 1, ,831 24,107 (b) Customs matters in respect of: Matters relating to differential custom duty rate on product 22,301 22,301 (c) Income tax (including fringe benefit tax) matters In respect of matters such as addition to the value of 24,244 24,244 closing stock under the provisions of Section 145 A of the Income Tax Act, 1961, disallowances of certain expenditure as revenue expenditure, etc. in respect of which the Company / Income tax department is in appeal with the first / higher appellate authority In respect of matters where the Company has received favorable order / partial relief from the first appellate authority but the Income Tax Department is pursuing further with the higher appellate authority 1,595 1,595 (d) Sales Tax Matters relating to certain sales considered as exempt sales and sales tax on discounts given to customers (e) Employee related matters: Matters pending with the Labour Court for the reinstatement of services of certain ex-employees Matters pending with the Assistant Labour Commissioner Not Not for the permanent employment of casual workers (f) Matters pending with the High Court / Civil Court relating to counter claim / claim against the Company for the alleged breach of marketing arrangement / non-payment for supplies made respectively. ascertainable ascertainable 7,991 7,991 (g) Service Tax B. Bank Guarantees In respect of differential custom duty on products 949 VAT Registration under Section 84 of Uttarakhand VAT Act and Central Sales Tax Act Under Section 33A of Water (P&CP) Act 1974 and u / s 31A of the Air (P&CP) Act Note: Future ultimate outflow of resources embodying economic benefits in respect of matters stated under 27 A(a) to 27 A(g) above is uncertain as it depends on the final outcome of judgements / decisions on the matters involved. Annual Report

46 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) (Currency Rupees thousands) 28 Capital Commitments (to the extent not provided for) The estimated amount of contracts remaining to be executed on capital account (net of capital advances) and not provided for, is ` 3,202(000) [Previous period ` 15,358(000)]. 29 The suppliers covered under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act) as given in Note 8 - Trade payables regarding the Micro and Small Enterprises has been determined based on the details regarding the status of the suppliers obtained by the Company. This has been relied upon by the auditors. Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006 As at 31 March 2014 As at 31 March 2013 ` 000 ` '000 (i) Principal amount remaining unpaid to any supplier as at the end of the accounting year / period 10, (ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting year / period 73 (iii) The amount of interest paid along with the amounts of the payment made to the supplier beyond the appointed day (iv) The amount of interest due and payable for the year / period 73 (v) The amount of interest accrued and remaining unpaid at the end of the accounting year / period 73 (vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid For the year ended 31 March 2014 For the period from 1 January 2012 to 31 March 2013 ` 000 ` ' Raw Materials Consumed Lauryl Alcohol Ethoxilate 432, ,896 Lauryl Alcohol 309, ,919 Alfa Olefin 183, ,168 Linear Alkyl Benzene 183, ,373 Sulphur 122, ,783 Others 323, ,560 1,555,194 1,596,699 Raw Materials Imported 415, ,401 Indigenous 1,139,759 1,000,298 1,555,194 1,596, Purchases of traded items Surfactants 458, , Annual Report

47 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) Opening Stock as at March 31, 2013 Closing Stock as at March 31, 2014 Net Sales during the year (#) Value Value Value ` 000 ` 000 ` Inventories and Sales of Finished Goods Manufactured items: 1,064 2, ,338 Sulphuric acid (3,127) (1,064) (160,906) Linear alkyl benzene sulphonic acid 27,499 16, ,305 (20,551) (27,499) (220,874) Surfactants 69, ,448 1,543,061 (94,573) (69,871) (1,550,098) Contract manufactured items 12,575 13, ,037 (19,705) (12,575) (209,380) Total of manufactured items 111, ,743 2,038,741 (137,956) (111,009) (2,141,258) Traded items: Surfactants 66,785 48, ,737 (86,692) (66,785) (646,033) By-products ( ) ( ) (32) Total of Traded items 66,785 48, ,737 (86,692) (66,785) (646,065) Total of manufactured and traded items 177, ,252 2,643,478 (224,648) (177,794) (2,787,323) # Net of excise duty Figures in bracket are for the previous period ended 31 March, For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 ` 000 ` Value of imports calculated on CIF basis Raw Materials 491, ,717 Traded Goods 280, ,146 Stores and Spares 2,902 2, Expenditure in Foreign Currency (subject to deduction of tax where applicable) Travelling 4,583 3,085 Export Commission Computer maintenance and software 42, Professional fees 19,561 3, Earnings in Foreign Currency FOB Value of Exports of Goods 342, ,864 Indenting commission 7,779 10,619 Annual Report

48 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 36 Segment information (a) Primary business segment The Company is engaged in manufacture of organic chemicals. As the Company is engaged only in one business segment, the Balance Sheet and the Statement of Profit & Loss Account for the period pertains to one business segment. (b) Secondary geographical segment Year ended 31 March 2014 Year ended 31 March 2014 Year ended 31 March 2014 India Outside India Total ` 000 ` 000 ` 000 Revenue by geographical market 2,294, ,616 2,657,227 (2,462,167) (347,551) (2,809,718) Carrying amount of segment assets 479,660 57, ,187 (Gross) (255,847) (68,010) (323,857) Capital expenditure 53,635 53,635 (115,038) (115,038) Notes : (1) Revenue is segregated into two segments namely India (Sales to customers within India) and Other countries (sales to customers outside India) on the basis of geographical segments. (2) Figures for the previous period are for fifteen months from 1 January 2012 to 31 March 2013 and are shown in brackets. For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 ` 000 ` The specified disclosures for Operating Leases as required by Accounting Standard 19 Leases are given below: Disclosures in respect of agreement for residential flats / Office Premises (along with furniture, fixtures etc. therein) taken on lease: (i) Lease payments recognised in the Statement of Profit and Loss for 25,389 33,595 the year / period (ii) Future minimum lease payments under non-cancellable operating lease : Not later than one year 32,772 34,021 Later than one year but not later than five years 44,160 94,357 Later than five years (iii) Significant leasing arrangements 1. Under the agreements, refundable interest free deposits / advance rent have been given. 2. The agreements contain provision for renewal. 3. The period of agreement ranges between 36 months to 60 months. 4. Under certain agreements, the Company is entitled to permit certain specified parties the use or sharing of the premises. 5. The lease agreements provide for an increase in the lease payments by 15% from the 34th month till the 59th month when it expires automatically. 46 Annual Report

49 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) (Currency Rupees thousands) 38 Related Party Disclosures Related Party Disclosures in accordance with the Accounting Standard 18 - Related Party Disclosures' are given below: (a) Parties where Control exists: Solvay S.A. is the ultimate holding company. Rhodia UK Ltd. holds 72.93% of the equity share capital in the Company and is a step down subsidiary of Solvay S.A. (b) Names of the related parties with whom the Company had transactions during the year / period (i) Fellow Subsidiaries: Solvay Inc. USA Rhodia Operations S.A.S., France Rhodia Nicca Ltd. Rhodia Poliamida E Especialidades LTD A, Brazil Rhodia Polyamide Co. Ltd., Korea P.T. Solvay Manyar Solvay (China) Co. Ltd. Solvay Asia Pacific Co. Ltd., Bangkok Solvay Specialty Chemicals Asia Pacific Pte. Ltd. Rhodia Polymers & Specialties India Pvt. Ltd. Rhodia Feixiang Specialty Chemicals Co. Ltd. Solvay (ZHENJIANG) Chemicals Co. Ltd. Zhuhai Solvay Specialty Chemicals Co. Ltd. Solvay (Zhangjiagang) Specialty Chemicals Co. Ltd. Solvay Hengchang (Zhangjigang) Specialty Rhodia Korea Co. Ltd. Chemical Co. Ltd. Sunshield Chemicals Ltd. Solvay Specialities India Private Limited Rhodia Mexico SA DA CV Solvay (Bangpoo) Specialty Chemicals Ltd. Note: The above have been identified on the basis of the information available with the Company. (ii) Key Management Personnel: Mr. Manoj Khullar, Managing Mr. Thomas Leutner (upto ) (c) Transactions with the Related Parties are for the year / period For the year ended 31 March 2014 For the period from 1 January 2012 to 31 March 2013 (i) Fellow Subsidiaries Sales of goods: Rhodia Operations S.A.S.,France ` ,823 ` ,313 Solvay Specialty Chemicals Asia Pacific Pte. Ltd. 53,039 39,624 Solvay Inc. USA 49,647 36,566 Solvay (ZHENJIANG) Chemicals Co. Ltd. 13,386 2,550 Rhodia Poliamida E Especialidades LTD A, Brazil 7,259 18,127 Rhodia Nicca Ltd. 2,393 4,458 Rhodia Mexico SA DA CV 1,422 8,660 Sunshield Chemicals Ltd. 3, , ,298 Purchase of goods: Solvay Specialty Chemicals Asia Pacific Pte. Ltd. 160, ,995 Rhodia Feixiang Specialty Chemicals Co. Ltd. 66 6,997 Solvay (ZHENJIANG) Chemicals Co. Ltd. 62,594 21,570 Zhuhai Solvay Specialty Chemicals Co. Ltd. 4,600 1,137 Sunshield Chemicals Ltd. 22,193 Solvay (Bangpoo) Specialty Chemicals Ltd. 36,152 36, , ,027 Annual Report

50 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 38 Related Party Disclosures (Continued) (c) Transactions with the Related Parties are for the year / period (Continued) For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 ` 000 ` 000 (i) Fellow Subsidiaries (Continued) Rendering of services: Rhodia Polymers & Specialties India Pvt. Ltd. 13,436 21,626 Solvay Specialty Chemicals Asia Pacific Pte. Ltd. 23,025 10,827 Solvay (Bangpoo) Specialty Chemicals Ltd Solvay (Zhangjiagang) Specialty Chemicals Co. Ltd Rhodia Polyamide Co. Ltd., Korea 1,543 Solvay Hengchang (Zhangjigang) Specialty Chemical Co. Ltd P.T. Solvay Manyar Rhodia Korea Co. Ltd. 4,468 1,543 Sunshield Chemicals Ltd. 18,772 2,472 Solvay Specialities India Private Limited 3,895 4,457 Solvay Inc. USA 593 Solvay Zhengiang Chemicals Co. Ltd ,010 43,556 Receiving of services: Solvay Specialty Chemicals Asia Pacific Pte. Ltd. 33,846 2,568 Solvay (China) Co. Ltd. 18,582 3,161 Solvay Asia Pacific Co. Ltd., Bangkok 2,541 Rhodia Operations S.A.S., France 8,888 63,857 5,729 Inter corporate loan taken: Solvay Specialities India Private Limited 100, ,000 Interest expense on inter corporate loan taken: Solvay Specialities India Private Limited 9,785 8,836 (ii) Key Management Personnel Remuneration: Mr. Thomas Leutner (upto ) 3,208 Mr. Manoj Khullar * 10,879 3,424 10,879 6,632 * The above amount does not include gratuity and compensated absence payable which is actuarially determined on an overall basis for the Company as a whole and individual information in respect of director is not available. 48 Annual Report

51 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) (Currency Rupees thousands) 38 Related Party Disclosures (Continued) (d) Balances Outstanding as at year / period end: As at 31 March 2014 As at 31 March 2013 ` 000 ` 000 Amount Payable: Fellow subsidiaries Solvay Asia Pacific Pte. Ltd., Singapore 58,023 29,615 Solvay (ZHENJIANG) Chemicals Co. Ltd. 5,228 3,880 Zhuhai Solvay Specialty Chemicals Co. Ltd Solvay (Bangpoo) Specialty Chemicals Ltd. 12,193 12,090 Rhodia Operations S.A.S., France 8,839 Solvay Asia Pacific Co. Ltd., Bangkok 2,475 Solvay (China) Co. Ltd. 17, ,700 46,167 Loan outstanding: Solvay Specialities India Private Limited 100, ,833 (Includes interest of ` 601(000), Previous period ` 833(000) Amount Receivable: Fellow subsidiaries Solvay Specialty Chemicals Asia Pacific Pte. Ltd. 10,653 12,760 Rhodia Poliamida E Especialidades LTD A, Brazil 1,017 3,540 Rhodia Operations S.A.S., France 2,925 19,966 Solvay Inc. USA 3,045 5,278 Solvay (ZHENJIANG) Chemicals Co. Ltd Solvay Hengchang (Zhangjiagang) 6 78 Rhodia Polymers & Specialties India Pvt. Ltd. 1,719 6,675 Rhodia Korea Co. Ltd. 1,032 1,543 Sunshield Chemicals Ltd. 4,935 1,572 Solvay Specialities India Private Limited Rhodia Mexico SA DA CV 7,993 Rhodia Nicca Ltd. 4,278 Solvay (Bangpoo) Specialty Chemicals Ltd ,848 64,061 (e) Short-term loan from bank (Note 7) of ` 303,708(000) [Previous period ` 172,217(000)] is secured by a corporate guarantee from Rhodia SA France, a subsidiary of the ultimate holding company. (f) No amounts have been written off / provided for or written back in respect of amounts receivable from or payable to the related parties. Annual Report

52 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) (Currency Rupees thousands) 39 Details of Employee Benefits as required by the Accounting Standard 15 Employee Benefits are as follows: For the year ended 31 March 2014 For the period from 1 January 2012 to 31 March 2013 ` 000 ` Defined Contribution Plans During the year, the Company has recognised the following amounts in the Statement of Profit and Loss. Employers' contribution to Provident Fund and Family Pension 6,770 6,316 Fund Employers' contribution to Superannuation Fund 1,462 2,776 The above amounts are included in Contribution to provident and other funds' under Employee benefits expense' in Note Defined Benefit Plan (Funded) (a) A general description of the Employees Benefit Plan: The Company has an obligation towards gratuity, a funded defined benefit retirement plan covering eligible employees. The plan provides for lumpsum payment to vested employees at retirement, death while in employment or on termination of the employment. In case of vested non management staff, gratuity is calculated in accordance with the provisions of the Payment of Gratuity Act,1972. Further, in case of retirement or superannuation after the completion of more than 20 years of service, additional gratuity of 20% of the amount of the gratuity calculated in accordance with the provisions of the Payment of Gratuity Act, 1972 is also payable. In case of vested management staff, gratuity benefit is an amount equivalent to 15 / 30 days salary depending upon the terms of appointment for each completed year of service subject to a maximum of 30 months salary. Vesting occurs upon the completion of five years of service. (b) Details of defined benefit plan As per Actuarial Valuation: For the year ended 31 March 2014 For the period from 1 January 2012 to 31 March 2013 ` 000 ` 000 Gratuity Particulars I. Components of employer expense 1. Current Service cost 2,603 2, Interest Cost 1,832 2, Expected return on Plan Assets (1,921) (2,266) 4. Actuarial Losses / (Gains) 3,500 1, Past Service cost 6. Total expense recognised in the Statement of Profit and Loss (included in Contribution to provident and other funds' under Employee benefits expense' in note 24) 6,014 3, Annual Report

53 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) II. For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 ` 000 ` 000 Actual Contribution and Benefits Payments for the year / period 1. Actual Benefits Payments (2,600) (2,224) 2. Actual Contributions 2,864 3,095 III. Net asset /(liability) recognised in the Balance Sheet 1. Present Value of Defined Benefit Obligation 30,931 25, Fair Value of Plan Assets 24,585 22, Funded Status [Surplus / (Deficit)] (6,346) (3,196) 4. Net (liability) / asset recognised in the Balance Sheet (6,346) (3,196) IV. Change in Defined Benefit Obligation during the year/ period 1. Present value of Defined Benefit Obligation as at the beginning 25,444 22, Current Service Cost 2,604 2, Interest Cost 1,832 2, Actuarial Losses / (Gains) 3, Benefits paid (2,600) (2,224) 6. Past Service cost 7. Present value of Defined Benefit Obligations as at end of the year / period 30,931 25,444 V. Change in Fair Value of Plan Assets during the year/period 1. Plan Assets as at the beginning 22,248 19, Expected return on Plan Assets 1,921 2, Actuarial Gains / (Losses) 152 (882) 4. Actual Company Contributions 2,864 3, Benefits paid (2,600) (2,224) 6. Plan Assets as at the end of the year / period 24,585 22,248 VI. Actuarial Assumptions 1. Discount Rate 9.30% 7.95% 2. Expected Return on plan assets 9.00% 9.00% 3. Salary Escalation Rate 8.00% 7.00% 4. Attrition years 12% p.a. 12% p.a. 45 & above 2% p.a. 2% p.a. 5. Mortality tables LIC ( ) Ult. LIC ( ) Ult. 6. Estimated amounts of contribution in the immediate next year. 3,000 2,864 Annual Report

54 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) VII. The expected rate of return on the plan assets is based on the average long term rate of return expected on investments of the Fund during the estimated term of the obligations. The actual return on plan asset is ` 2,073(000) [Previous period ` 1,384(000)] VIII. The discount rate is based on the prevailing market yields of Government of India securities as at the Balance Sheet date for the estimated term of the obligations. The assumption of the future salary increases, considered in actuarial valuation, takes into account the inflation, seniority, promotion and other relevant factors. IX. The major categories of Plan Assets as a percentage of the total plan assets For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 ` 000 ` 000 Insurer Managed Funds 100% 100% The gratuity benefit scheme of the Company is managed by Life Insurance Corporation of India (LIC). The Company does not have the details of the composition of the plan assets, by category, from the LIC for the current and the previous period and hence the disclosures as required by Accounting Standard (AS) 15 on Employee Benefits have not been given. For the year ended 31 March 2014 For the period from 1 January 2012 to 31 March 2013 Year ended 31 December 2011 Year ended 31 December 2010 Year ended 31 December 2009 X. Experience Adjustments 1. Present Value of Defined Benefit Obligation as at the Balance Sheet date ` 000 ` 000 ` 000 ` 000 ` ,931 25,444 22,615 20,507 14, Fair Value of Plan Assets as at the Balance Sheet date 24,585 22,248 19,993 14,496 8, Funded Status [Surplus / (Deficit)] (6,346) (3,196) (2,622) (6,011) (5,287) 4. Experience adjustment on Plan Liabilities 4,396 (289) 421 2,314 (1,772) 5. Experience adjustment on Plan Assets 152 (882) Annual Report

55 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 40 Earnings Per Share For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 (a) Weighted average number of equity shares of ` 10 each outstanding as at the Balance Sheet date Nos. 3,375,600 3,375,600 (b) Nominal value of share ` (c) Net Profit / (Loss) earning per share (Total operations) ` in 000 (67,666) 368,630 (d) Earnings per share (basic and diluted) (Total operations) ` (20.05) (e) Net Profit / (Loss) earning per share (Continuing operations) ` in 000 (67,666) (10,770) (f) Earnings per share (basic and diluted) (Continuing operations) ` (20.05) (3.19) 41 (a) Excise duty paid and collected from customers is shown separately and deducted from the Gross sales and Processing charges in the Statement of Profit and Loss. (b) Excise duty appearing under Other expenses (Note 26) represents (i) the difference between the excise duty included in the closing stock and that in the opening stock of manufactured finished goods ` 5,170(000) (Debit)[Previous period: ` 1,963(000) (Credit)] and (ii) the excise duty on rejections, etc. ` 258(000) (Credit) [Previous period ` 1,115(000) (Debit)]. 42 Foreign Currency exposures: Unhedged Exposures Particulars Amount in Foreign Currency Equivalent Amount in Indian Currency (` 000) Trade & other payables USD 4,077,061 (1,271,799) 247,396 (69,389) Euro 324,701 (157,205) 27,226 (11,000) Buyers' credit USD 3,248, ,133 (Nil) (Nil) Euro 83,881 (Nil) 7,033 (Nil) Packing credit USD 767,473 (493,390) 45,649 (26,548) Trade receivable and other receivables USD 926,299 (1,077,822) 55,097 (58,558) Euro 13,752 (17,091) 1,126 (1,189) Note : The figures in brackets represent previous year's figures. 43 Discontinuing Operation The operation of the Phosphate Business becoming commercially unviable, the Company has suspended its operations of Ambarnath unit from July The information relating to discontinuing operation as required under Accounting Standard 24 (AS 24) Discontinuing Operations is given here under: (a) The initial disclosure event for the discontinuing operation, as defined in Accounting Standard 24 (AS 24) Discontinuing Operations occurred during Annual Report

56 Rhodia Specialty Chemicals India Limited Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) (b) As at 31 March 2014, the carrying amount of (i) the total assets to be disposed of was ` Nil [Previous period ` 4,078(000)] and (ii) the total liabilities to be settled was ` Nil [Previous period ` 2,141(000)]. The carrying value of fixed assets held for disposal included in total assets was ` Nil [Previous period ` Nil]. (c) The revenue and expenses in respect of the ordinary activities attributable to the discontinuing operation during the year ended 31 March 2014: For the year ended 31 March 2014 (Currency Rupees thousands) For the period from 1 January 2012 to 31 March 2013 ` 000 ` 000 ` 000 ` 000 Income Net Sales Other Income 411, ,817 Expenditure Employee benefits expense 2,309 Other expenses 29,588 Depreciation and amortisation ,417 Profit / (Loss) before tax 379,400 Current tax : MAT for the period 71,000 MAT credit entitlement (71,000) Profit /(Loss) after tax 379,400 Note: Other income comprises of profit on sale of fixed assets at Ambarnath ` Nil [Previous period ` 367,367(000)], Liabilities no longer required written back ` Nil [Previous period ` 44,450(000)] (d) The amounts of net cash flows attributable to the operating, investing and financing activities of the discontinuing operation for the year ended 31 March 2014: As at 31 March 2014 As at 31 March 2013 ` 000 ` 000 (i) Net cash from / (used in) operating activities (74,821) (ii) Net cash from / (used in) investing activities 370, Exceptional item: Customs duty differential was payable for the year and previous periods in respect of one of the products as per the interaction with Customs authorities. 54 Annual Report

57 Notes forming part of the financial statements for the year ended 31 March 2014 (Contd.) 45 Amounts remitted in foreign currency during the year on account of dividend: (Currency Rupees thousands) Dividend Related to the period ended 1 January 2012 to 31 March 2013 Name of Party Number of shares ` 000 Rhodia UK Ltd. 2,461,973 4,924 Solvay Participation France 620,852 1,242 Total 3,082,825 6, Disclosure as per Clause 32 of the Listing Agreements with the Stock Exchange The Company has not given any loans and advances in the nature of loans to subsidiaries, associates and firms / companies in which directors are interested. 47 Prior Year Comparatives The current period financial statements are for twelve months from 1 April 2013 to 31 March 2014 as against previous period of fifteen months from 1 January 2012 to 31 March In view of this, the figures for the current period are not strictly comparable to those of the prior period of fifteen months. 48 Previous period figures have been regrouped / reclassified wherever necessary to correspond with the current year's classification / disclosure. For and on behalf of the Board of s S. N. Talwar Yogesh Thar Chairman Manoj Khullar Managing Niranjan Ketkar Legal Manager & Company Secretary Mumbai Date: 23 rd May 2014 Annual Report