The Directors present the 50^th Annual Report and Audited Financial Statements of the Company for the year ended 31^st March, 2016.

1. Financial Results: (Rs. In Lakhs)

2. Issue of Preference Shares:

In pursuance of the scheme of amalgamation (“the Scheme”) sanctioned by the Hon'ble High Court of Judicature at Bombay vide its Order dated 16^th October, 2015 between Khatau Capacitors Limited and Indokem Exports Limited (Transferor Companies) with Indokem Limited (Transferee Company), 2070975 8% Non Cumulative Redeemable Preference Shares) of the Company were issued to the members of the Transfer or Companies. As a result of this, the issue Authorized Capital of the Company has been increased from Rs. 25.30 crores to Rs. 26.42 crores in F.Y. 2015-2016.

3. Dividend:

Considering the accumulated losses the Board of Directors of your Company do not consider it appropriate to recommend any Dividend for the Financial Year ended 31^st March, 2016.

4. Operational Performance:

Revenue from operations for F.Y. 2015-2016 at Rs.5866.15 lakhs was higher by 8.94 % over last year (5384.55 lakhs). EBITDA at Rs.322.09 lakhs registered a decline over the EBITDA of Rs.410.88 lakhs in F.Y. 2014-2015. PAT for the year was Rs. (36.11 lakhs) registering a decline of 143.84% over the PAT of Rs.82.36 lakhs in F.Y. 2014-2015.

5. Transfer to Reserves:

In view of inadequate profits for the year under review, no amount has been transferred to the reserves.

6. Directors and Key Managerial Personnel:

Pursuant to the provisions of Section 149 of the Act, Shri. Kailash Pershad (DIN: 00503603), Shri. Rajagopalan Sesha (DIN: 00289643) and Shri. Bhalachandra Sontakke (DIN: 01225753) were ratified as Independent Directors of the Company at the Annual General Meeting convened on 30^th September, 2014. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as Independent Director during the year.

Smt. Asha M. Khatau retires by rotation and being eligible, has offered herself for re-appointment.

During the year, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than the sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

Pursuant to the provisions of Section 203 of the Act, the key managerial personnel of the Company are Shri. Mahendra K. Khatau as Chairman and Managing Director, Mr. Manish M. Khatau as Whole-Time Director, Shri. Mukund Nagpurkar as Chief Financial Officer and Mr. Bhavik B. Parekh as Company Secretary.

During the year Ms. Sugandha Vaidya resigned as the Company Secretary and Compliance Officer of the Company on 19^th September, 2015 and Smt. Leelabai K. Khatau resigned from the Directorship on 29^th January, 2016.

7. Appointment of Director:

Smt Asha M. Khatau, Non- Executive Director of your Company, retires by rotation and being eligible, offers herself for re-appointment. The details regarding Smt. Asha M. Khatau as required under Regulation 36 (3) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 are disclosed in the notice of the Annual General Meeting. None of the other Directors are related inter se except Shri. Mahendra K. Khatau and Mr. Manish M. Khatau who are related to each other.

8. Remuneration of Directors and Key Managerial Personnel:

Pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the details of remuneration of Directors and Key Managerial Personnel are as furnished in Annexure C.

9. Training and Familiarization Programme for Directors:

The Company has provided information and made the Independent Directors aware about the major developments in legal and regulatory areas, particularly regarding Companies Act, 2013 and Regulation 25 (7) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The details of Familiarization Programme for the Independent Directors are available on the Company's website at www.indokem.co.in

10. Statement on declaration given by Independent Directors:

The Independent Directors of the Company have submitted their declaration of independence as required under the provisions of Section 149 (7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Section 149 (6) of the Act.

11. Particulars of Employees:

None of the employees of the Company fall under the limits laid down in Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

12. Directors’ responsibility statement:

Pursuant to Section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

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

(iii) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down Internal Financial Control to be followed by the Company and such internal financial controls are adequate and operating effectively;

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

13. Statutory Auditors:

Pursuant to the provisions of Section 139 of the Companies Act, 2013, Sheth Doctor & Associates, Chartered Accountants, Mumbai, were appointed as the Statutory Auditors of the Company on 30^th September, 2014 for a period of three years to hold office until the conclusion of the Annual General Meeting to be held in the year 2017.

M/s. Sheth Doctor & Associates have issued a Certificate of eligibility pursuant to Section 141 of the Companies Act, 2013.

The Board of Directors of your Company recommends ratification of the appointment of M/s Sheth Doctor & Associates, Chartered Accountants, Mumbai from the conclusion of the forthcoming Annual General Meeting of the Company until the conclusion of the next Annual General Meeting to be held in the year 2017.

14. Auditors’ Observations:

As regards the Audit Qualification on the records and valuation of inventory at Ankleshwar Plant, the Management is of the view of that the inventories are usable for trading operations of the Company at Mumbai.

15. Secretarial Audit Report:

Pursuant to the Provisions of Section 204 of Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Ragini Chokshi & Co., Company Secretary in Whole-Time Practice, Mumbai to undertake Secretarial Audit of the Company for the Financial Year ended 31^st March, 2016. The Secretarial Audit Report issued by Ragini Chokshi & Co. in the prescribed Form MR-3 forms part of the Annual Report.

There are no-qualifications, reservations or adverse remarks in the Report.

16. Disclosures:

As required under Regulation 34(2) read with Schedule V of SEBI (Listing Obligations Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is enclosed as a part of the Annual Report.

The Company has taken necessary steps to adhere to all the requirements of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance together with the certificate of the Statutory Auditors confirming compliance with the conditions of Corporate Governance as stipulated in Regulation 34 (3) read with Schedule V of SEBI (Listing Obligation and Disclosure Requirements) Regulations is included as a part of the Annual Report.

17. Extract of Annual Return:

Pursuant to Section 134 (3)(a) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, the extract of Annual Return in the prescribed Form MGT-9 is attached herewith and marked as Annexure C.

18. Number of meetings of the Board:

Four (4) meetings of the Board were held during the Financial Year. For details of the meetings of the Board, please refer to the Corporate Governance report, which forms part of this report.

19. Performance evaluation of the Board:

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015. The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as the composition of Committees, effectiveness of Committee meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual directors to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

A separate meeting of Independent Directors convened in the month of March, 2016, to discuss the following:

(i) Review the performance of Non- Independent Directors and the Board as a whole;

(ii) Review the performance of the Chairperson of the Company, taking in to account the views of executive Directors and Non-Executive Directors;

(iii) Assess the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

All Independent Directors were present at the Meeting and discussed above and expressed their satisfaction.

20. Policy on Directors’ appointment and remuneration and other details

The Company's policy on Directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the Corporate Governance Report, which forms part of this report.

21. Internal financial control systems and their adequacy

Company is in the process of establishing Internal Financial Control over financial reporting in current financial year 2016-2017.

The details in respect of Internal Financial Control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

22. Audit Committee

The details pertaining to composition of Audit Committee are included in the Corporate Governance Report, which forms part of this report.

23. Particulars of loans, guarantees or investments

Pursuant to Section 186 of the Companies Act, 2013, the details of loans given, investments made or guarantees or securities given are mentioned in note no: 28 to the Financial Statements for the Financial Year 2015-16.

The loans, investments, guarantees and securities provided by the Company during the financial year ended 31^st March, 2016, together with the existing loans, investments, guarantees and securities do not exceed the limits prescribed under sub-section (2) of Section 186.

24. Transactions with parties:

None of the transactions with related parties fall under the scope of Section 188 (1) of the Act. Information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8 (2) of the Companies (Accounts) Rules, 2014 are stated in Annexure A in Form AOC-2 and the same forms part of this report.

25. Insurance:

All the properties and insurable interests of the Company including the buildings, plant and machineries and stocks have been adequately insured.

26. Material Changes and Commitments:

Previous Financial Year (i.e. 2014-2015) the Company had entered into a Memorandum of Understanding (MOU) with a prospective buyer for sale/ transfer of its asset at Ankleshwar. Pursuant to the MOU, the Company has received full payment in advance. Documentation for effecting sale/ transfer with the buyer is under process and will be concluded shortly.

The Company has entered into a Memorandum of Understanding (MOU) for acquisition of Plot of Land at MIDC, Ambernath together with factory building standing thereon and machineries installed therein.

27. State of Company’s Affairs:

There is no change in the nature of business during the year under review. No Order has been passed by any Regulatory Court or Tribunal, which can impact the going concern status of the Company and its operations in future.

28. The Conservation of Energy, Technology Absorption, Foreign exchange Earnings and Outgo:

Pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is as follows. Your Company is engaged in the continuous process of energy conservation by way of improved operational and maintenance practices:

A. Conservation of Energy:

(a) Energy Conservation measures taken:

(i) Electrical Energy:

- Regular preventive/ predictive maintenance of electrical system is carried out to ensure minimum loss of energy/ power supply.

- Regular up gradation in electrical system is done so as to minimize consumption of electrical power supply.

(ii) Furnace Oil/ LDO Consumption:

Considering the above issue there are no major consumption of Furnace Oil/ Light Diesel Oil. However, there are some processing activities carried out limiting the consumption of energy.

(b) Additional investments and proposals if any, being implemented for reduction of consumption of energy:

Apart from the above mentioned strategies your Company is in the process to upgrade and install new machineries which will altogether result in energy saving and will add to operational efficiency in coming years.

(c) Impact of the measures at (a) and (b) for reduction of consumption of energy and consequent impact on the cost of production:

There is no such special impact for the same.

(d) Total energy consumption and energy consumption per unit of production:

As per Form - “A” forming part of Annexure A

B. Technology Absorption:

Your Company has taken positive efforts for technology absorption and its up gradation.

(a) Modification in air conditioning system to improve process conditions.

(b) Modification in existing machines for high value and new products developments including process simplification.

(c) Up gradation of control system of after-treatment machines.

Due to above factors and measures been considered there are various benefits resulted as such;

(i) Cost reduction

(ii) Improvement in quality

(iii) Improvement in operating performance

(iv) New product developments

C. Foreign Exchange Earnings and Outgo: (Rs. In ‘000)

29. Risk Management:

Your Company has a robust risk management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risk trend, exposure and potential impact analysis at a Company level as also separately for business segments. The key business risks identified by the Company and its mitigation plans are included in Management Discussion and Analysis Report.

30. Subsidiary Company, Associate Company and Joint Venture Company:

Your Company does not have any Subsidiaries or Associates or Joint Venture Companies.

31. Deposits:

Your Company has not accepted any deposits from public.

32. Internal Financial Control:

Company is in the process of establishing Internal Financial Control over Financial Reporting in current Financial Year 2016-2017.

33. Committees of Directors and Key Managerial Personnel:

The details pertaining to Composition of Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship/ Grievance Committee, number of meetings held of such Committees' during the Financial Year 2015-2016 and meetings attended by each member of the Committee as required under the Companies Act, 2013 are provided in Corporate Governance Report forming part of the report.

34. Corporate Social Responsibility (CSR):

Your Company does not fall under the eligibility criteria of Corporate Social Responsibility as laid down under Section 135 of the Companies Act, 2013 and by virtue of above your Company has not initiated any initiative for the same.

35. Cost Audit:

Your Company does not fall under the eligibility criteria to conduct Cost Audit and to maintain Cost Records as required under Section 148 of the Companies Act, 2013 during the Financial Year 20152016.

36. Appreciation:

The Directors take this opportunity to thank the Company's employees, customers, vendors, investors for their continuous support and are grateful for the confidence and faith shown in them and also extends sincere gratitude to the Banks, Central and State Government Departments and the Local Authorities for their guidance and support.

By Order of the Board

For Indokem Limited

Sd/-

Shri. Mahendra K. Khatau

Place: Mumbai Chairman & Managing Director

Date: 10^th August, 2016 DIN: 00062794