DIRECTORS’ REPORT

Dear shareholders,

Your Directors are pleased to present their Twenty Sixth Annual Report together with the Audited Financial Statements of your Company for the financial year ended March 31, 2015.

Dividend

After considering the profitability, cash flow and overall financial performance of the Company, your Board of Directors of the Company are pleased to recommend a final dividend of Rs. 3.50 per equity share (35% on the face value of Rs. 10/- each) for the year ended March 31, 2015 subject to approval of the members at the forthcoming Annual General Meeting.

During the previous financial year, the Company has paid a dividend of Rs 5.00 per equity share (50% on face value of Rs. 10 each), and the total outgo was Rs. 247.64 Lacs towards dividend and Rs. 42.08 Lacs towards dividend distribution tax.

The final dividend, if declared as above would involve a total outgo of Rs. 255.95 Lacs towards dividend for the year and Rs. 51.17 Lacs towards dividend distribution tax.

Transfer to Reserves

Your Company proposes to transfer Rs. 150 Lacs to General Reserve (Previous Year Rs. 225 Lacs). Out of amount available for appropriation and an amount of Rs. 3,430 Lacs is proposed to be retained in the Statement of Profit and Loss.

State of Company's Affairs

The highlights of the Company's performance are as under:

General

The global economic environment during the year 2014­15 continued to be gloomy with slow growth in all emerging markets. The Indian economy also struggled with Industrial growth, high inflation, depreciation of Indian Currency, high interest cost. Negative business sentiments prevailed throughout the year.

Results of Operations

During the year under review, new product namely CPC Green has been added in bucket of the Company pursuant to the Scheme of Arrangement in the nature of demerger and transfer of CPC Green division from Asahi Songwon Colors Limited. Hence, the Company has earned a total income of Rs. 20,212 Lacs as compared to Rs. 14,500 Lacs of the previous year. However, Profit after Tax (PAT) decreased from Rs. 2,004 Lacs to Rs. 1,600 Lacs due to global economic situations.

The total sales of the Company increased from Rs. 13,897 Lacs to Rs. 19,210 Lacs during the year.

Exports

Further the total exports sale increased from Rs. 11,678 Lacs to Rs. 17,475 Lacs compare to the previous year. Your Directors are confident to explore better overseas market in the years to come with the strengthened product portfolio.

Capital Expenditure

During the year under review the Company has incurred capital expenditure of Rs. 537.99 Lacs.

Material Changes and Commitment, Affecting the Financial Position of the Company which has occurred between the end of financial year to which the Financial Statements relate and the date of the Report.

There has been no material changes and commitment, affecting the financial position of the Company which has occurred between the end of financial year to which the financial statements relate and the date of the report.

Authorised Share Capital

During the year under review, pursuant to Scheme of Arrangement in the nature of demerger and transfer of CPC Green Division of Asahi Songwon Colors Limited to the Company, sanctioned by the Hon'ble High Court of Gujarat, Ahmedabad vide order dated 17.10.2014 and effective from 02.12.2014 the Authorised Share Capital of Rs. 35,000,000/-has been transferred from Asahi Songwon Colors Limited to the Company, hence the Authorised Share Capital of the Company stand increased From Rs. 50,000,000/- to Rs. 85,000,000/-.

Share Capital

During the year under review, the paid up share capital increased as a result of Issue of 2,360,050 Equity Shares in the ratio of 5 Equity Shares of Rs. 10/- each against 26 Equity Shares of Rs. 10 each held by Shareholders of Asahi Songwon Colors Limited pursuant to Scheme of Arrangement in the nature of demerger and transfer of CPC Green Division of Asahi Songwon Colors Limited to the Company.

Issue of Shares with differential rights

During the year under review, the Company has not issued equity shares with differential rights.

Issue of Sweat Equity Shares

During the year under review, the Company has not issued Sweat Equity Shares.

Issue of Employee Stock Options

During the year under review, the Company has not issued any shares under Employee Stock Option.

Subsidiary Companies

During the year under review the Company does not have any subsidiary.

Finance and Insurance

Pursuant to the Scheme of Arrangement in the nature of demerger and transfer of CPC Green division of Asahi Songwon Colors Limited the Term Loan of Green Division as on 01.04.2014 has been transferred to the Company and hence the Company has been financed by State Bank of India for working capital and Term Loan.

All insurable interests of the Company, including plant and machinery, building, stocks, vehicles, stores and spares have been adequately insured against various risks and perils.

Credit Rating

The CARE has upgraded rating of the Company from "CARE BBB+" (Triple B Plus) to "CARE A-" (A Minus) assigned to the long term bank loans/facilities. The CARE has also upgraded rating assigned to the short term bank loans/facilities from

"CARE A2" (A Two) to "CARE A2+" (A Two Plus).

Listing

The Equity Shares of the Company continue to be listed on BSE Limited and Ahmedabad Stock Exchange Limited and Listing Fees for the year 2015-16 has been paid. 2,360,050

Equity Shares of Rs. 10 each allotted on 13.02.2015 pursuant to Scheme of Arrangement in the nature of demerger got listed on both the Stock Exchanges and also received the trading permissions.

Transfer to Investor Education and Protection Fund

As provided in Section 205C of the Companies Act, 1956, dividend amount which was due and payable and remained unclaimed and unpaid for the period of seven years has to be transferred to Investors Education and Protection Fund.

The Company has transferred an amount of Rs.880,885 remaining unclaimed was transferred to Investor Education and Protection Fund (IEPF) during the year.

Particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as "Annexure A" to the Board's report.

Risk Management

The risk management function is integral to the company and its objectives includes ensuring that critical risk are identified continuously, monitored and managed effectively in order to protect the company's business. The Board is of the opinion that there are no identifiable risks which may threaten the existence of the Company.

Corporate Social Responsibility Initiatives

In accordance with the provisions of Section 135 of the Companies Act, 2013 and the rules framed there under, the Company has a Corporate Social Responsibility Committee of Directors comprising Mrs. Paru M. Jaykrishna - Chairperson, Mr. Gautam Jain and Mr. Kiran J. Mehta has inter alia also formulated a CSR Policy.

The role of the CSR Committee is to review the CSR policy, indicate activities to be undertaken by the Company towards CSR activities and formulate a transparent monitoring mechanism to ensure implementation of projects and activities undertaken by the Company towards CSR initiatives.

The Report on CSR Activities, which forms part of the Directors' Report, is annexed as "Annexure B" to this report.

Board Evaluation

Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the non-executive directors and executive directors.

In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non­executive directors.

Public Deposits

The Company has not accepted deposit from public during the year and there was no deposit outstanding on March 31, 2015.

Policy on Appointment and Remuneration of Directors and Key Managerial Personel

The Company's policy on appointment and remuneration of Directors, Key Managerial Personnel and other employees and other matters as provided in Section 178 (3) of the Companies Act, 2013 has been disclosed in the Corporate Governance Report, which forms part of this Report.

The details of programmes for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at : www. aksharchemindia.com

Disclosures on Managerial Remuneration

Details of Managerial remuneration as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as per "Annexure C" to this report.

Particulars of Employees

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided as "Annexure D" to this report.

Declaration by Independent Directors

The Company has received necessary declaration from each independent director under Section 149(7) of the Companies Act, 2013 that he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

Directors and Key Managerial Personnel

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Gokul M. Jaykrishna (holding DIN: 00671652) Joint Managing Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered himself for re-appointment.

Mr. Munjal M. Jaykrishna, (DIN: 00671693) Joint Managing Director has been appointed as Chief Financial Officer (CFO) of the Company w.e.f. 14th March, 2015.

Mr. Meet Joshi, Associate Member of the Institute of Company Secretaries of India, (Membership No. A28814) has been appointed as Company Secretary and Compliance officer of the Company w.e.f. 23rd February, 2015.

Women Director

The Board of Directors of the Company includes a woman director viz. Mrs. Paru M. Jaykrishna. Accordingly, the Company is in compliance with the requirement of section 149(1) of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Independent Directors

All the Independent directors have been appointed for the term of five consecutive years from the date of Annual General Meeting of the Company held on 24th September, 2014 till the date of 30th Annual General Meeting in the year 2019, hence no Independent Director of the Company are liable to retire during the year under review.

Directors' Responsibility Statement

In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013 and based on the information provided by the management, your directors state that:

(a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) the Directors have selected such accounting policies and applied them consistently and made 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 March 31, 2015 and of the profit of the Company for the year ended on that date;

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

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

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

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Number of Meetings of the Board

Six (6) meetings of the Board of Directors were held during the year. For further details, please refer Corporate Governance Report attached with this Annual Report.

Audit Committee

The composition of the Audit committee, as per the applicable provisions of the Act and Rules, are as follows: Mr. Kiran J. Mehta - Chairman Dr. Pradeep Jha - Member

Mr. Param J. Shah - Member

A detailed note on the Board and its committees is provided under the Corporate Governance Report section in this Annual Report.

Vigil Mechanism/ Whistle Blower Policy

The Company has adopted vigil mechanism/whistle blower policy which provides a framework to promote a responsible and secure whistle blowing. It protects employees wishing to raise a concern about serious irregularities within the Company. It provides for a vigil mechanism to channelize reporting of such instances/ complaints/ grievances to ensure proper governance. The Audit Committee oversees the vigil mechanism.

Internal Financial Controls and their Adequacy

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

Statutory Auditors and Auditors' Report

At the Annual General Meeting held on September 25, 2014, M/s. Trushit Chokshi & Associates, Chartered Accountants, Ahmedabad (Firm Registration No. 111072W) were appointed as statutory auditors of the Company to hold office till the conclusion of the Twenty Eighth Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. Trushit Chokshi & Associates, Chartered Accountants, Ahmedabad (Firm Registration No. 111072W), as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 142 of the Companies Act, 2013.

The notes on financial statement referred to in their Audit Report are self explanatory and do not call for any further explanation.

Secretarial Auditors

Mr. Bipin L. Makawana, Practicing Company Secretary (Membership No. A15650), was appointed to conduct the secretarial audit of the Company for the financial year 2014­15, as required under Section 204 of the Companies Act, 2013 and Rules there under. Secretarial Audit Report for F.Y. 2014­15 forms part of the Annual Report as "Annexure E" to the Board's report.

The Secretarial Auditor has not made any adverse comments or given any qualification, reservation or adverse remarks or disclaimer in their Audit Report.

Cost Auditor

During the year under review, the provision regarding Cost Audit is not applicable to the Company.

Extract of Annual Return

The details forming part of the extract of the Annual Return in Form MGT-9 is appended as "Annexure F" to this report.

Particulars of Loans, Guarantees or Investments Made

Particulars of loans, guarantees or investments Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.

Particulars of Contracts or Arrangements Entered into with Related Parties

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 including certain arms length transactions under the third proviso thereto is disclosed in Form AOC-2, is appended herewith as "Annexure G" to the Board's Report and further explained in details in Notes to the financial statements provided in Annual Report.

Significant or Material Orders passed by The Regulators or Courts or Tribunals Impacting the Going Concern Status of the Company and / or the Company's Operations in Future.

There were no significant or material Orders have been passed by the regulators or Courts or Tribunals impacting the going concern status of the Company and / or the Company's operations in future.

Management Discussions and Analysis Report

In terms of Clause 49 of the Listing Agreement with the Stock Exchanges a Management Discussion and Analysis Report is appended as "Annexure H" to this Report.

Corporate Governance

Your Company is committed to maintain the highest standards of Corporate Governance. A separate Corporate Governance Report as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange(s) is furnished as "Annexure I" to this Report together with certificate from M/s. Trushit Chokshi & Associates, Chartered Accountants, Ahmedabad, confirming compliance with the conditions of Corporate Governance.

Composite Scheme of Arrangment

During the year under review Hon'ble High Court of Gujarat had sanctioned the Scheme of Arrangement in the nature of demerger and transfer of CPC Green Division of Asahi Songwon Colors Limited to the Company and consequential restructure of the Share Capital of Asahi Songwon Colors Limited vide certified order dated November 29, 2014 and the scheme became effective from December 2, 2014 from the date of filing the certified order with ROC, Gujarat. Pursuant to the scheme all the assets and liabilities of CPC Green Division of Asahi Songwon Colors Limited has been transferred to the Company on the appointed date i.e. April 1, 2014.

Addition in the Business of The Company

Pursuant to Scheme of Arrangement in the nature of demerger and transfer of CPC Green division from Asahi Songwon Colors Limited along with the Vinyl Sulphone (VS), new product namely CPC Green has been added in the business of the Company.

Details in Respect of Frauds Reported by Auditors Under Sub-Section (12) of Section 143 other than those which are Reportable to the Central Government

During the year under there were no frauds reported by Auditors under section 143 (12).

Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

Award to Directors

During the year under review Mrs. Paru M. Jaykrishna, Chairperson and Managing Director of the Company was honoured with the following awards.

• Best Woman Entrepreneur at SME Business Excellence Awards 2014 organized by Dun & Bradstreet in association with Federal Bank Limited and Times Group.

• Runner up in the category of Best Woman Entrepreneur Exporter at ECGC - D&B Indian Exporters' Excellence Awards 2015 organized by Dun & Bradstreet in association with Export Credit Guarantee Corporation of India Ltd (ECGC).

Human Resources and Industrial Relations

Your Company firmly believes that employees are the most valuable assets and key players of business success and sustained growth. Various employee benefits, recreational and team building efforts are made to enhance employee skills, motivation as also to foster team spirit. Industrial relations remained harmonious with a focus on productivity, quality and safety throughout the year.

Environment Safety and Health

Your Company continues to exercise persistent and meticulous efforts towards greener earth and environment conservation.

The Company preserves in its efforts to teach safe and environmentally accountable behavior in every employee, as well as its vendors. The Company is committed towards safety, not only of its own men and plant, but also of the society at large.

Solid waste generated at the Works, after treatment of its liquid effluent is shifted to a Gujarat Pollution Control Board (GPCB) approved site.

The Company continues to demonstrate its commitment to a clean and safe environment. The State of the art effluent treatment plant continues to run satisfactorily, so that the treated waste water discharged is well within the stipulated norms set by GPCB.

Your Company has ISO 14001:2004 and ISO 9001-2008 certification for its unit.

Appreciation and Acknowledgements

Your Directors are grateful and pleased to place on record their thanks to Government of India, Government of Gujarat, Electricity supply companies, and Bankers for their excellent support, guidance and continued cooperation.

The Company is thankful to the shareholders for reposing trust in the Company and their unflinching enthusiasm and patronage.

For and on behalf of Board of Directors

Mrs. Paru M. Jaykrishna

Chairperson and Managing Director

Date : August 12, 2015

Place : Indrad, Mehsana

Registered Office:

166-169, Village Indrad, Kadi - Kalol Road, Dist : Mehsana, Gujarat - 382 715 (India)