DIRECTORS' REPORT

To,

THE MEMBERS,

BDH INDUSTRIES LIMITED

Your Directors have pleasure in presenting Twenty Fifth Annual Report of the Company together with the Audited Financial Statements for the year ended 31st March, 2015.

REVIEW OF OPERATIONS :

During the year 2014-15 Company achieved Sales (Net) of Rs. 4461.36 Lakhs as compared to Rs. 4263.59 Lakhs in the previous year registering growth by 4.6% over previous year. The Operating Profit of the Company i.e. Profit before Interest and Depreciation has increased from Rs. 490.12 lakhs in previous year to Rs. 502.06 lakhs in 2014-15. The Company earned Net Profit of Rs. 256.97 lakhs during the year as against Rs. 229.78 lakhs as in previous year thereby showing growth of 12% in Net Profit after Tax. Your Directors have approved a transfer of Rs. 38.55 lakhs to General Reserve for the year ended 31st March 2015 as against an amount of Rs. 34.47 lakhs in previous year. After adding the surplus brought forward from previous year of Rs. 965.89 lakhs, Rs.1024.78 lakhs is carried to the Balance Sheet as surplus in Statement of Profit & Loss.

EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS :

No event occurred between the end of the year to which the financial statements are related and the date of report that would materially change or affect the financial positon of the Company.

CHANGE IN THE NATURE OF BUSINESS, IF ANY :

There has been no material change in the nature of business during the financial year under review.

DIVIDEND :

Your Directors are pleased to recommend dividend of Rs. 1.40/- per equity share of Rs. 10/- each (previous year Rs. 1.20/- per share) plus Special Silver Jubilee Dividend of Rs. 0.30 per equity share of Rs. 10/-, hence total dividend recommended is Rs. 1.70 per equity share of Rs. 10/- each for financial year ended 31st March, 2015. The said dividend on equity shares is subject to the approval of the shareholders at the Annual General Meeting. The total cash outflow on account of dividend payment, including distribution tax will be Rs.117.80 lakhs. The dividend is tax free in the hands of shareholders.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

The Board of Directors at present has six members Mrs. Jayashree Nair, is the Chairperson and Managing Director of the Company. She was appointed as Managing Director of the Company for a period of three years with effect from 1st April 2014 as approved by the members at the 23rd Annual General Meeting. Mr. S.C. Kachhara is the Executive Director & Chief Financial Officer of the Company. He was appointed as Executive Director of the Company for a period of three years with effect from 1st April 2014 as approved by the members at the 23rd Annual General Meeting. Mr. S. C. Kachhara was also re-designated the Chief Financial Officer of the Company with effect from 28th May 2014 in compliance with section 203 of the Companies Act 2013. Mr. S. C. Kachhara (DIN 00019666) retires by rotation at the forthcoming Annual General Meeting, being eligible and offers himself for re-appointment. Accordingly, the Board recommends his re-appointment.

There are three Independent Directors on the Board of the Company - Mr. A.V. Menon (DIN-00019770), Dr. Dinesh Variar (DIN-00019721) and Mr. Bhagirath Singh Sihag (DIN-00155407). In order to comply with the requirements of Section 149(4) and 149(5) of the Companies Act 2013, the Board of Directors recommended the appointment of the three Independent Directors as Independent Directors under the provisions of the Companies Act 2013, subject to the approval of the members at the 24th Annual General Meeting. The approval of members was obtained by postal ballot, e-voting and poll at the 24th Annual General Meeting and the results were announced to the stock exchange. The terms of appointment for the Independent Directors were issued by way of letter duly signed by Chairperson of the Board.

There is one Non- Executive Director on the Board of the Company - Mrs. Karthika Nair (DIN-00019695). To comply with the requirement of Section 203 of the Companies Act 2013, Mrs. Jayashree Nair, Managing Director, Mr. S. C. Kachhara, Executive Director and Chief Financial Officer and Ms. Nikita Phatak, Company Secretary of the Company have been re-designated as the Key Managerial Personnel of the Company. The Board of Directors met five times during the year on 28th May 2014, 12th August 2014, 17th September 2014, 14th November 2014 and 12th February 2015. The Policy for selection of Directors and determining independence of a director and Remuneration Policy for Directors, Key Managerial Personnel and and other employees is attached herewith as Annexure III(A) and Annexure III(B) to this report.

DECLARATION FROM INDEPENDENT DIRECTORS:

The Independent Directors on the Board of the Company have submitted their declaration stating that they meet the criteria of independence under section 149(6) of the Companies Act 2013.

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 :

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimated 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 and loss of the Company for that period;

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

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

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

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

CORPORATE GOVERNANCE :

The Company has complied with the requirements of Corporate Governance as stipulated under Listing Agreement and a Corporate Governance Report is part of this Annual Report. A certificate from Statutory Auditor of the Company on compliance of the conditions stipulated for Corporate Governance under Clause 49 of the Listing Agreement is attached to this report.A declaration by the Managing Director pursuant to clause 49 of the Listing Agreement regarding adherence to the Code of Conduct by the Members of the Board and by the Members of the Senior Management Personnel of the Company is also attached to this report.

LISTING WITH STOCK EXCHANGE :

The equity shares of the Company are listed with Bombay Stock Exchange Limited. The annual listing fee for year 2015-2016 has been promptly paid by the Company.

RISK MANAGEMENT POLICY:

The Company has adopted a Risk Management Policy to identify and categorize various risks, implement measures to minimize impact of these risks and a process to monitor them on regular basis.

RELATED PARTY TRANSACTIONS :

There were no materially significant related party transactions during the year that have any potential conflict with the interests of the Company. The transactions with related parties are disclosed in the notes to the financial statements. Form AOC-2 prescribed under the Companies Act 2013 and Companies (Accounts) Rules, 2014 is furnished as Annexure V to this report.

VIGIL MECHANISM :

The Company has established a Vigil Mechanism for Directors and employees to report their genuine concerns or grievances. The Whistle Blower Policy is adopted which provides safeguards against victimization of the Whistle Blower. The employees of the Company are free to report any concerns of unethical behavior, suspected fraud or violation of laws to the Audit Committee under this policy.

FORMAL ANNUAL EVALUATION :

As required under Schedule IV of the Companies Act 2013 and Clause 49(II)(B)(6) of the Listing Agreement the Independent Directors at their separate meeting held on 12th February 2015 evaluated the performance of the non-independent directors and the Board as a whole. They also reviewed the performance of the Chairperson of the Company, taking into account the views of Executive Director and Non-Executive Director and also assessed the quality, quantity and timeliness of flow of information between the Company management and the Board that was necessary for the Board to effectively and reasonably perform their duties.

Also as required under Clause 49 of the Listing Agreement, the Board assessed the performance of the Independent Directors as per the criteria laid down and have recommended their continuation on the Board. The Board of Directors assessed the performance of the individual directors on the Board based on parameters such as relevant experience and skills, focus on shareholder value creation, governance standards, knowledge of business, processes and procedures followed, integrity, relationship with Management, impact on key management decisions etc. The Members of the Committee of audit, nomination and remuneration, shareholders / investors grievance and share transfer were also assessed on the above parameters and also in context of the Committee's effectiveness vis-avis the Companies Act 2013 and the Listing Agreement.

INTERNAL FINANCIAL CONTROLS :

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.

FIxED DEPOSIT :

The Company has not invited / accepted any deposits during the period under review as envisaged under Sections 73, 74 and 76 of the Companies Act, 2013.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS :

The Company has not made any loans to any third party as envisaged under section 186 of the Companies Act, 2013. The Company has not given any guarantees other than bank guarantees int the normal course of business to meet the contractual obligations. The Board of Directors have authorized the Company to invest the surplus of the Company in deposits with Banks.

SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS :

During the year under review, there have been no significant and material orders passed by any regulators / courts / tribunals that could impact the going concern status and the Company's operations in future.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN ExCHANGE EARNINGS AND OUTGO :

The information required under Section 134(3)(m) of the Companies Act, 2013 read with the Rule 8(3)of Companies (Accounts)Rules, 2014, Chapter XI, particulars of energy conservation, technology absorption and foreign exchange earnings and outgo are appended hereto as Annexure IV to this Report.

INSURANCE :

The properties and assets of your Company are adequately insured.

INDUSTRIAL RELATION :

The Company has maintained cordial and harmonious relations with all its employees.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES :

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 none of the Directors/Employees are drawing remuneration / salaries in excess of Rs. 60,00,000/-per annum or Rs. 5,00,000/- per month.

ENVIRONMENT, HEALTH & SAFETY :

The Company continued its commitment to environment protection and industrial safety.Our manufacturing facility is accredited with WHO-GMP and complies with applicable environmental regulations. The Company also received ISO 9001:2008 Certificate from SGS United Kingdom Limited. Periodical audits are done internally to assess the efficiency of the plant. The Company conducts medical check-up programs, first aid courses and fire safety sessions for employees. The Company has also upgraded the fire fighting system during the year.

ExTRACT OF ANNUAL RETURN :

The Extract of Annual Return of the Company as on 31st March 2015 is annexed herewith as Annexure I to this Report.

AUDITORS AND AUDITORS' REPORT : STATUTORY AUDIT :

M/s. L. J. Kothari & Co., Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Directors recommend their re-appointment. The Auditors Report read with notes to financial statements are self-explanatory.

SECRETARIAL AUDIT :

Pursuant to the provisions of section 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. J. H. Ranade, Company Secretary in practice was appointed to conduct Secretarial Audit. The Secretarial Report for the year ended 31st March, 2015 is annexed as Annexure II to this report.

RATIO OF REMUNERATION :

b. The percentage increase in remuneration of Mrs. Jayashree Nair, Managing Director is 67%, Mr. S. C. Kachhara, Executive Director & Chief Financial Officer is 67% (as approved by members in 23rd Annual General Meeting) and Ms. Nikita Phatak, Company Secretary is 11%.

c. The median remuneration of employees increased by 11% in the financial year.

d. There are 162 permanent employees on the rolls of Company.

e. The Company's PAT increased from Rs. 229.78 lakhs in 2013-14 to Rs. 256.97 lakhs in 2014-15, an increase of 12% against which the average increase in remuneration is 11% and this increase is aligned with the Company's Remuneration Policy.

f. The aggregate remuneration of key managerial personnel (KMP) is Rs. 96.70 lakhs, revenue of the Company during the year is Rs. 4583.10 lakhs and the remuneration of KMP is 2% of the revenue.

g. The market capitalization of the Company as on 31st March 2015 was Rs. 29.91 crores and as on 31st March 2014 was Rs. 11.40 crores. The PE ratio of the Company as on 31st March 2015 was 11.64 and as on 31st March 2014 was 4.96.The Company made a public offer of equity shares (of face value Rs. 10/- each share) at premium (of Rs. 30/- each share) in the year 1995.

h. The average percentile increase in salaries of employees other than managerial personnel is 11% and increase in managerial remuneration is 67% as approved by the members at the 23rd Annual General Meeting.

i. There is no variable component linked to various parameters - financial and non-financial in the remuneration availed by the directors.

j. During the year there was no employee, who is not a director of the Company and received remuneration in excess of the highest paid director.

k. We affirm that remuneration paid is as per Remuneration Policy of the Company. GENERAL:

The Company has constituted an internal complaints committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for prevention and redressal of complaints of sexual harassment at workplace. Your Directors further state the during the year under review, there was no complaint filed pursuant to said Act.

APPRECIATION :

Your Directors thank statutory authorities and bankers for co-operation extended by them to the Company. Your Directors place on record their sincere appreciation of the continued support by the employees and finally thank all shareholders for the trust placed by them with the Company.

FOR AND ON BEHALF OF THE BOARD

Jayashree Nair

Chairperson & Managing Director

Place : Mumbai Date : 27th May, 2015