DIRECTORS' REPORT

To,

The Shareholders of Kokuyo Camlin Limited

Your Directors take pleasure in presenting herewith the 69th Annual Report together with the Audited Financial statements for the Financial Year ended 31st March, 2016

OPERATING PERFORMANCE:

During the year the Company reported net sale of Rs.61,418.72 Lacs as compared to Rs. 54,387.93 Lacs for the last year representing a robust value growth of 12.93 % over the corresponding period of the previous year. Your Company has continued to grow ahead of the stationery Industry despite a challenging macro environment. Company's focus has been to accelerate innovation and back new product launches with Increase marketing spends. During the last year your Company came out with new product launches in the domestic market which will further enhance the Company's competitiveness, improve the equity of its brands and drive increased penetration and consumption.

The continued focused approach of growing profitable business along with major steps taken in the areas of margin improvement and cost control have resulted in the better performance of the Company at the EBITA level for the year as compared to previous year.

Given the growth requirements of the business and absence of sufficient profits, your directors do not recommend any dividend for the financial year  2015-2016.

Your Company looks forward to further strengthen its performance in the coming years. The performance review, outlook and strategy have been spelt out in depth in the Management Discussion and Analysis Report which forms part of this Directors Report.

SHARE CAPITAL:

During the year under review, there was no change in the share capital structure and the paid up capital of the Company as on 31st March, 2016 was Rs. 1003.04 Lacs.

MERGER OF HOLDING COMPANY:

During the year under review our holding Company M/s. Kokuyo S & T Co Ltd, Japan merged into its 100% Holding Company Kokuyo Co Ltd, Japan w.e.f 1st October, 2015. In view of the merger, Kokuyo Co Ltd is now our Holding Company and one of the promoters of the Company. Kokuyo Co Ltd, Japan is listed on the Tokyo Stock Exchange.

MANAGEMENT DISCUSSION AND ANALYSIS:

In accordance with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.

MEETINGS OF THE BOARD:

During the year five Board Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(3) (c)  of the Companies Act, 2013, your Directors to the best of their knowledge and belief and according to the information and explanations obtained by them, hereby confirm:

a) That in the preparation of the annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures

b) That the Directors 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 at the end of the financial year ended 31st March, 2016 and of the profit of the Company for the year ended on that date.

c) That the Directors had taken proper and sufficient care for the maintenance 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) That the Directors had prepared the annual accounts on a going concern basis; and

e) That 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.

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

EXTERNAL COMMERCIAL BORROWINGS (ECB):

During the year under review, your Company availed fresh ECB for USD 31.20 lacs from Sumitomo Mitsui Banking Corporation (SMBC) for an average tenor of 5 years on unsecured basis. The funds drawn under ECBs were utilised to fund capital expenditure program of the Company and other approved end uses as per extant Reserve Bank of India Guidelines and the terms of the loan. As at 31st March, 2016, long term borrowings stood at Rs.2581.82 lacs as against Rs. 883.96 Lacs as on 31st March, 2015.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION  OF THE COMPANY:

There has been no Material changes and Commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statement relate (i.e. 31st March, 2016) and the date of the report.

PERFORMANCE EVALUATION OF THE  DIRECTORS ETC.:

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Regulation 17 of the Listing Regulations, the Remuneration and Nomination Committee has laid down the criteria for performance evaluation of Board of Directors (Including Independent Directors), Key Managerial Personnel and committees of the Board on the basis of which they have been evaluated.

REMUNERATION POLICY:

The Board has, on the recommendation of the Remuneration and Nomination Committee framed a policy for selection, appointment and remuneration of Directors and KMPs. The Remuneration Policy is stated in the Corporate Governance Report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The Company has not granted any loans, guarantees and investments during the financial  year ended 31st March, 2016.

RELATED PARTY TRANSACTIONS:

All Related Party Transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so  granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their review / approval on a quarterly basis.

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large. Accordingly, the disclosure of related Party Transactions as required under Section 134 (3) (h) of the Companies Act 2013 in form AOC-2 is not applicable to your Company.

The details of transaction with related parties are provided in the accompanying financial statements. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In terms of the provisions of the Companies Act, 2013, Mr. Takeo Iguchi and Mr.Yashushi Inoue, Directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.

The Company has received declarations from all the Independent Directors of the Company, confirming that they meet with the criteria of independence as prescribed both under Companies Act, 2013 and the Listing Regulations.

None of the Directors are disqualified from being appointed as Directors as specified in section 164 of Companies Act, 2013. The profile of Directors  seeking re-appointment forms part of the Corporate Governance Report.

The term of Mr. Dilip Dandekar, Chairman and Executive Director and Mr. Shriram Dandekar, Vice Chairman and Executive Director expired on 31st January, 2016. The Board of Directors in its meeting held on 29th January, 2016 re-appointed them on revised terms for a period of two years with effect from 1st February, 2016. The said appointment was also approved by members by passing Special Resolutions by way of postal ballot on 28th March, 2016 subject to approval of Central Government if required.

The Board of Directors also re-appointed Mr. Ayyadurai Srikanth as a "Manager" designated as "Chief Executive Officer " for a further period of two and half years with effect from 1st February 2016 on revised terms. The said appointment was also approved by the members by passing special resolution by way of Postal Ballot on 28th March 2016 subject to approval of Central Government if required.

The Company is in the process of filing an application in form MR-2 with Ministry of Corporate Affairs ("MCA"). The said form is pending for filing in  view of technical issues faced by the Company on the MCA site for which the Company has taken this matter with the MCA authorities.

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Companies Act, 2013 read with the Rules framed there under.

1. Mr. Ayyadurai Srikanth - Chief Executive Officer

2. Mr. Chetan Badal - Chief Financial Officer

3. Mr. Ravindra Damle - Vice President (Corporate) & Company Secretary

None of the Key Managerial Personnel have resigned during the year under review.

The Disclosure required under section 197(12) of the Companies Act, 2013, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure 'C' and forms an integral part of this report.

AUDITORS:

M/s. B. K. Khare & Co., Chartered Accountants (FRN:105102W)Mumbai, Statutory Auditors of the Company hold office till the conclusion of the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment as Statutory Auditors to hold office till the conclusion of the next Annual General Meeting.

The Company has received a letter from them to the effect that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 and that the appointment, if made shall be in accordance with the applicable provisions of the Companies Act, 2013 and the rules framed there under.

The Audit Committee and the Board of Directors recommends the re-appointment of M/s B. K. Khare & Co., Chartered Accountants, as the Auditors of the Company to hold office till the conclusion of the next Annual General meeting. The re-appointment proposed is within the time frame for transition under the third proviso to sub-section (2) of Section 139 of the Companies Act, 2013.

AUDITORS' REPORT:

The observation of the Auditors in their report, read with relevant notes to the accounts are self-explanatory and therefore do not require further explanations.

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, the Company has appointed M/s. J. H. Ranade & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2015-2016. The Secretarial Audit Report is Annexed herewith. The report does not contain any qualification, reservation or adverse remark.

DEPOSITS:

During the year under review, your Company has not accepted any deposits. There are no unclaimed deposits as on date.

CORPORATE GOVERNANCE:

Your Company has always endeavored to adhere to high standards of Corporate Governance and ensured its compliance both in spirit and law. As per SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a separate section on corporate governance practices followed by the Company, together with a certificate from the M/s. J. H. Ranade & Associates, Practicing Company Secretaries confirming compliance forms an integral part of this Report.

FAMILIARIZATION PROGRAMME FOR THE  INDEPENDENT DIRECTORS

In compliance with the requirements of Listing

Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The details of the familiarization programme are explained in the Corporate Governance Report. The same is also available on the website of the Company and can be accessed by web link <https://www>. kokuyocamlin.com/company-policies

RECONCILIATION OF SHARE CAPITAL AUDIT:

As directed by the Securities and Exchange Board of India (SEBI), Reconciliation of Share Capital Audit has been carried out at the specified period, by a Practicing Company Secretary.

SUBSIDIARY COMPANIES:

At present, the Company does not have any material subsidiary. No new subsidiary was incorporated or acquired by the Company during the period under review.

Pursuant to the Provisions of Section 129(3) of the Companies Act 2013, a statement containing salient features of the financial statements of Subsidiary/ Associate Company in Form AOC-1 is attached to the financial statements of the company.

In accordance with Section 136 of the Companies Act 2013, the Audited financial statements, including the consolidated financial statements and related information of the company and audited accounts of its subsidiary are available on the website www. kokuyocamlin.com

CONSOLIDATED FINANCIAL STATEMENTS:

As per SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the consolidated financial statements have been prepared by the Company in accordance with the applicable Accounting Standards. The audited consolidated financial statements together with Auditors' Report form part of the Annual Report. Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of each of the subsidiaries, associate companies and joint venture in the prescribed Form AOC-1 is attached to the financial statements of the Company. Pursuant to Section 136 of the Companies Act, 2013, the financial statements of the subsidiary and associate Company are kept for inspection by the shareholders at the Registered Office of the Company. The Company shall provide free of cost, the copy of the financial statements of its subsidiary and associate company to the shareholders upon their request. The statementsare also available on the website of the Company viz. www.kokuyocamlin.com under the Investor Relations section.

INVESTOR EDUCATION AND PROTECTION  FUND:

The Company had transferred a sum of Rs. 2.06 Lacs during the financial year to the Investor Education and Protection Fund established by the Central Government. The said amount represents Unclaimed Dividend for the financial year 2007-2008 with the Company for a period of 7 years from the due date of payment.

REGISTRAR AND SHARE TRANSFER AGENT:

M/s. Sharepro Services (India) Pvt. Ltd., Mumbai  were the Registrar and Share Transfer Agent of the Company. SEBI vide its order dated 22nd March, 2016 have restrained M/s. Sharepro Services (India) Pvt. Ltd. for carrying out Share Registry services and accordingly advised the Company to take necessary steps. Your Company has appointed M/s. Link Intime India Pvt. Ltd. as Registrar and Transfer Agents with effect from 13th May, 2016 and maintain the Register and Index of members at the address of the new Registrar and Transfer Agent M/s. Link Intime India Pvt. Ltd. The Directors recommend the special resolution of maintaining the records at the new address for your approval.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Company is an equal opportunity employer and consciously strives to build a work culture that promotes dignity of all employees. As required under the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed there under, the Company has implemented a policy on prevention, prohibition and redressal of sexual harassment at the workplace. All women, permanent, temporary or contractual including those of service providers are covered under the policy. An Internal sexual Harassment Committee comprising management  staff has been set up at office and factory locations,  which includes three women to redress complaints relating to sexual harassment. The committee also includes an outside women representative from an NGO. During the year under review, no case was reported under the said policy.

ADEQUACY OF INTERNAL FINANCIAL  CONTROLS:

The Company has its own process driven framework for Internal Financial Controls ("IFC"). For the year ended 31st March, 2016, the Board is of the opinion that the Company has sound IFC commensurate with the nature and size of its business operations; wherein controls are in place and operating effectively and no material weaknesses exist. Company has a process in place to continuously monitor the existing controls and identify gaps, if any, and implement new and /or improved controls wherever the effect of such gaps would have a material effect on the Company's operation.

SIGNIFICANT AND MATERIAL ORDERS  PASSED BY THE REGULATORS OR COURTS:

There are no significant or material orders passed by any regulator, tribunal or court that would impact the going concern status of the Company and its future operations.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Company believes it has a duty and responsibility to give back to the country and the society that have enabled the Company to scale great heights. The Company continues to be involved in various CSR initiatives on several fronts. The Company spreads awareness on the importance of cleanliness and hygiene amongst school children and hospitals.

In line with Kokuyo Camlin's Philosophy of making meaningful contribution to society, Company has been promoting art for good causes. On 27th September, 2015 Kokuyo Camlin celebrated World River day by inviting around 170 artist's to paint on the theme" Ganga" in Varanasi. The paintings are planned to be donated by artists to raise funds and  awareness for project ganga, a project promoted by our Prime Minister. The proceeds will go to Swacch Kashi Swasth Kasha project of My Home India.  The Company has carried out this campaign voluntarily for the year under review as Section 135 of the Companies Act, 2013 was not applicable to the Company.

ADOPTION OF NEW ARTICLES:

The Companies Act, 2013 and the Companies (Amendment) Act, 2015 has necessitated changes in the Articles of Association of the Company. Accordingly a new set of Articles of Association were adopted by the members through postal Ballot on 28th March, 2016.

CODE OF ETHICS & VIGIL MECHANISM /  WHISTLE BLOWER POLICY:

The Company has adopted code of Ethics and business conduct which lays down principles and standards that should govern the actions of the Company and employees. The Company has a vigil mechanism called "Whistle Blower Policy" with a view to provide a mechanism for employees of the Company to raise concerns of any violations of any legal or regulatory requirement, incorrect or misrepresentation of any financial statement and reports etc. The Company is committed to adhere to the highest standard of ethical, moral and legal conduct of business operations.

The Company has taken steps to establish Vigil Mechanism for Directors and Employees of the Company. The details of the Policy is posted on the website of the Company.

PREVENTION OF INSIDER TRADING:

The Company has also adopted a code of conduct for prevention of insider trading. All the Directors, senior management employees and other employees who have access to the unpublished price sensitive information of the Company are governed by this code. During the year under  review, there has been due compliance with the said code of conduct for prevention of insider trading based on the SEBI (Prohibition of Insider Trading) Regulations, 2015.

The Board at its meeting held on 14th May, 2015 has adopted revised code of prevention of insider trading based on the SEBI (Prohibition of Insider Trading) Regulations, 2015.

INSURANCE:

The Company's plant, property, equipment's and stocks are adequately insured against major risks. The Company also has appropriate liability insurance covers particularly for product liability. The Company has also taken Directors' and Officers' Liability Policy to provide coverage against the liabilities arising on them.

AWARDS/RECOGNITION/RANKINGS:

Kokuyo Camlin's mechanical Pencil creative for World Environment day won Abby award at the Goafest 2016.  Camlin's experience App rakhimaker bagged gold in digital marketing Innovation at Asia Pacific Customer Engagement Forum & Awards 2016.

GREEN INITIATIVE IN CORPORATE GOVERNANCE:

In support of the green initiative of the Ministry of Corporate Affairs, the Company has also decided to send the annual report through email to those shareholders who have registered their email id with the depository participant /Company's registrar and share transfer agent, in case a shareholder wishes to receive a printed copy he/she may please send a request to the company which will send the annual report to the shareholder.

The Company is providing evoting facility to all members to enable them to cast their votes electronically on all resolutions set forth in the Notice. This is pursuant to Section 108 of the Companies Act, 2013, Rule 20 of the Companies (Management and Administration) Rules, 2014 and Regulation 44 of the Listing Regulations. The instructions for e-voting is provided in the e-voting form.

ENERGY CONSERVATION, TECHNOLOGY  ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure A".

EXTRACT OF ANNUAL RETURN:

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure B".

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business  hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

ACKNOWLEDGEMENT:

Your Directors express their gratitude to the members, bankers, customers, financial institutions and other business constituents for their continued faith, assistance and support extended to the Company. Your Directors also sincerely appreciate the high degree of professionalism, commitment and dedication displayed by employees at all levels thereby contributing largely to the growth and success of the Company.

Your Directors also wish to place on record their appreciation for the support and guidance provided by its present parent Company Kokuyo Co. Ltd. Japan and also erstwhile Kokuyo S&T Co., Ltd., Japan which got merged with Kokuyo Co. Ltd. Japan

For and on behalf of the Board DILIP DANDEKAR

CHAIRMAN & EXECUTIVE DIRECTOR

Place: Mumbai

Date: 12th May, 2016