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Deepak Nitrite Ltd.

BSE: 506401 Sector: Industrials
NSE: DEEPAKNTR ISIN Code: INE288B01029
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OPEN 164.60
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VOLUME 18588
52-Week high 194.80
52-Week low 75.80
P/E 35.77
Mkt Cap.(Rs cr) 2,151
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 164.60
CLOSE 163.45
VOLUME 18588
52-Week high 194.80
52-Week low 75.80
P/E 35.77
Mkt Cap.(Rs cr) 2,151
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Deepak Nitrite Ltd. (DEEPAKNTR) - Director Report

Company director report

Dear Shareholders

Your Directors have the pleasure in presenting the Forty Sixth Annual Report togetherwith the Audited Statement of Accounts for the Financial Year ended March 31 2017.

FINANCIAL RESULTS

(Rs in Crores)

Particulars STANDALONE CONSOLIDATED
2016-17 2015-16 2016-17 2015-16
Sale and Other Income 1225.50 1337.27 1365.34 1374.52
Gross Profit (before interest depreciation and tax but exceptional item) 149.08 168.22 143.14 166.32
Exceptional item 74.97 - 70.48 -
Gross Profit (before interest depreciation and tax after exceptional item) 224.05 168.22 213.62 166.32
Less:
Interest 30.89 37.45 34.12 37.65
Depreciation 42.28 39.45 42.72 39.54
Provision for Current Tax 31.88 19.85 31.88 19.90
Provision for Deferred Tax 9.08 10.32 9.08 10.32
MAT Credit Entitlement Recognised (2.12) (3.99) (2.12) (3.99)
Loss for the year from Associates - - 0.14 0.17
Profit After Tax 112.04 65.15 97.94 62.73
Surplus in Profit & Loss Account Brought Forward 231.63 188.28 228.61 187.67
Amount available for appropriation 343.67 253.42 326.55 250.40

PERFORMANCE REVIEW

The Financial Year ("FY") 2016-17 was a challenging year on multiple frontsand your Company has delivered a resilient performance indicating robustness of thebusiness model. The emphasis on quality and sustainability of operations widening ofportfolio of products active customer engagement focus on profitable products and ahealthy mix of end-user industries and markets served has enabled it to emerge strongerand better positioned to capture the opportunities ahead. The performance in FY 2016-17should be viewed in light of the several challenges faced.

The wave of regional protectionism has spread across the developed world and hasincreased the pitch for supporting local production to preserve jobs and has thus impactedgrowth in export markets. These were coupled with BREXIT and instability in EU region. Thelingering effects of the depressed crude oil prices and resultant impact on petrochemicalintermediates also continued to exert pressure on growth. Furthermore re-entry of Iran asa global crude supplier improved the availability of higher grades of crudes therebyimpacting demand for fuel additive products. At the same time prices of commodities wereon the wane though they were thought to be reversing.

Apart from these developments your Company encountered multiple headwinds in the formof temporary closure of one of the three units at its Hyderabad facility due to excessiveflooding and the resulting issues related to pollution. The performance was furtherimpacted by an accidental fire that broke out at one of the distillation columns of yourCompany's manufacturing facility for Fine and Speciality Chemicals intermediates at RohaIndustrial Estate in Maharashtra. Both these events impacted the volume off take of keyproducts in the Fine & Speciality Chemicals as well as the Performance Productssegments. Apart from these major events demonetisation also impacted performance of someof your Company's end user industries which impacted your Company's operationstemporarily though it recovered swiftly.

Against this backdrop your Company has reported a resilient performance in FY 2016-17.Your Company recorded revenues at Rs 1221.56 crores in FY 2016-17 compared to Rs 1335.73crores in FY 2015-16 and volumes declined by 4% due to one-time events which impacted theproduction as well as sales. That said favorable product mix and aggressive marketinghelped your Company to increase volumes towards the end of the year especially in theestablished business segments partly offsetting this impact and enabling your Company toeffect a turnaround from the impact of one-time events in October and November 2016.

Further your Company leveraged its strength to switch to enhance the volumes of valueadded products to mitigate impact from down-cycle of existing product categories. Exportmarkets contributed 39% to the total revenues while contribution from domestic marketcame in at 61%. Export Revenue stood at Rs 470.84 crores in FY 2016-17 lower by 10.6%compared to Rs 525.75 crores last year a result of the multiple headwinds faced by yourCompany. Active efforts have been made by your Company to deepen its connect withcustomers in key export markets of Europe USA and China. Going ahead your Company willcontinue to work towards widening and deepening market presence to grow revenues fromexports in absolute terms. Once the Phenol project is commissioned the proportion ofexports in overall revenue mix in the consolidated performance will reduce since Phenoland Acetone are meant for domestic consumption being import substitution products. ProfitBefore Tax excluding Exceptional Items stood at

Rs 75.90 crores as compared to Rs 91.33 crores in FY 2015-16. Apart from the revenueimpact due to one time events your Company incurred certain one-time expenses as well ashigher depreciation due to increase in asset base. Profit After Tax excluding ExceptionalItems stood at Rs 53.33 crores in FY 2016-17 compared to Rs 65.15 crores in FY 2015-16.Earnings Per Share (excluding Exceptional Items) for FY 2016-17 stood at Rs 4.55 per share(of face value of Rs 2 each) on an enlarged capital base compared to Rs 6.07 per share inFY 2015-16.

The road ahead appears encouraging as your Company foresees several opportunities inthe Indian chemicals space. Following the unforeseen events your Company has nowrestarted all the facilities at Roha except one and is confident of restoring the growthmomentum. It is anticipated that all the three SBUs viz. Basic Chemicals Fine &Speciality Chemicals and Performance Products segment will contribute positively to theperformance. Your Company is confident of its prospects as the focus of strategies andefforts of the last few years has been to diversify and strengthen the business model andallow your Company to further elevate the growth trajectory by strengthening all of thegrowth engines. A review of the performance during the year is given under the section"Management Discussion and Analysis Report".

ISSUE OF SHARES

During FY 2016-17 your Company offered Equity Shares to the Qualified InstitutionalBuyers ("QIBs") on private placement basis through Qualified InstitutionsPlacement ("QIP") in accordance with Chapter VIII of SEBI (Issue of Capital andDisclosure Requirements) Regulations 2009. Accordingly 14423076 Equity Shares of Rs2/- each were allotted to QIBs on March 7 2017 at an issue price of Rs 104.00 per EquityShare (including premium of Rs 102.00 per Equity Share). The QIP issue proceedsaggregating to Rs 150.00 crores will be utilised in accordance with the objects stated inthe offer document. Pending utilization the unutilised amount of issue proceeds have beeninvested in Liquid Mutual Funds.

Post issuance of Equity Shares under QIP the issued subscribed and paid-up capital ofyour Company has increased from Rs 23.26 crores in FY 2015-16 to Rs 26.14 crores in FY2016-17.

DIVIDEND

Based on your Company's performance the Board of Directors has recommended payment ofdividend of Rs 1.20 (Rupee One and Paisa Twenty only) per Equity Share for the year endedMarch 31 2017 on 130711266 Equity Shares of Rs 2/-each as against Rs 1.20/- (RupeeOne and Paisa Twenty only) per Equity Share in the previous year.

The total sum of the dividend if approved including Corporate Dividend Tax will beRs 18.88 crores (previous year Rs 16.79 crores).

TRANSFER TO RESERVES

Your Company proposes to transfer Rs 5.00 crores to the General Reserves out of theamount available for appropriation.

UPDATE ON PHENOL AND ACETONE PROJECT

As you may be aware your Company is implementing a Greenfield project to manufacturePhenol and Acetone at Dahej in the State of Gujarat. This project is being implementedthrough Deepak Phenolics Limited (‘DPL') a wholly owned subsidiary of your Company.The capacity of the Phenol Plant will be 200000 MTPA and that of co-product Acetone willbe 120000 MTPA. DPL would also be manufacturing 260000 MTPA of Cumene which is aFeedstock for manufacturing Phenol and Acetone. This project is expected to becommissioned in the second half of FY 2017-18 with total capital outlay of around Rs 1400crores to be funded through a combination of debt and equity.

The project once commissioned is expected to substitute the Phenol imports to India.India currently imports most of its Phenol requirements and the country's current demandwill absorb the entire capacity that DPL plans to install. With an objective of developingworking relationships with major clients across India as well as establish strongmarketing and distribution channels DPL has already started seed marketing to understandthe market dynamics and the response thus far has been encouraging.

FINANCE

Your Company follows stringent guidelines to efficiently manage its working capitalrequirements and maintain its debt at a reasonable level. Hence debt / equity ratio stoodat a healthy level of 0.78 times. With expansion also your Company strives to maintainhealthy Debt:Equity ratio of not crossing 1.5 times once the project starts generatingrevenue. The overall capital outlay for this project is approximately Rs 1400 croreswhich is being funded through a combination of Debt and Equity. Your Company has alreadytied up the entire debt portion of Rs 840 crores while the Equity funds are being raisedand deployed in a progressive manner your Company has made significant progress inraising equity for the project as it secured funds to the tune of Rs 150 crores throughphase II of Qualified Institutional Placement (QIP) which was concluded in March 2017.

This is in addition to equity funds already raised in Phase I of the QIP and sale ofparcel of land in FY 2015-16 and FY 2016-17 respectively. Interest costs declined duringthe year due to repayment of debt better negotiation of funding costs as well asreduction in the general softening of interest rate. Depreciation increased due to regulargrowth and maintenance Capex. Your Company has an active team to manage its foreignexchange exposures and hence to minimize the risk. Due to prudent management your Companyhas been able to effectively manage its cash flows.

There is always an effort to reduce the overall interest costs. Debt : Equity as onMarch 31 2017 came down to 0.78 compared to 1.04 as on March 31 2016. ICRA Limitedre-affirmed the long-term rating of [ICRA] A+ and Short Term rating of [ICRA] A1+ assignedto the fund based limits and non-fund based limits of your Company. ICRA also reaffirmedthe short-term rating of [ICRA] A1+ assigned to the Commercial Paper programme.

DIRECTORS

The Board of Directors at their Meeting held on August 4 2016 elevated Shri Deepak C.Mehta as the Chairman & Managing Director of your Company w.e.f. August 5 2016 afterretirement of Shri C. K. Mehta from the Directorship of the Company. Shri C. K. Mehtafounder of your Company has been designated as Chairman-Emeritus w.e.f. August 5 2016.

The Board of Directors at their Meeting held on April 28 2017 has appointed ShriSanjay Upadhyay the Chief Financial Officer of your Company as Additional Director andWhole-time Director designated as Director-Finance & Chief Financial Officer. Heshall continue to be the Chief Financial Officer of your Company.

As required under the provisions of Section 152 of the Companies Act 2013 Shri AjayC. Mehta Managing Director a Director liable to retire by rotation will be retiring atthe ensuing Annual General Meeting. He is eligible for reappointment at the ensuing AnnualGeneral Meeting and has offered himself for re-appointment.

KEY MANAGERIAL PERSONNEL

Shri Deepak C. Mehta Chairman & Managing Director Shri Ajay C. Mehta ManagingDirector Shri Umesh Asaikar Executive Director & CEO Shri Sanjay Upadhyay Director– Finance & CFO Shri Maulik Mehta Whole-Time Director and Shri Arvind BajpaiCompany Secretary are the Key Managerial Personnel of your Company.

MEETINGS OF THE BOARD

During FY 2016-17 five (5) Board Meetings were held. The details of the Board Meetingswith regard to their dates and attendance of each of the Directors there at have been setout in the Report on Corporate Governance which forms part of this Report.

INDEPENDENT DIRECTORS

The Independent Directors of your Company have furnished the declaration that they meetthe criteria of independence as provided in Section 149 (6) of the Companies Act 2013.

PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (‘Listing Regulations') the Board ofDirectors have carried out annual evaluation of its own performance Board Committees andindividual Directors.

The performance of the Board / Committee was evaluated after seeking inputs from allthe Directors / Committee members on the basis of the defined criteria includingcomposition and structure effectiveness of meetings information and functioning.

Performance evaluation of Independent Directors was done by the entire Board excludingthe Independent Director being evaluated on the basis of following evaluation criteria:

Your Directors have expressed their satisfaction for the evaluation process.

AUDIT COMMITTEE

The Audit Committee consists entirely of Independent Directors with Shri Sudhin Chokseyas the Chairman of the Committee. The other members of the Audit Committee are Shri SudhirMankad and Shri S. K. Anand. The terms of reference of the Audit Committee details ofmeetings held during the year and attendance of members are set out in the Report onCorporate Governance which forms part of this Report.

STATUTORY AUDITOR'S REPORT

The observations made in the Auditor's Report of M/s. B. K. Khare & Co. CharteredAccountants read together with relevant notes thereon are self-explanatory and hence donot call for any comments. There is no qualification reservation adverse remark ordisclaimer by the Statutory Auditors in their Report.

REPORTING OF FRAUD BY AUDITORS

There is no instance of fraud reported by the Auditors during the FY 2016-17.

SECRETARIAL AUDITOR'S REPORT

The Secretarial Audit Report of M/s. KANJ & Associates Company Secretaries Punefor the Financial Year ended March 31 2017 does not contain any qualificationreservation adverse remark or disclaimer by the Secretarial Auditors. However thecomments of the Secretarial Auditor in their Report has been noted and necessary steps arebeing taken in this regard. The Secretarial Audit Report is annexed as Annexure - A whichforms part of this Report.

AUDITORS

(A) Statutory Auditors:

In compliance with the Companies (Audit and Auditors) Rules 2014 the Members at the43rd Annual General Meeting of your Company held on August 8 2014 appointedM/s. B. K. Khare & Co. Chartered Accountants Mumbai as Statutory Auditors of theCompany to hold the office until the conclusion of the ensuing Annual General Meeting ofthe Company.

The Board of Directors of your Company on the basis of recommendation of the AuditCommittee has recommended the appointment of M/s. Deloitte Haskins & Sells LLPChartered Accountants (FRN:117366W/W-100018) as the Statutory Auditors of the Company fora term of five years from conclusion of the 46th Annual General Meeting of theCompany upto the conclusion of the 51st Annual General Meeting of the Company.M/s. Deloitte Haskins & Sells LLP Chartered Accountants (FRN:117366W/W-100018) havesubmitted a certificate to your Company stating that their appointment if made shall bewithin the limits prescribed under the Companies Act 2013 and that they satisfy thecriteria prescribed under Section 141 of the Companies Act 2013.

(B) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theSecretarial Audit for the year ended March 31 2017 was carried out by the SecretarialAuditor M/s. KANJ & Associates Company Secretaries Pune. The Board of Directors ofyour Company has appointed M/s. KANJ & Associates Company Secretaries Pune to carryout Secretarial Audit of the Company for FY 2017-18.

(C) Cost Auditors:

The Board of Directors of your Company has appointed M/s. B. M. Sharma & CompanyCost Accountants to conduct audit of your Company's cost records for FY 2017-18 at aremuneration of Rs 650000/- (Rupees Six Lakhs Fifty Thousands only) plus out of pocketexpenses. As required under the provisions of Companies Act 2013 the remuneration ofCost Auditors as approved by the Board of Directors is subject to ratification by theshareholders at the ensuing Annual General Meeting. The Cost Audit Report will be filedwithin the prescribed period of 180 days from the close of the Financial Year.

(D) Internal Auditors:

The Board of Directors has appointed M/s. Sharp & Tannan Associates CharteredAccountants as Internal Auditors of your Company to conduct Internal Audit for FY2017-18.

FIXED DEPOSITS

During FY 2016-17 your Company has not accepted or renewed any Fixed Deposits.

As on March 31 2017 39 warrants aggregating to

Rs 783507 issued by your Company to the respective deposit holders towards compulsoryrepayment of deposits and interest thereon in accordance with the provisions of Section 74of the Companies Act 2013 remained uncleared. There has been no default in repayment ofdeposits or interest thereon during the year and there are no deposits outstanding as onMarch 31 2017.

VIGIL MECHANISM

In accordance with the provisions of Section 177 of the Companies Act 2013 andrequirements of Listing Regulations your Company has a vigil mechanism which has beenincorporated in the Whistle Blower Policy for Directors and employees to report genuineconcerns. The Whistle Blower Policy also provides for adequate safeguards againstvictimization of persons who use vigil mechanism and for direct access to the Chairman ofthe Audit Committee in appropriate or exceptional cases. The Whistle Blower Policy isuploaded on the website of your Company.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the year ended March 312017 were at arm's length basis. There were no materially significant related partytransactions entered into by your Company during the year and hence no information isrequired to be provided as prescribed under Section 134(3)(h) of the Companies Act 2013read with Rule 8(2) of the Companies (Accounts) Rules 2014.

SUBSIDIARIES AND ASSOCIATES

As required by Rule 8(1) of the Companies (Accounts) Rules 2014 the Board's Reporthas been prepared on a Standalone basis. Further during the FY 2016-17 no Company hasbecome or ceased to be subsidiary joint venture or associate of your Company.

Your Company has the following subsidiaries and associate:

(a) Deepak Phenolics Limited

Your Company's Phenol and Acetone Project is being undertaken through Deepak PhenolicsLimited (‘DPL') a wholly owned subsidiary. The said Project is at the constructionstage and commercial production has not started yet. DPL has started seed marketing ofPhenol in India. However as these activities are at an early stage there is noinformation to provide on the highlights of its performance and its contribution to theoverall performance of the Company during the period under report.

(b) Deepak Nitrite Corporation Inc. (USA)

Deepak Nitrite Corporation Inc. (‘DNC') is a wholly owned subsidiary companyformed in the United States of America to cater to the marketing requirements of yourCompany in the North and South American region. DNC actively does market research andscouts for market and potential customers for your Company's products in the North andSouth American region. DNC contributes in enhancing Company's exports in the said regionand overall profitability of your Company.

(c) Deepak Gulf LLC

Deepak Gulf LLC is an associate company where your Company has 49% shareholding. AsDeepak Gulf LLC has not commenced any commercial activity yet there is no information toprovide on the highlights of its performance and its contribution in overall performanceof your Company during the period under report.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read with Rule8(1) of the Companies (Accounts) Rules 2014 a statement containing salient features ofthe Financial Statements of your Company's subsidiaries in Form AOC-1 is attached to theFinancial Statements.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013

The Particulars of Loans granted and Investments made by your Company have beendisclosed in the Financial Statements.

MATERIAL CHANGES

There have been no material changes and commitments affecting the financial position ofyour Company since the close of Financial Year i.e. since March 31 2017. Further it ishereby confirmed that there has been no change in the nature of business of your Company.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(5) of the Companies Act 2013 ("theAct") the Board of Directors of your Company to the best of their knowledge andability confirm that: (a) in the preparation of the Annual Accounts the applicableaccounting standards have been followed and there are no material departures; (b) theyhave selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of your Company at the end of the Financial Year and of the profit ofyour Company for that period; (c) they have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of your Company and for preventing and detecting fraud andother irregularities;

(d) they have prepared the Annual Accounts on a going concern basis; (e) they have laiddown internal financial controls to be followed by your Company and that such internalfinancial controls are adequate and are operating effectively; (f) they have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems were adequate and operating effectively.

CORPORATE GOVERNANCE

As required under Listing Regulations a Report on Corporate Governance with aCertificate from a Company Secretary in Practice confirming compliance of the conditionsof Corporate Governance and a Management Discussion and Analysis Report areattached which form part of this Report.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) activities of your Company are beingimplemented through Deepak Foundation the group's charitable trust encompassing socialinterventions in various developmental domains such as Health Education Livelihood etc.

During FY 2016-17 your Company has spent Rs 205.00 Lakhs on CSR activities againstthe requirement of Rs 166.00 Lakhs being 2% of average of the net profits for thepreceding three years.

The brief outline of the CSR policy of your Company composition of the Committee andreport on initiatives undertaken by your Company on CSR activities during the year are setout in Annexure - B of this Report in the format prescribed in the Companies (CorporateSocial Responsibility Policy) Rules 2014.

REMUNERATION POLICY

In compliance with the provisions of Section 178 of the Companies Act 2013 and ListingRegulations the Remuneration Policy of your Company is set out as Annexure - C.

EXTRACTS OF ANNUAL RETURN

The extract of Annual Return as required under Section 134(3) (a) of the Companies Act2013 read with Rule 12(1) of the Companies (Management and Administration) Rules 2014forms part of this Report and annexed as Annexure - D.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Companies Act 2013 read with Rule5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 is annexed as Annexure - E.

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO

Pursuant to the requirement of Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 the relevant data pertaining to theconservation of energy technology absorption and foreign exchange earnings and outgo areprovided in Annexure - F of this Report.

STATE OF COMPANY'S AFFAIRS

The state of the Company's affairs is given under the heading ‘Performance Review'and various other headings in this Report and in the Management Discussion and Analysiswhich forms part of this Report.

SIGNIFICANT OR MATERIAL ORDERS PASSED AGAINST THE COMPANY

Pursuant to the requirement of Section 134(3)(q) of the Companies Act 2013 read withRule 8(5)(vii) of the Companies (Accounts) Rules 2014 it is confirmed that during theFinancial Year under review there are no significant or material orders passed by theregulators or courts or tribunals impacting the going concern status and your Company'soperations in future.

INTERNAL CONTROL SYSTEMS

Your Company has in place adequate internal control systems including InternalFinancial Controls. The Internal Control System is exercised through documented policiesguidelines and procedures to ensure compliance with various policies practices andstatutes and that all assets are safeguarded and protected against loss from unauthoriseduse or disposition and that those transactions are authorised recorded and reportedcorrectly.

The Internal Auditor carries out extensive audits throughout the year across alllocations and across all functional areas. The audit observations and corrective actionstaken thereon are periodically reviewed by the Audit Committee to ensure effectiveness ofthe internal control system. The internal control is designed to ensure that the financialand other records are reliable for preparing financial statements and other data and formaintaining accountability of persons.

RISK MANAGEMENT

Risk is an integral part of any business and therefore Risk Management is an importantfunction that the business management has to perform to ensure sustainable businessgrowth.

Your Directors have adopted a Risk Management Framework. The Framework operates fortimely identification of the elements of risks in your Company's business theirassessment monitoring and the mitigation strategy. The Risk Management Committeeconstituted by the Board of Directors oversees the risk assessment and mitigationprocesses regularly. The composition of the Risk Management Committee is disclosed in theReport on Corporate Governance which forms part of this Report.

RESEARCH & DEVELOPMENT

Your Company has a Research and Development facility at Nandesari Gujarat with pilotplants at Roha Maharashtra and Nandesari Gujarat. This facility has been recognised bythe Department of Science and Technology. Your Company has spruced up its Research &Development facility for innovation and to collaborate with its customers to understandconsumer preference and develop new productapplicationstocatertotheneedsofitscustomers.YourCompany focuses its Research andDevelopment efforts to develop cost effective cleaner technologies to improveprofitability. Through its Research and Development capabilities your Company has beensuccessful in developing and enhancing its portfolio of customised products. Your Companybelieves that its ability to develop new product applications and ability to customiseproducts to suit customer needs have helped in expanding its customer base therebyenabling it to establish leadership position.

SAFETY HEALTH & ENVIRONMENT

Your Company focuses on protecting the interests of the environment safeguarding thehealth and safety of employees and ensuring the sustainability of the business in linewith your Company's objectives policies and the requirements of applicable laws andregulations. Your Company believes that a safety culture is central to taking safety tohigher levels and its top management continuously works towards establishing sustainingand improving the safety culture. Your Company has implemented Process Safety Management(PSM) at Nandesari and other locations. As a part of PSM initiative your Company hascarried out Safety Integrity Level (SIL) based HAZOP studies and Layer of ProtectionAnalysis

(LOPA) study for existing and new processes and products. The outcomes of these studiesare being used to enhance Process Automation in all the Units which will in turn improveprocess safety at the sites. These efforts have been recognised in different forumsincluding "Best Compliant Company" under the Process Safety Code by the IndianChemical Council (ICC). Your Company has accepted and implemented the principles ofTogether for Sustainability (TfS) and has fetched the prestigious 75% score in Togetherfor Sustainability (TfS) Audit by Intertek. Your Company is signatory to ‘ResponsibleCare' initiatives and holds Responsible Care logo.

The ICC audit team carried out Responsible Care Surveillance Audit and has allowedyour Company to use the logo for an extended period of three years. Your Company hasupgraded the Quality Environment & Occupational Health & Safety ManagementSystems as per revised standards for ISO 9001 ISO 14001 & OHSAS 18001 at allmanufacturing plants and corporate office. Your Company is committed to maintain itsoperations and workplace free from incidents and significant risk to the health and safetyof its stake holders through improved engineering practices strong channels ofcommunication safety awareness robust checking systems and sound training practices.Your Company has dedicated team at each Plant which continuously monitors performance toensure adherence to global regulations. It regularly monitors the occupational health ofemployees working in designated hazardous areas with respect to exposure to hazardouschemicals and processes. Your Company has well-equipped Occupational Health Centers at allmanufacturing locations to monitor health of employees on regular basis.

It also monitors employees for any indications of lifestyle or work-style relateddiseases and provides counselling. Your Company follows well-mapped procedure in order toselect projects assess impacts on society and environment and mitigate any adverseimpacts. It has instituted a compliance management system which mandates undertaking anadverse impact analysis and risk analysis study Hazard & Operability Study (HAZOP)and implementation of actions based on such analysis.

Environmental performance indicators of your Company are defined and monitored by thetop management regularly. Special emphasis is given on resource conservation and processinnovations to convert waste streams into saleable products and minimize use of water inprocessing.

Your Company proactively fulfils the environmental requirements of customers bydelivering products that match international standards. Your Company continues to focus onproper treatment of effluents and reduction of pollution as a part of its green andeco-friendly initiatives. This has made your Company a safe and healthy place to work. Allraw materials and products within supply chain framework of your Company are transportedin a secure manner for the safety of its customers carriers suppliers distributors andcontractors. Your Company takes utmost care during transportation and ensures compliancewith all checks and measures for a safe and secured delivery.

AWARDS & ACCOLADS

Your Company was conferred with Corporate Social Responsibility Award 2015-16 in thecategory of Women Empowerment Private Sector Companies with turnover between Rs 201 Crores- Rs 3000 Crores by FICCI. Further the Comprehensive Emergency Obstetric & NewbornCare (CEmONC) implemented in partnership with Govt. of Gujarat by Deepak Foundation underthe CSR activities of your Company has been awarded as the Best CSR project by Gujarat CSRauthority for cohesive and strategic partnerships.

HUMAN RESOURCES

Your Company's Human Resource philosophy is to establish and build a high performingorganization responding to the ever-changing business environment where each and everyemployee is motivated to perform to the fullest capacity; to contribute to developing andachieving individual excellence and organizational objectives and thereby contributingcontinuously to improved performance and to realize the full potentials of its personnel.Your Company has undertaken inter alia an exercise of identifying OrganizationalCompetencies and all the Senior Management employees have gone through Assessment Centreswith a view to developing the requisite Competencies for performing their roles withgreater effectiveness. During the year under review your Company's industrial relationsat all manufacturing and other locations have remained healthy cordial and amicable. Allthese efforts are concentrated on attracting and retaining the best talent in the industryas people are at the centre of your Company's growth.

INSURANCE

All the insurable interests of your Company including inventories buildings plant andmachinery are adequately insured against risk of fire and other risks.

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013

Your Company has in place a Anti-Discrimination and Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The Internal Complaints Committee has been set up to redress thecomplaints received regarding sexual harassment at workplace. All employees (permanentcontractual temporary trainees) are covered under this policy. No compliant was receivedfrom any employee during FY 2016-17 and hence no complaint is outstanding as on March 312017 for redressal.

ACKNOWLEGDEMENT

Your Directors wish to place on record their appreciation to the Investors BankersCustomers Business Associates all Regulatory and Govt. authorities for their continuedsupport encouragement and confidence reposed in your Company's management.

Your Directors also convey their appreciation to the employees at all levels for theirdedicated services efforts and collective contribution towards growth of your Company.

For and on behalf of the Board
Place: Mumbai DEEPAK C. MEHTA
Date: April 28 2017 Chairman & Managing Director

ANNEXURE 3 A

Form No. MR-3

SECRETARIAL AUDIT REPORT

FOR THE FINANCIAL YEAR ENDED MARCH 31 2017

[Pursuant to section 204(1) of the Companies Act 2013 and rule No.9 of the Companies

(Appointment and Remuneration Personnel) Rules 2014]

To

The Members

Deepak Nitrite Limited 9/10 Kunj Society Alkapuri Vadodara 390007 Gujarat.

We have conducted the secretarial audit of the compliance of applicable statutoryprovisions and the adherence to good corporate practices by Deepak Nitrite Limited(hereinafter called "the Company"). Secretarial Audit was conducted in a mannerthat provided us a reasonable basis for evaluating the corporate conducts/statutorycompliances and expressing our opinion thereon.

Based on our verification of the Company's books papers minute books forms andreturns filed and other records maintained by the Company and also the informationprovided by the Company it's officers agents and authorised representatives during theconduct of secretarial audit we hereby report that in our opinion the Company hasduring the audit period covering the financial year ended on March 31 2017 generallycomplied with the statutory provisions listed hereunder and also that the Company hasproper Board-processes and compliance-mechanism in place to the extent in the manner andsubject to the reporting made hereinafter:

We have examined the books papers minute books forms and returns filed and otherrecords maintained by the Company for the financial year ended on March 31 2017 accordingto the provisions of: (i) The Companies Act 2013 (the Act) and the rules made thereunder;(ii) The Securities Contracts (Regulation) Act 1956 (‘SCRA') and the rules madethere under; (iii) The Depositories Act 1996 and the Regulations and Bye-laws framedthereunder; (iv) Foreign Exchange Management Act 1999 and the rules and regulations madethere under to the extent of Foreign Direct Investment Overseas Direct Investment andExternal Commercial Borrowings; (v) The following Regulations and Guidelines prescribedunder the Securities and Exchange Board of India Act 1992 (‘SEBI Act'):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares andTakeovers) Regulations 2011.

(b) Securities And Exchange Board of India (Prohibition of Insider Trading)Regulations 2015. (c) The Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2009.

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999: There are no events occurred during theperiod which attracts provisions of these guidelines hence not applicable.

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)Regulations 2008: There are no events occurred during the period which attractsprovisions of these guidelines hence not applicable.

(f) The Securities and Exchange Board of India (Registrars to an Issue and ShareTransfer Agents) Regulations 1993 regarding the Companies Act and dealing with client:There are no events occurred during the period which attracts provisions of theseguidelines hence not applicable.

(g) The Securities and Exchange Board of India (Delisting of Equity Shares)Regulations 2009: There are no events occurred during the period which attractsprovisions of these guidelines hence not applicable. and (h) The Securities and ExchangeBoard of India (Buyback of Securities) Regulations 1998: There are no events occurredduring the period which attracts provisions of these guidelines hence not applicable.

(vi) Other laws as applicable specifically to the Company: (a) The Environment(Protection) Act 1986; (b) The Water (Prevention & Control of Pollution) Act 1974;(c) The Air (Prevention & Control of Pollution) Act 1981; (d) Public LiabilityInsurance Act 1991;

(e) Explosives Act 1884;

(f) Hazardous Wastes (Management Handling and Transboundary Movement) Rules 2008; (g)Petroleum Act 1934 and Rules made thereunder. We have also examined compliance with theapplicable clauses of the following: (i) Secretarial Standards issued by The Institute ofCompany Secretaries of India. (ii) Listing Agreements and Securities And Exchange Board ofIndia (Listing Obligations and Disclosures requirements) Regulations 2015 entered into bythe Company with BSE Limited and National Stock Exchange of India Limited. During theperiod under review the Company has generally complied with the provisions of abovementioned Acts Rules Regulations Guidelines Standards etc. The Company has convenedthree board meetings and one Audit Committee Meeting by Video Conferencing as provided inthe Companies Act 2013. Considering the procedures as prescribed under Companies(Meetings of Board and Its powers) Rules 2013 for conducting of such meetings by VideoConferencing the Company has to strengthen the necessary processes and procedures forconducting the meetings by Video Conferencing.

We further report that:

The Board of Directors of the Company is duly constituted with proper balance ofExecutive Directors Non-Executive Directors and Independent Directors. The changes in thecomposition of the Board of Directors that took place during the period under review werecarried out in compliance with the provisions of the Act. Adequate notice is given to alldirectors to schedule the Board Meetings agenda and detailed notes on agenda were sent atleast seven days in advance and a system exists for seeking and obtaining furtherinformation and clarifications on the agenda items before the meeting and for meaningfulparticipation at the meeting.

All the decision in the board meetings were carried through by majority while therewere no dissenting members' views and hence not captured and recorded as part of theminutes. We further report that there are adequate systems and processes in the Companycommensurate with the size and operations of the Company to monitor and ensure compliancewith above referred applicable laws rules regulations and guidelines. The Company hasdeveloped internal "Code of Conduct for regulating monitoring and reporting oftrading by insiders"(Code of Conduct)" as per Securities And Exchange

Board of India (Prohibition of Insider Trading) Regulations 2015. The Company needs tostrengthen the internal processes and procedures for the said code of conduct. We furtherreport that during the audit period the Company has following events having a majorbearing on the it's affairs in pursuance of the above referred laws rules regulationsguidelines standards etc.

State Pollution Control Board ("TSPCB") for closure of one of its three unitssituated at Hyderabad (‘closure order'). After reviewing the compliance status of theclosure order the said closure order was temporarily revoked by TSPCB up to January 312017. Further after reviewing the status of various actions taken by the Company inaccordance with the conditions specified in the temporary revocation TSPCB issuedpermanent revocation of the closure order to the Company.

_ $Q_LQFLGHQW_RI_D_ILUH_EURNH_RXW_DW_RQH_RI_WKH_GLVWLOODWLRQ_ columns of the Company'smanufacturing facilities situated at Roha Maharashtra on October 21 2016. The fire wasbrought under control promptly and there were no casualties. The incident resulted intotemporary stoppage of production of one of the intermediates. As a safety precautionmanufacturing in all the other plants at Roha unit were temporarily stopped. Out of thefour facilities at this unit three have resumed operations in a phased manner.

Agent Link-In Time India Private Limited.

Deepak Phenolics Limited a Wholly Owned Subsidiary of the Company up to Rs 240 crores.

Dinesh Joshi
Partner
KANJ & Associates
Company Secretaries
Place: Pune FCS No: 3752
Date: April 27 2017 C P No:2246

To

The Members

Deepak Nitrite Limited

9/10 Kunj Society Alkapuri

Vadodara 390007

Gujarat.

Our report of even date is to be read along with this letter.

1. Maintenance of secretarial record is the responsibility of the management of theCompany. Our responsibility is to express an opinion on these secretarial records based onour audit.

2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the Company.

4. Wherever required we have obtained the management representation about thecompliance of laws rules and regulations and happening of events etc.

5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.

6. The Secretarial Audit report is neither an assurance as to the future viability ofthe Company nor of the efficiency or effectiveness with which the management has conductedthe affairs of the Company.

Dinesh Joshi
Partner
KANJ & Associates
Company Secretaries
Place: Pune FCS No: 3752
Date: April 27 2017 C P No: 2246

ANNEXURE 3 B

REPORT ON CORPORATE SOCIAL RESPONSIBILITY

1. A brief outline of the Company's Corporate Social Responsibility (CSR) Policyincluding overview of projects or programs proposed to be undertaken and a reference tothe web-link to the CSR Policy and projects or programs:

Outline of Company's CSR Policy:

The Company's CSR policy is to remain a responsible corporate entity mindful of itssocial responsibilities to all stakeholders including consumers shareholders employeeslocal community and society at large.

Overview of Projects or programs undertaken:

Various projects and programs are being undertaken as per the CSR policy of theCompany. The major Programs are ICDS Mobile Health Unit CEmONC Home Health Aid Courseand DOHC in the field of healthcare. The details of these programs undertaken by theCompany during the Financial Year 2016-17 are provided in a separate section on CSR in theAnnual Report.

Weblink to the CSR Policy of the Company:http://deepaknitrite.com/pdf/investor/DNL_Corporate%20Social%20Responsibility%20Policy.pdf

2. The Composition of CSR Committee: The CSR Committee comprises of Shri Sudhir Mankadas Chairman and Dr. S. Sivaram Shri Deepak C. Mehta and Shri Umesh Asaikar as Members.

3. Average Net Profit of the Company for the last three financial years: Rs 8289.48Lakhs.

4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above): Rs 165.79Lakhs.

5. Details of CSR Spent during the Financial Year:

(a) Total amount to be spent for the financial year: Rs 165.79 Lakhs (b) Amountunspent if any: NIL

(c) Manner in which the amount was spent during the Financial Year is detailed below:

(Rs in Lakhs)

(1) (2) (3) (4) (5) (6) (7) (8)
Sr No. CSR project or activity identified Sector in which the project is covered Projects or programs Amount outlay (budget) project or programs wise Amount spent on the projects or programs Sub-heads Cumulative expenditure upto the reporting period 1 Amount Spent:
(1) Local area or other Direct or through implementing agency
(2) Specify the State and District Where projects or programs was undertaken 1. Direct Expenditure On projects or programs
2. Overheads
1 CEmONC2 Health Care Jabugam 26.00 28.97 52.55 Implementing
Dist.: Vadodara 0.83 (23.35) Agency
State: Gujarat
2 Construction of Farm Pond Conservation natural resource of Roha - 5.77 9.27 Implementing
Dist. Raigad State: Maharashtra 0.00 (3.50) Agency
3 Mobile Health Unit Health Care Dahej 29.50 23.89 75.53 Implementing
Dist.: Bharuch State: Gujarat 1.97 (49.67) Agency
4 Help Desk Project Health Care Vadodara 7.50 12.42 21.57 Implementing
Dist.: Vadodara State: Gujarat 1.40 (7.75) Agency
5 Mobile Health Unit Health Care Roha 25.00 18.83 28.81 Implementing
Dist. Raigad 1.52 (8.46) Agency
State: Maharashtra
6 ICDS3 Health Care Nandesari 32.50 28.45 55.33 Implementing
Dist.: Vadodara 2.21 (24.67)
State: Gujarat
7 DOHC4 Health Care Nandesari 19.07 17.96 57.50 Implementing
Dist.: Vadodara 1.11 (38.43 ) Agency
State: Gujarat
8 Home Health Aid Skill Development/ Vadodara 23.56 25.11 44.07 Implementing
Course Education Dist.: Vadodara 1.00 (17.96) Agency
State: Gujarat
Hyderabad
Dist.: Hyderabad
State: Telangana
9 Mobile Library Skill Development /Education Roha 14.65 10.06 13.12 Implementing
Dist. Raigad 0.89 (2.17) Agency
State: Maharashtra
10 Setting up a De-addiction and counseling center Health Care Hyderabad 12.70 12.08 12.87 Implementing
Dist.: Hyderabad 0.79 Agency
State: Telangana
11 Management Cost - NA 9.52 9.74 22.11 Implementing
(12.37) Agency
TOTAL 200.00 205.00

1 Figures in brackets are of Previous Year.

2 Comprehensive Emergency Obstetric Newborn Care Unit.

3 Integrated Child Development Services

4 Deepak Occupational Health Center

6. The CSR Committee of the Company hereby confirms that the implementation andmonitoring of CSR Policy is in compliance with CSR objectives and Policy of the Company.

DEEPAK C. MEHTA SUDHIR MANKAD
Chairman & Managing Director Chairman of CSR Committee

ANNEXURE - C

NOMINATION AND REMUNERATION POLICY

1. INTRODUCTION

A transparent fair and reasonable process for determining the appropriate remunerationat all levels of the Company is required to ensure that shareholders remain informed andconfident in the management of the Company. To harmonize the aspirations of humanresources consistent with the goals of the Company and in terms of the provisions of theCompanies Act 2013 and the rules made thereunder and the Listing Agreement as amendedfrom time to time this policy on nomination and remuneration of Directors on the Board ofthe Company Key Managerial Personnel and other employees in the Senior Management isformulated in compliance with Section 178 of the Companies Act 2013 read with theapplicable rules thereto and Clause 49 of the Listing Agreement with the Stock Exchanges.

This Policy shall act as a guideline for determining inter-aliaqualifications positive attributes and independence of a Director appointment andremoval of the Directors Key Managerial Personnel and Senior Management employees andmatters relating to the remuneration for the Directors Key Managerial Personnel and otheremployees.

Pursuant to the requirement of Section 178 of the Companies Act 2013 and Clause 49 ofthe Listing Agreement with the Stock Exchanges the Company has a duly constitutedNomination and Remuneration Committee.

2. OBJECTIVE OF THE POLICY

2.1. The objective of this Policy is to outline a framework to ensure that theCompany's remuneration levels are aligned with best industry practices and are good enoughto attract and retain competent Directors on the Board Key Managerial Personnel andSenior Management Personnel of the quality required. The key objectives of this Policyinclude: (i) guiding the Board in relation to appointment and removal of Directors KeyManagerial Personnel and Senior Management employees; (ii) evaluating the performance ofthe members of the Board and provide necessary report to the Board for further evaluationof the Board; (iii) recommending to the Board the remuneration payable to the Directorsand setting forth a policy for determining remuneration payable to Key ManagerialPersonnel and Senior Management employees.

2.2. While determining the remuneration for the Directors

Key Managerial Personnel and Senior Management employees regard should be given toprevailing market conditions business performance and practices in comparable companiesalso to financial and commercial health of the Company as well as prevailing laws andgovernment/other guidelines to ensure that pay structures are appropriately aligned andthe levels of remuneration remain appropriate. 2.3. While designing the remunerationpackage it should be ensured: (i) The level and composition of remuneration is reasonableand sufficient to attract retain and motivate persons to ensure the quality required torun the Company successfully. (ii) Remuneration to Directors Key Managerial Personnel andSenior Management employees involves a balance between fixed and incentive pay reflectingshort and long term performance objectives appropriate to the working of the Company andits goals.

2.4. Some part of the remuneration package may be linked to the achievement ofcorporate performance targets of the Company and a strong alignment of interest withstakeholders.

2.5. The Committee shall observe the set of principles and objectives as envisagedunder the Companies Act 2013 ("Act") (including Section 178 thereof) rulesframed thereunder and clause 49 of the Listing Agreement including inter-aliaprinciples pertaining to determining qualifications positives attributes integrity andindependence. 2.6. In this context the following Policy has been formulated by theNomination and Remuneration Committee and recommended to the Board of Directors foradoption.

3. EFFECTIVE DATE

This Policy shall be effective from the date of its adoption by the Board.

4. DEFINITIONS

4.1. In this Policy the following terms shall have the meaning assigned to them: (i)"Act" means The Companies Act 2013 and rules made thereunder.

(ii) "Board of Directors" or "Board" means the Board of Directorsof the Company.

(iii) "Committee" means Nomination and Remuneration Committee of Board ofDirectors of the Company constituted in accordance with the provisions of Section 178 ofthe Act and the Listing Agreement.

(iv) "Company" means "Deepak Nitrite Limited." (v)"Director" shall mean a member of the Board of Directors of the Companyappointed from time to time in accordance with the Articles of Association of the Companyand provisions of the Act. (vi) "Employees' Stock Option" means the option givento the Directors other than Independent Directors officers or employees of a Company orof its holding company or subsidiary company or companies if any which gives suchdirectors officers or employees the benefit or right to purchase or to subscribe forthe shares of the company at a future date at a pre-determined price.

(vii) "Executive Director" shall mean a Director who is in the whole-timeemployment of the Company other than Managing Director.

(viii) "Financial Year" shall mean the period ending on the 31stday of March every year.

(ix) "Independent Director" shall mean a Director referred to in Section 149(6) of the Act read with Clause 49 of the Listing Agreement.

(x) "Key Managerial Personnel" or "KMP" shall have the meaningascribed to it in the Act. (xi) "Listing Agreement" shall mean the ListingAgreement entered into by the Company with the Stock Exchanges where the shares /securities of the Company are listed.

(xii) "Managing Director" means a Director who by virtue of the Articles ofAssociation of the Company or an agreement with the Company or a resolution passed in itsgeneral meeting or by its Board of Directors is entrusted with substantial powers ofmanagement of the affairs of the Company and includes a Director occupying the position ofManaging Director by whatever name called. (xiii) "Policy" or "thisPolicy" means "Nomination and Remuneration Policy." (xiv)"Remuneration" means any money or its equivalent given or passed to any personfor services rendered by him and includes perquisites as defined under the Income-tax Act1961. (xv) "Senior Management" means personnel of the Company who are members ofits core management team excluding the Board of Directors. This would include all membersof management one level below the Executive Directors including all the functional heads.

4.2. Unless the context otherwise requires words and expressions used in this Policyand not defined herein but defined in the Companies Act 2013 and/or Listing Agreement asmay be amended from time to time shall have the meaning respectively assigned to themtherein.

5. APPLICABILITY

This Policy is applicable to:

(i) Directors (Managing Director Executive Director Independent Director andNon-Independent Director) (ii) Key Managerial Personnel (iii) Senior Management employees(iv) Other Employees

6. NOMINATION AND REMUNERATION COMMITTEE

6.1. Role of the Committee:

(i) Identifying persons who are qualified to become Director and who may be appointedin Senior Management cadre in accordance with the criteria laid down recommend to theBoard their appointment and removal and shall carry out evaluation of every Director'sperformance. (ii) Formulating the criteria for determining qualifications positiveattributes and independence of a Director and recommend to the Board a policy relatingto the remuneration for the Directors Key Managerial Personnel and Senior Managementemployees. (iii) Formulating the criteria for evaluation of Independent Directors and theBoard. (iv) Devising a policy on Board diversity. (v) Ensuring that the Board comprises ofa balanced combination of Executive Directors and Non-Executive Directors. (vi) TheCommittee shall take into consideration and ensure the compliance of provisions underSchedule V of the Companies Act 2013 for appointing and fixing remuneration of ManagingDirectors / Executive Directors.

(vii) While approving the remuneration the Committee shall take into account financialposition of the Company trends in the industry qualifications experience and pastperformance of the appointee. (viii) any other role as may be specified by the Board.

6.2. Composition of the Committee

(i) The Committee shall comprise of at least three (3) Directors all of whom shall benon-executive Directors and at least half shall be Independent Directors.

(ii) The Board shall reconstitute the Committee as and when required to comply with theprovisions of the Act and/or the Listing Agreement. (iii) Membership of the Committeeshall be disclosed in the Annual Report. (iv) Term of the Committee shall continue unlessterminated by the Board of Directors.

6.3. Chairman of the Committee

(i) Chairman of the Committee shall be an Independent Director. (ii) Chairman of theCompany (whether Executive or non-Executive) may be appointed as a member of the Committeebut shall not Chair the Committee. (iii) In the absence of the Chairman the members ofthe Committee present at the meeting shall choose one amongst them to act as Chairman.(iv) Chairman of the Committee shall be present at the Annual General Meeting or maynominate some other member to answer the shareholders' queries.

6.4. Frequency of the Meetings of the Committee

The meeting of the Committee shall be held at such intervals as may be required.

6.5. Committee Member's Interest

(i) A member of the Committee is not entitled to be present when his or her ownremuneration is discussed at a meeting or when his or her performance is being evaluated.

(ii) The Committee may invite such executives as it considers appropriate to bepresent at the meetings of the Committee.

6.6. Quorum

The quorum necessary for transacting business at a meeting of the Committee shall betwo (2) members or one-third of the members of the Committee whichever is greater.

6.7. Voting at the Meeting

(i) Matters arising for determination at Committee meetings shall be decided by amajority of votes of members present. Any such decision shall for all purposes be deemed adecision of the Committee. (ii) In the case of equality of votes the Chairman of themeeting will have a casting vote.

7. APPOINTMENT AND REMOVAL OF DIRECTORS KEY MANAGERIAL PERSONNEL AND SENIOR MANAGEMENTEMPLOYEES

(i) The Committee shall identify and ascertain the integrity qualification expertiseand experience of the person for appointment as a Director KMP or Senior Managementemployee. (ii) A person should possess adequate qualifications expertise and experiencefor the position he/ she is considered for appointment as a Director Key ManagerialPersonal or Senior Management employee.

(iii) The Company shall not appoint or continue the employment of any person asManaging Director / Executive Director who has attained the age of seventy years. Providedthat the term of the person holding this position may be extended beyond the age ofseventy years with the approval of shareholders by passing a special resolution based onthe explanatory statement annexed to the notice for such motion indicating thejustification for such appointment.

(iv) The appointment as recommended by the Committee to the Board shall be subject tothe approval of the Board.

7.1. Criteria for appointment of Independent

Director:

(i) The proposed appointee shall comply with the criteria specified in the relevantprovisions of the Act and/or the Listing Agreement. He or she shall not directly orindirectly represent the interest of any specific vendor or customer or stakeholder andshall have business reputation and strong ethical standards and possess leadership skillsand business experience including board procedures. (ii) The Independent Director shallfulfill the qualification and requirements specified under the Act and Listing Agreement.

(iii) He or she shall also declare his or her independent status prior to theirappointment to the Board and maintain the same during his or her tenure as an IndependentDirector. Being a Director of the Company he or she shall adhere to the Code of Conductstipulated for the Director.

7.2. Criteria for appointment of Managing Director /

Executive Director:

(i) The Company can have more than one Managing Director or Executive Director.

(ii) The appointee(s) shall have good educational background preferably withspecialization in the field. He shall have exemplary skills and leadership qualities tolead the Company or as the case may be the function assigned to him. (iii) Depending onthe role and responsibility he shall have hands on experience in the relevant field. Forexample as ED (Operations) is expected to have adequate knowledge and experience about theplant operations and related issues. The suitability of the candidate shall be determinedon a case to case basis by the Committee. Being a Director of the Company ManagingDirector / Executive Director shall adhere to the Code of Conduct stipulated for theDirector.

(iv) He shall fulfill the conditions as specified in Part I of Schedule V of the Act.However in case the conditions specified in Part I of Schedule V of the Act are notfulfilled such appointments shall be subject to the approval of the Central Government.

7.3. Criteria for appointment of KMPs:

(i) Pursuant to the requirement of Section 203 of the Act the Company is required toappoint a Managing Director / Manager / Chief Executive Officer and in their absence anExecutive Director as Whole Time KMP. (ii) The Company may also appoint a Chief ExecutiveOfficer (CEO) who may or may not be a Director. The qualifications experience and statureof the CEO could be in line with that of the Executive Director. Where the CEO isdesignated as KMP he shall act subject to the superintendence and control of the Board.(iii) The Company is also required to appoint a Chief Financial Officer (CFO) as KMP asper the requirement of the Act. The CFO shall preferably be a Chartered Accountant or aCost & Management Accountant or hold an equivalent qualification and have relevantwork experience. He shall be well versed in finance function including but not limited tofunding taxation forex and other core matters. As required under the Listing Agreementthe appointment of CFO shall be subject to approval of the Audit Committee.

(iv) As required under the said Section of the Act a Company Secretary (CS) is alsorequired to be appointed by the Company as a KMP. The CS shall have the prescribedqualification and requisite experience to discharge the duties specified in law and as maybe assigned by the Board / Managing Director / Executive Director from time to time. (v)KMPs other than Managing Director and/or Executive Director shall adhere to the Code ofConduct stipulated for the Senior Management.

7.4. Criteria for appointment of Senior Management employees:

(i) Senior Management employees shall possess the requisite qualifications expertiseand experience depending upon the requirement of the relevant position.

(ii) The Committee has discretion to decide whether qualifications expertise andexperience possessed by a person are sufficient / satisfactory for the concerned position.(iii) Senior Management employees shall adhere to the Code of Conduct stipulated for theSenior Management.

7.5. Term / Tenure

(i) Managing Director and Executive Director

The Company shall appoint or re-appoint any person as its Managing Director / ExecutiveDirector for a term not exceeding five years at a time. No re-appointment shall be madeearlier than one year before the expiry of the term. (ii) Independent Director

(a) An Independent Director shall hold office for a term up to five consecutive yearson the Board of the Company and will be eligible for re appointment on passing of aspecial resolution by the Company and disclosure of such appointment in the Board'sreport.

(b) No Independent Director shall hold office for more than two consecutive terms butsuch Independent Director shall be eligible for appointment after expiry of three years ofceasing to become an Independent Director.

Provided that an Independent Director shall not during the said period of three yearsbe appointed in or be associated with the Company in any other capacity either directlyor indirectly. (c) The Independent Director shall comply with the requirement of number ofdirectorships he or she can hold as prescribed under the provisions of the Act or theListing Agreement including any amendment thereto from time to time.

7.6. Familiarization Programme for Independent

Directors

The Company shall familiarize the Independent Directors with the Company their rolesrights and responsibilities in the Company nature of the industry in which the Companyoperates business model of the Company etc. through various programmes.

7.7. Evaluation

(i) Subject to Schedule IV of the Companies Act 2013 and Clause 49 of the ListingAgreement the Committee shall carry out the evaluation of Directors periodically.

(ii) The performance evaluation of Independent Directors shall be done by the entireBoard of Directors excluding the Director being evaluated. (iii) The IndependentDirectors at their separate meeting shall review on yearly basis the performance ofNon-Independent Directors and the Board as a whole.

(iv) The Independent Directors at their separate meeting shall also review on yearlybasis the performance of the Chairperson of the Company taking into account the views ofExecutive Directors and Non-Executive Directors.

(v) The entire process of the Performance Evaluation shall be kept in strict confidenceand shall not be disclosed to any person except to those required to perform their dutiesunder the Act.

(vi) All the records of Performance Evaluation process and outcome shall be maintainedby the Company Secretary of the Company and shall be kept at the Registered Office of theCompany. Such records shall be preserved till such time as may be decided by the Boardfrom time to time or as required under the Act.

7.8. Removal

Due to reasons for any disqualification mentioned in the Act rules made thereunder orunder any other applicable laws rules and regulations the Committee may recommend to theBoard with reasons recorded in writing removal of a Director KMP and Senior Managementemployees subject to the provisions and compliance of the applicable laws rules andregulations.

7.9. Retirement

The Director KMP and Senior Management employees shall retire as per the applicableprovisions of the Act and/or the prevailing policy of the Company. The Board will have thediscretion to retain the Director KMP Senior Management employees in the same position /remuneration or otherwise even after attaining the retirement age in the interest and forthe benefit of the Company in accordance with the provisions of the Act and approval ofmembers wherever required.

8. REMUNERATION

8.1. Remuneration to Managing Director:

(i) The remuneration comprising of salary allowance perquisites and other benefitspayable to Managing Director will be determined by the Committee and recommended to theBoard for approval. (ii) In addition to the remuneration as stated in 8.1.1. aboveManaging Director shall also be paid a Commission calculated with reference to the NetProfits of the Company in a particular Financial Year as may be determined by the Boardof Directors subject to the overall ceiling stipulated in Section 197 and other relevantprovisions of the Act.

(iii) The Managing Director shall be entitled to the following perquisites /allowances: (a) Housing – Rent free furnished residential accommodation. In case noaccommodation is provided by the Company Managing Director shall be paid house rentallowance as may be decided by the Board of Directors.

(b) Re-imbursement of gas electricity water charges and furnishings.

(c) Re-imbursement of medical expenses incurred for self and members of his family asper rules of the Company.

(d) Leave travel concession for self and members of his family as per rules of theCompany.

(e) Fees of clubs subject to maximum of two clubs. (f) Medical insurance as per rulesof the Company.

(g) Personal Accident Insurance as per rules of the Company.

(h) Provision of car and telephone at residence. (i) Company's contribution toprovident fund superannuation fund or annuity fund gratuity and encashment of leave asper rules of the Company. (j) Retirement and other benefits as per rules of the Company.

(iv) The remuneration and commission to be paid to the Managing Director shall be asper the statutory provisions of the Act and the rules made thereunder for the time beingin force and shall be subject to the approval of the shareholders of the Company andCentral Government wherever required.

(v) The remuneration / commission payable to Managing Director shall be reviewed by theBoard after close of each Financial Year and based on the Profits made by the Company inthat Financial Year Managing Director shall be paid such enhanced remuneration as theBoard may decide subject to the ceiling limits specified in Section 197 and otherapplicable provisions of the Act read with Schedule V of the Act.

(vi) The Managing Director shall not be entitled to sitting fees for attending themeetings of the Board or any Committee thereof.

8.2. Remuneration to Executive Director:

(i) Fixed Pay

(a) Executive Director shall be eligible for a monthly remuneration as may be approvedby the Board on the recommendation of the Committee in accordance with the provisions ofthe Act and rules made thereunder for the time being in force. (b) The Fixed Pay ofExecutive Director shall comprise of salary perquisites allowances and other benefits.The perquisites allowances and other benefits to the Executive Director shall include butnot be limited to the following: i. Re-imbursement of medical expenses incurred for selfand members of his family as per policy of the Company. ii. Leave travel concession forself and members of his family as per policy of the Company. iii. Medical and otherinsurances as per policy of the Company.

iv. Company Car with Driver. v. Company's contribution to provident fundsuperannuation fund or annuity fund gratuity and encashment of leave as per the policyof the Company. vi. Retirement and other benefits as per policy of the Company. vii.Hardship Allowance as applicable in accordance with the policy of the Company.

(c) The break-up of the pay scale and quantum of perquisites including employer'scontribution to P.F pension scheme medical expenses etc. shall be decided and approvedby the Board on the recommendation of the Committee and approved by the shareholders andCentral Government wherever required. (ii) Variable Pay In addition to the salaryperquisites allowances and other benefits as mentioned above Executive Director willalso be entitled to a Variable Pay by way of Performance Linked Incentive. This amountshall be paid annually after the end of each Financial Year. The Performance LinkedIncentive shall be in the range of 25% to 40% of cost to the Company which will beentirely based on the individual's performance and Company's performance and may vary from80% to 125% of the Variable Pay as per policy of the Company. (iii) Loyalty Bonus Inaddition to the above Executive Director shall also be entitled for the Loyalty Bonus asper policy of the Company.

(iv) Payment of Variable component / Increments (a) Payment of Variable component ofthe remuneration of the Executive Director for a particular Financial Year and incrementsto the existing remuneration structure of Executive Director shall be recommended by theManaging Director to the Committee based upon the individual performance and also theCompany's performance as per policy of the Company. (b) The Committee shall review thepayment of variable component of the remuneration of the Executive Director for aparticular Financial Year and increments to the existing remuneration structure ofExecutive Director as recommended by the Managing Director and recommend the same to theBoard for its approval. Such Variable component and proposed enhanced remuneration asrecommended by the Committee to the Board should be within the overall limits ofmanagerial remuneration as prescribed under the Act and rules made thereunder.

(c) The Executive Director shall also be entitled to reimbursement of all legitimateexpenses incurred by him while performing his duties and such reimbursement will not formpart of his remuneration.

(v) Executive Director shall not be entitled to sitting fees for attending meetings ofthe Board or any Committee thereof.

8.3. Minimum Remuneration

Where in any financial year the Company has no profits or its profits are inadequatethe Company shall pay remuneration to its Managing Director(s) and Executive Director(s)in accordance with the provisions of Schedule V of the Act and if it is not able to complywith such provisions with the previous approval of the Central Government.

8.4. Remuneration to Independent Director and

Directors other than Managing Director/ Executive Director:

(i) Sitting Fees

The Independent Director / Directors other than Managing Director and ExecutiveDirector may receive remuneration by way of fees for attending meetings of Board orCommittee thereof. Provided that the amount of such fees shall not exceed the maximumamount as provided in the Act per meeting of the Board or Committee or such amount as maybe prescribed by the Central Government from time to time. The Sitting Fee paid toIndependent Directors shall not be less than the Sitting Fees payable to other Directors.

(ii) Commission on the Net Profits

Apart from receiving the Sitting Fees Independent Director(s) / Non-IndependentDirector(s) may be paid Commission on the Net Profits of the Company for a particularFinancial Year within the monetary limit approved by shareholders subject to the limitnot exceeding 1% of the Net Profits of the Company computed as per the applicableprovisions of the Act. The amount of Commission payable to each Independent Director /Non-

Independent Director for a particular Financial Year shall be decided by the Chairmanof the Company and shall be approved by the Board. (iii) Stock Options IndependentDirector shall not be entitled to any stock option of the Company.

8.5. Provisions for excess remuneration

If any Director draws or receives directly or indirectly by way of remuneration anysuch sums in excess of the limits prescribed under the Act or without the prior sanctionof the Central Government where required he / she shall refund such sums to the Companyand until such sum is refunded hold it in trust for the Company. Subject to the approvalof Central Government the shareholders of the Company may waive recovery of such excessremuneration by passing an Ordinary Resolution.

8.6. Remuneration to KMP and Senior Management employees:

(i) The remuneration to KMP and Senior Management employees shall comprise of Fixed Payand Variable Pay and governed by the DNL HR Policy.

(ii) The Committee may authorize the Managing Director / Executive Director todetermine from time to time the remuneration payable to KMP and Senior Management employeeincluding their increments. The powers of the Committee in this regard may be delegated tothe Managing Director / Executive Director.

(iii) Remuneration of a KMP at the time of their appointment will be recommended by theManaging Director / Executive Director to the Committee. The Committee shall review suchremuneration and recommend the same to the Board for approval. Any subsequent modificationto the remuneration of KMP shall be decided by the Managing Director / Executive Directoras may be authorised by the Committee.

(iv) Fixed Pay

The Fixed Pay of KMP and Senior Management employees shall comprise of salaryperquisites allowances and other benefits as per policy of the Company. The break-up ofthe pay scale and quantum of perquisites including but not limited to employer'scontribution to P.F pension scheme medical expenses etc. shall be decided by theManaging Director / Executive Director.

(v) Variable Pay

The remuneration of KMP and Senior Management employees will also comprise performancelinked variable pay which may vary from 25% to 40% of the cost to the Company. This amountof variable pay shall be paid annually after the end of each Financial Year and will beentirely based on the individual's performance and Company's performance and may vary from80% to 125% of the variable pay as per policy of the Company. Such variable pay for aparticular Financial Year shall be decided by the Managing Director / Executive Director.(vi) Hardship Allowance and Loyalty Bonus In addition to the above KMP and SeniorManagement employees shall also be entitled for the Hardship Allowance as may beapplicable and Loyalty Bonus as per policy of the Company.

8.7. The remuneration to other employees of the Company shall be governed by DNL HRPolicy.

8.8 Loans and Advances to Employees

(i) The Loans advances and other financial assistance facilities to the employeesshall be governed by the DNL HR policy as amended from time to time and shall beconsidered as a part of ‘conditions of service' for employees of the Company.

(ii) Advances to the employees for the purpose of performance of other duties shall begoverned by the DNL HR Policy as amended from time to time and shall be considered as apart of ‘conditions of service' for employees of the Company.

9. BOARD DIVERSITY

(i) The Board of Directors shall have the optimum combination of Directors from thedifferent areas / fields like operations projects production management qualityassurance finance legal sales and marketing research and development human resourcesetc. or as may be considered appropriate.

(ii) The Board shall have at least one Director who has accounting or related financialmanagement expertise.

10. DISCLOSURE

This Policy shall be disclosed in the Board's Report.

11. REVIEW OF THE POLICY

This Policy shall be reviewed by the Committee after every three years.

12. AMENDMENTS TO THE POLICY

The Board of Directors on its own and / or as per the recommendations of Nomination andRemuneration Committee can amend this Policy as and when deemed fit.

In case of any amendment(s) clarification(s) circular(s) etc. issued by the competentauthorities not being consistent with the provisions laid down under this Policy suchamendment(s) clarification(s) circular(s) etc. shall prevail over the provisionshereunder and this Policy shall stand amended accordingly from the effective date as laiddown under such amendment(s) clarification(s) circular(s) etc.

For and on behalf of the Board
Place: Mumbai DEEPAK C. MEHTA
Date: April 28 2017 Chairman & Managing Director

Form No. MGT - 9 EXTRACT OF ANNUAL RETURN

(As on March 31 2017)

[Pursuant to section 92(3) of the Companies Act 2013 and rule 12(1) of the Companies(Management and Administration) Rules 2014]

I. REGISTRATION AND OTHER DETAILS:
i) CIN L24110GJ1970PLC001735
ii) Registration Date June 61970
iii) Name of the Company Deepak Nitrite Limited
iv) Category/Sub-Category of the Company Public Company/Limited by Shares
v) Address of the Registered Office and Contact Details 9/10 Kunj Society Alkapuri
Vadodara- 390 007
Tel: 91-265-235 1013 233 4481
Fax No. : 91-265- 233 0994
vi) Whether listed company Yes
vii) Name Address and Contact Details of Registrar and Link Intime India Pvt. Ltd.
Transfer Agent if any: 101 247 Park L. B. S. Marg
Vikhroli (W)
Mumbai - 400078.
Tel: 022 - 2594 6970
Toll free number: 1800 2208 78
Email: rnt.helpdesk@linkintime.co.in

II. PRINCIPAL BUSINESS ACTIVITY OF THE COMPANY

Business activities contributing 10% or more of the total turnover of the company:-

Sr. No. Name and Description of main Products/ Services NIC Code of the Product/Service % to total turnover of the Company
1. Sodium Nitrite 24121 17%
2. 2 Ethyl Hexyl Nitrate 24121 11%
3. Methoxylamine Hydrochloride 24121 11%
4. Optical Brightening Agent 24121 13%

III. PARTICULARS OF HOLDING SUBSIDIARY AND ASSOCIATE COMPANIES

Sr. No. Name and Address of the Company CIN/GLN Holding/ Subsidiary/ Associate % of shares held Applicable Section
1. Deepak Phenolics Limited (Registered office at 9/10 Kunj Society Alkapuri Vadodara -390007 U24100GJ2011PLC064669 Subsidiary 100% 2(87)(ii)
2. Deepak Nitrite Corporation Inc. 10801 Johnston Road Suit 204 Charlotte NC 28226 USA NA Subsidiary 100% 2(87)(ii)
3. Deepak Gulf LLC P.O. Box 128 Wadi Kabir PC 117 Sultanate of Oman NA Associate 49% 2(6)

IV. SHAREHOLDING PATTERN (Equity share Capital Break up as percentage of Total Equity)i) Category-wise Share Holding

Category of Shareholders No. of Shares held at the beginning of the year No. of Shares held at the end of the year % change during the
Demat Physical Total % of total Demat Physical Total % of total year
Shares Shares
A. Promoters1 Indian
Individuals/ H.U.F 22571070 - 22571070 19.41 22867361 - 22867361 17.49 -1.92
Central/State Government(s)
Bodies Corporate 37653000 - 37653000 32.38 37945000 - 37945000 29.03 -3.35
Financial Institutions/ Banks - - - - - - - - -
Any Other (specify) - - - - - - - - -
Sub-Total (A)(1) 60224070 - 60224070 51.79 60812361 - 60812361 46.52 -5.27
Foreign - - - - - - - - -
Non Resident Individuals/ - - - - - - - - -
Foreign Nationals
Bodies Corporate - - - - - - - - -
Institutions - - - - - - - - -
Qualified Foreign Investor - - - - - - - - -
Any Other (specify) - - - - - - - - -
Sub Total (A)(2) - - - - - - - - -
Total holding of Promoter 60224070 - 60224070 51.79 60812361 - 60812361 46.52 -5.27
(A)=(A)(1)+(A)(2)
B. Public Shareholding - - - - - - - - -
Institutions - - - - - - - - -
Mutual Fund/UTI 6433940 18000 6451940 5.55 14339243 18000 14357243 10.98 5.43
Financial Institutions/Banks 12349 1100 13449 0.01 785824 1100 786924 0.60 0.59
Central/State Government(s) - - - - - - - - -
Venture Capital Funds - - - - - - - - -
Insurance Companies 640000 - 640000 0.55 0 - 0 0.00 -0.55
Foreign Institutional 8200000 - 8200000 7.05 18840153 - 18840153 14.41 7.36
Investors2
Foreign Venture Cap. Inv - - - - - - - - -
Qualified Foreign Investor - - - - - - - - -
Any Other (specify) - - - - 1350 0 1350 0.00 0.00
Foreign Bank
Sub-Total (B)(1) 15286289 19100 15305389 13.16 33966570 19100 33985670 26.00 12.84
Non Institutions
Bodies Corporate 13639514 154990 13794504 11.86 13023178 0 13023178 9.96 -1.90
Individuals
i) Holding nominal share 18704644 168770 20391414 17.54 15429382 1577950 17007332 13.01 -4.53
capital upto Rs 1 lakhs
ii) Holding nominal share capital in excess of Rs 1 lakhs 5691339 108170 5799509 4.99 4022767 251140 4273907 3.27 -1.72
Qualified Foreign Investor - - - - - - - - -
Any Other(specify) - - - - - - - - -
Overseas Corporate Bodies - - - - - - - - -
Individual NRI- Rep.- Non 761754 6050 767804 0.66 403444 6050 409494 0.31 -0.35
Rep.
Trust 5500 - 5500 0.00 4225 - 4225 0.00 0.00
Hindu Undivided Family - - - - 949713 - 949713 0.73 0.73
Clearing Member - - - - 245386 - 245386 0.19 0.19
Sub-Total (B)(2) 38802751 1955980 40758731 35.05 34078095 1835140 35913235 27.48 -7.57
Total Public shareholding 54089040 1975080 56064120 48.21 68044665 1854240 69898905 53.48 5.27
(B)=(B)(1)+(B)(2)
TOTAL (A)+(B) 114313110 1975080 116288190 100.00 128857026 1854240 130711266 100.00 0.00
Shares held by Custodians and against which Depository Receipts have been issued - - - - - - - - -
GRAND TOTAL (A)+(B)+(C) 114313110 1975080 116288190 100.00 128857026 1854240 130711266 100.00 0.00

1 Includes shareholding of promoter group.

2 Foreign Portfolio Investors (FPI).

(ii) Shareholding of Promoters

A. Details of Shareholding of Promoters and Promoter group

Sr. No. Shareholder's Name Shareholding at the beginning of the year Shareholding at the end of the year % change in shareholding during the year
No. of Shares % of total shares of the Company % shares pledged/ encumbered to total shares No. of Shares % of total shares of the company % shares pledged/ encumbered to total shares
1. C. K. Mehta 86430* 0.08 - 86430* 0.07 - -
2. Deepak C. Mehta 20940040 18.01 - 21236331 16.25 - -1.76
3. Ajay C. Mehta - - - - - - -
4. Stiffen Credits And Capital Pvt Ltd 8379940 7.21 - 8379940 6.41 - -
5. Checkpoint Credit And Capital Pvt Ltd 7206050 6.20 - 7206050 5.51 - -
6. Stepup Credits And Capital Pvt Ltd 6915580 5.95 - 6915580 5.29 - -
7. Stigma Credits And Capital P Ltd 6178100 5.31 - 6178100 4.73 - -
8. Skyrose Finvest Pvt Ltd 3691250 3.17 - 3691250 2.82 - -
9. Pranawa Leafin Pvt Ltd 2190000 1.88 - 2246000 1.72 - 0.16
10. Forex Leafin Pvt. Ltd. 2169780 1.87 - 2169780 1.66 - -
11. Kantaben Chimanlal Mehta 970000 0.83 - 970000 0.74 - -
12. Sundown Finvest Pvt Ltd 812300 0.70 - 812300 0.62 - -
13. Ila Deepak Mehta 396010 0.34 - 396010 0.30 - -
14. Maulik Deepak Mehta 131300 0.11 - 131300 0.10 - -
15. Meghav Deepak Mehta 47290 0.04 - 47290 0.04 - -
16. Hardik Leafin Pvt Ltd 110000 0.09 - 346000 0.26 - 0.17

* Include 8040 shares held as the Karta of HUF.

(iii) Change in Promoter's Shareholding

Sr. No. Name & reason of increase/decrease Shareholding at the beginning of the Financial Year – 2016-17 Transactions during the year Cumulative shareholding at the end of the Financial Year – 2016-17
No. of shares held % of total shares of the Company Date Increase / (decrease) No of shares held % of total shares of the Company
1. Deepak Chimanlal Mehta 20940040 18.01 - - 20940040 18.01
Market Purchase - - 20-03-2017 101399 21041439 16.10
Market Purchase - - 21-03-2017 194892 21236331 16.25
At the end of the Financial Year - - - - 21236331 16.25
2. Pranawa Leafin Pvt Ltd 2190000 1.88 - - 2190000 1.68
Market Purchase - - 22-03-2017 56000 2246000 1.72
At the end of the Financial Year - - - - 2246000 1.72
3. Hardik Leafin Pvt Ltd 110000 0.09 - - 110000 0.09
Market Purchase - - 14-06-2016 190000 300000 0.26
Market Purchase - - 22-03-2017 46000 346000 0.26
At the end of the Financial Year - - - - 346000 0.26

(iv) Shareholding of top ten Shareholders (Other than Directors Promoters and Holdersof GDRs and ADRs)

Sr. No. Name & reason of increase/decrease Shareholding at the beginning of the Financial Year – 2016-17 Transactions during the year Cumulative shareholding at the end of the Financial Year – 2016-17
No. of shares held % of total shares of the Company Date Increase / (decrease) No of shares held % of total shares of the Company
1. Franklin India Smaller Companies Fund 6100000 5.25 - - 6100000 5.25
Market Purchase - - 16-05-2016 to 20-05-2016 313886 6413886 5.52
Market Purchase - - 06-06-2016 to 10-06-2016 100000 6513886 5.60
Market Purchase - - 13-06-2016 to 17-06-2016 508536 7022422 6.04
Market Purchase - - 27-06-2016 to 30-06-2016 66567 7088989 6.10
Market Sale - - 12-09-2016 to 16-09-2016 (30111) 7058878 6.07
Market Sale - - 03-10-2016 to 07-10-2016 (19889) 7038989 6.05
Market Purchase - - 21-11-2016 to 25-11-2016 160506 7199495 6.19
At the end of the Financial Year - - - - 7199495 5.51
2. Reliance Capital Trustee Co. Ltd - - - - - -
Market Purchase - - 19-12-2016 to 23-12-2016 778000 778000 0.67
Market Purchase - - 26-12-2016 to 30-12-2016 3573572 4351572 3.74
Market Sale - - 16-01-2017 to 20-01-2017 (11700) 4339872 3.73
Allotment pursuant to QIP - - 07-03-2017 2788461 7128333 5.45
At the end of the Financial Year

-

-

-

-

7128333

5.45

3. ICICI Lombard General Insurance 3200000 2.75 - - 3200000 2.75
Company Ltd
Market Purchase - - 16-05-2016 to 20-05-2016 40249 3240249 2.79
Allotment pursuant to QIP - - 07-03-2017 1442310 4682559 3.58
At the end of the Financial Year - - - - 4682559 3.58
4. DCS Infotech Pvt Ltd 4998720 4.30 - - 4998720 4.30
Market Sale - - 13-03-2017 to 17-03-2017 (128523) 4870197 3.73
Market Sale - - 20-03-2017 to 24-03-2017 (221477) 4648720 3.56
At the end of the Financial Year - - - - 4648720 3.56
5. Fidelity Puritan Trust-Fidelity Low-Priced 5000000 4.30 - - 5000000 4.30
Stock Fund
Market Sale - - 24-10-2016 to 28-10-2016 (194000) 4806000 4.13
Market Sale - - 31-10-2016 to 04-11-2016 (50600) 4755400 4.09
Market Sale - - 07-11-2016 to 11-11-2016 (69169) 4686231 4.03
Market Sale - - 14-11-2016 to 18-11-2016 (186231) 4500000 3.87
Market Sale - - 06-02-2017 to 10-02-2017 (19869) 4480131 3.85
Market Sale - - 13-02-2017 to 17-02-2017 (43889) 4436242 3.81
Market Sale - - 20-02-2017 to 24-02-2017 (73796) 4362446 3.75
Market Sale - - 27-02-2017 to 03-03-2017 (112446) 4250000 3.65
Market Sale - - 20-03-2017 to 24-03-2017 (68546) 4181454 3.20
Market Sale - - 27-03-2017 to 31-03-2017 (81454) 4100000 3.14
At the end of the Financial Year - - - - 4100000 3.14
6. Government Pension Fund Global 3200000 2.75 - - 3200000 2.75
At the end of the Financial Year - - - - 3200000 2.45
7. L and T Mutual Fund Trustee Ltd - - - - - -
Allotment pursuant to QIP - - 07-03-2017 2837685 2837685 2.17
Market Purchase - - 20-03-2017 to 24-03-2017 26090 2863775 2.19
Market Purchase - - 27-03-2017 to 31-03-2017 61894 2925669 2.24
At the end of the year - - - - 2925669 2.24
8. IDFC Mutual Fund - - - - - -
Allotment pursuant to QIP - - 07-03-2017 2788461 2788461 2.13
At the end of the Financial Year - - - - 2788461 2.13
9. Birla Sun Life Trustee Company Private - - - - - -
Limited A
Allotment pursuant to QIP - 07-03-2017 2254682 2254682 1.72
Market Purchase - 13-03-2017 to 17-03-2017 100 2254782 1.73
Market Purchase - 27-03-2017 to 31-03-2017 59800 2314582 1.77
At the end of the year - - - - 2314582 1.77
10. Birla Sun Life Insurance Company Limited - - - - - -
Allotment pursuant to QIP - 07-03-2017 1502407 1502407 1.15
Market Purchase - 13-03-2017 to 17-03-2017 147000 1649407 1.26
At the end of the Financial Year - - - - 1653527 1.27

(v) Shareholding of Directors and Key Managerial Personnel:

None of the Directors or KMP except Shri Deepak C. Mehta and Shri Maulik D. Mehta(covered under points (ii) above) hold any Shares of the Company and except as disclosedin point (iii) above there has not been any change in such holdings during the FinancialYear.

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due forpayment

(Rs in Lakhs )

Indebtedness at the beginning of the Financial Year 2016-17 Secured Loans excluding deposits Unsecured Loans Deposits Total Indebtedness
i) Principal Amount 43912 5608 - 49520
ii) Interest due but not paid - - - -
iii) Interest accrued but not due 163 4 - 167
Total (i+ii+iii) 44075 5612 - 49687
Change in Indebtedness during the Financial
Year 2016-17
Addition 9460 11754 - 21214
Reduction 13342 - - 13342
Net Change (3882) 11754 - 7872
Indebtedness at the end of the Financial Year 2016-17
i) Principal Amount 40029 17362 - 57392
ii) Interest due but not paid - - - -
iii) Interest accrued but not due 127 39 - 166
Total (i+ii+iii) 40156 17401 - 57558

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to ManagingDirector Whole-time Directors and/or Manager:

Name of MD/WTD/Manager
Sr. No. Particulars of Remuneration Shri Deepak Shri Ajay C. Shri Umesh Shri Maulik Total Amount
C. Mehta Mehta Asaikar D. Mehta
1. Gross Salary
(a) Salary as per provisions contained in section 256.39 49.19 344.40 67.18 717.16
17(1) of the Income Tax Act 1961
(b) Value of Perquisites u/s 17(2) Income Tax Act 49.72 22.98 43.42 8.17 124.29
1961
(c) Profits in lieu of salary under section 17(3) - - - - -
Income Tax Act 1961
2. Stock Option - - - - -
3. Sweat Equity - - - - -
4. Commission -
- as % of profit 26.00 26.00 - 52.00
- others - - - - -
5. Others please specify - - - - -
Total (A) 332.11 98.17 387.82 75.35 893.45

*Retired from Directorship of the Company w.e.f. August 5 2016.

Remuneration to Key Managerial Personnel other than MD/MANAGER/WTD (Rs InLakhs)

Sr. No. Particulars of Remuneration Company Secretary CFO Total
1. Gross Salary
(a) Salary as per provisions contained in section 17(1) of the Income Tax Act 1961 33.60 162.36 195.96
(b) Value of Perquisites u/s 17(2) Income Tax Act 1961 0.32 0.45 0.77
(c) Profits in lieu of salary under section 17(3) Income Tax Act 1961 - - -
2. Stock Option - - -
3. Sweat Equity - - -
4. Commission
- as % of profit - - -
- others specify ..
5. Others please specify - - -
Total 33.92 162.81 196.73

I. Penalties/Punishment/Compounding of offences:

Type Section of the Companies Act Brief Description Details of Penalty/ Punishment/ Compounding fees imposed Authority [RD/NCLT/ COURT] Appeal made if any (give Details)
A. Company
Penalty NIL
Punishment
Compounding
B. Directors
Penalty NIL
Punishment
Compounding
C. Other Officers in default
Penalty NIL
Punishment
Compounding

 

For and on behalf of the Board
Place: Mumbai DEEPAK C. MEHTA
Date: April 28 2017 Chairman & Managing Director

ANNEXURE – E

DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT 2013:

PART (A) – DISCLOSURE AS REQUIRED UNDER RULE 5(1) OF THE COMPANIES (APPOINTMENTAND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014:

1. Ratio of remuneration of each Director to the median remuneration of the employeesof the Company for the Financial Year ended March 31 2017 and the percentage increase inremuneration of each director Chief Financial Officer Chief Executive Officer CompanySecretary or Manager in the Financial Year ended March 31 2017:

Name of the Director / KMP Remuneration % increase in Remuneration in the Ratio to median remuneration
(Rs in Lakhs)
F.Y. 2016-17
Shri C. K. Mehta1 1.60 -64.44 0.40
Chairman Emeritus
Shri Deepak C. Mehta 332.11 -3.14 82.00
Chairman & Managing Director
Shri Ajay C. Mehta 98.17 -70.83 24.24
Managing Director
Shri Maulik Mehta2 75.35 NA 18.60
Whole-time Director
Shri Nimesh Kampani 5.20 -7.14 1.28
Independent Director
Shri Sudhin Choksey 9.15 9.58 2.26
Independent Director
Shri Sudhir Mankad 9.00 4.05 2.22
Independent Director
Dr. Richard H. Rupp 5.90 156.52 1.46
Independent Director
Shri S. K. Anand 9.90 7.03 2.44
Independent Director
Dr. S. Sivaram 5.45 21.11 1.35
Independent Director
Prof. Indira Parikh 3.70 15.63 0.91
Independent Director
Shri Umesh Asaikar 387.82 5.51 95.76
Executive Director
Shri Sanjay Upadhyay 162.81 11.55 NA
Director-Finance3 & Chief Financial Officer
Shri Arvind Bajpai 33.92 18.35 NA
Company Secretary

1Retired from Directorship of the Company w.e.f. August 5 2016. 2Appointedas Whole-time Director of the Company w.e.f. May 9 2016.

3Appointed as Director-Finance and Chief Finance Officer of the Company w.e.f.April 28 2017.

1. During the Financial Year 2016-17 there was an increase of 11 % in the medianremuneration of employees.

2. There were 1317 permanent employees on the rolls of the Company as on March 312017.

3. Average Percentile increase already made in the salaries of employees other thanManagerial Personnel in the last financial year was 11 % and average percentile decreasein remuneration of Managerial Personnel was 22.82 %. There was an average decrease of22.82% in the Managerial Remuneration for the Financial Year 2016-17 as compared toFinancial Year 2015-16. Therefore there is no justification and information regardingexceptional circumstances for increase in Managerial Remuneration to be disclosed.

4. It is affirmed that the remuneration is as per the Remuneration Policy of theCompany.

PART (B) – Information as per Rule 5 (2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and forming part of the Board's Reportfor the year ended on March 31 2017.

(a) Details of Top ten employees in terms of gross remuneration paid during the yearended March 31 2017:

Sr. No. Name of Employee Designation Remuneration Received Nature of Employment Qualification Experience Date of commencement of Employment Age The Last Employment held before joining the Company % of Equity shares held
1. Deepak C. Mehta Chairman & Managing Director

33210801

Permanent

B.Sc. 39 Years June 14 1978 61 Industrialist 16.25
2. Umesh M. Asaikar Chief Executive Officer 38782123 Permanent B.Tech. MMS AICWA 38 Years September 1 2008 62 Defiance Knitting Industries Ltd NIL
3. Sanjay Upadhyay Director-Finance* & Chief Financial Officer

16280961

Permanent

M.Com. AICWA FCS AMP (Wharton USA) 35 Years April 1 1994 56 Bhor Industries Ltd. NIL
4. Ajay C. Mehta Managing Director 9817356 Permanent B.Sc.(Hons.) M.S. Chem. Engg. 33 Years September 12 1984 58 Deepak Fertilizers and Petrochemicals Corporation Ltd NIL
5. Maulik D. Mehta Whole-time Director 8402337 Permanent MBA 6 Years August 6 2011 34 Rotaract Club of Pune 0.10
6. Pramod K. Garg President - BC 8447733 Permanent M.Sc. Ph.D. (Agri. Chem.) 34 Years June 1 2006 59 Jay Research Foundation NIL
7. Girish R. Satarkar President - Performance Products

7424930

Permanent

M. Tech. (Textile Chemistry) 27 Years February 2 2015 53 Diamines & Chemicals Ltd NIL
8. Gandhasiri Kamlakar Rao Sr. GM - Marketing (FSC)

6478261

Permanent

B.Sc. MBA 32 Years December 1 1992 57 Chemox Industries Ltd. NIL
9. Jagdeep Amritlal Vyas Sr. GM - Accounts & Taxation 6440717 Permanent B.Com. DBM DCM PG-Senior Management Program (IIM-Calcutta) 35 Years August 27 2007 57 Unitherm Engineers Ltd. NIL
10. Somsekhar Asimkumar Nanda Sr. GM - Finance & Treasury 6336884 Permanent ACA ICWA (Inter) PG-Senior Management Program (IIM-Calcutta) 23 Years April 12 2012 50 Hindustan Engineering & Industries NIL

(b) Details of every employee who was employed throughout the financial year was inreceipt of gross remuneration for that year which in the aggregate was not less than OneCrores Two lakhs rupees;

1. Deepak C. Mehta Chairman & Managing Director

33210801

Permanent

B.Sc. 39 Years June 14 1978 61 Industrialist 16.25
2. Umesh M. Asaikar Chief Executive Officer 38782123 Permanent B. Tech. MMS AICWA 38 Years September 1 2008 62 Defiance Knitting Industries Ltd NIL
3. Sanjay Upadhyay Director-Finance* & Chief Financial Officer

16280961

Permanent

M.Com. AICWA FCS AMP (Wharton USA) 35 Years April 1 1994 56 Bhor Industries Ltd. NIL

 

(c) Details of every employee who was employed for a part of the financial year was in receipt of remuneration for any part of that year at a rate which in the aggregate was not less than Eight lakhs fifty thousand rupees per month;

 

NIL NA NA NA NA NA NA NA NA NA

 

(d) Details of every employee who was employed throughout the financial year or part thereof was in receipt of remuneration in that year which in the aggregate or as the case may be at a rate which in the aggregate is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children not less than two percent of the equity shares of the company.

 

NIL NA NA NA NA NA NA NA NA NA

* Appointed as Director-Finance of the Company w.e.f. April 28 2017 Note: ShriDeepak C. Mehta and Shri Ajay C. Mehta are brothers. Shri Maulik D. Mehta is son of ShriDeepak C. Mehta and nephew of Shri Ajay C. Mehta.

For and on behalf of Board
Place: Mumbai Deepak C. MEHTA
Date: April 28 2017 Chairman & Managing Director

ANNEXURE – F

INFORMATION REQUIRED UNDER SECTION 134(3)(M) OF THE COMPANIES ACT 2013 READ WITH RULE8(3) OF THE COMPANIES (ACCOUNTS) RULES 2014 PERTAINING TO CONSERVATION OF ENERGYTECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

(A) Conservation of Energy

(i) Steps taken or impact on conservation of energy:

- Changed column packing replacement of chilling units air compressors with highefficiency system

- Processes improved to reduce utility and improve energy conservation.

(ii) Steps taken for utilising alternate sources of energy:

- Power trading through open access and bilateral agreements

(iii) Capital Investment on energy conservation equipments: Rs 95.41 Lakhs

(B) Technology Absorption:

i. Efforts made towards technology absorption:

- Technology developed for Nitrogen Oxide utilisation in chemical reactions and undercommercialisation

ii. Benefits derived like product improvement cost reduction product development orimport substitution:

- Process improved by in-house research to reduce consumption norms by productsvalorisation evaluated alterna- tive routes to make cheaper and cleaner technologies.

iii. Information regarding technology imported during the last 3 years: NIL

iv. Expenditure incurred on Research and Development:

(Rs in Lakhs)
Particular 2016-17 2015-16
a) Capital 214.54 158.95
b) Recurring 692.33 662.67
c) Total 906.87 821.62
d) Total R & D expenditure as a percentage to total turnover 0.74% 0.62%

(C) Foreign Exchange Earnings and Outgo:

The Foreign Exchange earned in terms of actual inflows during the year and the ForeignExchange outgo during the year in terms of actual outflows.

(Rs in Lakhs)

Particulars 2016-17 2015-16
Total Foreign Exchange Earned 45191.40 50731.13
Total Foreign Exchange Outgo 19566.02 24954.50

 

For and on behalf of the Board
Place: Mumbai DEEPAK C. MEHTA
Date: April 28 2017 Chairman & Managing Director