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Coromandel International Ltd.

BSE: 506395 Sector: Agri and agri inputs
NSE: COROMANDEL ISIN Code: INE169A01031
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OPEN 791.05
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VOLUME 49548
52-Week high 829.85
52-Week low 336.50
P/E 18.65
Mkt Cap.(Rs cr) 23,216
Buy Price 792.10
Buy Qty 31.00
Sell Price 791.00
Sell Qty 1.00
OPEN 791.05
CLOSE 789.85
VOLUME 49548
52-Week high 829.85
52-Week low 336.50
P/E 18.65
Mkt Cap.(Rs cr) 23,216
Buy Price 792.10
Buy Qty 31.00
Sell Price 791.00
Sell Qty 1.00

Coromandel International Ltd. (COROMANDEL) - Director Report

Company director report

Dear Members

Your Board of Directors have pleasure in presenting the 58th Annual Report togetherwith the Audited Financial Statements for the financial year ended March 312020.

1. Summary of Financial Results

Rs In crores

Particulars 2019-20 2018-19
Revenue:
From Operations 13117 13204
Other Income 38 36
Total Revenue 13155 13240
Profit:
Profit before Interest Depreciation and Taxation 1763 1450
Less: Interest 235 251
Depreciation 157 113
Profit Before Tax 1371 1086
Less: Provision for Tax (including deferred tax) 312 372
Profit After Tax 1059 714

Your Company's Revenue from Operations for the year was Rs 13117 crores as against Rs13204 crores last year. The Profit before Interest Depreciation and Taxation grew to Rs1763 crores from Rs 1450 crores in the previous year registering a growth of 22%. TheNet Profit for the year grew to Rs 1059 crores from Rs 714 crores in the previous yeari.e. an increase of 48% YoY.

EBITDA margin increased 240 basis points to 13.4% in 2019-20 over 2018-19 and PATmargin increased 270 basis points to 8.0% in 2019-20 over 2018-19. The Earnings Per Share(EPS) for the year stood at Rs 36.20 per share an increase of 48% compared to Rs 24.41per share for the previous year.

Your Company proposes to transfer an amount of Rs 300 crores to the General Reservesand retain Rs 1624.49 crores in the Statement of Profit and Loss.

2. Business Environment

The country witnessed an above normal South West and North East monsoon during the yearresulting in improved crop sowing. Food grain production for the year is expected to be at296 million tons higher by 4% compared to previous year. Your Company's key markets ofTelangana Andhra Karnataka and Maharashtra received above-normal rainfall whichincreased reservoir levels and canal irrigation. During the year the Kaleshwaram projecton Godavari river was inaugurated which has resulted in assured irrigation in thenorthern districts of Telangana. Agriculture in Telangana and Andhra Pradesh continued toperform well thanks to the active engagement by the State Governments increasedirrigation desilting of canals & tanks and income support schemes for the farmers.

The Government of India has been focusing on agriculture as one of its priority sectorand has announced 16-point measures during Budget 2020-21 to revive the agriculture sectorin line with the Government's target to double farmer's income. These measures include anincrease in agriculture credit by Rs 3 lakh crores improving the situation inwater-stressed districts focus on zero- budget farming and balanced use of fertilisers.Direct Income Support Schemes introduced by various State and the Central Governmenthelped in improving the cash availability with farmers at the time of sowing.

On the Direct Benefit Transfer (DBT) relating to Fertilisers the Governmentisexpanding its scope. Duringthe year pilot testing was conducted through linking of PoSmachines with soil health cards to promote balanced nutrition. "The PesticideManagement Bill 2020" was introduced in the Parliament during the year. The Billseeks to regulate the highly fragmented agrochemical market in India and ensure theavailability of pesticides with minimum risks. This Bill when passed will replace theInsecticide Act 1968.

With the higher reservoir levels and the prediction of a normal South West monsoon bythe Indian Meteorological Department (IMD) Indian agriculture is expected to witness agood Kharif season during the coming year.

COVID-19: At the end of the year the business environment was severely impacted byCOVID-19. The pandemic which originated in December 2019 at Wuhan in China spread acrossthe globe impacting trade and mobility. Several nations including India have adopted acomplete lockdown of their economy in line with the recommendation of the World HealthOrganization (WHO) to contain the spread of the pandemic and gear up their medicalinfrastructure.

In India the agricultural sector has remained relatively insular during COVID-19. TheGovernment has classified agriculture and related industries under essential commoditiesto ensure food security and provide livelihood opportunities to the rural workforce.Though the manufacture and transport of essential commodities like Fertiliser andAgrochemicals were exempted under the guidelines issued by the Ministry of Home Affairsthe Agri inputs industry faced challenges in the initial period affected by the labourshortage employee mobility and strict administrative checks impacting the raw materialhandling production and distribution. However the situation is fast normalizing and theindustry is now geared up to increase its production with support from the Centre and theState Governments.

The Government has announced three major reforms in the area of agri output marketingas the aftermath of COVID-19 which is expected to result in improved price discovery forthe farm produce. These reforms include increased participation of private playersreforming the Agriculture Produce Market Committee (APMC) and promoting contract farming.With faster adoption of superior products smarter delivery mechanism digital and agritechnology penetration Indian agriculture is gearing up for a second green revolution inthe years to come.

3. Performance Review

Fertiliser

Fertiliser business maintained a stable growth despite facing tough environmentalconditions during the first half of the year. Business focused on backward integration ofits plant operations infrastructure strengthening capability building and customer-centricity initiatives to sustain its growth trajectory.

Overall primary sales volumes have moved up by 4% to 31.4 lakh tons driven by themanufactured product sales volume which increased by 11% to 30.7 lakh tons. Consumptionas reflected through point of sales from retailers to the farmers increased by 12% to31.6 lakh tons. Market share for the year in NPK fertiliser stood at 15.7 percent amarginal reduction from 16.2 percent in 2018-19. Integrated nutrient marketing structurewith the experienced agronomist team has supported the business well in promoting itsbalanced nutrition approach and market development initiatives. During the year Businesssuccessfully merged the operations of SSP with Fertiliser to leverage the businesssynergies.

Your Company's fertiliser plants operated at their highest ever capacity producing29.8 lakh tons of phosphatic fertilisers during the year. Under the "Make inIndia" initiative your company established a world class Phosphoric Acid plant atVisakhapatnam generating employment opportunities conserving the precious foreignexchange and ensuring supply security for the Visakhapatnam fertiliser unit. This secondPhosphoric Acid plant was successfully commissioned in the third quarter of the year andis operating at its full capacity.

Single Super Phosphate (SSP) business which is now fully integrated with fertiliserbusiness maintained its national leadership position with a market share of 14%. Duringthe year sales volumes grew by 1% to 5.7 lakh tons. The business focused on providingfarmers with superior granulated and fortified products. Production for the year stood at6.0 lakh tons which is 7% higher than the previous year.

The fertiliser business launched 2 new products. Groplus an enahanced SSP product andGroSmart relaunch of 24-24-0-8. Both the products were well- received by the customersand have created a niche in the market.

Crop Protection

Crop Protection business continues to be a key focus area and growth engine for yourCompany. The business has taken progressive steps towards upgrading its portfolio withpatented combinations and technical manufacture of recently off patented molecules. In2019-20 the Crop Protection business introduced six new products including two productsfrom indigenous technical manufacturing (Pymetrozine and Pyrazosulfuron ethyl) onepatented indigenous combination and 3 co-marketing products. These products have receivedencouraging response from the market.

Your Company has strengthened its Research & Development and Product Developmentfunctions and is focussing on testing trails registration and introduction of newmolecules. The Company aims to introduce 4-5 new products every year.

With focus on "Make in India" your company continued to invest in itsmanufacturing capabiliites. Three new plants were commissioned during the year - MancozebWDG plant at Dahej Pymetrozine plant at Ankleshwar and Pyrazosulfuron plant at Sarigam.These new plants will not only serve the needs of India but will enhance exportopportunities and support to position India as a global manufacturing hub foragrochemicals. Your company undertook other major infrastructure projects like setting upstate of the art warehouses and upgrading the pilot plant. Sarigam plant safely resumedand continued its operations from the second quarter.

Overall the turnover of the business declined by 6 percent largely on account ofcurtailed production of the Sarigam plant during the first quarter. The launch of newproducts has supported the growth in the domestic formulation and B2B business. YourCompany in line with its long-term strategic plan is strengthening its presence in thekey markets in India and also evaluating opportunities in select international markets.

Biopesticide business has been fully integrated with the Crop Protection business. YourCompany is the largest Azadirachtin manufacturer in the world with patented proprietaryproducts and state-of-art manufacturing facility. During the year the manufacturingfacility was further upgraded to improve the efficiency of aza extraction. Companycontinued to invest in neem plantation to ensure raw material security and facilitateproduct traceability. Your Company's presence in Biopesticides Bio-stimulants andBio-surfactants has enriched the overall product portfolio and enabled the Company toprovide Integrated Pest Management solutions to the farming community.

Retail

Your Company's retail business registered good growth driven by favourableenvironmental conditions across the markets. Business continued to strengthen its customervalue proposition of 'Quality Trust and Farm Advice'. Over the years the retail centreshave evolved as a 'Complete Farming Solution Multi-Brand Platform' offering the entirerange of agri-input products and services under one roof. Through its ~750 storessupported by ~2000 development teams these retail centres work closely with growershelping them optimize crop yields and maximize economic returns on their farms. Businessis in the process of leveraging technology solutions to improve its customer connectinitiatives and product delivery mechanisms. During the year the Company continueddrone-based crop diagnostics and farm advisory solutions. It expanded its farmmechanization offerings through the Custom Hiring and Service Centres.

Specialty Nutrients

Your Company continued to perform well in the Specialty Nutrients business andintroduced two new products Fitsol pomegranate and Bosmax. It also started in-housemanufacturing of Novozin. The Company has collaborated with multiple agri input playersacross the value chain to improve its customer connect initiatives. The business hasimplemented digital initiatives during the year to ensure better reach to the endconsumers. Business is also collaborating with Farmer Producer OrganisationsCooperatives Seed companies and Agri Universities to increase its reach and marketdevelopment.

Organic Fertiliser

Your Company has been pioneering efforts in the area of soil health enrichment bymarketing various composts like City compost Pressmud compost etc. These composts arerich sources of organic carbon and help in replenishing the soil. During the currentfinancial year Company continued its commitment towards improving soil health andcreating awareness among the users by doing more than 40000 carbon tests at the farmer'sfield.

During the year Organic volumes were at 1.3 lakh tons. Business continued its focus onpromoting differentiated variants segment strengthened its sourcing capabilities andquality assurance systems. The Company is promoting the 'Swachh Bharat' campaign byconverting the municipal waste into city compost manure.

Response to COVID-19:

Your Company stands in support with the Central Government State Governments and localgoverning bodies and remains committed to the farming community in these challengingtimes. Your Company has contributed Rs 10 crores to the PM Cares Fund and Chief MinisterRelief Fund of various States. Company's relief and rehabilitation interventions includethe distribution of masks hand sanitizers hand wash soap and other daily essentials inand around its area of operations. Your Company has been educating the farmers on theaspects of health hygiene and safety through its retail and dealer network. It has alsodeployed extensive use of digital media for creating farmer awareness. Further theCompany is engaged in supporting women Self Help Groups in the manufacturing anddistribution of masks to meet the local needs under the guidance of the District MedicalAuthorities.

To ensure the availability of agri inputs for the upcoming Kharif season the Company isoperating its plants after meeting all the standards laid down by the districtadministration on safety and social distancing. The majority of the retail centers and thedealer channel have been operating to meet the agri input demands of the farmers.

4. Finance

Your Company continued to focus on managing cash efficiently and ensured that it hadadequate liquidity and back up lines of credit. Net Cash from operations for the yearstood at Rs 1867 crores. It follows a prudent financial policy and aims at maintaining anoptimum financial gearing.

Your Company continues to be a long-term debt free Company. Debt to Equity Ratio was0.37 as of March 312020.

It has been credit rated by CRISIL Limited (CRISIL) and India Ratings & ResearchPrivate Limited (India Ratings & Research). The Company's long-term credit rating by'CRISIL' continued to be 'CRISIL AA+ (stable)' and shortterm debt rating at 'CRISIL A1+'.The Company's longterm credit rating by 'India Ratings & Research (A Fitch GroupCompany)' continued to be 'IND AA+ (stable)' and short-term debt rating at 'IND A1+'. Thisreflects a very high degree of safety regarding timely servicing of financial obligationsand also a vote of confidence reposed in your Company's financials.

There were no material changes and commitments affecting the financial position of theCompany between the end of the financial year and the date of this Report.

5. Dividend

Your Directors are pleased to recommend a Dividend of Rs 12/- per equity share Rs 1/-each (1200%) for the financial year ended March 312020 subject to the approval of themembers at the ensuing Annual General Meeting.

The Company has adopted Dividend Distribution Policy in line with the requirements ofListing Regulations. The Dividend Distribution Policy is available on the website of theCompany at https://coromandel.biz/pdf/2016-2017/InvestorsInformation/DividendDistributionPolicy.pdf.

6. Consolidated Financial Results

Consolidated Financial Statements incorporating the operations of the Company itsSubsidiaries Associates and Joint Venture Companies are appended. As required under theprovisions of the Companies Act 2013 (the Act) a statement showing the salient featuresof the financial statements of the subsidiaries associates and joint ventures is enclosedas Annexure A to this Report.

The financial statements of the subsidiary companies will be made available to themembers of the Company and its subsidiary companies on request and will also be kept forinspection at the Registered Office of the Company.

7. Subsidiary Companies:

Brief details of the performance of the subsidiaries of the Company are given below:

a) CFL Mauritius Limited:

CFL Mauritius Limited a wholly-owned subsidiary incurred a loss of $ 0.03 million(equivalent to Rs 0.26 crores) during the year ended March 312020. The primary source ofincome for this subsidiary is dividend income from Foskor (Pty) Limited and the subsidiarydid not receive any dividend from Foskor during the year 2019.

b) Parry Chemicals Limited (PCL):

PCL a wholly owned subsidiary of the Company earned a total revenue of Rs 0.94 croresfor the year ended March 31 2020 and Profit after Tax was Rs 0.36 crores.

c) Dare Investments Limited (DIL):

DIL a wholly owned subsidiary of the Company did not have any significant operationsand incurred a loss of Rs 0.01 crores for the year ended March 312020.

d) Liberty Pesticides and Fertilisers Limited (LPFL):

LPFL a wholly owned subsidiary of the Company did not have any significant operationsduring the year 2019-20. It earned a profit of Rs 0.10 crores for the year ended March 312020.

e) Coromandel Brasil Limitada (CBL):

CBL a Limited Liability Partnership owned 100% by the Company and its subsidiary CFLMauritius Limited is primarily engaged in getting product registrations in Brazil andprocuring orders for supplies from India. It earned a profit of Brazilian Reals 0.4million (equivalent to Rs 0.69 crores) for the year ended March 312020.

f) Sabero Organics America SA (SOAL)

SOAL is primarily engaged in getting product registrations in Brazil and procuringorders for supplies from India. It earned a net profit of Brazilian Reals 0.02 million(equivalent to Rs 0.03 crores) for the year ended December 31 2019. During the year ithas become a wholly-owned subsidiary of the Company.

g) Sabero Australia Pty Limited (SAPL)

SAPL did not have any significant operations during the year 2019-20. It earned a netprofit of AUD 0.01 million (equivalent to '0.05 crores) for the year ended March 312020.

h) Sabero Europe BV (SEBV)

SEBV is primarily engaged in getting product registrations in Europe and procuringorders for supplies from India. It did not have any significant operations during the yearended May 312019.

i) Sabero Argentina SA (Sabero Argentina)

Sabero Argentina is primarily engaged in getting product registrations in Argentina andprocuring orders for supplies from India. It did not have any significant operationsduring the year ended March 31 2020.

j) Coromandel Agronegocios De Mexico SA de CV (Coromandel Mexico)

Coromandel Mexico is primarily engaged in getting product registrations in Mexico andprocuring orders for supplies from India. It earned a net profit of Mexican Peso 0.69million (equivalent to Rs 0.25 crores) for the year ended December 312019.

k) Parry America Inc.

Parry America Inc is primarily engaged in the sale of bio-pesticides in America. Itmade a net profit of USD 0.47 million (equivalent to Rs 3.33 crores) for the year endedMarch 312020.

l) Coromandel International (Nigeria) Limited (CINL)

Coromandel International (Nigeria) Limited is engaged in getting product registrationsin Nigeria and procuring orders for supplies from India. It made a net loss of Naira 10.04million (equivalent to Rs 0.23 crores) for the year ended December 312019.

m) Coromandel Mali SASU (CMS)

Coromandel Mali SASU (CMS) was incorporated on February 04 2020 as a Wholly OwnedSubsidiary (WOS) of the Company for the purpose of obtaining registration for marketing ofagrochemicals. CMS is registered with Ministry in Charge of Statistics Republic of Maliand is yet to commence its business operations.

Joint Venture Companies

Brief details of the performance of the Joint Venture (JV) companies of the Company aregiven below:

a) Coromandel SQM (India) Private Limited (CSQM)

CSQM a joint venture between Coromandel and Soquimich European Holding (SQM) Chilemanufactures Water Soluble Fertilisers (WSF) at Kakinada Andhra Pradesh and offersSpeciality Nutrition Solutions to institutional clients. Total income for the year was Rs58.8 crores and the net profit was Rs 0.25 crores. Your Company has agreed in principle toacquire the shareholding of SQM for a consideration of Rs 12 crores. The Share PurchaseAgreement was planned for execution prior to the year end has got delayed due to COVID-19and is now expected to be signed within next few weeks.

b) Yanmar Coromandel Agrisolutions Private Limited (YCAPL)

YCAPL a Joint Venture company between Coromandel Yanmar and Mitsui is in thebusiness of sales and service of agri-tech equipment focussed on farm mechanization inIndia. YCAPL's Combine Harvester has been consolidating its position as amongst the marketleaders in India. Total income for the year was Rs 82.5 crores and the net profit was Rs1.6 crores.

Associate Company

a) Sabero Organics Philippines Asia Inc (SOPA)

SOPA an associate company is based in Philippines and did not have any significantoperations during the year 2019-20.

Strategic Investment:

a) Tunisian Indian Fertilisers S.A. Tunisia (TIFERT):

TIFERT a company based in Tunisia manufactures phosphoric acid which is a key rawmaterial for operating Phosphatic Fertiliser plants. Your Company's strategic investmentin TIFERT (15% equity) is aimed at securing an uninterrupted supply of phosphoric acid forthe Company's operations at Kakinada and Visakhapatnam. During the year TIFERT continuedto improve its performance and registered its highest production of phosphoric acid.Indian partners Coromandel and GSFC continued to provide necessary technical support toTIFERT to improve the plant performance.

b) Foskor (Pty) Limited South Africa (Foskor):

Your Company along with CFL Mauritius Limited holds 14% equity in Foskor. Foskorsupplies high-quality phosphoric acid which is used for phosphatic fertilisermanufacturing at Kakinada and Ennore plants of your Company. The performance of Foskor wasaffected during the year due to various operational issues and resulted in lower capacityutilization. Your Company is working with the Foskor team on a business turnaround planand is providing technical assistance for improving acid production and plant efficiency.

8. Risk Management Policy

The Company has constituted a Risk Management Committee. Details of constitution of theCommittee are set out in the Corporate Governance Report. The Company has formulated aRisk Management Policy under which various risks associated with the business operationswere identified and risk mitigation plans have been put in place details of which are setout in the Management Discussion and Analysis Report.

9. Internal Financial Control Systems and their adequacy

The Company has adequate internal controls consistent with the nature of business andsize of the operations to effectively provide for safety of its assets reliability offinancial transactions with adequate checks and balances adherence to applicable statuesaccounting policies approval procedures and to ensure optimum use of available resources.These systems are reviewed and improved on a regular basis. It has a comprehensivebudgetary control system to monitor revenue and expenditure against approved budget on anongoing basis.

The Company has its own corporate internal audit function to monitor and assess theadequacy and effectiveness of the Internal Controls and System across all key processescovering various locations. Deviations are reviewed periodically and due complianceensured. Summary of Significant Audit Observations along with recommendations and itsimplementations are reviewed by the Audit Committee and concerns if any are reported tothe Board.

10. Related Party Transactions

All related party transactions were placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee was obtained for the transactions which areforeseen and are repetitive in nature. The related party transactions entered into arereviewed by an independent audit firm to confirm that they were in the ordinary course ofbusiness and at arm's length basis. The Policy on Related Party Transaction is availableon the Company's website at https://coromandel.biz/pdf/2020-2021/InvestorsInformation/PoliciesAndCodes/ PolicyOnRelatedPartyTransactions 2020.pdf.

None of the Directors had any pecuniary relationship or transactions with the Companyexcept the payments made to them in the form of remuneration sitting fees and commission.

11. Auditors

a) Statutory Auditors and their report

M/s. Deloitte Haskins & Sells (Deloitte) Chartered Accountants were appointed asAuditors of the Company for a period of 5 consecutive years from the conclusion of theAnnual General Meeting held on July 23 2014. Their term of appointment of 5 years expiredat the 57th Annual General Meeting and were re-appointed at the 57th Annual GeneralMeeting for a period of two years till the conclusion of 59th Annual General Meetingtotalling to 10 years (appointed since 2011-12). As per the Companies (Amendment) Act2017 the requirement of annual ratification of the Statutory Auditor's appointment hasbeen dispensed with hence there is no requirement to seek an annual ratification of theirappointment this year.

As required under Regulation 33 of the Listing Regulations the Auditors have confirmedthat they hold a valid certificate issued by the Peer Review Board of the Institute ofChartered Accountants of India.

The Auditor's Report given by M/s Deloitte Haskins & Sells Statutory Auditors onthe financial statements of the Company for the year ended March 31 2020 is part of theAnnual Report. The Auditor's Report does not contain any qualification reservation oradverse remark. During the year under review the Auditors had not reported any matterunder Section 143(12) of the Act therefore no detail is required to be disclosed underSection 134(3)(ca) of the Act.

b) Cost Auditors and their report

Pursuant to Section 148 of the Companies Act 2013 read with Companies (Cost Recordsand Audit) Rules 2014 and amendments thereof the Company is required to maintain costaccounting records in respect of products of the Company covered under CETA categories.Further the cost accounting records maintained by the Company are required to be audited.

For the financial year 2019-20 M/s Narasimha Murthy & Co and Mrs. Jyothi Satishwere appointed as Cost Auditors. On the recommendation of the Audit Committee the Boardhas appointed M/s Narasimha Murthy & Co. Cost Accountants and M/s. Jyothi Satish& Co. Cost Accountants as Cost Auditors for auditing the cost records of the Companyfor the year 2020

21. The Cost Audit Report for the year 2018-19 has been filed with Ministry ofCorporate Affairs within the prescribed time limit.

The Companies Act 2013 mandates that the remuneration payable to the Cost Auditor isratified by the shareholders. Accordingly a resolution seeking the shareholders'ratification of the remuneration payable to the Cost Auditor for the FY 2020-21 isincluded in the Notice convening the 58th Annual General Meeting.

c) Secretarial Auditor and their report

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board had appointed M/s. R Sridharan& Associates Practicing Company Secretaries to undertake the secretarial audit ofthe Company for the financial year 2019-20.

The report of the Secretarial Auditor is enclosed as Annexure B and forms part of thisreport. The Secretarial Audit Report does not contain any qualification reservation oradverse remark.

In terms of Regulation 24A of the Listing Regulations there is no material unlistedsubsidiary incorporated in India. Material unlisted subsidiary for the purpose of thisRegulation is a subsidiary whose income/net worth exceeds 10% of the consolidatedincome/net worth respectively of the Company and its subsidiaries in the immediatelypreceding accounting year. Hence there is no requirement for a Secretarial audit to beconducted for any of the Company's subsidiaries in India.

12. Particulars of Loans Guarantees and Investments

Details of loans and guarantees given and investments made under Section 186 of the Actare given in the Notes to the Financial Statements.

13. Public Deposits

The Company has not accepted any deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits) Rules2014 and no amount of principal or interest was outstanding as on the Balance Sheet date.

14. Board and Committees

a) Board of Directors

Your Company is managed and controlled by a Board comprising an optimum blend ofExecutive and NonExecutive Professional Directors. As on March 31 2020 the Board ofDirectors comprises of ten (10) Directors consisting of a Managing Director and nine (9)Non-Executive Directors out of which five (5) are Independent Directors including oneWoman Director. The composition of the Board is in conformity with Regulation 17 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and the relevantprovisions of the Companies Act 2013. The Directors possess requisite qualifications andexperience in general corporate management strategy finance engineering informationtechnology and other allied fields which enable them to contribute effectively to theCompany in their capacity as Directors of the Company.

Declarations from all Independent Directors have been received confirming that theymeet the criteria of independence as prescribed under both the Companies Act 2013 and theListing Regulations 2015 and the same have been considered and taken on record by theBoard.

Mr. Sumit Bose was appointed as an Independent Director of the Company for a period offive years w.e.f. March 21 2016 and his current term ends on March 20 2021. Section 149of the Act provides that an Independent Director shall hold office for a term up to twoterms on the Board of a Company but after expiry of first term of five years shall beeligible for reappointment on passing of a special resolution by the Company. Board haspursuant to the recommendation of the Nomination and Remuneration Committee recommendedhis re-appointment as an Independent Director of the Company. Accordingly a specialresolution proposing the re-appointment of Mr. Sumit Bose as an Independent Director ofthe Company for a second term for the period from March 21 2021 to March 29 2024 isbeing placed before the shareholders for their approval.

Mr. Sameer Goel was appointed as Managing Director of the Company for a period of fiveyears effective October 01 2015 and his current term of office as Managing Director ofthe Company expires on September 30 2020. Board has pursuant to the provisions of Section196 of the Companies Act 2013 recommended his reappointment as Managing Director for aperiod from October 012020 to January 312023 and accordingly an ordinary resolutionproposing the re-appointment of Mr. Sameer Goel is being placed before the shareholdersfor their approval.

In accordance with Article 17.29 of the Company's Articles of Association read withSection 152 of the Act Mr. M M Venkatachalam retires by rotation at the ensuing AnnualGeneral Meeting and being eligible offers himself for re-appointment.

b) Evaluation of the Board's performance

In accordance with the provisions of Section 134 of the Act and Regulation 17 of theListing Regulations the Board has carried out evaluation of its own performance theperformance of Committees of the Board namely Audit Committee CSR Committee RiskManagement Committee Stakeholders Relationship Committee and Nomination and RemunerationCommittee and also the Directors individually. The manner in which the evaluation wascarried out and the process adopted has been mentioned in the Corporate Governance Report.

c) Board Meetings

A calendar of Board meetings is prepared and circulated in advance to the Directors.During the year 2019-20 six (6) Board Meetings were held the details of which are givenin the Corporate Governance Report.

d) Audit Committee

The Audit Committee comprises of Mr. Sumit Bose Chairman Dr. B V R Mohan Reddy Mr.Prasad Chandran Mr. M M Venkatachalam Ms. Aruna B. Advani and Mr. K V Parameshwar asmembers. All the recommendations made by the Audit Committee were accepted by the Board.

e) Familiarisation Programme for Independent Directors

On their appointment Independent Directors are familiarised about the Company'soperations and businesses. Interaction with the senior leadership team (Business Heads andkey executives) of the Company is also facilitated. Detailed presentations on the businessof each of the Division are also made to the Directors. A manual containing all importantpolicies of the Company are also given to the Directors. Direct meetings with the Chairmanand the Managing Director are further facilitated for the new appointee to familiarisehim/ her about the Company/ its businesses and the Group practices.

As part of the familiarisation program a handbook is provided to all the Directorsincluding Independent Directors at the time of their appointment. The handbook provides asnapshot to the Directors of their duties and responsibilities rights appointmentprocess and evaluation compensation Board procedure and stakeholders' expectations. Thehandbook also provides the Directors with an insight into the Group's practices. Furtherperiodic emails are sent to all the Directors covering events that may have an impact onthe business of the Company and/ or the agriculture sector in general and fertiliser andcrop protection industries in particular. During the year separate meetings were held forIndependent Directors wherein the senior leadership team made presentations on theirrespective businesses and functions and Independent Directors have visited the factoriesR&D centres and Retail stores of the Company. The details of the familiarisationprogram as above are also disclosed on the Company's website.

In terms of the recently introduced regulatory requirements providing for theestablishment of an on-line database of Independent Directors by Indian Institute ofCorporate Affairs every Independent Director is required to register themselves on theportal before June 30 2020 and pass an online proficiency self-assessment test conductedby the Institute within a year. All the Independent Directors of the Company have alreadyregistered themselves on the portal.

f) Directors' Responsibility Statement

The Directors' Responsibility Statement pursuant to the provisions of Section 134(3)(c)and 134(5) of the Companies Act 2013 ("the Act") is appended as Annexure C tothis Report.

15. Key Managerial Personnel

Mr. Sameer Goel Managing Director Mrs. Jayashree Satagopan Chief Financial Officerand Mr. P Varadarajan Company Secretary are the Key Managerial Personnel (KMP) of theCompany.

16. Employees

a) Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Salient features of the Remuneration Policy are set out in the CorporateGovernance Report. The Remuneration Policy is available on the Company's website athttps://coromandel.biz/pdf/2020- 2021/InvestorsInformation/PoliciesAndCodes/RemunerationPolicy 2020.pdf.

b) Policy on prevention prohibition and redressal of Sexual Harassment at workplace

The Company has in place Prevention of Sexual Harassment Policy (POSH) in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An Internal Compliance Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees are covered under thisPolicy. During the year 2019-20 there were no incidents of sexual harassment reported.

c) Particulars of Employees

A table containing the particulars in accordance with the provisions of Section 197(12)of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is appended as Annexure D to this Report. A statementcontaining the name of employees who are in receipt of remuneration in excess of Rs10200000/- per annum during the financial year 2019-20 under Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is enclosed asAnnexure E to this Report.

d) Employee Stock Option Plans

Employee Stock Option Scheme 2007 - ESOP 2007

The Company had in the past approved an Employee Stock Option Scheme 2007 (ESOP Scheme2007) under which employees were granted Options. The Company made grants under the saidScheme during the period 2007 to 2011. Number of vested Options outstanding as at the yearend under the ESOP Scheme 2007 was 2150. It is not proposed to make any further grantsunder ESOP Scheme 2007.

Employee Stock Option Plan - ESOP 2016

The Shareholders had through Postal Ballot on January 112017 authorised the Board/Nomination and Remuneration Committee to issue to the employees such number of Optionsunder the ESOP Scheme 2016 as would be exercisable into not exceeding 14581000 fullypaid- up equity shares of Rs 1/ - each in the Company. The Nomination and RemunerationCommittee is empowered to formulate detailed terms and conditions of the ESOP Scheme2016 administer and supervise the same. The specific employees to whom the Options wouldbe granted and their eligibility criteria would be determined by the Nomination andRemuneration Committee at its sole discretion. Further the Nomination and RemunerationCommittee is empowered to determine the eligible subsidiary companies whether existing orfuture whose employees will be entitled to stock options under this Scheme. Optionsgranted under this ESOP 2016 would vest on or after 1 (one) year from the date of grantbut not later than 4 (four) years from the date of grant of such Options or any otherterms as decided by the Nomination and Remuneration Committee. The Company has granted126840 options to the employees during the year under ESOP Scheme 2016. The number ofOptions vested and outstanding as at the year-end was 821850. The disclosure required tobe made under Regulation 14 of SEBI (Share Based Employee Benefits) Regulations 2014 isavailable on the Company's website at https://coromandel.biz/inv financial.html.

17. Extract of the Annual Return

In accordance with Section 134(3)(a) of the Act an extract of the Annual Return in theprescribed format is appended as Annexure F to this Report.

18. Vigil Mechanism/ Whistle Blower Policy

The Company has a Whistle Blower Policy which provides the employees customersvendors and directors an avenue to raise concerns on ethical and moral standards and legalprovisions in conduct of the business operations of the Company. It also provides fornecessary safeguards for protection against victimization for whistle blowing in goodfaith. The Vigil Mechanism is also placed on the website of the Company.

19. Conservation of energy technology absorption foreign exchange earnings and outgo.

The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Act readwith Companies (Accounts) Rules 2014 are enclosed as Annexure G to this Report.

20. Corporate Social Responsibility Initiatives

Corporate Social Responsibility (CSR) has been an integral part of your Company'sculture and the Company has been associated in the past directly and through AMMFoundation (an autonomous public charitable trust engaged in philanthropic activities inthe field of Education and Healthcare) for contributing towards society's development.During the year your Company has undertaken various CSR projects in the areas ofeducation health and community development targeting inclusive growth and social capitalimprovement. Details of composition of CSR Committee and CSR Projects undertaken duringthe year are given in Annexure H to this Report.

21. Safety Health and Environment (SHE)

Your Company gives high priority to employee's Health Safety and Environment and hasadopted the zero harm policy. Your Company has put in robust processes and establishedsafety performance indicators to track its SHE performance. Employees are consistentlyencouraged to raise safety concerns and these inputs are periodically monitored and closedout. The Company has carried out Safety Culture Survey for the second consecutive year andan overall improvement in performance has been observed. It has also adopted a BehaviourBased Safety program "Safe start" to enhance the level of safety culture. Dupontand Chola MS Risk Services were engaged for risk assessment at various plants and proposedaction points are being implemented.

During the year the combined Total Recordable Injury Rate (TRIR) per million-man hoursstood at 0.58 for Fertiliser and SSP business and 1.15 for crop protection plants. All keymanufacturing sites continued with the structural integrity upgrading program to mitigateasset integrity risks. All the warehouses were upgraded and modernised by installation ofsafety features like smoke detectors fire sprinkler systems and CCTVs. Vizag and Ennoreunits of your Company have won the CII EHS Excellence Award from Southern Region and havebeen rated 3 stars. Ankleshwar plant won the Gold Trophy on "Reduction of TRIR"organised by QCFI (Quality Circle Forum of India - Gujarat Chapter).

Your Company's commitment towards environmental sustainability remains firm. Thebio-diversity effort of having Bird's Paradise inside the factory premises at Kakinada hasbeen recognised by the Government of Andhra Pradesh by felicitating the State BiodiversityAward in May'2019.

Considering water as a precious commodity all the units are completely recycling andutilizing the wastewaters in the process itself and Zero Liquid Discharge (ZLD) ismaintained always.

At Ankleshwar plant green belt development has been carried out covering 1730 sq. mtrwhich is maintained as a garden area and named " Shanti Niketan".

Your Company is committed to continuously striving in the field of occupational health& safety and to protect the environment.

22. Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance. Asstipulated under the requirements of the Listing Regulations a report on CorporateGovernance duly audited is appended as Annexure I for information of the Members. Therequisite certificate from the Auditors of the Company confirming compliance with theconditions of Corporate Governance is attached to the Report on Corporate Governance.

23. Management Discussion & Analysis

The Management Discussion and Analysis Report highlighting the industry structure anddevelopments opportunities and threats future outlook risks and concerns etc. isfurnished separately and forms part of this Directors' Report.

24. Business Responsibility Report

Pursuant to Regulation 34 of Listing Regulations the Company has prepared the BusinessResponsibility Report in line with business principles as provided in the BusinessResponsibility Policy adopted by the Company. Business Responsibility Report is enclosedas Annexure J to this Report and the same is also available on the website of the Companyat https://coromandel.biz/inv report.html.

25. Other disclosures

a) Share Capital

The paid-up equity share capital of the Company as on March 312020 was Rs 29.30crores. During the year the Company has allotted 426420 equity shares of Rs 1/- eachunder ESOP Scheme 2007 (26250 shares) and under ESOP Scheme 2016 (400170 shares).

b) Material Subsidiary Policy

The Company has adopted a policy for determining material subsidiary in line with therequirements of the Listing Regulations. The Policy on Material Subsidiary is available onthe website of the Company at https://coromandel.biz/pdf/2020-2021/InvestorsInformation/PoliciesAndCodes/ PolicyOnMaterialSubsidiaries 2020.pdf.

c) Compliance of Secretarial Standards

The Company has complied with the Secretarial Standards issued by The Institute ofCompany Secretaries of India and approved by the Central Government.

d) Reporting of Frauds

There was no instance of fraud during the year under review which required theAuditors to report to the Audit Committee and / or Board under Section 143(12) of the Actand the rules made there under.

e) Significant and material orders passed by regulators or courts

There are no significant material orders passed by the Regulators or Courts which wouldimpact the going concern status of the Company and its future operations.

26. Acknowledgement

Your Directors wish to express their grateful appreciation for the valuable support andco-operation received from bankers business associates lenders financial institutionsshareholders various departments of the Government of India as well as the StateGovernments the farming community and all our other stakeholders.

The Directors acknowledge and would like to place on record the commitment anddedication on the part of the employees of your Company for their continued efforts inachieving good results.

On behalf of the Board of Directors
Place : Chennai M M Murugappan
Date : May 26 2020 Chairman