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Coromandel International Ltd.

BSE: 506395 Sector: Agri and agri inputs
NSE: COROMANDEL ISIN Code: INE169A01031
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OPEN 427.00
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VOLUME 3145
52-Week high 541.40
52-Week low 340.00
P/E 18.21
Mkt Cap.(Rs cr) 12,845
Buy Price 437.00
Buy Qty 1.00
Sell Price 439.15
Sell Qty 131.00
OPEN 427.00
CLOSE 439.95
VOLUME 3145
52-Week high 541.40
52-Week low 340.00
P/E 18.21
Mkt Cap.(Rs cr) 12,845
Buy Price 437.00
Buy Qty 1.00
Sell Price 439.15
Sell Qty 131.00

Coromandel International Ltd. (COROMANDEL) - Director Report

Company director report

Dear Members

Your Board of Directors have pleasure in presenting the 56th Annual Reporttogether with the Audited Financial Statements for the financial year ended 31 March2018.

1. Summary of Financial Results

' In crores

2017-18 2016-17
Revenue:
From Operations 10986 10185
Other Income 58 54
Total Revenue 11044 10239
Profit:
Profit before Interest Depreciation and Taxation 1278 1036
Less: Interest 178 224
Depreciation 97 100
Profit Before Tax 1003 712
Less: Provision for Tax (including deferred tax) 344 235
Profit After Tax 659 477

Your Company's Revenue from Operations for the year grew to Rs.10986 crores fromRs.10185 crores last year registering a growth of 8% year on year (YoY). The Profitbefore Interest Depreciation and Taxation grew to Rs.1278 crores from Rs.1036 crores inthe previous year. The Net Profit for the year grew to Rs.659 crores from Rs.477 crores inthe previous year i.e. an increase of 38% YoY. EBIDTA margin improved 146 basis points to11.6% in 2017-18 over 2016-17 and PAT margin strengthened 132 basis points to 6.0% in2017-18 over 2016-17. The Earnings per share (EPS) for the year stood at Rs.22.57 pershare an increase of 38% compared to Rs.16.35 per share for the previous year.

Your Company proposes to transfer an amount of Rs.300 crores to the General Reservesand retain Rs.785 crore in the Statement of Profit and Loss.

2. Business Environment

During the year India received rainfall at 95% of long period average (LPA) which islower than the normal rainfall. However Coromandel's key south peninsular marketsrecorded normal south west monsoon (at 99% of LPA levels) that resulted in higher residualmoisture and improved reservoir levels aiding in higher crop sowing during Kharif andRabi seasons. India's food grain production is expected to increase by 2 percent to 280million tons. With higher expected output in horticulture cotton and sugarcaneAgriculture GVA grew by 3.4 percent during the year.

The Government's ambitious goal of doubling farmer income by 2022 continues to be amajor enabler of farm productivity and farmer prosperity. Several progressive policymeasures undertaken by the Government like bringing additional area under irrigationcoverage promoting micro irrigation & precision farming direct benefit transfer ofsubsidies mandatory soil health cards financial inclusion crop insurance schemesdeveloping agri infrastructure and storage capabilities are all set to positively changethe dynamics of India's agriculture industry. Initiatives targeted towards productivityimprovement cost and consumption reduction in farm inputs like seed and water increasedfarmer awareness and access to markets towards a better realisation augur well forimproving the overall well being of the farming community.

On the policy front Direct Benefit Transfer (DBT) in fertilisers has been rolled outacross India in a phased manner wherein around 2 lakh Point of Sales (PoS) machines havebeen distributed to the retailers for recording the purchase of fertilisers. The systementailed at improving traceability across the fertiliser value chain and promoting soilhealth is a positive step towards driving balanced nutritional practices. Furthermorethe Government has mandated the industry to market Urea in 45 kg bags instead oftraditional 50 kg bags from 2018-19 onwards. Higher budgetary allocation towards NPKfertilisers signals a positive intent in promoting balanced nutritional practices. YourCompany smoothly transitioned into the new subsidy regime strengthened its field presenceand aligned its sales closer to consumption period.

During the year the Government implemented Goods and Services Tax (GST) the biggestindirect tax reform in the country since its independence. The long-term impact of GST isseen as positive having a simplified unified indirect tax regime across the country anddriving formalization of the economy favouring organized players like your Company. YourCompany successfully migrated to the Goods and Services Tax regime. The incidence of GSTson some of the raw materials being higher than the output rates Phosphatics Fertiliserindustry is currently under an inverted duty structure resulting in GST creditaccumulation. Industry has been making active representations to the GST Council toaddress this concern.

3. Performance Review

Favourable agricultural environment in your Company's key markets supported by stableraw material prices and lower channel inventory aided higher agri input consumption andresulted in improved business performance. During the year your Company has madesignificant strides by expanding its market presence scaling up its branding &customer connect initiatives through our integrated marketing approach improving itssourcing efficiencies and enhancing its manufacturing capabilities.

Fertiliser

Phosphatics Fertiliser business of your Company improved its sales volumes by 11percent to 27.66 lakh tons registering significant growth of unique products andincreasing its market share to 15.8 percent (14.6 percent in FY17). The normal monsoon inSouth and East markets aided faster stock liquidation and your Company's channel stocksremain at comfortable levels. Your Company has further strengthened its field teampresence to improve its last mile connectivity with the retailers and farmers.

Manufacturing units drove operational efficiencies and significantly increased itscapacity utilization to 83 percent up from 70 percent in FY17. Production volumes grew by19 percent to 28.64 lakh tons. The Phosphoric acid augmentation project envisaged to addanother 1 lakh tons of acid at Visakhapatnam unit is on track and is slated to becompleted in 2019-20. Further your Company continued the focus on developing itsoperational flexibility by working with alternate phosphate rock and acid sources.

Crop Protection

Crop Protection business registered top-line growth in domestic and exports marketsimproving its turnover by 7% percent in FY17-18. Lower crop prices higher stock inventoryin Latin American markets and higher raw material costs driven by strict environmentregulations in China impacted the margins of the business. Mancozeb production at both themanufacturing facilities of Sarigam and Dahej improved the product availability forcatering to the growth opportunities in international markets.

Domestic formulations did well on specialty and captive generics front improved itschannel presence and dealer engagement initiatives. During the year four new formulationswere introduced in the domestic markets which have received encouraging response from thecustomers. R&D centre focused on developing chemistry and technology for some of thekey recently off patented molecules apart from development of new combination productsand process improvement relating to the existing products.

During the year your Company acquired the Bio pesticide business from E.I.D Parry(India) Limited which would enable the business to gain entry in high growth bio pesticidesegment in Indian North American and European markets. The acquisition has been effectivefrom 01 April 2018 and provides a synergistic fit to its crop protection productportfolio.

Retail

Coromandel's Retail business registered good growth improving its scale andoperational efficiency. The growth was primarily driven by strong performance of thenon-fertiliser segment and a focused product and store approach. To improve farm advisoryservices 'Gromor Advisory Council' comprising of scientists from leading agricultureuniversities was constituted and nutritional package of practices for eight crops weredeveloped. Business expanded its footprint in Western Maharashtra by opening four newstores during the year. Partnering with the Andhra Pradesh Government your company openedfive new Custom Hiring & Service Centres (CHSC) for providing farm mechanizationservices.

Specialty Nutrients

Specialty Nutrients registered good growth during the year leveraging strengths of theintegrated marketing structure and promoting its focus products. New crop specific watersoluble fertiliser products were introduced during the year which have received goodresponse from the market. With the Government's thrust towards promoting balancednutrition and water use efficiency the business expects significant growth opportunitiesin coming years.

Single Super Phosphate (SSP)

The Single Super Phosphate (SSP) business increased its sales by 9 percent to 5.20 lakhtons becoming the market leader despite higher channel stocks and sub-par monsoons inits key markets. Capacity consolidation was carried out through debottlenecking UdaipurBaroda and Nimrani units improving the operational efficiencies and productionthroughput. Business continued its focus on promoting quality awareness amongst thecustomers and carried out multiple Quick Test campaigns. With the industry formalizationpost GST implementation Government's policy intervention (effective 01 April 2018)mandating the sale of SSP in manufacturer's brand names your Company expects freshimpetus driving business volumes in coming years for the organized players.

Organic Manure

Your Company's Organic business grew its volumes by 9 percent to 1.44 lakh tonsfocusing on value added granulated products. Coromandel continued to be the market leaderin the City Compost segment. To serve organic certified inputs necessary reliable vendorbase quality assurance systems and supply chain models have been established

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.253 crores. Your Company follows a prudent financial policy and aims atmaintaining an optimum financial gearing. Your company continues to be a Long Term DebtFree company. Debt to Equity Ratio was 0.86 as on 31 March 2018.

Your Company has been credit rated by CRISIL Limited. The Company's long term creditrating by 'CRISIL' continued to be 'CRISIL AA+ (stable)' and short term debt rating at'CRISIL A1+'. This reflects a very high degree of safety regarding timely servicing offinancial obligations and also a vote of confidence reposed in your Company's financials.

5. Dividend

Your Directors are pleased to recommend a final Dividend of Rs.3.50 per equity shareRs.1/- each. Your Board had earlier approved an interim dividend of Rs.3/- per equityshare on 16 March 2018 and the same was paid on 03 April 2018. The total dividend forthe year ended 31 March 2018 would accordingly be Rs.6.50 per equity share of Rs.1/-each. The total outgo for the year would be Rs.229 crore including dividend distributiontax of Rs.39 crore.

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 http://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 is appended. As required under the provisions of the Act astatement showing the salient features of the financial statements of the subsidiariesassociates and joint ventures is enclosed as 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 $0.04 million(equivalent to Rs.0.28 crore) during the year ended 31 December 2017. Primary source ofincome for this subsidiary is dividend income from Foskor (Pty) Ltd. and the subsidiarydid not receive any dividend from Foskor during the year 2017.

b) Parry Chemicals Limited (PCL):

PCL a wholly owned subsidiary of the Company earned a total revenue of Rs.0.93 crorefor the year ended 31 March 2018 and Profit after Tax was Rs.0.09 crore.

c) Dare Investments Limited (DIL):

DIL a wholly owned subsidiary of the Company did not have any significant operationsand incurred a loss of Rs.0.04 crore for the year ended 31 March 2018.

d) Liberty Pesticides and Fertilisers Limited (LPFL):

LPFL a wholly owned subsidiary of the Company did not have any significant operationsduring the year 2017-18. It earned a profit of Rs.0.13 crore for the year ended 31 March2018.

e) Coromandel Brasil Limitada (CBL):

CBL a Limited Liability Partnership owned 100% by the Company and its subsidiary CFLMauritius Ltd. is primarily engaged in getting product registrations in Brazil andprocuring orders for supplies from India. It earned a profit of Brazilian Reals 0.25million (equivalent to Rs.0.51 crore) for the year ended 31 December 2017.

f) Sabero Organics America SA (SOAL)

SOAL is primarily engaged in getting product registrations in Brazil and procuringorders for supplies from India. It incurred a net loss of Brazilian Reals 0.42 million(equivalent to Rs.0.87 crore) for the year ended 31 December 2017.

g) Sabero Australia Pty Ltd. (SAPL)

SAPL did not have any significant operations during the year 2017-18. It incurred a netloss of AUD 0.01 million (equivalent to Rs.0.04 crore) for the year ended 31 March 2018.

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 31 March 2018.

i) Sabero Argentina SA (Sabero Argentina)

Sabero Argentina is primarily engaged in getting product registrations in Argentina andprocuring orders for supplies from India. It incurred a net loss of Argentine Peso 0.18million (equivalent to Rs.0.07 crore) for the year ended 31 December 2017.

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 0.22million (equivalent to Rs.0.08 crore) for the year ended 31 December 2017.

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 SQM Chile manufactures Water SolubleFertilisers (WSF) at Kakinada Andhra Pradesh and offers Speciality Nutrition Solutions toinstitutional clients. During the year the JV launched two new crop specific WSF products'Ultrasol Solanaceae' and 'Speedfol Chilli' which have received encouraging response fromthe customer. Total income for the year was Rs.73.80 crore and the net profit was Rs.4.37crore.

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. Combine Harvester introduced in the market last year has received positive responsefrom the customers. Total income for the year was Rs.23.26 crore and the net loss wasRs.6.78 crore.

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 2017-18.

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 uninterrupted supply of phosphoric acid forCompany's operations at Kakinada and Visakhapatnam. During the year TIFERT soughtstrategic intervention from the Tunisian Government for ensuring uninterrupted supplies ofrock phosphate from mines to the Plant. The ongoing improvement projects includingcommissioning of Auxiliary Boiler in December 2017 improved the concentrated acidthroughput. Indian partners Coromandel and GSFC continued to provide necessary technicalsupport to TIFERT to improve the plant performance.

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

Your Company along with CFL Mauritius Limited holds 14% equity of FOSKOR. During theyear FOSKOR improved its performance on rock phosphate and NPK production withphosphoric acid production remaining at last year levels. Weak acid & rock prices andstrong South African Rand impacted business profitability. Your Company is continuouslyengaged with FOSKOR for providing technical support in running the plant efficiently.

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 a Risk Management Policy under which various risksassociated with the business operations are identified and risk mitigation plans have beenput in place details of which are set out in the Corporate Governance Report/ManagementDiscussion 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 toBoard.

10. Related Party Transactions

During the year the Company has obtained approval of the shareholders through PostalBallot for the following transactions: (a) Acquisition of Bio Pesticides Business ofE.I.D Parry (India) Ltd. holding company; (b) Acquiring from E.I.D Parry (India) Limitedthe total shareholding in Parry America Inc.; and (c) Appointment of Mr. A Vellayan asAdvisor to the Company for a period of five years.

Except these transactions all other transactions that were entered into with therelated parties during the financial year were at arm's length and in the ordinary courseof business. There were no material related party transactions made by the Company withthe Promoters Directors Key Managerial Personnel or the Senior Management Personnelwhich may have a potential conflict with the interest of the Company at large.

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 http://www.coromandel.biz/pdf/InvestorsInformation/RPTPolicyJul2017.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 fee and commission.

11. Auditors

a) Statutory Auditors

M/s Deloitte Haskins & Sells Chartered Accountants were appointed as Auditors ofthe Company for a period of five years from the conclusion of the Annual General Meetingheld on 23 July 2014. As required under the provisions of Section 139 of the Act aresolution for the yearly ratification of their appointment is being placed before theshareholders for their approval.

The Auditors Report given by M/s Deloitte Haskins & Sells Statutory Auditors onthe financial statements of the Company for the year ended 31 March 2018 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

Pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit)Rules 2014 the cost records of the Company are required to be audited. Based on therecommendations of the Audit Committee your Board has appointed Mr. V Kalyanaraman andMs. Jyothi Satish Practicing Cost Accountants to audit the cost records of the Company.

The Cost Audit Report for the year 2016-17 has been filed with Ministry of CorporateAffairs within the prescribed time limit.

c) Secretarial Auditor

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 2017-18.

The report of the Secretarial Auditor is enclosed as Annexure B and forms partof this report. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark.

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 deposit from the public under Chapter V of the Act orunder the corresponding provisions of Section 58A of the Companies Act 1956 since 2003and 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 Non-Executive Professional Directors. As on 31 March 2018 the Board ofDirectors consists of eight (8) Directors consisting of Managing Director and seven (7)Non-executive Directors out of which four (4) 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. All the Directors possess requisite qualificationsand experience in general corporate management strategy finance engineeringinformation technology and other allied fields which enable them to contribute effectivelyto the Company in their capacity as Directors of the Company. Declarations from allIndependent Directors have been received confirming that they meet the criteria ofindependence as prescribed both under the Companies Act 2013 and the Listing Regulations2015 and the same have been considered and taken on record by the Board.

After serving the Company's Board close to two decades Mr. A Vellayan stepped down asChairman and Director of the Company on 31 January 2018 on attaining the age of 65years. Under his leadership the Company transformed into one of the leading farmsolutions providers in India by establishing long standing relationships across its widespectrum of stakeholders with a reputation for trust ethical standards and passion forgrowth. The Board placed on record its appreciation of the valuable contribution made byMr. A Vellayan during his tenure as Chairman and Director for the growth and developmentof the Company.

Given his deep business insight on agri inputs industry his association with industrybodies and associations policy advocacy with various government bodies/institutions anddealing with global players in the industry Board recommended the appointment of Mr. AVellayan as an Advisor to the Company effective 1 February 2018 and the same has beenapproved by the shareholders through postal ballot.

Mr. M M Murugappan was appointed as an Additional Director (Non-ExecutiveNon-Independent) and as Chairman of the Company with effect from 31 January 2018. Mr. M MMurugappan has extensive experience in the field of engineering technology corporatestrategy policy formulation and organization transformation. He brings in valuablebusiness insights being an active Board member of various companies specialized in theareas of engineering automotive financial services and IT. His keen business acumen isinvaluable for the business growth of the Company. Company has received a notice from amember under Section 160 of the Act proposing his nomination for Directorship at theensuing Annual General Meeting.

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 theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations) the Board has carried out evaluation of its own performance the performanceof Committees of the Board namely Audit Committee CSR Committee Risk ManagementCommittee Stakeholders Relationship Committee and Nomination and Remuneration Committeeand also the directors individually. The manner in which the evaluation was carried outand 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 2017-18 six Board Meetings were held the details of which are given inthe Corporate Governance Report.

d) Audit Committee

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

e) Familiarisation Programme for Independent Directors

On their appointment Independent Directors are familiarized about the Company'soperations and businesses. Interaction with the Business Heads and key executives of theCompany is also facilitated. Detailed presentations on the business of each of theDivision are also made to the Directors. A manual containing all important policies of theCompany is also given to the directors. Direct meetings with the Chairman and the ManagingDirector are further facilitated for the new appointee to familiarize him/her about theCompany/its businesses and the Group practices.

As part of the familiarization programme 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 impact on thebusiness of the Company and/or the agriculture sector in general and fertiliser andpesticides industries in particular. The details of familiarisation programme as above arealso disclosed on the Company's website.

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 Cto this Report.

15. Key Managerial Personnel

Mr. Sameer Goel Managing Director Mrs. Jayashree Satagopan Chief Financial Officer(effective 1 November 2017) and Mr. P Varadarajan Company Secretary are the KeyManagerial Personnel (KMP) of the Company. Mr. S Sankarasubramanian as Chief FinancialOfficer was one of the KMP of the Company till 31 October 2017. He has taken up the roleas President-Fertiliser Business.

16. Employees

a) Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. Salient features of the Remuneration Policy is set out in the CorporateGovernance Report. The Remuneration Policy is available on the Company's website at http://www.coromandel.biz/pdf/InvestorsInformation/ RemunerationPolicvJul2017.pdf .

b) Policy on prevention of Sexual Harassment

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 2017-18 an incident of sexual harassment was reported which wasinvestigated by the ICC under the Policy and action has been taken thereon.

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 statement containing the name of employees who are in receipt of remuneration inexcess of the prescribed limits and top 10 employees in terms of remuneration drawn underRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is enclosed as Annexure E to this Report.

d) Employee Stock Option Plans

Employee Stock Option Scheme 2007 - ESOP 2007 The Company had in the past approvedan Employee Stock Option Scheme 2007 (ESOP Scheme 2007) under which employees weregranted Options. The Company made grants under the said Scheme during the period 2007 to2011. Number of vested Options outstanding as on date under the ESOP Scheme 2007 are52100. It is not proposed to make any further grants under ESOP Scheme 2007.

Employee Stock Option Plan - ESOP 2016

The Shareholders had through Postal Ballot on 11 January 2017 authorized theBoard/Nomination and Remuneration Committee to issue to the employees such number ofOptions under the ESOP 2016 as would be exercisable into not exceeding 14581000 fullypaid- up equity shares of Rs.1/- each in the Company.

The Nomination and Remuneration Committee is empowered to formulate detailed terms andconditions of the ESOP Scheme 2016 administer and supervise the same. The specificemployees to whom the Options would be granted and their eligibility criteria would bedetermined by the Nomination and Remuneration Committee at its sole discretion. Furtherthe Nomination and Remuneration Committee is empowered to determine the eligiblesubsidiary companies whether existing or future whose employees will be entitled tostock options under this Scheme.

Options granted under this ESOP 2016 would vest on or after 1 (one) year from the dateof grant but not later than 4 (four) years from the date of grant of such Options or anyother terms as decided by the Nomination and Remuneration Committee. The Company hasgranted 148900 options to the employees during the year under ESOP 2016. Total number ofOptions granted under ESOP Scheme 2016 is 2323400. The number of Options vested andoutstanding are 31 1740.

The disclosure required to be made under Regulation 14 of the said Regulations isavailable on the Company's website at http://www.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.

On the health front Coromandel has begun construction of a Hospital in Kakinada havingdiagnostic facilities and an out-patient facility which is scheduled to be completedduring the financial year 2018-19. The Coromandel Medical Centres in Ennore SarigamKakinada and Vizag catered to the medical needs of ~80000 patients and the Mobile MedicalVan catered to ~13000 patients in Sarigam in 2017-18.

The Coromandel Girl Child Education Scheme offering economic assistance to girls instandards IX and X reached out to 1468 girls in 658 schools. The Scheme aims atproviding educational assistance to girls to encourage them to continue their education.All the CSR projects of the Company are in accordance to the provisions of Section 135 ofthe Act. The CSR policy of the organization is mentioned on the Company website (http://coromandel.biz/csrpolicy.html). Details of composition of CSR Committee and CSR Projects undertakenduring the year are given in Annexure H to this Report.

21. Safety Health and Environment (SHE)

Your Company gives utmost importance to employee's health and safety given thesensitive nature of operations that involves handling of chemical products. Company hasput in robust processes and safety performance indicators to track its SHE performance.Employees are encouraged to raise 'near-miss' safety concerns and these inputs areperiodically monitored and closed. During the year the Total Recordable Injury Rate(TRIR) per million man hours stood at 0.94. Coromandel adopted additional five elementsunder advanced risk based Process Safety Management Systems (PSMS) expanding management'scommitment and involvement towards Plant safety. All key manufacturing sites took upQuantitative Risk Assessment (QRA) studies through external agencies to refresh the riskregister and improve safety culture.

Coromandel's commitment towards environmental sustainability remains firm. To improveEnvironmental Management reporting advanced emission monitoring equipment were installedat the sites. Energy efficient lighting systems were deployed across the organisation.During the year around 10000 tree saplings were planted in public areas. Green beltcover at Kakinada manufacturing site was extended to 50 percent of the factory areaproviding a conducive environment and a Bird's Paradise inside the factory premises.

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.The requisite 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 theCompany at http:// coromandel.biz/inv report.html .

25. Other disclosures

a) Share Capital

The paid up equity share capital of the Company as on 31 March 2018 was Rs.29.24crore. During the year the Company has allotted 714282 equity shares of Re. 1 eachunder ESOP Scheme 2007 (609082 shares) and under ESOP 2016 (105200 shares).

b) Postal Ballot

During the year under review shareholders have approved following business throughPostal ballot (including e-voting) on 23 February 2018 by way of ordinary resolutionswith requisite majority:

a) Acquisition of Bio Business from E.I.D Parry (India) Ltd.

b) Acquisition of Parry America Inc. from E.I.D Parry (India) Ltd.

c) Appointment of Mr. A Vellayan as Advisor to the Company for a period of 5 years.

c) 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 http://coromandel.biz/pdf/InvestorsInformation/PolicvOnMaterialSubsidiarv.pdf.

d) 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.

26. Acknowledgement

Your Directors wish to express their grateful appreciation for the valuable support andco-operation received from bankers business associates lenders financialinstitutionsshareholders various departments of the Government of India as well as theState Governments 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
For Coromandel International Limited
Place: Secunderabad M M Murugappan
Date: 24 April 2018 Chairman