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Deepak Nitrite Ltd.

BSE: 506401 Sector: Industrials
BSE 15:07 | 18 Sep 268.50 -0.50






NSE 14:54 | 18 Sep 270.00 1.30






OPEN 269.60
VOLUME 11763
52-Week high 337.55
52-Week low 204.60
P/E 16.38
Mkt Cap.(Rs cr) 3,662
Buy Price 268.50
Buy Qty 66.00
Sell Price 268.90
Sell Qty 85.00
OPEN 269.60
CLOSE 269.00
VOLUME 11763
52-Week high 337.55
52-Week low 204.60
P/E 16.38
Mkt Cap.(Rs cr) 3,662
Buy Price 268.50
Buy Qty 66.00
Sell Price 268.90
Sell Qty 85.00

Deepak Nitrite Ltd. (DEEPAKNTR) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the Forty Eighth Annual Report together withthe Audited Statement of Accounts for the Financial Year (FY) ended March 31 2019.

Financial Results

The Company's financial performance for the year ended March 31 2019 is summarizedbelow:

(` in crores)

standalone Results

consolidated Results

2018-19 2017-18 2018-19 2017-18
total Revenue (Gross) 1794.52 1490.77 2715.04 1688.47
Less : Excise Duty on sale of Goods - 24.25 - 24.73
Total Revenue (Net of Excise Duty) 1794.52 1466.52 2715.04 1663.74
Operating Profit Before Depreciation Finance Cost Exceptional Item 308.23 214.37 429.02 208.60
and Tax
Less : Depreciation and Amortization expenses 52.88 51.95 77.79 52.60
Less : Finance Costs 42.85 40.34 83.25 45.15
Profit before Tax 212.50 122.08 267.98 110.85
Less : Tax expenses 74.46 38.62 94.32 31.83
Net Profit for the Year 138.04 83.46 173.66 79.02
Other Comprehensive Income (2.67) 0.86 (2.84) 0.86
Total Comprehensive income for the Year 135.37 84.32 170.82 79.88
Surplus brought forward from previous year 402.32 342.02 380.61 324.76
Balance available for Appropriation 537.64 426.20 548.16 404.49

Performance Review standalone

In FY 2018-19 Total Revenue including Other Income stood at

` 1794.52 Crores as against ` 1490.77 Crores in FY 2017-18.

EBITDA came in at ` 308.23 Crores in FY 2018-19 higher by 44% as compared to ` 214.37Crores in FY 2017-18. Raw material costs stood at ` 976.17 Crores as against ` 843.82Crores in FY 2017-18 up by 16%. Profit Before Tax (PBT) excluding Exceptional Items stoodat ` 212.50 Crores as compared to ` 122.08 Crores in FY 2017-18. The Profit After Tax(PAT) excluding Exceptional Items came in at ` 138.04 Crores as compared to ` 83.46 Croresin FY 2017-18. Favourable shift in product mix strategic modifications in geographyend-user based better customer selection various cost leadership initiatives acrossbusiness segments led to better PAT performance. The Depreciation and Finance Costs duringthe year stood at ` 52.88 Crores and

` 42.85 Crores respectively.

Domestic Revenues stood at ` 1211.53 Crores from ` 968.38 Crores in FY 2017-18representing a growth of 25% owing to strong demand trends from local customers. YourCompany apart from reasons explained above has also been benefitted due to productionand supply disruption in China. The Revenue from exports stood at

` 580.39 Crores compared to ` 510.85 Crores last year.

The Chemical Industry in India is witnessing an unprecedented growth opportunitylargely due to International events. For a company like Deepak Nitrite which is intochemical intermediates the opportunity stands accentuated as its products support a widerange of industries. In the current scenario Chemical Intermediates are witnessing a bigjump in demand both due to growing demand from domestic end user industries and reducedavailability of intermediates from China. Your Company expects the situation to remainconducive in the foreseeable future.

At this backdrop Your Company was able to ensure peak performance amidst fluctuatingpricing of Raw Materials and volatility in Foreign Exchange.


In FY 2018-19 Total Revenue including Other Income stood at

` 2715.04 Crores as against ` 1688.47 Crores in FY 2017-18.

EBITDA came in at ` 429.02 Crores in FY 2018-19 higher by 106% as compared to ` 208.60Crores in FY 2017-18. Raw material costs stood at

` 1646.70 Crores as against ` 1038.79 Crores in FY 2017-18 up by 59%.

Profit Before Tax excluding Exceptional Items stood at ` 267.98 Crores as compared to `110.85 Crores in FY 2017-18. The Profit After Tax excluding Exceptional Items came in at `173.66 Crores as compared to ` 79.02 Crores in FY 2017-18. Apart from reasons cited abovefor better performance the newly commissioned Phenol- Acetone manufacturing facilityperformed well and contributed to PBT PAT sizably within a very short time of itsoperation exhibiting sustainability of this business. The depreciation and finance costsduring the year stood at ` 77.79 Crores and ` 83.25 Crores respectively.

The Domestic Revenues stood at ` 2106.55 Crores from ` 1164.22 Crores in FY 2017-18representing a growth of 81% owing to strong demand trends from local customers and alsodue to commencement of operation of Phenol - Acetone plant which are sold in domesticmarket being import substitutes. The Revenue from Exports stood at ` 593.38 Crorescompared to ` 511.96 Crores last year.


Based on your Company's Performance the Board of Directors of your Company is pleasedto recommend a Dividend of ` 2/- (Rupees Two only) per Equity Share for the year endedMarch 31 2019 on 136393041 Equity Shares of ` 2/- each as against ` 1.30 (Rupee Oneand Paisa Thirty only) per Equity Share in the previous year.

The total amount of Dividend if declared by the Members including Dividend Tax willbe ` 32.89 Crores (Previous Year ` 21.83 Crores).


Regulation 43A of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 (‘Listing Regulations') requires top 500listed entities based on market capitalization calculated as on March 31 of everyFinancial Year to formulate a Dividend Distribution Policy and disclose the same in theirAnnual Report and on their websites. Accordingly the Board of Directors of your Companyhas adopted a Dividend Distribution Policy which aims to ensure fairness sustainabilityand consistency in distributing profits to the Shareholders. The Dividend DistributionPolicy is attached as Annexure - A and is also available on the website of your Company

Share Capital

The Paid-up Equity Share Capital of your Company as on March 31 2019 was ` 27.27Crores comprising of 136393041 Equity Shares of ` 2/- each. Your Company has not issuedany Equity shares during the Financial Year 2018-19.

Transfer To Reserves

Your Company proposes to transfer ` 5 Crores to the General Reserves out of the amountavailable for appropriation.

Update On Phenol And Acetone Project

The Members are aware that your Company through its wholly owned subsidiary DeepakPhenolics Limited (‘DPL') commenced commercial production at a state-of-the-artplant at Dahej to manufacture 200000 MTPA of Phenol and 120000 MTPA of its co-productAcetone on November 1 2018. This is supported by manufacturing facility of 260000 MT ofCumene which is a feedstock for manufacturing Phenol and Acetone. With this your Companyaddresses the opportunity offered by the supply deficit in the domestic market which ismajorly being met by imports. In addition to being cost competitiveness as a domesticsupplier to domestic end users your Company started leveraging on the latestmanufacturing technologies in its state-of-the art plant which is efficient in everyaspect.

The plant is expected to save approx. USD 350 – 400 mn of Foreign Exchange everyyear by way of value addition of petrochemicals which otherwise was being converted to lowvalue LPG or was being exported. With an objective of developing working relationshipswith major clients across India as well as establishing strong marketing and distributionchannels DPL had worked on seed marketing of Phenol to understand and penetrate in themarket. The seed marketing activity helped DPL to leverage its relationship to sell largemanufacturing quantities. DPL has appointed distributors across India for selling anddistributing Phenol and Acetone. It also has well tied up transportation and otherlogistics requirements which is one of the key requirements for handling such large volumeof moving inbound and outbound materials.


Your Company tries to strike a balance in its capital structure on a consolidated levelwhile efficiently managing its working capital thereby maintaining debt at a reasonablelevel. During the year under review the total debt of your Company decreased due toscheduled repayments and improved working capital management. However as your Companycommissions its expansion projects on a consolidated level the consolidated debt levelhas gone up. This level is expected to normalise as the Phenol-Acetone project has startedgenerating revenue and it shall operate for the whole year from FY 2019-20 onwards. YourCompany has already provided entire committed equity to its Phenol-Acetone project. On aconsolidated basis Debt Equity Ratio of your Company is at 1.11 which is reasonablycomfortable given the size of its Phenol-Acetone project and associated debt. Interestcosts increased marginally during the year due to repayment of low cost Foreign Currencydebt increase in the LIBOR and increase in market rate in Rupee borrowing. Depreciationincreased due to regular growth and maintenance Capex. Your Company has an active team tomanage its Foreign Exchange exposures to minimise risk arising out of imports and exports.Due to prudent fund management your Company has been able to effectively manage its cashflows. There is always an effort to reduce the overall interest costs. On a standalonebasis Debt/Equity as on March 31 2019 is reduced to 0.31 compared to 0.49 as on March31 2018 while on a consolidated level Debt/Equity ratio stood at 1.11 times asmentioned above.

ICRA Limited re-affirmed the long-term rating of [ICRA] A+ and Short Term rating of[ICRA] A1+ assigned to the fund based limits and non-fund based limits of your Company.ICRA also re-affirmed the short-term rating of [ICRA] A1+ assigned to the Commercial Paperprogramme. The outlook on the long-term rating has been revised from Stable to Positive.

Further CRISIL Limited has assigned the Long-Term rating as CRISIL AA- Stable andShort term rating as CRISIL A1+ to your Company.


During the year under review following are the changes in the composition ofDirectors: Shri Umesh Asaikar (DIN: 06595059) was re-appointed as a Whole-time Directordesignated as the Executive Director & CEO of your Company for a period from May 92018 to May 31 2020. The said re-appointment was approved by the Members at the 47thAnnual General Meeting of your Company held on August 3 2018.

Shri Deepak C. Mehta (DIN: 00028377) was re-appointed as the Chairman & ManagingDirector of your Company w.e.f. December 14 2018 for a period of five (5) years subjectto the approval by the Members. Pursuant to Provision of Section 152 of the Companies Act2013 Shri Sanjay Upadhyay (DIN: 01776546) Director-Finance & Chief FinancialOfficer retires by rotation at the ensuing Annual General Meeting and being eligible hasoffered himself for re-appointment. The Board recommends his re-appointment for approvalby the Members. The Board of Directors of your Company appointed Shri Sanjay Asher (DIN:00008221) and Smt. Purvi Sheth (DIN: 06449636) as Additional Directors at their meetingheld on May 3 2019 As per provisions of the Companies Act 2013 Shri Sanjay Asher andSmt. Purvi Sheth hold office as Additional Director upto the ensuing Annual GeneralMeeting. Your Company has received notice from a Member proposing candidature for theappointment of Shri Sanjay Asher and Smt. Purvi Sheth as Independent Directors for aperiod of three (3) consecutive years alongwith requisite fees. The Resolution(s) for theappointment of Shri Sanjay Asher and Smt. Purvi Sheth as Independent Directors are givenin the Notice for approval by the Members.

Shri Sudhin Choksey Shri Sudhir Mankad Shri Sandesh Kumar Anand Dr. SwaminathanSivaram and Dr. Richard H. Rupp Independent Directors have consented to act asIndependent Directors for the second term subject to approval of shareholders by way ofSpecial Resolution. Accordingly Special Resolutions for the re-appointment of Shri SudhinChoksey Shri Sudhir Mankad Shri Sandesh Kumar Anand Dr. Swaminathan Sivaram and Dr.Richard H. Rupp as Independent Directors of your Company for second term of three (3)consecutive years are given in the Notice for approval by the Members.

Shri Nimesh Kampani and Prof. Indira Parikh Independent Directors of the Company haveexpressed their desire not to be reappointed as Independent Directors of the Company forsecond term. Accordingly the Board of Directors do not recommend their re-appointment asIndependent Directors of the Company for second term. The first term of appointment ofShri Nimesh Kampani and Prof. Indira Parikh is upto August 7 2019 and August 8 2019respectively.


As required under Section 203 of Companies Act 2013 of Companies Act 2013 read withRule 8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014following persons are the Key Managerial Personnel of the Company:

1. Shri Deepak. C. Mehta Chairman & Managing Director

2. Shri Umesh Asaikar Executive Director & CEO

3. Shri Sanjay Upadhyay Director-Finance & CFO

4. Shri Maulik Mehta Whole-time Director

5. Shri Arvind Bajpai Company Secretary


During FY 2018-19 Four (4) Board Meetings were held. The details of Board Meetingswith regard to their dates and attendance of each of the Directors thereat 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 (7) of the Companies Act 2013 andRegulation 25(8) of the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.

The Board of Directors of your Company confirms that the Independent Directors fulfillthe conditions specified in Section 149 (6) of the Act and Regulation 16(1)(b) of theListing Regulations and are independent of the management.

Performance Evaluation

Pursuant to the provisions of 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:

Relevant Knowledge Expertise and Experience.

Devotion of time and attention to your Company's long term strategic issues.

Addressing the most relevant issues for your Company.

Discussing and endorsing your Company's strategy

Professional Conduct Ethics and Integrity.

Understanding of Duties Roles and Function as Independent


Your Directors have expressed their satisfaction to the evaluation process.

Audit Committee

The Audit Committee consists of all Independent Directors with Shri Sudhin Choksey asthe 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.


The observations made in the Auditor's Report of M/s. Deloitte Haskins & Sells LLPChartered Accountants read together with relevant notes thereon are self-explanatory andhence do not call for any comments. There is no qualification reservation adverse remarkor disclaimer by the Statutory Auditors in their Report.


There was no instance of fraud during the year under review which required theStatutory Auditors to report to the Audit Committee and/or Board under Section 143(12) ofthe Act and the rules made thereunder.

Secretarial Auditor's Report

The Secretarial Audit Report of M/s. KANJ & Co. LLP Company Secretaries Pune forthe Financial Year ended March 31 2019 does not contain any qualification reservationadverse remark or disclaimer by the Secretarial Auditors.

The Secretarial Audit Report in Form MR-3 is annexed as Annexure - B which forms partof this Report.


(a) statutory auditors

The Statutory Auditor of your Company M/s. Deloitte Haskins & Sells LLP CharteredAccountants (Firm Registration

No.: 117366W/W-100018) were appointed for a period of five (5) years at the 46thAnnual General Meeting held on June 26 2017. The Companies (Amendment) Act 2017 haswaived the requirement for ratification of the appointment of Statutory Auditor by theshareholders at every Annual General Meeting. Hence the ratification of appointment ofStatutory Auditors by your Company is not required. Accordingly the Statutory Auditorwill continue to hold office till the conclusion of the 51st Annual GeneralMeeting of the Company approved by the Members at the 46th Annual GeneralMeeting of the Company.

(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 2019 was carried out by the SecretarialAuditors M/s. KANJ & Co. LLP Company Secretaries Pune. The Board of Directors ofyour Company has appointed M/s. KANJ & Co. LLP Company Secretaries Pune to carry outSecretarial Audit of your Company for FY 2019-20.

(C) Cost Auditors

The Board of Directors of your Company has appointed M/s. B. M. Sharma & Co. CostAccountants to conduct audit of your Company's cost records for FY 2019-20 at aremuneration of ` 750000/- (Rupees Seven Lakhs Fifty Thousand only) plus applicable taxtravelling and other out of pocket expenses in connection with the said Audit. As requiredunder the provisions of Companies Act 2013 the remuneration of Cost Auditors as approvedby the Board of Directors is subject to ratification by the shareholders at the ensuingAnnual General Meeting.

The Cost Audit Report will be filed within the prescribed period of 180 days from theclose 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 the Internal Audit for FY2019-20.

Fixed Deposits

During FY 2018-19 your Company has not accepted or renewed any Fixed Deposits.

As on March 31 2019 37 warrants aggregating to ` 743507 issued by your Company tothe respective deposit holders towards compulsory repayment of deposits and interestthereon in accordance with the provisions of Section 74 of the Companies Act 2013remained uncleared. There has been no default in repayment of deposits or interest thereonduring the year and there are no deposits outstanding as on March 31 2019.

Vigil Mechanism

Your Company has adopted a Whistle Blower Policy to provide a formal vigil mechanismto the Directors and employees to report their concerns about unethical behaviourincluding actual or suspected leak of unpublished price sensitive information actual orsuspected fraud or violation of your Company's Code of Conduct or ethics policy. ThePolicy provides for adequate safeguards against victimisation of employees who avail ofthe mechanism and also provides for direct access to the Chairman of the Audit Committee.It is affirmed that no personnel of the Company has been denied access to the AuditCommittee.

The Whistle Blower Policy is available on the website of your Company at


All Related Party Transactions that were entered into during the Financial Year were onan arm's length basis in the ordinary course of business and were in compliance with theapplicable provisions of the Companies Act 2013 (‘the Act') and the ListingRegulations. There were no materially significant Related Party Transactions entered intoby your Company during the year that would have required shareholders' approval under theListing Regulations or the Act.

All Related Party Transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for the transactions which arerepetitive in nature. A statement of all Related Party Transactions is placed before theAudit Committee for its review on a quarterly basis specifying the name of the RelatedParty nature and value of the transactions.

In line with the requirements of the Act and Listing Regulations your Company hasadopted a Policy on Related Party Transactions which is available on your Company'swebsite at www.

Details of transactions with Related Parties are provided in the accompanying FinancialStatements. There were no transactions with Related Parties during the year which wouldrequire to be reported in Form AOC-2.


Financial Statements

As required under Rule 8(1) of the Companies (Accounts) Rules 2014 the Board's Reporthas been prepared on a Standalone basis.

The Consolidated Financial Statements of your Company and its subsidiaries prepared inaccordance with Indian Accounting Standards notified under the Companies (IndianAccounting Standards) Rules 2015 (‘Ind AS') forms part of the Annual Report and arereflected in the Consolidated Financial Statements of your Company.

The annual Financial Statements of the subsidiaries and related detailed informationwill be kept at the Registered Office of your Company as also at the Registered Officesof the respective Subsidiary Companies and will be available to investors seekinginformation at any time. They are also available on the website of your Company. TheConsolidated Financial results reflect the operations of subsidiary Companies DeepakPhenolics Limited and Deepak Nitrite Corporation Inc. Your Company has adopted a Policyfor determining Material Subsidiaries in terms of Regulation 16(1)(c) of the ListingRegulations. The Policy as approved by the Board is uploaded on your Company's website.

PERFORMANCE OF SUBSIDIARIES (a) Deepak Phenolics Limited

Deepak Phenolics Ltd. (DPL) a wholly-owned subsidiary of your Company commencedcommercial production at its Mega-Plant for manufacturing Phenol & Acetone on November1 2018.

DPL has reported Revenue from Operations of ` 913.50 Crores for the period ended March31 2019 and Net Profit for the period was ` 35.88 Crores.

(b) Deepak Nitrite Corporation Inc. (USA)

Deepak Nitrite Corporation Inc. (‘DNC') is a wholly owned subsidiary companyincorporated in the United States of America to cater to the marketing requirements ofyour Company in 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 also provides warehousing distribution and customerrelationship management services.

During FY 2018-19 the Total Revenue of DNC was USD 178347 and the Net Income for theperiod was USD 4888.

Pursuant to the provisions of Section 129(3) of the Companies Act 2013 read with Rule5 of the Companies (Accounts) Rules 2014 a statement containing salient features of theFinancial 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 forming part of the Annual Report.

Material Changes And Commitments

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 2019 and the date ofthis Report. Further it is hereby confirmed that there has been no change in the natureof business of your Company.


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 accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of your Company at the end of the Financial Year and of the profit of yourCompany for that period; (c) they have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of your Company and for preventing anddetecting fraud and other irregularities; (d) they have prepared the Annual Accounts on agoing concern basis; (e) they have laid down internal financial controls to be followed byyour Company and that such internal financial controls are adequate and are operatingeffectively; (f) they have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

Corporate Governance

A separate report on Corporate Governance is provided together with a Certificate fromShri Dinesh Joshi a Practising Company Secretary M/s. KANJ & Co. LLP CompanySecretaries Pune regarding compliance of conditions of Corporate Governance as stipulatedunder Listing Regulations.


The Business Responsibility Report on your Company's business as required by Regulation34(2) of the Listing Regulations initiatives on environmental social and governanceaspects forming part of this Report is annexed as Annexure - C.


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 2018-19 your Company has spent ` 250 Lakhs on CSR activities against therequirement of ` 213 Lakhs being 2% of average of the net profits for the preceding threeyears. Your Company has a policy on Corporate Social Responsibility and the same has beenposted on the website of the Company at The Report on CSR activities interms of the requirements of Companies (Corporate Social Responsibility Policy) Rules2014 is annexed herewith as Annexure - D which forms part of this Report.


Your Company has adopted a Nomination and Remuneration Policy for the Directors KeyManagerial Personnel and Senior Management employees pursuant to the requirement ofSection 178 of the Companies Act 2013 and Listing Regulations.

The Nomination and Remuneration Policy of your Company is annexed as Annexure - E.

Extracts Of Annual Return

Pursuant to Section 92(3) of the Companies Act 2013 read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extract of the Annual Return inthe prescribed form i.e. Form MGT-9 is annexed herewith as Annexure – F which formspart of this Report.

Annual Return

Pursuant to provisions of Section 92 (3) of the Companies Act read with Rule 8A (1) ofthe Companies (Accounts) Rules 2014 as amended from time to time your Company hasuploaded draft Annual Return for the Financial Year ended March 31 2019 on the website ofyour Company at


Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197 of the Companies Act 2013 and Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 have been annexed to this report asAnnexure - G.

Details of employee remuneration as required under provisions of Section 197 of theCompanies Act 2013 and Rule 5(2) and 5(3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 are available at the Registered Office of yourCompany during working hours 21 days before the 48th Annual General Meetingand shall be made available to any shareholder on request. Such details are also availableon your Company's Website


Foreign Exchange Earnings And Outgo

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 - H of this Report.


The state of your Company's affairs is given under the heading ‘PerformanceReview' and various other headings in this Report and in the Management Discussion andAnalysis which forms part of the Annual Report.

Significant Or Material Orders Passed Against The


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 FY2018-19 there were no significant or material orders passed by the Regulators or Courts orTribunals impacting the going concern status and your Company's operations in future.

Secretarial Standards Of Icsi

Your Company is in compliance with the Secretarial Standards on Meetings of the Boardof Directors (SS - 1) and General Meetings (SS - 2) issued by The Institute of CompanySecretaries of India and approved by the Central Government.


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 actions taken thereon are periodically reviewedby the Audit Committee to ensure effectiveness of the Internal Control System. TheInternal Control system is designed to ensure that the financial and other records arereliable for preparing Financial Statements and other data and for maintainingaccountability of persons.

Risk Management

Your Company has in place a Risk Management framework to identify evaluate and monitorbusiness risks and challenges across your Company. The Risk Management Policy pursuant toSection 134 of the Companies Act 2013 has been adopted based on this framework. The RiskManagement Policy provides for creation of a Risk Register identification of risks andformulating mitigation plans. The enterprise risks for your Company are identified by therespective Risk Managers and presented to the Board for review. Your Company has dulyconstituted Risk Management Committee. The Committee reviews your Company's performanceagainst identified risks formulates strategies towards identifying new and emergent risksthat may materially affect your Company's overall risk exposure and reviews the RiskManagement Policy and structure.

The Board of Directors reviews the risk assessment and minimization proceduresregularly. The Risk Register gets updated periodically to ensure that the risks remainrelevant at any point in time and corresponding mitigation measures are effective. Thisprovides a proactive and value adding review process which enables maintaining the riskprofile at an acceptable level in a rapidly changing environment.


Your Company has a Research & Development (R&D) facility at Nandesari Gujaratwith pilot plants at Roha Maharashtra and Nandesari Gujarat. The Department ofScientific and Industrial Research (DSIR) New Delhi on behalf of Government of Indiavide letter August 10 2017 has recognized your Company's in-house R&D facilities forfurther period of 3 years i.e. upto March 31 2020.

Your Company continues to invest in a comprehensive Research & Developmentprogramme leveraging its world-class infrastructure benchmarked processesstate-of-the-art technology and a business-focused R&D strategy.

Your Company's R&D center at Vadodara focuses on innovation of new compounds inorder to substitute imports of pharmaceutical and agrochemical intermediates innovationand development of specality chemicals and personal care intermediates and value addedproducts from by-products.

Your Company continues to focus its R&D efforts on process improvement of itsexisting products recovery of products from effluents. The R&D departments also helpsin troubleshooting in manufacturing departments.

Your Company is a knowledge led entity and has spruced up its R&D facility forinnovation and to collaborate with its customers to understand consumer preference anddevelop new product applications to cater to the needs of its customers. Your Companyfocuses its R&D efforts to develop cost effective cleaner technologies to improveprofitability. Through its R&D capabilities your Company has been successful indeveloping and enhancing its portfolio of cutting edge products. Your Company believesthat its ability to develop new product applications and ability to customize products tosuit customer needs have helped in expanding its customer base thereby enabling it toestablish leadership position.


Your Company believes in responsible chemistry for sustainable future through itscommitment to the principles of Responsible Care. The continual improvement of safetyhealth environment protection energy and resources efficiency and social responsibilityis inbuilt in the strategy of your Company. Your Company has laid down policiesprinciples and standards which are mandatory for all its manufacturing units foradherence. It aims to achieve excellence in environment protection health management andsafety across its businesses. Your Company's Environment Health and Safety (EHS) Policyalso specifies the EHS requirements to be observed by its suppliers contractors &others.

Your Company has adopted global principles of sustainable development Responsible Careand management system standards. It has undertaken several environmental initiatives inthe areas of reduction in greenhouse gases and energy efficiency programs.

Your Company has system to ensure compliance to the requirements of applicable laws andregulations. Manufacturing locations of your Company has facilities for the propertreatment of effluents. Your Company's emissions effluents and wastes are within thepermissible limits.

Employees' health and safety is accepted as a core business value at your Company. Thetop management of your Company continuously works towards establishing sustaining andimproving the safety culture.

All manufacturing plants and corporate office of your Company has Quality Environment& Occupational Health & Safety Management Systems as per revised standards for ISO9001 ISO 14001 & OHSAS 18001.

Your Company has Process Safety Management (PSM) system at all manufacturing locations.It has carried out Safety Integrity Level (SIL) based HAZOP studies and Layer ofProtection Analysis (LOPA) study for existing and new processes and products. The outcomesof these studies are being used to enhance Process Automation in all the Units which inturn improves process safety at the sites.

Your Company had zero lost time incidents during the year. Good engineering practicespreventive checking systems safety awareness and training has helped your Company inmaintaining its operations and workplace free from incidents.

Your Company regularly monitors the occupational health of employees working indesignated hazardous areas with respect to exposure to hazardous chemicals and processes.It also monitors employees for any indications of lifestyle or work-style related diseasesand provides counseling. Well-equipped Occupational Health Centers are in place at allmanufacturing locations to monitor health of employees on regular basis.

Your Company has accepted and implemented the principles of Together for Sustainability(TfS) and has fetched the prestigious 75% score in Together for Sustainability (TfS) Auditby Intertek.

Your Company is founder member of Nicer Globe initiative. It takes utmost care duringtransportation and ensures compliance with all checks and measures for a safe and secureddelivery. All raw materials and products within supply chain framework of your Company aretransported in a secure manner for the safety of its customers carriers suppliersdistributors and contractors.

Your Company proactively fulfills the environmental requirements of customers bydelivering products that match international standards.

Human Resources

Your Company considers its employees as most valuable resource and ensures strategicalignment of Human Resource practices to business priorities and objectives. YourCompany's constant endeavour is to invest in people and processes to improve human capitalfor the organisation and service delivery to its customers. Attracting developing andretaining the right talent will continue to be a key strategic initiative and theorganisation continues to be focussed on building up the capabilities of its people. Givengrowth plans of your Company an important strategic focus of your Company is to continuenot only to nurture its human capital but also proactively focus on preparing allemployees for the challenges of the future. Your Company strives to provide a healthyconducive and competitive work environment to enable the employees excel and create newbenchmarks of productivity efficiency and customer delight. Your Company always believesin maintaining mutually beneficial industrial relations with the Union which are ofparamount importance for success of any organisation and hence the industrial relationshave always been smooth cordial and trusting.


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 the sexual harassment of women at workplace(prevention


Your Company has in place an Anti-Discrimination and Harassment Policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. An 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 complaint was receivedfrom any employee during FY 2018-19 and hence no complaint is outstanding as on March 312019 for redressal.


Your Directors place on record their deep appreciation to employees at all levels fortheir hard work dedication and commitment. The Board also places on record itsappreciation for the continued cooperation and support received by your Company during theyear from investors bankers financial institutions customers business partners allregulatory and government authorities and other stakeholders.

For and on behalf of the Board

Deepak C. Mehta

Place: Vadodara Chairman & Managing Director Date : May 3 2019 (DIN: 00028377)