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Deepak Nitrite Ltd.

BSE: 506401 Sector: Industrials
BSE 15:59 | 02 Dec 2219.55 67.95






NSE 15:59 | 02 Dec 2219.60 68.15






OPEN 2151.60
VOLUME 97816
52-Week high 3020.00
52-Week low 785.85
P/E 70.33
Mkt Cap.(Rs cr) 30,275
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2151.60
CLOSE 2151.60
VOLUME 97816
52-Week high 3020.00
52-Week low 785.85
P/E 70.33
Mkt Cap.(Rs cr) 30,275
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Deepak Nitrite Ltd. (DEEPAKNTR) - Director Report

Company director report

Dear Shareholders

Your Directors have pleasure in presenting the Fiftieth Annual Report and maidenIntegrated Report of Deepak Nitrite Limited (‘your Company' or ‘the Company')along with the Audited Financial Statements for the Financial Year (‘FY') ended March31 2021. The consolidated performance of the Company and its subsidiaries has beenreferred to wherever required.


Your Company's financial performance for the year ended March 31 2021 is summarizedbelow:

( in Crores)
Particulars Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Total Revenue (Gross) 1822.68 2237.24 4381.27 4264.91
Operating Profit Before Depreciation Finance Cost Exceptional Item and Tax (EBITDA) 549.61 804.28 1268.55 1061.00
Less: Depreciation and Amortization expenses 66.88 77.93 152.63 139.73
Less: Finance Costs 4.12 20.32 74.20 114.87
Profit Before Tax 478.61 706.03 1041.72 806.40
Less: Tax Expenses 123.89 161.99 265.91 195.37
Net Profit for the year 354.72 544.04 775.81 611.03
Other Comprehensive Income (1.30) (3.66) (1.07) (3.80)
Total Comprehensive income for the year 353.42 540.38 774.74 607.23
Surplus brought forward from previous year 934.73 511.26 1015.31 525.01
Balance available for Appropriation 1288.07 1051.62 1789.97 1184.97

The year started with COVID-19 pandemic as a global challenge creating disruptionacross the world. The physical and emotional wellbeing of employees continues to be a toppriority for the Company with several initiatives to support employees and their familiesduring the pandemic. In April 2020 the Company decided that it would prioritize bothlives and livelihoods and ensured that all its locations operated with the highestattention to man and material safety. The Company also has taken up the responsibility ofvaccinating all its employees and spouses and will continue to look for opportunities toprovide succour to the families that depend on it. Your Company in partnership withDeepak Foundation has strengthened Covid care centres at three locations and supported insetting up 130 beds dedicated for Covid purchased oxygen PSA plants to be deployed atnearby facilities and has taken other appropriate measures. The Company also expandedCOVID medical and life insurance coverage for all its employees.


During FY 2020-21 the Company delivered a solid performance in the backdrop of achallenging macro-economic environment despite losing one month of production during theyear due to nationwide lockdown. The Company's diverse product line and operationalexcellence continues to be stronghold against widespread uncertainties. Amidst theseverity of the second wave the Company continues to function at a high level ofefficiency and make progress on various growth initiatives while adhering to Governmentdirectives local guidelines and safety protocols across all its facilities. The Companyhas either maintained or increased market share across products. Your Company hasdemonstrated resilience in its business performance to close the year with y-o-y growth inits Strategic Business Units (‘SBUs').

Total Revenue including Other Income in FY 2020-21 was 1822.68 Crores compared to2237.24 Crores in FY 2019-20 and EBITDA in FY 2020-21 was at 549.61 Crores as against804.28 Crores reported in the previous year. Profit Before Tax (‘PBT') came in at478.61 Crores as compared to 706.03 Crores in FY 2019-20. Profit After Tax (‘PAT')stood at 354.72 Crores as compared to 544.04 Crores in FY 2019-20.

Due to the uncertainties in external environments the best option for the Company wasto become more nimble-footed. The Company paid very close attention to internal processesof people management supply chain and operations and worked to maximize productivitywherever possible. The Company gained value from these focused efforts in terms ofoptimizing product mix particularly in the Fine & Speciality Chemicals SBU. As alwaysthe wide range of your Company's products helped it to overcome some businesses whosedemand were affected by COVID / oil crisis such as fuel additives and paper chemicals. Therobust performance during the year was an outcome of the diverse product range built upover five decades guidance of the able and competent leadership commitment anddedication of all associates.

During FY 2020-21 Domestic Revenues were 954.25 Crores compared to 1292.94 Crores inFY 2019-20 and Export Revenues were 854.89 Crores as against 936.72 Crores in the previousyear.

India has become an important and a high potential market for the chemical industryand your Company is well placed to capitalize on this trend due to its varied productofferings and decades of manufacturing excellence. There has also been a noticeable risein demand from global consumers across key product categories. Interventions to de-risksupply chain from China have contributed to mitigate the supply chain challenges forIndian chemical majors. The China plus one strategy has meaningfully impacted demandwhich is likely to steadily accelerate in the quarters and years ahead. This is expectedto benefit the industry including the Company which is well equipped globally anddomestically with established infrastructure and proven track record alongside a highlevel of forward and backward integration in an improving demand scenario.

Deepak Phenolics Limited

Your Company's wholly owned material subsidiary Deepak Phenolics Limited (‘DPL')entered FY 2020-21 amidst a nation-wide lock down imposed by the authorities as aprecautionary step to contain the spread of COVID-19. Domestic demand dropped tounprecedented low levels. Global markets also witnessed significant correction in terms ofdemand. Further global markets suffered by Trade conflicts political uncertaintiesheightened volatility in commodity prices with some never before seen developments withrespect to sharp fall in crude oil price at beginning of year and sharp rise in metalprices at the end of financial year.

DPL had its IPA plant ready for start but faced inevitable consequence of lack oflicensor support for start-up and stabilisation due to the then COVID related restrictionson travelling of licensors. Despite the restrictions faced DPL commissioned the IPA planton its own during April-2020 in the midst of the lockdown and nothing could have beentimelier in addressing the pressing need of sanitiser alcohol in India.

Further as India and the global markets opened up towards middle of the first quarterboth Phenol and Acetone started to regain their rightful positions in the global markets.With the judicious mix of domestic sales and exports DPL achieved around 115% capacityutilization in FY 2020-21 despite remaining offline for the entire month of April-2020.Higher production reflected ability to work on operating leverage to report above 100% ofcapacity utilisation in the second complete year of operations from a plant of thismagnitude indicates the level of preparedness of the organisation supported by reliablemanagement of complex material logistics.

Despite the nationwide lockdown and slowdown in the economic activity in India thedomestic market for Phenol exhibited a modest growth of 5-6% compared to the previous yearindicating the intrinsic resilience of the market DPL operates in. Acetone market in Indiahowever declined around 6% compared to the previous year largely due to slowdown inderivatives and other surface coating segments comprising paints inks and other coatings.

DPL has created new benchmark in revenues and profitability marking this as a milestoneyear for Deepak Group. DPL managed to achieve its targets in the backdrop of volatility inprices of raw materials and finished goods thereby demonstrating resilience. DPL reportedelevated growth in revenues and profitability combined with opening up of new avenues ofgrowth prospects. DPL reported Revenues of 2563 Crores in FY 2020-21 as against 2010Crores in FY 2019-20 with Profit After Tax of 421 Crores in FY 2020-21 as against 67Crores in FY 2019-20 registering growth of 28% and 528% respectively.

DPL continued to remain the largest producer of Phenol and Acetone in India with amarket share of much above 50%. During the year under review DPL was successfully placingits products in the highly competitive global market across multiple continents (Far EastAsia South America Europe). Your Company is glad to report that DPL's products were wellreceived in the international market.

Phenol is a versatile industrial organic chemical and is used for manufacture ofvarious chemical intermediates. This is consumed in a broad spectrum of end-user segmentsincluding ply laminates foundry paints rubber surfactants pharmaceuticals andagro-chemicals. Acetone and IPA are mainly used in pharmaceutical manufacturing aside fromits significant applications in paints adhesives and thinners amongst many others.Acetone is a co-product of the production process for Phenol and IPA is on-purposeproduced from Acetone.


During FY 2020-21 the Company surpassed a remarkable milestone of 1000 Crores in PBTas it clocked 1041.72 Crores. Total Revenue including Other Income during FY 2020-21 was4381.27 Crores growing 3% as compared to 4264.91 Crores last year. The accretiveperformance of the Phenolics business and that of the Fine & Speciality Chemicalssegment has driven the performance. The current year's performance is even more resilientgiven the fact that there was one month of production loss due to nationwide lockdown.This was achieved due to the exemplary dedication of the teams in the backdrop of thepandemic related curbs and localised lockdowns imposed by relevant authorities.

EBITDA came in at 1268.55 Crores in FY 2020-21 higher by 20% as compared to 1061.00Crores in FY 2019-20. Raw material costs stood at 2264.26 Crores as against 2373.50Crores in FY 2019-20 lower by 5%. The Company's integrated manufacturing model whichencompasses basic building blocks to complex speciality chemical intermediates hasenabled it to capitalize on the opportunities from the global disruption in a remunerativemanner.

Profit Before Tax (PBT) stood at 1041.72 Crores as compared to 806.40 Crores in FY2019-20. The Profit After Tax (PAT) came in at 775.81 Crores as compared to 611.03 Croresin FY 2019-20 representing a strong growth of 27%. Better profitability was achieved byoperational improvements in the Phenolics market and incremental contribution from IPAproducts that was supported by efficient logistics management. The Company's performancehas been highly influenced by the breadth and depth of its products and processcompetency. This resilience has been instrumental in delivering consistent returnsregardless of the myriad challenges faced during the period.

Domestic Revenues stood at 3088.06 Crores from 3157.88 Crores in FY 2019-20 lower by2% while Revenue from Exports improved by 19% to 1271.69 Crores as compared to 1071.83Crores last year. Consistent performance during the fiscal year reflects the Company'sdeeply rooted resilience and attributed to exemplary teamwork enhanced operations andbetter marketing and logistics capabilities. Overall your Company remains optimisticabout the numerous opportunities that have emerged because of increased focus on India'spotential.


Based on your Company's healthy performance the Board of Directors are pleased torecommend a final dividend of 4.50 (Rupees Four and Paise Fifty only) being 225% perequity share of face value of 2.00 (Rupees Two only) each for the year ended March 312021. Also to commemorate the Golden Jubilee year of the Company the Directors haverecommended a special dividend of 1.00 (Rupee One only) being 50% per equity share offace value of 2.00 (Rupees Two only) each to be paid to the Members of the Company.Accordingly the total dividend (final and special) as recommended for the year endedMarch 31 2021 is 5.50 (Rupees Five and Paise Fifty only) being 275% per equity share asagainst the interim dividend of 4.50 (Rupees Four and Paise Fifty only) being 225% perequity share paid during the financial year ended March 31 2020. The total dividend asabove on 136393041 Equity Shares of 2.00 (Rupees Two only) each if approved by theMembers would involve a total cash outflow of 75.02 Crores resulting in a dividendPayout of 21.15% of the standalone profits of the Company.


The issued subscribed and paid-up Equity Share Capital of the Company as on March 312021 was 27.28 Crores comprising of 136393041 Equity Shares of 2.00 each. The Companyhas not issued any Equity Shares during FY 2020-21. There was no change in Share Capitalduring the year under review.


The Company proposed to transfer an amount of 5 Crores to the General Reserves out ofthe amount available for appropriation (Previous Year 10 Crores). The closing balance ofthe retained earnings of the Company for FY 2020-21 was 1288.07 Crores.


The Company endeavours to maintain an optimal capital structure from time to time;however during the year the Company has generated cash profit out of its operationsthereby maintaining debt at a lower level. During the year under review the total debt ofthe Company declined given the scheduled repayments & prepayments made and betterworking capital management.

Reduction in total debt resulted in lower interest costs for the Company. Depreciationincreased due to change in estimated useful life of certain Property Plant and Equipment.The Company has a dedicated team monitoring the exposure of foreign exchange anddynamically minimizing the risk arising therefrom. Due to judicious management theCompany has been able to manage its cash flow position in an efficient manner. On aStandalone basis Total Debt:

Equity as on March 31 2021 reduced to Nil compared to 0.14 times as on March 31 2020.

The Company is well placed in the industry delivering quality guided by a robustproduct mix. Thus on the back of steady performance over the years both ICRA and CRISILhas upgraded long term credit rating from AA- to AA while the short term rating of theCompany remains at the highest level at A1+. This is primarily owing to the Company'ssustainable business performance commercial viability across most segments of itsproducts diversified product portfolio constant innovation and efficient operations.

In case of the Company's wholly owned subsidiary Deepak Phenolics Limited(‘DPL') ICRA has upgraded the long term credit rating by two notches i.e. from"ICRA A/Stable" to "ICRA AA-/Stable" and also upgraded short termcredit rating from "ICRA A1" to "ICRA A1+" which is the highest ratingin short term category.

During the year DPL has pre-paid substantial part of its borrowing apart fromhonouring committed repayments. Pursuant to this consolidated Net Debt / Equity ratio is0.15x as of March 31 2021 compared to 0.67x as of March 31 2020.


Shri Umesh Asaikar [DIN: 06595059] completed his term of appointment as ExecutiveDirector & CEO of the Company on May 31 2020. Accordingly Shri Umesh Asaikar retiredas Executive Director & CEO of the Company from close of business hours on May 312020.

Shri Maulik D. Mehta [DIN: 05227290] retires by rotation at the ensuing Annual GeneralMeeting of the Company and being eligible offers himself for re-appointment.

The Board of Directors at their meeting held on May 5 2021 upon the recommendation ofNomination and Remuneration Committee approved the re-appointment of Shri Maulik D. Mehtaas an Executive Director & Chief Executive Officer of your Company for further periodof five (5) years with effect from May 9 2021 subject to approval by Members. Aresolution seeking Members' approval for his re-appointment along with other requireddetails forms part of the Notice.

Dr. Richard H. Rupp [DIN: 02205790] who was appointed as an Independent Director atthe 48th Annual General Meeting of the Company held on June 28 2019 for asecond term of three (3) consecutive years i.e. upto August 7 2022 will attain the ageof seventy five (75) years during the second term of his appointment. An approval ofMembers of the Company by way of Special Resolution is required in terms of Regulation17(1A) of SEBI Listing Regulations for Dr. Richard H. Rupp to continue as an IndependentDirector of the Company beyond the age of seventy five (75) years.

A Special Resolution seeking Members' approval for the same along with other requireddetails forms part of the Notice.

During FY 2020-21 Shri Sandesh Kumar Anand [DIN: 00001792] ceased to be an IndependentDirector of the Company with effect from November 1 2020. However he continues to be aNon-Executive Non-Independent Director of the Company liable to retire by rotation.

Pursuant to the provisions of Section 149 of the Companies Act 2013 ('the Act')Independent Directors of the Company have submitted declarations that each of them meetthe criteria of independence as provided in Section 149(6) of the Act along with Rulesframed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations.

There has been no change in the circumstances affecting their status as IndependentDirectors of the Company.

During the year under review the Non-Executive Directors of the Company had nopecuniary relationship or transactions with your Company other than sitting feescommission and reimbursement of expenses if any.

Pursuant to the provisions of Section 203 of the Act Shri Deepak C. Mehta Chairman& Managing Director Shri Maulik D. Mehta Executive Director & CEO Shri SanjayUpadhyay Director - Finance & CFO and Shri Arvind Bajpai Company Secretary &Compliance Officer are the Key Managerial Personnel of the Company as on March 31 2021.Except retirement of Shri Umesh Asaikar from the position of Executive Director & CEOas mentioned above there has been no change in the Key Managerial Personnel of theCompany during the year ended March 31 2021.

Shri Deepak C. Mehta is also the Chairman & Managing Director of the Company'swholly owned subsidiary Deepak Phenolics Limited (‘DPL'). As per the terms of hisappointment he is entitled to receive remuneration from DPL by way of commission on netprofits of DPL calculated in accordance with the provisions of Section 198 of the Act. Theaggregate remuneration of Shri Deepak C. Mehta from the Company and its wholly ownedsubsidiary shall always be in accordance with Section V of Part II of Schedule V to theAct.


During FY 2020-21 four (4) meetings of Board of Directors of the Company were held.For details of meetings of the Board of Directors with regard to the dates and attendanceof each of the Directors thereat please refer to the Corporate Governance Report whichis a part of this Report.


The Board of Directors has carried out an annual evaluation of its own performance thatof Board Committees and of individual Directors pursuant to the provisions of the Actand SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 ('SEBIListing Regulations').

The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.

The performance of the respective Committees were evaluated by the Board after seekinginputs from the Committee members on the basis of criteria such as the composition ofCommittees effectiveness of Committee meetings etc.

The above criteria are as per the Performance Evaluation Policy of the Company approvedby the Board of Directors upon the recommendation of Nomination and RemunerationCommittee.

As required under Regulation 25 of the Listing Regulations a separate meeting of theIndependent Directors of the Company was also held on March 16 2021 to evaluate theperformance of the Chairman Non-Independent Directors and the Board as a whole and alsoto assess the quality quantity and timeliness of flow of information between themanagement of the Company and the Board.

The Board and the Nomination and Remuneration Committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualDirector to the Board and Committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and inputs in meetings etc.

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 the Company's long term strategic issues.

• Addressing the most relevant issues for the Company.

• Discussing and endorsing the Company's strategy

• Professional Conduct Ethics and Integrity.

• Understanding of Duties Roles and Function as Independent Director.

• Your Directors have expressed their satisfaction to the evaluation process.


A duly constituted Audit Committee consists of majority of Independent Directors withShri Dileep Choksi Independent Director as the Chairman of the Committee. The othermembers of the Audit Committee are Shri Sudhir Mankad and Shri Sanjay Asher IndependentDirectors and Shri Sandesh Kumar Anand Non-Executive Non-Independent Director. The termsof reference of the Audit Committee details of meetings held during the year andattendance of members of the Audit Committee are set out in the Report on CorporateGovernance which forms part of this Report.

During the year under review all the recommendations of the Audit Committee wereaccepted by the Board.


At the 46th Annual General Meeting of the Company held on June 26 2017 theMembers approved appointment of Deloitte Haskins & Sells LLP Chartered Accountants(Firm Registration No.: 117366W/W-100018) as Statutory Auditors of the Company to holdoffice for a period of five (5) years from the conclusion of that Annual General Meetingtill the conclusion of the 51st Annual General Meeting.


The observations made in the Auditors' Report of Deloitte Haskins & Sells LLPChartered Accountants for the year ended March 31 2021 read together with relevant notesthereon are self-explanatory and hence do not call for any comments. There is noqualification reservation adverse remark or disclaimer by the Statutory Auditors intheir Report.


Pursuant to the provisions of Section 204 of the Act read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Secretarial Auditfor the year ended March 31 2021 was carried out by the Secretarial Auditors KANJ &Co. LLP Company Secretaries Pune. The Board of Directors of your Company has appointedKANJ & Co. LLP Company Secretaries Pune to carry out Secretarial Audit of yourCompany for FY 2021-22.


The Secretarial Audit Report of KANJ & Co. LLP Company Secretaries Pune for theyear ended March 31 2021 in Form No. MR-3 is annexed as Annexure - A which forms part ofthis Report.

The observations made in the Secretarial Audit Report of KANJ & Co. LLP CompanySecretaries Pune for the year ended March 31 2021 are self- explanatory and hence do notcall for any comments. There is no qualification reservation adverse remark ordisclaimer by the Secretarial Auditors in their Report.


The Company is required to maintain cost records under Companies (Cost Records andAudit) Rules 2014. Accordingly cost records have been maintained by your Company.

The Board of Directors on the recommendation of the Audit Committee appointed B. M.Sharma & Co. Cost Accountants to conduct audit of the Company's cost records for FY2021-22 at a remuneration of 800000/- (Rupees Eight Lakhs only) plus applicable taxesand out of pocket expenses. As required under the provisions of the Act the remunerationof Cost Auditors as approved by the Board of Directors is subject to ratification by theMembers at the ensuing Annual General Meeting. A Resolution for the ratification ofremuneration of Cost Auditors for FY 2021-22 is provided in the Notice. Your Directorsrecommend the same for approval by the Members.

The Cost Audit Report will be filed within the prescribed period of 180 days from theclose of the Financial Year.


On the recommendation of the Audit Committee the Board of Directors of the Company hasappointed Sharp & Tannan Associates Chartered Accountants as Internal Auditors ofyour Company to conduct the Internal Audit for FY 2021-22 and 2022-23.


During the year under review the Statutory Auditors Cost Auditors and SecretarialAuditor have not reported any instances of frauds committed in the Company by its Of cersor Employees to the Audit Committee under Section 143(12) of the Act details of whichneeds to be mentioned in this Report.


The Company has in place a Risk Management framework to identify evaluate and monitorbusiness risks and challenges across the Company. The Risk Management Policy pursuant toSection 134 of the Act has been adopted based on this framework. The Risk ManagementPolicy provides for creation of a Risk Register identification of risks and formulatingmitigation plans.

The Board of Directors of your Company has formed a Risk Management Committee to frameimplement and monitor the Risk Management plan for the Company. The Committee isresponsible for monitoring and reviewing the Risk Management plan and ensuring itseffectiveness. The details about the Risk Management Committee have been provided in theCorporate Governance section of the Annual Report.

The enterprise risks for the Company are identified by the respective Risk Managers andpresented to the Risk Management Committee for review. The Committee evaluates theperformance of the Company against perceived risks develops approaches to classifypotential and evolving challenges that may adversely impact the overall risk exposure ofthe Company. The major risks identified by the businesses and functions are systematicallyaddressed through mitigating actions on a continuing basis.

The Risk Register gets updated periodically to ensure that the risks remain relevantat any point in time and corresponding mitigation measures are effective. This provides aproactive and value adding review process which enables maintaining the risk profile at anacceptable level in a rapidly changing environment.

The Audit Committee has additional oversight in the area of financial risks andcontrols.


Your Company remains committed to ensuring an effective Internal Control environmentthat inter alia provides assurance on orderly and efficient conduct of operationssecurity of assets prevention and detection of frauds / errors accuracy and completenessof accounting records and the timely preparation of reliable financial information.

The Company has an independent Internal Audit function with well-established RiskManagement processes both at the business and corporate levels and provide assurance onthe adequacy and effectiveness of Internal Controls compliance with operating systemsinternal policies and regulatory requirements.

The Audit Committee regularly reviews the major findings of the Internal Audits andcorrective measures taken thereon to ensure the efficacy of the Internal Control process.These reviews are done with respect to different locations and functions to help takeeffective steps for ensuring compliance.

The system of Internal Control is structured to verify that financial and otherdocuments are accurate in compiling financial reports and other data and in maintainingtransparency for individuals.

Statutory Auditors' Report on Internal Financial Controls as required under Clause (i)of Sub-section 3 of Section 143 of the Act is annexed with the Independent Auditors'Report.


Pursuant to provisions of Section 177 (9) of the Act read with Regulation 22(1) of theSEBI Listing Regulations your Company has adopted a Whistle Blower Policy to provide aformal vigil mechanism to the Directors and employees to report their concerns aboutunethical behavior including actual or suspected leak of unpublished price sensitiveinformation actual or suspected fraud or violation of the Company's Code of Conduct orethics policy. The Policy provides for adequate safeguards against victimization ofemployees who avail of the mechanism and also provides for direct access to the Chairmanof the Audit Committee in certain cases. It is affirmed that no personnel of the Companyhas been denied access to the Audit Committee.

The Whistle Blower Policy is available on the Company's website at Policy.pdf.


During FY 2020-21 the Company has not accepted or renewed any Fixed Deposits. As onMarch 31 2021 35 warrants aggregating to 723507 issued by the Company to therespective deposit holders towards compulsory repayment of deposits and interest thereonin accordance with the provisions of Section 74 of the Act remained uncleared. There hasbeen no default in repayment of deposits or interest thereon during the year and there areno deposits outstanding as on March 31 2021.


There are no material related party transactions entered into by the Company withPromoters Directors Key Managerial Personnel or other designated persons which may havea potential conflict with the interest of the Company at large. Accordingly thedisclosure of related party transactions as required under Section 134(3)(h) of the Actin Form No. AOC-2 is not applicable to the Company.

All transactions with related parties were reviewed and approved by the AuditCommittee. Prior omnibus approval of the Audit Committee is obtained for related partytransactions which are of repetitive nature and entered in the ordinary course of businessand on arm's length basis. A statement giving details of all related party transactions isplaced before the Audit Committee and the Board of Directors on a quarterly basis.

The policy on Related Party Transactions as approved by the Board of Directors isuploaded on the website of the Company www. None of the Directors has anymaterial pecuniary relationships or transactions vis-a-vis the Company.


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

Pursuant to requirement of Section 136 of the Act which has exempted companies fromattaching the financial statements of the subsidiary companies along with the AnnualReport of the company your Company will make available the Annual Financial Statements ofthe subsidiary companies and the related detailed information to any Member of the Companyon receipt of a written request from them at the Registered Office of the Company. TheAnnual Financial Statements of the subsidiary companies will also be kept open forinspection at the Registered Office of the Company on any working day during businesshours. These are also available on the website of your Company

The Consolidated Financial Statements of the 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 the Company.

The Consolidated Financial Statements include the operations of following subsidiaries:

• Deepak Phenolics Limited

• Deepak Nitrite Corporation Inc.

• Deepak Clean Tech Limited

During FY 2020-21 Deepak Clean Tech Limited was incorporated on October 9 2020 as awholly owned subsidiary of the Company. There is no other company which has become orceased to be subsidiary or associate of the Company during the year ended March 31 2021.

Your Company has adopted a Policy for determining Material Subsidiaries in terms ofRegulation 16(1)(c) of the SEBI Listing Regulations. The Policy as approved by the Boardis uploaded on the Company's website


(a) Deepak Phenolics Limited

The Company's wholly owned subsidiary Deepak Phenolics Limited (‘DPL') is in thebusiness manufacturing of Phenol Acetone and their downstream products.

During FY 2020-21 the Revenue from Operations of DPL was 2563 Crores and Profit AfterTax for the period was 421 Crores.

(b) Deepak Nitrite Corporation Inc. (USA)

Deepak Nitrite Corporation Inc. ("DNC") is a wholly owned subsidiaryincorporated in the United States of America to cater to the marketing requirements of theCompany in North and South American region. During FY 2020-21 the total revenue of DNC wasUSD 21667 and the Net Income for the period was USD 625.

(c) Deepak Clean Tech Limited

Deepak Clean Tech Limited is a newly incorporated wholly owned subsidiary of theCompany and it is yet to commence commercial operations.

In accordance with the provisions of the Act Regulation 33 of the SEBI ListingRegulations and applicable Accounting Standards the Audited Consolidated FinancialStatements of the Company for FY 2020-21 together with the Auditor's Report forms partof this Annual Report. A statement containing the salient features of the Company'ssubsidiaries associate and joint venture company in the prescribed Form No. AOC-1 isattached to the Financial Statements.


Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in the notes to the Financial Statements.


There have been no material changes and commitments affecting the financial position ofthe Company since the close of Financial Year i.e. since March 31 2021 and the date ofthis Report. Further it is hereby confirmed that there has been no change in the natureof business of the Company.


Based on the framework of Internal Financial Controls established and maintained by theCompany work performed by the Internal Statutory Secretarial and Cost Auditors andexternal agencies including audit of Internal Financial Controls over Financial Reportingby the Statutory Auditors and reviews performed by the management and relevant BoardCommittees including the Audit Committee the Board is of the opinion that your Company'sInternal Financial Controls were adequate and effective during FY 2020-21. Accordinglypursuant to Section 134(5) of Act the Board of Directors to the best of their knowledgeand ability confirm that:

(a) in the preparation of the Annual Accounts for the Financial Year ended March 312021 the applicable accounting standards have been followed and there are no materialdepartures;

(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the Financial Year ended March 312021 and of the profit of the Company for the year ended on that date;

(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the Annual Accounts on a going concern basis;

(e) they have laid down Internal Financial Controls to be followed by the Company andthat such Internal Financial Controls are adequate and are operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


Your Company is committed to maintain the highest standards of Corporate Governance andadhere to the Corporate Governance requirement set out by Securities and Exchange Board ofIndia (SEBI). The Report on Corporate Governance under Regulation 34 of the SEBI ListingRegulations read with Schedule V of the said Regulations forms an integral part of theAnnual Report. The requisite Certificate from a Practising Company Secretary KANJ &Co. LLP Company Secretaries Pune confirming compliance with the conditions of theCorporate Governance is attached to the Report on Corporate Governance.


The Securities and Exchange Board of India under Regulation 34(2) (f) of SEBI ListingRegulations read with National Guidelines on Responsible Business Conduct issued byMinistry of Corporate Affairs Government of India on March 13 2019 requires top onethousand listed companies to prepare and present a Business Responsibility Report(‘BRR') to its stakeholders in the prescribed format describing the initiatives takenby the company on Environmental Social and Governance perspective. As on March 31 2021your Company is at 164th position on the basis of capitalization at NSE and at 167thposition at BSE.

The Business Responsibility Report covering initiatives on Environmental Social andGovernance aspects forming part of this Report is annexed as Annexure - B.


Your Company believes that sustainable development calls for concerted efforts towardsbuilding an inclusive sustainable and resilient future for people and planet throughharmonising economic growth social inclusion and environment protection. In furtheranceto this commitment the Company had taken paradigm shift from compliance based reportingto governance based reporting and accordingly in the interest of its stakeholders theCompany on voluntary basis adopted for the first time the Integrated Reporting (IR)framework of the International Integrated Reporting Council to report on all the sixcapitals that the Company uses to create long term stakeholder value. The IntegratedReport is a part of this Annual Report which provides a clear concise and comprehensivevision of business model.


In terms of Regulation 34 (2) (e) of SEBI Listing Regulations read with otherapplicable provisions the detailed review of the operations performance and futureoutlook of the Company and its business is given in the Management Discussion and AnalysisReport which forms part of this Annual Report and is incorporated herein by reference andforms an integral part of this Report.


Your Company has been one of the foremost proponents of inclusive growth and sinceinception has been continuing to undertake projects for overall development and welfareof the society. The Company's commitment to the development of weaker and underprivilegedsections of society is continuing for four decades now. Through the group's charitabletrust "Deepak Foundation" the Company has upgraded its Corporate SocialResponsibility (‘CSR') activities to cover a larger section of the societyencompassing social interventions in various developmental domains such as HealthEducation Livelihood etc. in order to support the downtrodden needy and marginalizedcitizens and also to create social infrastructure for their sustenance.

During the year under review the Company has spent 7.44 Crores on CSR activitiesagainst the requirement of 7.44 Crores being 2% of average of the Net Profits for thepreceding three years.

The Company has in place a CSR Policy which provides guidelines to conduct its CSRactivities. The CSR Policy has been posted on the website of the Company at

The Report on CSR activities in terms of the requirements of Companies (CorporateSocial Responsibility Policy) Rules 2014 is annexed herewith as Annexure - C which formspart of this Report.


Your Company has adopted a Nomination and Remuneration Policy for the Directors KeyManagerial Personnel and other employees pursuant to the requirement of Section 178 of theAct and the Listing Regulations. The Nomination and Remuneration Policy of your Company isannexed as Annexure - D and is also available on the Company's website on


Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are annexed to this Report as Annexure-E.

Disclosures relating to remuneration and other details as required under Section197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 forms part of this Report. Having regardto the provisions of the second proviso to Section 136(1) of the Act the Annual Report isbeing sent to the Members of the Company excluding the aforesaid information. Any Memberinterested in obtaining such information may write to the Company Secretary.


Pursuant to Section 134(3)(a) and 92(3) of the Act the Annual Return has been placedon the website of the Company


The information pertaining to Conservation of Energy & Technology Absorption andForeign Exchange Earnings and Outgo as required under Section 134(3)(m) of the Act readwith Rule 8(3) of the Companies (Accounts) Rules 2014 is attached as Annexure - F to thisReport.


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.


Pursuant to the requirement of Section 134(3)(q) of the Act read with Rule 8 (5)(vii)of the Companies (Accounts) Rules 2014 it is confirmed that during FY 2020-21 there wereno significant and material orders passed by the Regulators or Courts or Tribunalsimpacting the going concern status and the Company's operations in future.


During the year under review the Company is in compliance with the SecretarialStandards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2)issued by the Institute of Company Secretaries of India as approved by the CentralGovernment.


Your Directors state that no disclosure or reporting is required in respect of thefollowing matters as there is no transaction on these items during the year under review:

(i) Issue of equity shares with differential rights as to dividend voting orotherwise.

(ii) Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and except Employees' Stock Options Schemes referred to in this Report.

(iii) The Company does not have any scheme of provision of money for the purchase ofits own shares by employees or by trustees for the benefit of employees.

(iv) There is no Corporate Insolvency Resolution Process initiated under the Insolvencyand Bankruptcy Code 2016.


Your Company has a Research and Development (‘R&D') facility at NandesariGujarat with pilot plants at Roha Maharashtra and Nandesari Gujarat. The Department ofScientific and Industrial Research (‘DSIR') New Delhi on behalf of the Governmentof India vide letter October 14 2020 has recognized the Company's in-house R&Dfacilities for a further period of extension up to March 30 2023.

The R&D center at Nandesari focuses on the innovation of new compounds tosubstitute imports of pharmaceutical and agrochemical intermediates innovation anddevelopment of speciality chemicals and personal care intermediates and value-addedproducts from by-products.

The Company's R&D efforts are focused on process development of new and existingmolecules. It is your Company's constant endeavor to develop cost effective sustainablecutting edge technologies for manufacturing of chemicals. Considerable attention is alsopaid to develop processes which will have minimal environment impact. The Company is inthe process of developing different technology platforms for efficient manufacturing ofchemicals which will make the Company a reliable partner of choice for sustainablesupply. Substantial efforts are made to develop new product applications which meetscustomer demands.


Your Company is committed to ensure a sound Safety Health and Environment (‘SHE')performance related to its activities products and services. It is continuously takingvarious steps to develop and adopt Safer Process technologies and unit operations.

The Company is investing in areas such as Process Automation for increased safety andreduction of human error element Enhanced level of training on Process and Behaviourbased safety adoption of safe & environmental friendly production process upgradingeffluent treatment facilities Reverse Osmosis plants Multiple Effect Evaporator etc toreduce the discharge of effluents commissioning of Waste Heat recovery systems and so onto ensure the Reduction Recovery and Reuse of effluents & other utilities. SHEManagement System is monitored and reviewed periodically. Structured & regular safetymeetings are carried out to Review Existing Process Safety Parameters.

Systematic and well documented scale up procedure is in place for the development ofproduct from R&D to Pilot to Commercial Scale.

It includes risk assessment and process safety study at each stage to ensure inherentlysafe processes.

The Company has policy and system in place to deploy internationally recognizedguidelines such as the principles of the United Nations' Global Compact theInternational Labour Organization ("ILO") conventions and Responsible CareInitiative. It has system in place to ensure social compliances related to human rightslabour & social standards anti-discrimination conflict of interest andanti-corruption. This is being audited by third party as a part of Together forSustainability ("TfS") system.

Health and Safety remained a core area of importance for the Company with an aim toachieve accident-free workplace. Your Company believes that all injuries occupationalillnesses as well as safety and environmental incidents are preventable. This ensures thatall employees strive for excellence in their own personal safety and the safety of othersincluding employees contractors customers and the communities within which the Companyoperates.

The Company follows a strict incident reporting system. All incidents includingnear-miss and unusual occurrence are also logged into the Safety MIS. Each incident isanalysed for their root-causes and required precautions are taken to prevent therecurrences. Each management of change and projects undertaken by the Company are made toundergo HAZOP studies before commencement. All plant-setting changes are first approvedthrough Management of Change procedure before implementation. Workplace safety and ProcessSafety Management through employee engagement initiatives are continuously beingstrengthened. Your Company has a system of Internal and external Safety Audits and actionsbased on audit findings. All Manufacturing Units including Corporate Office are certifiedwith the latest standard of ISO 9001 ISO 14001 and ISO 45001. The safety team regularlyconducts safety awareness programs across plants to achieve continuous improvement interms of process safety workplace safety and behavioural transformation.

Logistic safety Management system

The Company has along with its peers founded Nicer Globe an independent platformwhich provides real-time monitoring of the movement of hazardous materials across thelength and breadth of India. This helps in monitoring any deviations in speed or route ordriving time restrictions which results in minimizing transport related incidents. Almostall raw materials and products within supply chain framework of the Company aretransported in a secure manner with GPS for real-time monitoring for the safety of itscustomers carriers suppliers distributors and contractors.


The Company is committed to the chemical industry's Responsible Care initiative andhave set out the basic principles fully aligned with UN Sustainable Development Goals.Commitment to environmental protection extends beyond the scope of legal requirements. Ithas focused on recycle and reuse and reduction of pollution load and constantly working onto reduce environmental footprint and find innovative solutions that benefit theenvironment.


Your Company recognizes its employees as most valuable resource and ensures strategicalignment of Human Resource Initiatives and practices to business priorities andobjectives. Its constant endeavor is to invest in Human Talent and Talent ManagementProcesses to improve capabilities and potentials of human capital of the organization tocope with challenging business environment varying needs of the customers and bring aboutcustomers delight by focusing on the Customers' needs. This approach has allowed theCompany to withstand and overcome the challenges posed by COVID -19. Attractingdeveloping and retaining the right talent and keeping them motivated will continue to be akey strategic initiative and the organisation continues to be focused on building up thecapabilities of its people to cater to the business needs. Given growth plans of theCompany an important strategic focus is to continue to not only nurture its humancapital but also proactively focus on preparing all employees for the challenges of thefuture.

The Company strives to provide a healthy conducive and competitive work environment toenable the employees excel and create new benchmarks of quality productivity efficiencyand customer delight. The Company always believes in maintaining mutually beneficialhealthy and smooth industrial relations with the employees and the Unions which is anessential foundation for the success of any organisation. The proactive initiativescombined with fair Wage Settlements at Manufacturing Plants have ensured healthier andmore transparent Industrial Relations based on foundation of mutual trust andco-operation.


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


Your Company is committed to creating and maintaining a secure work environment whereits employees agents vendors and partners can work and pursue business together in anatmosphere free of harassment exploitation and intimidation. To empower women and protectwomen against sexual harassment and as per the requirement of the Sexual Harassment ofWomen at Workplace (Prevention Prohibition & Redressal) Act 2013 and Rules madethereunder a policy for prevention of sexual harassment is already in place and InternalComplaints Committee had been set up at all major locations of the Company. This policyallows employees to report sexual harassment at the workplace. The Internal Committee isempowered to look into all complaints of sexual harassment and facilitate free and fairenquiry process with clear timelines. To build awareness in this regard the Company hasbeen conducting various programme on a continuous basis.

During FY 2020-21 no complaint was received from any employee and hence no complaintis outstanding as on March 31 2021 for redressal.


Your Directors express their gratitude to customers vendors dealers investorsbusiness associates and bankers for their continued support during the year. We place onrecord our appreciation of the commitment and contribution made by the employees at alllevels. Our resilience to meet challenges was made possible by their hard worksolidarity cooperation and support.

We thank the Government of India the State Governments and statutory authorities andother government agencies for their support and look forward to their continued support inthe future.

For and on behalf of the Board
Deepak C. Mehta
Place: Vadodara Chairman & Managing Director
Date: May 5 2021 (DIN: 00028377)