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Linde India Ltd.

BSE: 523457 Sector: Industrials
NSE: LINDEINDIA ISIN Code: INE473A01011
BSE 11:33 | 08 Apr 484.95 17.10
(3.66%)
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493.15

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474.50

NSE 11:29 | 08 Apr 483.15 15.50
(3.31%)
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484.00

HIGH

493.00

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OPEN 474.55
PREVIOUS CLOSE 467.85
VOLUME 1551
52-Week high 801.00
52-Week low 378.00
P/E 33.47
Mkt Cap.(Rs cr) 4,136
Buy Price 484.95
Buy Qty 4.00
Sell Price 485.30
Sell Qty 1.00
OPEN 474.55
CLOSE 467.85
VOLUME 1551
52-Week high 801.00
52-Week low 378.00
P/E 33.47
Mkt Cap.(Rs cr) 4,136
Buy Price 484.95
Buy Qty 4.00
Sell Price 485.30
Sell Qty 1.00

Linde India Ltd. (LINDEINDIA) - Director Report

Company director report

The Directors have pleasure in submitting their Report together with the AuditedAccounts ofyour Company for the year ended 31 December 2018:

The Company's standalone financial performance for the year ended 31 December 2018 issummarized below:

In Rupees million Year ended 31 Dec. 2018 Year ended 31 Dec. 2017
Revenue from operations 21196.54 21149.87
Earnings before interest tax depreciation amortisation and impairment (EBITDA) 3490.09 3443.80
Less: Depreciation and amortisation expense (including impairment) 1991.38 2062.55
Earnings before interest and tax (EBIT) 1498.71 1381.25
Less: finance costs 1027.01 1164.69
Profit before tax (PBT) before exceptional item 471.70 216.56
Less: Exceptional items - 55.00
Profit before tax (PBT) after exceptional item 471.70 161.56
Tax expenses/(Release) 136.84 (27.82)
Net Profit after tax (A) 334.86 189.38
Total Other Comprehensive Income for the year (41.16) 11.36
Total Comprehensive Income for the year 293.70 200.74
Retained earnings opening balance brought forward (B) 5271.99 5167.28
Add: Net Profit for the year 334.86 189.38
Less: Other comprehensive income recognised in retained earnings (net of taxes) (C) 58.14 7.69
Profit available for appropriation (D)= (A) + (B) + (C) 5548.71 5348.97
Appropriations:
Dividend on Equity share including dividend distribution tax paid' (E) (102.81) (76.98)
Retained earnings closing balance carried forward (G)= (E)- (F) 5455.90 5271.99

'Pertains to dividend for the financial year 2017 paid during the year @10% (Previousyear @7.5% for the financial year 2016)

Global merger of Linde AG and Praxair Inc.

At the outset the Board of Directors of your Company is pleased to inform that thefocal point of the strategic development for your Company during the year 2018 was thesuccessful completion of the business combination between Linde AG the ultimate holdingcompany ofyour Company with Praxair Inc. on 31 October 2018. In this respect a legallybinding Business Combination Agreement had been signed between Linde AG and Praxair Inc.on 1 June 2017. With completion of the global merger on 31 October 2018 Linde pic acompany incorporated in Ireland has become the new holding company of both Linde AG andPraxair Inc. and as such Linde pic is now the new ultimate holding company of yourCompany.

During the year as part of the approval process from various anti-trust authoritiesacross the globe for the aforesaid business combination Linde AG and Praxair Inc.had in January 2018 applied to the Competition Commission of India (CCI) seekingapproval for the business combination in India pursuant to which the CCI issued itsclearance letter dated 7 September 2018 to Linde AG and Praxair Inc. approving theproposed business combination between Linde AG and Praxair Inc. subject to divestment ofcertain assets controlled by them in India. Accordingly your Company is required to makedivestiture ofJSW-2 1800 tpd ASU situated at Bellary the Company's 50% shareholding inBellary Oxygen Company Pvt. Ltd. Hyderabad Cylinder Tilling Station (excluding theNitrous Oxide facility) and the Chennai Cylinder Tilling Station as a part of thedivestment mandated by the CCI. Your Board after detailed deliberations in this regard andafter considering potential benefits of the business combination and the various legalimplications thereof subject to shareholders' approval pursuant to Section 180(1)

(a) of the Companies Act 2013 granted it's in principle approval for the divestmentof the aforesaid assets and also appointed an independent financial advisor for assistingLinde India in execution and carve out of the aforesaid divestment assets within thetimeline set out in the CCI order. Your Company is currently in negotiations withpotential buyers and expects that the fair value of the assets less the sale costs islikely to be higher than their aggregate carrying amount of Rs. 2403.66 million.

Financial Performance 2018

Your Company achieved a satisfactory growth in the overall revenues during the year2018 in both its business segments that is Gases and Related business and ProjectEngineering with the total revenue from operations recording a growth of 7.8% year onyear. During the year under review the revenue from operations in the Gases business atRs.18013.44 million recorded a growth of 4.8% as compared to Rs.17190.91 million (net ofexcise duty of Rs.819.30 million up to 30 June 2017) in the previous year. Excluding theimpact of re-contracting of the 1290 tpd air separation unit atjamshedpur which has beenexplained in the section on gases business the underlying growth in the gases business is9.1% resulting primarily from strong demand from steel and automobile sector growth inmerchant business and the pricing initiatives offset by impact of breakdown of a large airseparation unit at a customer site in Jamshedpur in the first half of 2018. The ProjectEngineering business revenues stood at Rs.3895.76 million as compared to Rs. 3128.52million during the previous year recording an increase of 24.5% year on year. The PEDrevenues grew primarily on the back of orders from steel and refinery sectors besidesturnkey projects overseas.

During the year under review your Company achieved a higher EBITDA of Rs.3490.09million as compared to Rs.3443.80 million in the previous year. As explained above thisincrease was primarily driven by growth of merchant business as well pricing initiativesimplemented in the gases business which was partially offset by the aforesaid breakdownof the air separation unit atjamshedpur and provisions aggregating to Rs.419.80 millionmade during the year in respect of indirect taxes post medical retirement benefitsincrease in the gratuity ceiling etc.

The Profit before taxes (after exceptional items) for the year under review amounted toRs. 471.70 million a significant increase over Rs. 161.56 million achieved in previousyear. The Company has benefited from a lower depreciation of Rs.1991.38 million duringthe year 2018 as compared to Rs.2062.55 million in the previous year due to nildepreciation charged on assets held for sale as per the order of Competition Commission ofIndia. During the year there has also been a reduction in the interest cost of Rs.137.68million arising mainly from repayment of the ECB borrowings.

Net profit for the year 2018 at Rs. 334.86 million compares favourably as against Rs.189.38 million in the previous year.

Dividend

The Board of Directors of your Company has recommended a higher dividend of 15% (Rs.1.50 per equity share of Rs. 10 each) on 85284223 equity shares of Rs. 10 each in theCompany for the year 2018 as compared to 10% (Re. 1 per equity share of Rs. 10 each)declared for the year 2017. This decision has been taken in view of the improvement in theunderlying business which looks sustainable and the cash flow position of the Company andis in line with the Dividend Distribution Policy of the Company. The dividend is subjectto the approval of the shareholders at the ensuing 83rd Annual General Meetingscheduled to be held on 16 May 2019. This dividend together with the dividend tax willresult in cash outlay of Rs. 154.22 million as compared to Rs. 102.81 million in theprevious year. The Board has not recommended any transfer to general reserves from theprofits during the year under review.

The Dividend Distribution Policy is annexed to this report and is also available on theCompany's website at www.linde.in. [Annexure 1]

Consolidated Financial Statements

Although the Company does not have any subsidiary as per the reguirement of Section129(3) of the Companies Act 2013 and the applicable Indian Accounting Standard 110 issuedby the Institute of Chartered Accountants of India your Company has prepared consolidatedfinancial statements for the year ended 31 December 2018 together with its joint venturecompany viz. Bellary Oxygen Company Private Limited. The said consolidated financialstatements of the Company form part of the annual report. However since the Company doesnot have a subsidiary the compliance under Section 136 about separate financialstatements do not apply to it.

Details of Joint Venture Company

The Company has one joint venture in the gases business viz. Bellary Oxygen CompanyPvt. Ltd. which operates an 855 tpd Air Separation Unit at Bellary Karnataka for supplyof gases under a long-term gas supply agreement to JSW Steel Ltd.'s works at Bellary.Pursuant to Section 129(3) of the Companies Act 2013 a statement containing the salientfeatures of the financial statements of the joint venture company in the prescribed FormAOC-1 is annexed to this report. [Annexure 2]

Industry Developments

The gases business is capital intensive by nature as it requires large investments insetting up of air separation units as well as new packaged gases sites. The supply chainin the gases business also requires significant investments in the form of distributionassets and storage networks to service bulkvolumes as well as in the form of cylinders toservice relatively smaller volumes in packaged gases business. The industry comprisesmajor users in steel chemicals and refinery sectors and a large number of merchant liguidcustomers primarily in metal glass automobile petrochemicals and pharmaceuticalsectors besides customers for medical gases.

New applications continue to provide growth opportunities. This growth also getssupported by the outsourcing of gases reguirement under a 'Build Own Operate' (BOO) typeof supply scheme opportunities mainly in steel and refinery sectors. The projectengineering business on the other hand is characterised by a different business model andthrives on designing and engineering supply installation commissioning and sale of airseparation units cryogenic plants vessels etc. to third parties on turnkey basis. Theproject engineering business therefore reflects the appetite for new projects in diversecore sectors of the economy.

Business Segments

Your Company's business has two broad segments viz. Gases and Related Products andProject Engineering in line with the operating model of the Linde Group.

Gases and Related Products

The Gases and Related Products segment comprises of pipeline gas supplies (Onsite) tovery large industrial customers mainly the primary steel glass and chemical industriessupply of liquefied gases through Cryogenic tankers (Bulk) to cater to mid-size demandsacross a wide range of industrial sectors and compressed gas supply in cylinders (PackagedGas) for meeting smaller demand for gases mainly across fabrication manufacturing andconstruction industry. The primary production of gases (oxygen nitrogen and argon) ismostly achieved through cryogenic distillation of air in Air Separation Units (ASU).Oxygen Nitrogen and Argon may also be produced in the gaseous state and supplied throughpipeline to the Onsite customers or produced in liquid form and stored in insulatedcryogenic tanks for supply to Bulk customers or further processed in the Packaged Gasplants to bottle compressed gas in cylinders. The strategy of the bulk and packaged gasbusiness continues to focus on building density and sustaining market leadership throughapplication led gas sales and enhanced service levels. The Healthcare business animportant part of the Gases business provides high quality gases for pharmaceutical usesuch as medical oxygen synthetic air and nitrous oxide in addition to providing state ofthe art medical gas distribution systems to major hospitals.

During the year the original long-term gas supply contract with Tata Steel in respectof the 1290 tonnes per day air separation unit at the customer's steel works atjamshedpurwas renewed for a further period of 10 years with effect from 1 July 2018. The renewal hasbeen implemented with revised commercial structure (Lease and O&M basis) whichresults in elimination of the power pass through component in the revenue. In view of thesame the underlying growth in the gases business works out to 9.1% which was mainlydriven by growth in the merchant business and pricing initiatives. The performance of theGases business during the 1st quarter of 2018 was however significantlyimpacted as a result of breakdown of certain critical eguipment at a large air separationunit at a customer site injamshedpur which occurred in the third weekofjanuary 2018. YourCompany took appropriate action on war footing to carry out repair of the eguipment aswell as replacement of the Booster Air Compressor of the ASU. During this period the ASUoperated at a turned down capacity which continued till the 1st weekofjune2019 when the plant resumed operations at full capacity. During the year under reviewbarring the breakdown of the aforesaid ASU most of the onsite plants performed well withspecific power as per or better than the plan and achieved reliability of nearly 99%.

During the financial year 2018 the Indian Steel Industry which is a major driver forthe demand for gases underwent consolidation with mid and large size companies in primarysteel segment being acguired by steel majors. As per the report of World SteelAssociation the total steel production in India during the year 2018 was 106.5 milliontonnes which recorded a growth of 5% with respect to the previous year. As per NationalSteel Policy of the Government of India the steel production in India is projected torise to 300 million tonnes by 2030.

The automotive and ancillary sectors witnessed a positive gas demand through most partof the year on the back of good growth in this segment both in passenger and commercialvehicles. However this sector showed subdued demand during Q4 of 2018 which continuedinto Q1 of 2019. The automotive sector is a major Argon consumer and is a significantdriver of high value Argon sales of the Company.

The bulk business which is a major part of the merchant and packaged gases businessregistered volume growth of nearly 7% and revenue growth of 19% versus previous yeardespite product shortage arising out of eguipment breakdown in the air separation unit atJamshedpur. The growth in the Bulk business was supported by sales to refineries and steelmills as well as sales through distributors. The Industrial Packaged Gas Business alsoregistered volume growth of 23% and revenue growth of 37%.

Linde India continues to focus on introducing new products and applications into themarket to secure growth and improve margins. During the year your Company was able tosecure a number of orders by leveraging Linde applications technology some of which arehighlighted below.

Your Company secured its first major win by leveraging its technology around low leveloxygen enrichment in Sulphur Recovery Unit in the refinery sector. The year also witnessedwins using CIRRUS and CUMULUS technologies which help customers in emission controland solvent recovery in bulk drugs manufacturing industry.

Your Company is also successfully leveraging the newly built state of the art food Laband Technology Centre in Vijayawada by securing its first Instant Quick freezing (IQL)freezer for shrimp freezing. As compared to mechanical freezing Linde's nitrogenapplication offered a low initial investment and lesser operating costs. The benefits tothe customer are not only in terms of cost savings but are also in terms of enhancement ofquality. The Linde's IQL technology with use of liquid nitrogen also allows the customersto tag their premises as ammonia free.

Besides this your Company also applied its nitrogen solution for tyre curingsuccessfully to secure a maiden order from tyre industry in India. Your Company continuesin its drive for implementing Argon based shielding gas solutions for welding in theautomotive industry which is one of the major drivers of argon sales.

Healthcare is a strongly growing part of the gases business and your Company continuesto maintain its leadership in healthcare gases market. The liquid medical oxygen businessrecorded a volume growth of 4% as compared to 2017. Your Company launched Linde's patentedLIV cylinders for medical oxygen in select cities which is getting very good responsein the markets. We expect good growth in the LIV product line in the coming years. YourCompany has also launched ENTONOX - an anaesthetic gas which is very useful duringnatural child birth and also short-term pain relief in a range of medical procedures. Withthe increasing adoption of natural delivery (in contrast to C-section delivery) yourCompany sees good opportunity for increasing use of ENTONOX therapy going forward.

The Distribution function which takes care of the supply chain in the Gases business iskey to its strategy. As mentioned earlier the supply chain requires significantinvestments in the form of distribution assets and storage networks to service bulkvolumes as well as in the form of cylinders to service relatively smaller volumes in thepackaged gases business. During the year the Company implemented several measures toimprove efficiency of the distribution function such as phasing out of low capacitytankers introduction of 7KL tankers with flow meter for medical supplies with the aim ofreducing cost of delivery and improving billing accuracy. Besides actions have been takento improve delivered volume by about 2% by optimizing the payload per vehicle. Increaseddistribution capability of liquid products to 1500 tpd improvement in supply failureshigher capacity utilization of VITTs and cylinder vehicles over 2017 improvement inkilometers run etc. are some of the highlights of Deliver.

Transport safety in India has its own share of challenges and to overcome and mitigatethe same your Company has installed eguipment to monitor fatigue and distraction of thedrivers on road.

Your Company also set up a Transport Operation Center (TOC) to monitor and alert thedrivers on a 24/7 basis anticipating fatigue and distraction from the TOC. The digitalmonitoring of the driver risk profile and other actions have helped the Company achieve4.46 safe million kilometers run in 2018 besides reduction in driving violations overlast year. As a part of the Deliver program all Transport Managers have undergone aReboot Program and their competency were assessed by 3rd Party and wereaccordingly issued license to operate.

Linde India had launched the Customer experience (Cx) Program in 2015. Cx performanceis measured on defined metric system across three KPIs which are Acknowledgement of thecomplaint Response time and Target resolution time. All the three KPIs have shown furtherimprovement as compared to 2017.

Project Engineering

The Project Engineering Division (PED) comprises the business of design engineeringsupply installation testing and commissioning of Air Separation plants and relatedprojects on turnkey basis. The Project Engineering Division also has a ASME-"U"stamp certified plant manufacturing works to fabricate core proprietary eguipment such asdistillation columns for air separation plants cryogenic liguid storage tanks ambientand steam bath vaporizers process vessels LINIT plants small sized cold boxescontainerized micro plants for cylinder filling for in-house use as well as for sale tothird party customers.

The Project Engineering business achieved highly improved performance during the yearclocking revenue of Rs. 3895.76 million as compared to Rs. 3128.52 million during theprevious year recording an increase of 24.5% year on year. The growth in the PED revenueswas primarily on the back of orders from steel and refinery sectors besides turnkeyprojects executed overseas. During the year the Division won fresh orders of over Rs.4000 million which mainly include large value orders for supply of cryogenic nitrogenplants with associated IA/PA system on turnkey basis. Apart from the refineries in Indiathe Division was also able to get export order from a customer in Bangladesh for supplyinga cryogenic oxygen plant (IMPACT 3MH model). This export order was won against stiffinternational competition. The PED derives support from Linde Engineering Munich by wayof transfer of technology for design and manufacture of plants in India. In addition toabove the Division has also received an order from the refinery sector for supplyinga VPSA oxygen plant.

During the year the Division successfully commissioned 2200 tpd ASU for JSW Steel Ltd.at their Dolvi site in Maharashtra completed supplies for 33 tpd merchant ASU for LindeMalaysia at Bintulu and several cryogenic nitrogen plants for customers in the refinerysector in India and overseas besides Adani Mundra port terminal.

The Division is working towards receiving the Integrated Management System (IMS)Certificate (ISO 9001 1400118001) for their EPC business which will help it to get morebusiness in the overseas markets.

As on 31 December 2018 the order book position of the Project Engineering Division forthird party projects stood in the range of Rs. 6000 million.

Opportunities and Threats

India continues to be the fastest growing economy in the world and the positiveeconomic outlook of the country presents several opportunities in both the Gases andProject Engineering businesses of the Company. As per the World Economic League TableIndia's economy is likely to have overtaken Trance to become the 5th largesteconomy in the world in dollar terms in 2018 and the ongoing economic growth in the yearsahead will present several opportunities for the manufacturing sector. However thecontinuing trade tensions between U.S. and China and the rise in crude prices pose somerisk. Demand from the steel sector remains the main driver for the growth of the gasesbusiness in India and the expansion as well as consolidation in primary steel sector andrefineries is expected to create opportunities for the Project Engineering business. Thefocus on application technology-based selling of gases in manufacturing food andbeverage cement paper oil and gas etc. is likely to create more demand for the gasesbusiness. The global merger between Linde AG and Praxair Inc. is also expected to harnesspotential of both the companies and deliver value to all stakeholders.

On the other hand aggressive addition of new merchant capacities by competitors in analready competitive market place may have adverse impact on price in certain geographies.A more detailed information on risk is covered in this report under the risk managementsection.

Risk Management

Your Company's business faces various risks - strategic as well as operational in bothits segments viz. Gases and Project Engineering which arise from both internal andexternal sources. As explained in the report on Corporate Governance the company has anadeguate risk management system which takes care of identification assessment and reviewof risks. The Company had held its last risk workshop in the year 2017 which was attendedby the senior management team with a view to refresh the various risks facing the Company.A refresher risk workshop is proposed to be held in later part of 2019 when a betterunderstanding of the new risk landscape is expected to emerge. The risks being addressedby the Company during the year under review included risk relating to aggressive capacityaddition by competitors risk of sustained high interest cost arising from adverse cashflows over dependence of business on steel sector risk of investments not deliveringbusiness case assumptions including merchant credits and impairment competitive risks inthe Gases and Project Engineering etc. Since the Project Engineering Division of yourCompany is engaged in execution of various in-house and third-party projects it carriesan inherent risk of time and cost overrun. Your Board of Directors provides oversight ofthe risk management process in the Company and reviews the progress of the action plansfor the identified key risks with a distinct focus on top 5 key risks on a quarterlybasis.

The Company has a Risk Policy with an objective to provide a more structured frameworkfor proactive management of all risks related to the business of the Company and to makeit more certain that the growth and earnings targets as well as strategic objectives aremet.

Finance

As on 31 December 2018 your company had three loan facilities by way of externalcommercial borrowings (ECB) aggregating to Rs. 6277.76 million from Linde AG. Thefacilities were executed mainly for funding of large air separation units (ASU) at TataSteel Jamshedpur (2550 tpd ASU) SAIL Rourkela (2X853 tpd ASU) and Tata SteelKalinganagar (2X1200 tpd scale plants). All the three facilities are fully drawn down andfully hedged both with regard to the principal and interest payments. During the year theCompany made principal repayment to the tune of Rs. 2554.76 million against these ECBs.

As on 31 December 2018 your Company had two USD denominated term loan facility of twoyears from Citibank aggregating to USD 23.28 million. The facilities are fully hedged withregard to the principal and interest payment. Your Company also had a Rupee term loan ofRs. 1000 million which was a USD denominated loan facility of USD 15.67 million in theprevious year. Your Company also borrowed an additional term loan of Rs. 600 millionfor a period of one year from HSBC. The term loan facilities were executed to fundongoing small capital expenditure and working capital reguirements.

During the year the Company negotiated at arm's length an inter corporate loan of Rs.1000 million from Linde Engineering India Pvt. Ltd. for a further period of one year. Thefacility was executed as an alternative financing mode for short-term funds. This facilityis in addition to the existing inter corporate loan of Rs. 1500 million from the sameparty. During the year Rs. 100 million was repaid to Linde Engineering India Pvt. Ltd.resulting in a total outstanding of Rs. 2400 million at the year end.

Your Company also availed short term working capital demand loans from its banks formeeting cash flow mismatches which were repaid during 2018.

There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which these financialstatements relate and the date of this report.

Credit Rating

The Company's total bank facilities- both fund-based and non-fund based are rated byCRISIL which has reaffirmed its long-term credit rating of CRISIL AA with Stable outlookon its bank facilities. The rating denotes high degree of safety regarding timelyservicing of financial obligations.

Open Offer under SEBI Takeover Regulations

During the year on 24 October 2018 pursuant to the applicable regulations of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations 2011 as amended The BOCGroup Ltd. ("The Acquirer") along with Praxair Inc. and Linde HoldingsNetherlands B.V. as persons acting in concert with the Acquirer made a public announcementfor Open Offer to the public shareholders of the Company for acquisition of up to21321056 equity shares (i.e. 25% of the paid-up share capital of the Company) held bythem at an offer price of Rs. 276.09 excluding interest. The mandatory Open Offer wastriggered by announcement made by Linde AG and Praxair Inc. in connection with the mergerof eguals between the two companies under a new holding company Linde pic in the year2016. The Acquirer along with the persons acting in concert subseguently made a DetailedPublic Statement to the public shareholders of the Company in terms of the SEBI(Substantial Acquisition of Shares and Takeovers) Regulations 2011 inter aliaexpressing its intention to make a voluntary delisting offer to all the publicshareholders of the Company.

Voluntary Delisting Offer of the Promoter Group

In line with the above The BOC Group Ltd. along with promoter group of the Companyholding 63963167 equity shares of Rs. 10/- each aggregating to 75% of the paid-upequity share capital of the Company conveyed their intention to voluntarily delist theequity shares of the Company from the BSE Ltd. and the National Stock Exchange of IndiaLtd. in accordance with SEBI (Delisting of Equity Shares) Regulations 2009.

The Promoter Group's proposal for voluntary delisting offer was considered by the Boardof Directors of the Company and later approved by way of a special resolution passed bythe public shareholders of the Company by postal ballot. The special resolution authorisedThe BOC Group Ltd. to acquire up to 21321056 equity shares (i.e. 25% of the paid-upshare capital of the Company) held by the public shareholders of the Company either byitself or along with any member of the promoter group as person acting in concert inaccordance with the provisions of SEBI (Delisting of Equity Shares) Regulations 2009. Thepublic shareholders holding equity shares of the Company were invited to submit bidsthrough a reverse book building mechanism which commenced on 15 January and closed on 21January 2019. following the expiry of the bid period the offer price discovered in termsof the SEBI Delisting Regulations was Rs. 2025/- which was rejected by the BOC GroupLtd. and the person acting in concert. Following this the BOC Group Ltd. publishednecessary Post Offer Public Announcement for failure of the Delisting Offer and aCorrigendum to the same in newspapers for information of the shareholders of the Company.Accordingly the Acquirer did not acquire any equity shares tendered by the publicshareholders pursuant to the Delisting Offer and the equity shares of the Company continueto remain listed on the stock exchanges.

In view of the failure of the voluntary delisting offer the Open Offer process hascommenced again and the Acquirer and the persons acting in concert have filed a draftletter of offer with SEBI as per regulation 5A of the SEBI (Substantial Acquisition ofShares and Takeovers) Regulations 2011. The Acquirer would take further steps for themandatory Open Offer under these regulations after considering comments of the SEBI inthis regard.

Investor Education and Protection Fund

During the year under review your Company transferred the 56th unpaid/unclaimed dividend amount of Rs. 0.56 million for the financial year ended 31 December2010 to the Investor Education and Protection Tund in compliance with the provisions ofSections 124 and 125 of the Companies Act 2013. In compliance with these provisions readwith the Investor Education and Protection Fund Authority (Accounting Audit Transferand Refund) Rules 2016 your Company also transferred 17482 shares to the Demat Accountof the IEPF Authority in respect of which dividend had remained unpaid/unclaimed for aconsecutive period of 7 years. Further information in this regard is provided in theCorporate Governance Report.

Deposits

During the year the Company has not accepted any deposits from public under Chapter Vof the Companies Act 2013.

Significant and Material Orders passed by the Regulators or Courts

There have been no significant and material orders passed by the Regulators or Courtsor Tribunals impacting the going concern status and Company's operations.

Particulars of loans guarantees or investments The particulars of loans guaranteesgiven and investments made during the year under Section 186 of the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are annexedto this Report. [Annexure 3]

Safety Health Environment and Quality (SHEQ)

At Linde our aim truly is to avoid causing any harm to people or the environment andas such Safety remains one of our topmost priority. Compliance with SHEQ rules standardsprocedures are pre-requisite for all employees & contractors and the management iscommitted to ensuring that all personnel are trained and made competent before undertakingany safety critical job for the Company.

Linde Safety Day 2018 was celebrated at all Linde operating sites as well as projectsites on 24 April 2018 with the theme of Risk- Expect the unexpected. Think about therisks. The global observance of the Linde Safety day at all sites allows us tocollectively deepen our understanding of safety and what we can personally do to keepourselves and those around us safe.

As a part of the Supply & SHEQ Improvement plan (SSIP) key programs were rolledout to bring more focus on risk identification & control measures reinforcingtraining & competencies for all high-risk jobs etc. Job Procedure Check wasintroduced to train personnel in the Operations function in checking adequacy of the highrisk standard operating procedures (SOPs) through on-the-job verification and recordingcorrective measures for any identified gaps or risks. It was aimed to strengthen theexisting SOPs in the sites to ensure that the jobs are completed safely. Certification ofmaintenance staffs program and certification of electrical competent persons were alsointroduced to impart competency-based-training (CBT) for mechanical maintenance staff andelectrical competent persons respectively being part of Safety Critical Roles inoperational/maintenance activities.

The Electronic & Special Gases operations at the Mundra site which handles varioushazardous gases was reviewed to reinforce site operations & safety management systemcertification of safety critical roles permit to work system PPE matrix alarm matrixgas leak detection (fixed and portable) system emergency response protocols and fullrange of emergency response tool (ERT) kits for operations & transportation. Periodicmock drill involving site team and customer team are being done on different gas leakagehandling scenarios at regular intervals.

Transport Safety remains the single and biggest challenge and focus area forcontinuous improvement for our organization. According to the statistical analysisfrom the past transport related incidents are mainly caused by driver fatigue &distraction. In order to monitor the fatigue & distraction we have installed F&D(Fatigue and Distraction) devices in 300 delivery vehicles both in bulk and packaged gasesbusiness and the remaining vehicles are proposed to be covered in 2019. In our continuousendeavor to improve Transport Safety a Transport Operation Center has been set up by theLinde Group at the Company's head office at Kolkata. The Center uses some of the state ofart technologies for identifying positive driving behavior of the drivers using livemonitoring data and video analytic skills and periodic trend analysis. As a part of ourtransport safety initiative we have introduced driver duty & driving hoursmonitoring through digitized mode. In our effort towards improving the quality of thedrivers we have taken them through various behavioral safety programs such as Act Safe. Toimprove the driving skills a group of around 30 drivers were sponsored to attend PracticalRollover Prevention Training at WABCO facility in Chennai.

Your Company continues to mandate complete transparency in reporting of all accidentsand incidents; even the minor ones are reported. Thereafter depending on the incidentthe same is duly investigated; corrective actions are identified and actioned upon. TheLessons from Incidents (LFIs) of all major Incidents are circulated to prevent repeat ofsimilar incidents.

With the help of the Major Hazards Review Programme (MHRP) all major sites have beencertified with relevant MHRP CAT1 CAT2 and CAT3 certificates. This MHRP program helps theorganization to assess the offsite risk due to our operation and based on the same riskcontrol measures are established to reduce the offsite risk.

As a part of commitment to Environment protection initiatives like rain waterharvesting water recycling recycling of waste generated continue to be reinforced. Allmajor ASU sites are certified and sustained with IS014001 certification. The actions forcertification to the latest ISO 9001:2015 and IS014001:2015 standards have also beeninitiated.

Security vulnerability risk assessments are carried out at high risk sites andeffective CCTV monitoring arrangements have been made at some of the high-risk locations.

Human Resources

The Linde Group has been a frontrunner in human resource practices and as a companyoperating within the Group Linde India has aspired to become an employer of choice.

During the year 2018 the progress of the global merger between Linde AG and PraxairInc. resulted in review of several HR policies at country levels with a view to preparethe organisation for the upcoming change. This also included a recruitment freeze in theorganisation from May 2018. Amidst all this and due to the resulting uncertainty usuallycaused during times of global mergers the human resource function faced severalchallenges. With the completion of the merger the new global organisation has now startedtaking shape and the new Linde values viz. Safety Integrity Community Inclusion andAccountability and our behaviours viz. living our values achieving goals and making animpact is expected to set clear expectations for success of the people in the neworganisation.

Linde's global brand and HR practices nevertheless attract and retain quality talentfrom the engineering and management colleges. We have progressed on focused HR initiativesin a sustained manner to meet this objective and are seeing these bear fruits now. Thereis a change where employees have started taking keen interest in identifying their owndevelopment needs and bridging them by way of on the job experience as well as instructorled training and e-learning modules. This is reflected in the performance managementsystem which enables employees to accomplish their development needs.

We also aspire to be a "Talent Ready" organization which is ensured by hiringtalent at the entry level with focus on grooming young talent through learning anddevelopment. In the beginning of 2018 we inducted 39 young graduates from variousengineering and management campuses across the country this year with a view to create atalent pool for the future across various functions and to combat normal attrition in theorganisation. After the initial orientation these young recruits have been inducted intovarious functions. With 50% gender diversity talent in this group we now have womentaking up roles in Sales Deliver and Operations which erstwhile were typicallymale-centric functions. Besides after a careful review of the performance and long-termemployability of various associates working in core PGP operations several associateswere moved to payroll of the Company.

We have been encouraging internal movement of talent and have ensured 5% of suchmovements every year over last 3 years. This enables employees to have a wider exposurewhich helps them to take larger roles in the organization. To ensure continuity ofbusiness there is a succession planning exercise in place which gives clarity up to thetop 3 levels of the organization.

Your Company sustained focus on diversity and inclusion(D&l) through the year inmultiple ways. We celebrated the international women's day in an inclusive manner byorganizing a theatre performance which highlighted the importance of D&l in our dailylives. The hiring of gender diverse talent from campuses was yet another way of fulfillingour commitment to the D&l agenda.

We are committed towards creating a work environment which is safe and free ofharassment for all our employees and associates. This year we developed short trainingmodules in Hindi for drivers and operations staff on Prevention of Sexual Harassment atworkplace. These sessions are mandatory and being conducted at each site.

The Company harmonious employee relations across all its plants and offices in Indiathrough the year and actions were also initiated during the year to close some of the oldpending employment related litigations. As on 31 December 2018 the Company had a totalmanpower strength of 808.

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 The Company remains committed to provide and promote a safehealthy and congenial atmosphere irrespective of gender caste creed or social class ofthe employees. The Company's Policy on Prevention of 'Sexual Harassment' is in line withthe provisions of The Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 and the Rules made thereunder. Internal Complaints Committee (ICC)has been set up to redress complaints if any received regarding sexual harassment. Allemployees whether permanent contractual temporary etc. have been covered under thisPolicy. The Policy is gender neutral.

During the year 2018 one complaint alleging sexual harassment was received by theCompany which was investigated and redressed by the Internal Complaints Committee. Thecomplaint was closed after initiating applicable conseguence management action. As apreventive measure and to create awareness in this area the Company has been conductingrefresher programs for all permanent and contractual employees.

Prescribed Particulars of remuneration

The disclosures pertaining to ratio of remuneration of each Director to the medianremuneration of all the employees of the Company percentage increase in remuneration ofeach director and other details as required under Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended are annexed to this Report. [Annexure 4]

In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 as amended a statement containing the names and other prescribed particularsof top 10 employees in terms of remuneration drawn and that of every employee who ifemployed throughout the year ended 31 December 2018 was in receipt of remunerationaggregating to not less than Rs. 10.20 million; and if employed for part of the said yearwas in receipt of remuneration not less than Rs. 0.85 million per month is annexed to andforms part of this Report. However having regard to the provisions to the first provisoof Section 136(1) of the Companies Act 2013 the Annual Report is being sent to all theMembers of the Company excluding this information. The aforesaid statement is availablefor inspection by shareholders at the Registered Office of the Company during businesshours on working days up to the date of the ensuing Annual General Meeting. Anyshareholder interested in obtaining a copy of the said information may write to theCompany Secretary at the Registered Office of the Company and the same will be furnishedon reguest and the said information is also available on the website of the Company. Noneof the employees is covered under Rule 5(3)(viii) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended.

Corporate Social Responsibility (CSR)

As a member of The Linde Group your Company has been a socially responsible corporateand our core values define the way we operate and create value within the larger society.Linde's core principles and values form the basis of its CSR policy. Your Company istherefore committed to behave responsibly towards people society and the environment forinclusive growth of the society where we operate to conserve natural resources and todevelop sustainable products. In line with its CSR Policy Linde India's CSR commitmentcentres around four thematic areas- Education Health Environment and Livelihood (skilldevelopment) and other areas specified in Schedule VII to the Companies Act 2013.

Some of the CSR projects/ initiatives taken up/sustained during the year includeproviding special education to differently abled children at Indian Institute of CerebralPalsy (IICP) supporting homes of underprivileged children and schools run by NGOs atKolkata Chennai and Bangalore drive- safe campaign in collaboration with Kolkata Policeand contribution towards flood relief in Kerala. Your Company spent an amount of Rs. 3.26million during the year on various CSR projects/ activities as above which far exceedsthe mandated CSR spend of Rs. 0.19 million as per the Companies Act 2013. Your Board isof the view that some of the CSR initiatives need to remain ongoing to sustain themomentum of these initiatives. The details of the CSR projects/ activities for the year2018 are covered in the Annual Report on CSR activities which is annexed to this Report.[Annexure 5]

Your Company encourages volunteering of services by its employees into its CSRinitiatives which are measured as employee days spent on CSR projects.

Business Responsibility Report

The Linde Group supports the United Nations Global Compact and every year publishes adetailed Corporate Responsibility Report incorporating the Global Compact's ten principlesand their impact into our business activities in the manner required for GRI reporting. Asa member of The Linde Group your Company has adopted the various policies of its parentthat relate to the 9 principles laid down by Securities and Exchange Board of India forbusiness responsibility reporting by the top 500 listed entities in India based on marketcapitalisation. As stipulated in Regulation 34(2) of the SEBI Listing Regulations 2015your Company has included a Business Responsibility Report as an integral part of theAnnual Report for the year 2018 briefly describing initiatives taken by it from anenvironment social and governance perspective during the year under review.

Corporate Governance

As a member of The Linde Group your Company attaches great importance to soundresponsible management and good corporate governance. Arising from the completion of theglobal merger between Linde AG and Praxair Inc. Linde pic a company incorporatedin Ireland has become the new holding company of both Linde AG and Praxair Inc. Linde picnow has redefined its vision mission and strategic direction and has replaced some of itslegacy codes and policies to align with the new Linde values. Your Company howeverremains committed to business integrity high ethical standards and professionalism in allits activities same as ever. As an essential part of this commitment the Board ofDirectors of Linde India Limited supports high standards in corporate governance.

It is the endeavour of the Board and the executive management of your Company to ensurethat their actions are always based on principles of responsible corporate management. Inthe Linde Group corporate governance is seen as an on-going process. During the year theCommittee on Corporate Governance set up by SEBI under the Chairmanship of Mr Uday Kotakmade several recommendations for improving governance in listed companies. SEBI has videnotification dated 9 May 2018 implemented most of these recommendations by way of SEBI(Listing Obligations and Disclosure Reguirements) (Amendment) Regulations 2018. YourCompany closely follows the developments in the governance norms and has taken lead inensuring compliance with the same. A separate report on Corporate Governance along withthe certificate of the Auditors Deloitte Haskins & Sells LLP confirming complianceof the conditions of corporate governance as stipulated under SEBI (Listing Obligationsand Disclosure Reguirements) Regulations 2015 forms an integral part of this annualreport.

Board Meetings

A calendar of Board and Committee meetings is agreed and circulated in advance to theDirectors. The Board met eight times during the year under review details where of aregiven in the Corporate Governance Report which forms part of this Report.

Board Membership Criteria

The Nomination and Remuneration Committee of the Company identifies and ascertains theintegrity qualification expertise positive attributes and experience of persons forappointment as Directors and thereafter recommends the candidature for election as aDirector on the Board of the Company. The Committee follows defined criteria in theprocess of obtaining optimal Board diversity which inter alia includes optimum combinationof executive and non-executive directors appointment based on specific needs and businessof the Company qualification knowledge experience and skill of the proposed appointeeetc. The Policy on appointment and removal of Directors Board Diversity Criterion andRemuneration to Directors/Key Managerial Personnel/ Senior Management forms part of theNomination and Remuneration Policy of the Company which is available on the Company'swebsite at www.linde.in.

Familiarisation Programme for Directors

In terms of Regulation 25(7) of SEBI (Listing Obligations and Disclosure Reguirements)Regulations 2015 your Company is required to conduct the Familiarisation Programme forIndependent Directors (IDs) to familiarise them about their roles rightsresponsibilities in your Company nature of the industry in which your Company operatesbusiness model of your Company etc. through various initiatives. The details of trainingand familiarization programmes for Directors has been provided under the CorporateGovernance Report. Apart from the initial familiarisation program as above presentationsare made to the Board Members at almost all board meetings to enable them to familiariseand update themselves with the changes in the applicable legal framework competitionindustry specific developments etc. The details of the familiarisation programs heldduring and up to the year 2018 are available on the Company's website www.linde.in.

Performance Evaluation

During the year pursuant to provisions of Section 134 Section 149 read with Code ofIndependent Directors (Schedule IV) and Section 178 of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Reguirements) Regulations 2015 the Nomination andRemuneration Committee of the Board reviewed the process and criteria used in the previousyear for evaluating the performance of the Board its Committees Chairman of the Boardand the individual directors. Arising from the review minor improvements were made in theperformance evaluation form for the year 2018. Like the previous year an online platformwas provided to the Directors for participating in the performance evaluation processwhich contained a structured questionnaire for seeking feedback from the directors oncertain predefined attributes applicable to them including some specific ones for theIndependent Directors. More details about the performance evaluation process followed bythe Board is provided in the Corporate Governance Report.

Declaration of Independent Directors The Company has received declarations from all theIndependent Directors of the Company confirming that they meet the criteria ofindependence as prescribed both under the Companies Act 2013 and SEBI (ListingObligations and Disclosure Reguirements) Regulations 2015.

Internal Control Systems and their adequacy

Your Company has an adequate system of internal control commensurate with the size andthe nature of its business which ensures that transactions are recorded authorised andreported correctly apart from safeguarding its assets against loss from wastageunauthorised use and removal.

The internal control system is supplemented by documented policies guidelines andprocedures. The Company's Internal Audit Department continuously monitors theeffectiveness of the internal controls with a view to provide to the Audit Committee andthe Board of Directors an independent objective and reasonable assurance of the adequacyof the organization's internal controls and risk management procedures. The Internal Auditfunction submits detailed reports periodically to the management and the Audit Committee.The Audit Committee reviews these reports with the executive management with a view toprovide oversight of the internal control systems.

Your Board has in compliance with the Companies Act 2013 and the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 approved several policies onimportant matters such as related party transactions risk management nomination andremuneration of directors and senior managers whistle blower mechanism CSR insidertrading practices and procedures for fair disclosure of unpublished price sensitiveinformation materiality of events/ information preservation of documents etc. whichprovide robust guidance to the management in dealing with such matters to support internalcontrol. The Company reviews its policies guidelines and procedures of internal controlon an on-going basis in view of the ever changing business environment.

During the year Price Waterhouse Chartered Accountants who were engaged by theCompany last year for reviewing and strengthening the framework of its existing internalfinancial controls across the Company were engaged for review and testing of the operatingeffectiveness ofvarious internal controls in the organisation. Price Waterhouse hassubmitted a report to the Audit Committee and the Board on their findings based on thetesting of the key controls for the year 2018. The Statutory Auditors of the Company havealso independently reviewed internal financial controls over financial reporting and PriceWaterhouse as well the Statutory Auditors have confirmed that these controls wereoperating effectively as at 31 December 2018. As stated in the Responsibility Statementyour Directors have confirmed that based on the reviews performed by the internalauditors statutory auditors cost auditors secretarial auditors and the reviewsundertaken by the management and the Audit Committee the Board is of the opinion that theCompany's internal financial controls have been adeguate and effective during thefinancial year 2018.

Directors

During the year under review the Board of Directors of the Company on therecommendation of its Nomination and Remuneration Committee and in accordance with theapplicable provisions of the Companies Act 2013 read with the applicable rules framedthereunder the Articles of Association of the Company and the SEBI Listing Regulations2015 appointed Dr Shalini Sarin [DIN No.06604529] as an Additional Director and subjectto the approval of the Members of the Company as an Independent Director of the Companyfor a term of five consecutive years with effect from 10 July 2018. Dr Sarin holds officeas an additional director up to the date of the ensuing annual general meeting and iseligible for appointment as a Director. Notice under Section 160 of the Companies Act2013 has been received from a Member proposing her candidature for the office of Directorof the Company.

Mr Sanjiv Lamba Director and the Non- Executive Chairman of the Company retires by wayof rotation at the ensuing Annual General Meeting and has conveyed his decision not tooffer himself for reelection as a Director of the Company in view of his broadenedresponsibilities. Mr Lamba has been a Member of the Audit Committee and the Nomination andRemuneration Committee of the Board. He has made significant contributions to the Companyas well as the functioning of the Board and the aforesaid Committees besides providingdynamic leadership to the Board of Directors during his tenure as the Chairman. TheDirectors place on record their most sincere appreciation of the invaluablecontribution made by Mr Lamba during his tenure as a Director and later as a Chairmanof the Board of Directors of the Company.

Necessary resolutions for approval of appointment of Dr Shalini Sarin as a Director andan Independent Director and for retirement by rotation of Mr Sanjiv Lamba as Director ofthe Company are included in the Notice of the ensuing Annual General Meeting. The Boardrecommends the aforesaid resolutions for your approval.

Key Managerial Personnel

Pursuant to Section 203 of the Companies Act 2013 the Key Managerial Personnel of theCompany are Mr Moloy Banerjee Managing Director Mr Indranil Bagchi Chief financialOfficer (CLO) and Mr Pawan Marda Asst. Vice President and Company Secretary. During theyear there has been no other change in the Key Managerial Personnel.

Responsibility Statement

Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company audit and reviews performed by the internalauditors statutory auditors cost auditors secretarial auditors and the reviewsundertaken by the management and the Audit Committee the Board is of the opinion that theCompany's internal financial controls have been adeguate and effective during thefinancial year 2018.

As required by Sections 134(3)(c) and 134(5) of the Companies Act2013 the Directorsto the best of their knowledge and belief state and confirm:

a. that in preparation of the annual financial statements for the year ended 31December 2018 applicable accounting standards have been followed along with properexplanations relating to material departures if any;

b. that they had selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the aforesaid financial year andof the profit of the Company for that period;

c. that they had taken proper and sufficient care for the maintenance of adeguateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d. that the aforesaid annual financial statements have been prepared on a going concernbasis;

e. that they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adeguate and were operating effectively; and

f. that they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adeguate and operating effectively.

There have been no instances of fraud reported by the Statutory Auditors under Section143(12) of the Companies Act 2013 and the Rules framed thereunder.

Secretarial Standards

The Company has proper systems in place to ensure compliance with the provisions of theapplicable standards issued by The Institute of Company Secretaries of India and suchsystems are adeguate and operating effectively.

Related Party Transactions

All related party transactions entered during the year were in ordinary course ofbusiness and on arm's length basis and the same have been disclosed under Note 44 of theNotes to the Standalone Financial Statements. No material related party transactionsarising from contracts/arrangements with related parties referred to the Section 188(1) ofthe Companies Act 2013 were entered during the year by the Company. Accordingly thedisclosure of related party transactions as required under Section 134(3)(h) of theCompanies Act 2013 in Form AOC-2 is not applicable.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

Details of conservation of energy technology absorption and foreign exchange earningsand outgo in accordance with Section 134(3)(m) read with Companies (Accounts) Rules 2014are annexed to this Report. [Annexure 6]

Extract of Annual Return

An extract of Annual Return as on the financial year ended on 31 December 2018 in FormNo. MGT-9 as required under Section 92(3) of the Companies Act 2013 read with Rule 12(1)of the Companies (Management and Administration) Rules 2014 as amended is set out as anannexure to the Directors' Report and forms part of this Annual Report. [Annexure 7]

Outlook

During 2018 the advanced economies of the world showed recovery in economic activity.However the recent tariff war between U.S. and China volatility in the global crudeprices and geo political concerns have also posed certain degree of risk all of whichhave caused some volatility in economic activity. In this backdrop India has emerged asthe fastest growing economy in the world. In the midst of the current socio-politicalsituation the country is heading for the general elections for electing the next LokSabha. India's macro-economic fundamentals however remain robust as the growth is drivenby domestic consumption. As per the Central Statistics Organization and InternationalMonetary Fund India is presently poised to achieve a GDP growth of 7% for the currentfiscal which is expected to rise to 7.4% in 2020. On the other hand the Index ofIndustrial Production which is more relevant for the gases business recorded an averagegrowth of about 5 to 6% during most part of the year 2018. The IIP has however showedsoftening during Q4 of 2018 which has also continued in Q1 of 2019.

Steel industry continues to drive demand for gases in India although refineriesautomobiles pharmaceuticals fabrication construction glass and several end userindustry segments contribute to the growth of the gases industry in India. Rapid rise insteel production has resulted in India becoming the 2nd largest producer ofcrude steel during 2018 from its 3rd largest status in 2017. The Government'sNational Steel Policy 2017 which has laid down the broad roadmap for encouraging longterm growth for the Indian steel industry augurs well for the gases industry in India.

Automobile industry which is another important segment that drives demand for gases isexpected to grow at a CAGR of 12% between 2017-26 as India is poised to become an autoexport hub in the near future.

Healthcare has become one of India's largest sectors both in terms of revenue &employment. The industry is growing at a tremendous pace owing to its coverage servicesand increasing expenditure by public as well private players and the Ayushman Bharatprogram of the Government of India. Your Company therefore remains optimistic about theHealthcare sector and will continue to maintain the focus it deserves.

While the Indian economy may continue to face the challenges arising from high globalcrude prices geo political concerns the tariff war etc. your Board remains cautiouslyoptimistic about the future outlook.

Auditors

Statutory Audit

Messrs Deloitte Haskins & Sells LLP Chartered Accountants (Firm's RegistrationNo. 117366W/W-100018) was appointed as the Statutory Auditors of the Company at its 81stAnnual General Meeting from the conclusion of the said meeting until the conclusion of the86th Annual General Meeting subject to ratification of their appointment atevery annual general meeting. However in view of the omission of the first proviso to subsection 1 of Section 139 of the Companies Act 2013 with effect from 7 May 2018 whichrequired such ratification it is proposed to pass a resolution for partial modificationof the earlier resolution passed by the Members at the 81st Annual GeneralMeeting and the same is included in the Notice of the Annual General Meeting.

The reports of the Statutory Auditors Deloitte Haskins & Sells LLP CharteredAccountants on the standalone and consolidated financial statements of the Company for theyear 2018 form part of this Annual Report. The Statutory Auditors have submitted anunmodified opinion on the audit of financial statements for the year 2018 and there is noqualification reservation adverse remark or disclaimer given by the Auditors in theirReport.

Secretarial Audit

The Board of Directors of the Company had appointed M/s. Vinod Kothari & Co. afirm of Company Secretaries pursuant to the provisions of Section 204 of the CompaniesAct 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 for undertaking the secretarial audit of the Company for the year 2018. In terms ofthe provisions of Section 204(1) of the Companies Act 2013 a Secretarial Audit Reportdated 18 February 2019 in Form MR-3 given by the Secretarial Auditor is annexed with thisReport. The observations made by the Secretarial Auditors in their Report areselfexplanatory. The Report confirms that the Company had complied with the statutoryprovisions listed under Torm MR-3 and the Company also has proper board processes andcompliance mechanism. The Secretarial Audit Report does not contain any qualificationreservation or adverse remark. [Annexure 8]

Cost Audit

In terms of Section 148 of the Companies Act 2013 the Company is required to have theaudit of the cost accounting records conducted by a Cost Accountant. Messrs BandyopadhyayaBhaumik & Co. a firm of Cost Accountants conducted this audit for the Company'sfinancial year ended 31 December 2017 and submitted their report to the Central Governmentinform CRA 4on11 June 2018. The audit of the cost records for the year 2018 is expected tocommence shortly. The Board of Directors of the Company have on the recommendation of theAudit Committee appointed M/s. Bandyopadhyaya Bhaumik & Co. Cost Accountants havingregistration no. 000041 as the Cost Auditor for the year ending on 31 December 2019 toconduct cost audit under the Companies (Cost Records and Audit) Rules 2014 as amendedfrom time to time. In accordance with the provisions of Section 148(3) of the CompaniesAct 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules 2014 theremuneration payable to the Cost Auditors as recommended by the Audit Committee andapproved by the Board has to be ratified by the Members of the Company and appropriateresolution in this regard forms part of the Notice convening the AGM.

Your Directors also convey their sincere appreciation of the support and cooperationreceived from the various Government departments and agencies and look forward to theircontinued support in the future. The Board also takes this opportunity to thank the LindeGroup for their strategic inputs guidance and support in various operational andfunctional areas.

Disclaimer

Certain statements in this report relating to Company's objectives projectionsoutlook expectations estimates etc. may be forward looking statements within themeaning of applicable laws and regulations. Although the Company believes that theexpectations reflected in such forward looking statements are reasonable no assurance canbe given that such expectations will prove to have been correct. Accordingly actualresults or performance could differ materially from such expectations projections etc.whether express or implied as a result of among other factors changes in economicconditions affecting demand and supply success of business and operating initiatives andrestructuring objectives change in regulatory environment other government actionsincluding taxation natural phenomena such as floods and earthquakes customer strategiesetc. over which the Company does not have any direct control.

Acknowledgements

The Board of Directors wishes to place on record their deep appreciation of thecooperation received from the bankers customers dealers suppliers and all otherbusiness associates and the shareholders of the Company during the year under review. YourDirectors also place on record their appreciation of the contribution made by theemployees of the Company at all levels.

On Behalf of the Board

S Lamba

Chairman

DIN: 00320753

Singapore

22 March 2019.