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Linde India Ltd.

BSE: 523457 Sector: Industrials
NSE: LINDEINDIA ISIN Code: INE473A01011
BSE 00:00 | 18 Jun 1549.55 -20.60
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NSE 00:00 | 18 Jun 1546.50 -23.20
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OPEN 1575.00
PREVIOUS CLOSE 1570.15
VOLUME 10877
52-Week high 2078.60
52-Week low 514.65
P/E 73.26
Mkt Cap.(Rs cr) 13,215
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1575.00
CLOSE 1570.15
VOLUME 10877
52-Week high 2078.60
52-Week low 514.65
P/E 73.26
Mkt Cap.(Rs cr) 13,215
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Linde India Ltd. (LINDEINDIA) - Director Report

Company director report

The Directors have pleasure in submitting their Report together withthe Audited Financial Statements of your Company for the year ended 31 December 2019:

The Company's standalone financial performance for the year ended 31December 2019 is summarized below:

In Rupees million Year ended 31 Dec. 2019 Year ended 31 Dec. 2018
Revenue from operations 17617.86 21916.54
Earnings before interest tax depreciation amortisation and impairment (EBITDA) 4356.54 3490.09
Less: Depreciation and amortisation expense (including impairment) 1772.54 1991.38
Earnings before interest and tax (EBIT) 2584.00 1498.71
Less: Finance costs 862.50 1027.01
Profit before tax (PBT) before exceptional item 1721.50 471.70
Add: Exceptional items 8407.55 -
Profit before tax (PBT) after exceptional item 10129.05 471.70
Tax expenses 2857.26 136.84
Net Profit for the year (after tax) (A) 7271.79 334.86
Total Other Comprehensive Income for the year(B) (17.23) (41.16)
Total Comprehensive Income for the year(C)=(A)+(B) 7254.56 293.70
Movement in Equity
Retained earnings opening balance brought forward 5445.90 5271.99
Add: Net Profit for the year 7271.79 334.86
Less: Other comprehensive income recognised in retained earnings (net of taxes) (16.29) (58.14)
Profit available for appropriation (D) 12701.40 5548.71
Appropriations:
Dividend on Equity share including dividend distribution tax paid during the year* (E) (154.23) (102.81)
Retained earnings closing balance carried forward (F)= (D)-(E) 12547.17 5445.90

¦Pertains to dividend for the financialyear 2018 @ 15% (Previousyear @ 10% for the financialyear2017) on 85284223 equity shares of Rs.10 each.

Financial Performance 2019

Your Company delivered total revenues from operations of Rs. 17617.86million during the financial year 2019 as compared to Rs. 21916.54 million achieved inthe previous year. This decline of about 19.6 % in the total revenue from operations ismainly on account of adoption of lndAS115on "Revenue from Contracts withCustomers" during the year under review. The first time application of new accountingstandard Ind AS115on Revenue from Contracts with Customers had a negative impact onrevenue as your Company used "Modified Retrospective Approach" for transition toInd AS 115. Accordingly power and fuel cost in respect of onsite plants which in theprevious year was disclosed gross has now been shown net of sales related costs reimbursedby the customer. This has resulted in reduction in revenue and a reduction of an egualamount in power and fuel cost to the tune of Rs.4976.61 million for the year ended 31December 2019. The underlying gases revenue for the year 2019 without the adjustment asper Ind AS 115 however recorded a growth of about 3.1%.

Besides the divestment of the "South Region DivestmentBusiness" of the Company inter alia comprising of the 1800 tonnes per day onsite AirSeparation Unit atJSW Steel's steelworks at Bellary and the Company's packaged gasesplants located at Hyderabad and Chennai with effect from 16 December 2019 in compliancewith the order issued by the Competition Commission of India also contributed to somedecline in the revenues of the Gases business.

At the segment level the revenue from operations in the Gases businesssegment at Rs. 13221.04 million recorded a decline of 26.6% as compared to Rs. 18020.78million in the previous year on account of adjustment for Ind AS 115as mentioned above.The underlying growth in the gases business was achieved on the back of higher revenues inonsite and healthcare business together with pricing actions in onsite merchant andpackaged gases. Similarly the Project Engineering business segment (PED) revenues stoodat Rs.4396.82 million as compared to Rs. 3895.76 million during the previous yearrecording an increase of 12.9% year on year. The PED revenues grew primarily on the backof orders from steel and refinery sectors besides supplies for projects overseas.

During the year under review your Company achieved higher earningsbefore interest depreciation and amortisation (EBITDA) of Rs.4356.55 million for theyear 2019 as compared to Rs. 3490.09 million in the previous year. This increase in theoperating profit over 2018 was driven by growth in merchant business pricing actionsacross onsite bulk and merchant gases business and higher provisions made during 2018 inrespect of indirect taxes post medical retirement benefits gratuity etc. The Companyalso benefited from a lower depreciation of Rs. 1772.54 million during the year 2019 ascompared to Rs. 1991.38 million in the

previous year due to nil depreciation charged during the year oncertain 'assets held for sale' as per the order of the Competition Commission of India fordivestiture of certain assets as a condition for approving the global merger of Linde AGand Praxair Inc. During the year there has also been a reduction in the interest cost ofRs.164.51 million arising mainly as a result of repayment of the ECB borrowings. Profitbefore tax (PBT) before exceptional item improved to Rs. 1721.50 million as compared toRs. 471.70 million in the previous year.

The "South Region Divestment Business" was divested duringthe year on a "slump-sale" and "as is where is basis". This hasresulted in an exceptional profit of Rs. 8407.55 million after adjusting for carryingvalue of the business of Rs. 2739.23 million consent fees for assignment of contract ofRs. 2500 million and other related expenditure for sale of the business of Rs. 153.22million.

Your Company's Profit before tax for the year 2019 stood atRs.10129.05 million. Profit after tax of Rs. 7271.79 million for the year 2019 comparesfavourably as against Rs. 334.86 million achieved in the previous year.

Dividend

In recognition of the improved financial performance during the year2019 and the exceptional profits earned from the divestment of South Region DivestmentBusiness of the Company in compliance with the order of the CCI the Board of Directors ofyour Company is pleased to recommend a dividend of 100% (Rs. 10/- per equity share) on85284223 equity shares of Rs.10 each in the Company for the year 2019. This dividendincludes a Special Dividend of 75% (Rs. 7.50 per equity share) in view of the exceptionalincome earned by the Company from divestment of South Region Divestment business.

The Board's recommendation for dividend has been made after dueconsideration of the sustainability of the operating performance and cash flow position ofthe Company and is in line with its Dividend Distribution Policy. The dividend is subjectto the approval of the shareholders at the ensuing 84th Annual General Meeting scheduledto be held on Friday

18 September 2020 and will be paid on or about 23 September 2020 tothe Members whose names appear in the Register of Members as per the Book Closure datei.e. from Saturday 12 September 2020 to Friday

18 September 2020 (both days inclusive). This dividend will result incash outgo of Rs. 852.84 million as compared to Rs. 154.23 million in the previous yearwhich was inclusive of dividend tax. In view of the changes made under the Income tax Act1961 by the finance Act 2020 dividends paid or distributed by the Company shall betaxable in the hands of the Shareholders. Your Company shall accordingly make thepayment of the Dividend after deduction of tax at source.

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 alsoavailable on the Company's website at www.linde.in. [Annexure 1]

Update on Global Merger Voluntary delisting &Open Offer

The Members are aware that in response to the application made to theCompetition Commission of India (CCI) by Linde AG and Praxair

Inc. seeking approval for the business combination in India CCI videits Order dated 06 September 2018 (in Combination Registration No. C-2018/01/545)approved the aforesaid business combination subject to divestment of certain assetscontrolled by them in India. Accordingly Linde India Ltd. was required to makedivestiture of the Company's "South Region Divestment Business" and"Belloxy Divestment Business" as described in the CCI Order. During the year2019 Linde India has completed the divestment of its "South Region DivestmentBusiness" as per the Business Transfer Agreement signed with Air Water India Pvt.

Ltd. The "South Region Divestment Business" was divestedduring the year on a "slump-sale" and "as is where is basis" for anaggregate sale consideration of Rs.13800 million. This has resulted in an exceptionalprofit of Rs. 8407.55 million after adjusting carrying value of business of Rs. 2739.23million consent fees for assignment of contract of Rs. 2500 million and other relatedexpenditure for sale of the business of Rs. 153.22 million. The approval of theshareholders for divestment of the "Belloxy Divestment Business" was obtained on20 Tebruary 2020 and the same is presently in process.

Outcome of voluntary delisting of equity shares& subseguent Open Offer by The BOC Group Ltd.

The Members of the Company are aware that as informed earlier in thereport of the Board of Directors for the year 2018 the offer price discovered in terms ofthe SEBI Delisting Regulations was Rs.2025/- which was rejected by The BOC Group Ltd.and the person acting in concert on 24January 2019. Following the same The BOC Group Ltd.published necessary Post Offer Public Announcement for failure of the Delisting Offer innewspapers. In view of the failure of the Voluntary Delisting Offer The BOC Group Limitedas the Acquirer along with Praxair Inc. and Linde Holdings Netherlands B.V. as personsacting in concert (PAC) made an open offer during the year 2019 to acguire up to21321056 fully paid up equity shares of Rs.10/- each representing 25% of the votingcapital of Linde India Limited which closed on 17 September 2019. The BOC Group Ltd.acquired 25276 shares tendered under the said Open Offer on 27 September 2019. Theshareholding of The BOC Group Ltd. thus increased to 63988443 equity

shares representing 75.03% of the total voting share capital of LindeIndia Limited. The Acquirer has subseguently on 27 April 2020 for the purpose ofachieving the minimum public shareholding reguirement in compliance with the provisions ofSecurities Contracts (Regulation) Rules 1957 as amended SEBI (Listing Obligations andDisclosure Reguirements) Regulations 2015 read with para 2(a) and para 3 of the SEBIcircular no. SEBI/HO/CFD/CMD/CIR/P/43/2018 dated 22 February 2018 sold the said 25276shares through the stock exchange mechanism. As a result of the same the shareholding ofthe promoter group in the Company now stands at 75% of its total voting capital.

Consolidated Financial Statements

Although the Company does not have any subsidiary as per thereguirement of Section 129(3) of the Companies Act 2013 and the applicable IndianAccounting Standard 110 issued by the Institute of Chartered Accountants of India yourCompany has prepared consolidated financial statements for the year ended 31 December 2019together with its joint venture company viz. Bellary Oxygen Company Private Limited. Thesaid consolidated financial statements of the Company form part of the annual report.However since the Company does not have a subsidiary the compliance under Section 136about separate financial statements do not apply to it.

Details of Joint Venture Company

Bellary Oxygen Company Private Ltd.

As on 31 December 2019 the Company had one joint venture in the gasesbusiness viz. Bellary Oxygen Company Pvt. Ltd. which operates an 855 tpd Air SeparationUnit at Bellary Karnataka for supply of gases under a long-term gas supply agreement toJSW Steel Ltd.'s works at Bellary. Pursuant to Section 129(3) of the Companies Act 2013a statement containing the salient features of the financial statements of the jointventure company in the prescribed Form AOC-1 is annexed to this report. [Annexure 2]

Pursuant to the order dated 6 September 2018 passed by the CompetitionCommission of India (Combination Registration no- C-2018/01/545) the Members of theCompany had on 20 February 2020 approved by way of Special Resolution divestment of"Belloxy Divestment Business of the Company". The Belloxy Divestment Businesscomprises of the business of distributing and selling liguid oxygen liquid nitrogen& liquid argon purchased from Bellary Oxygen Company Private limited and conductedfrom the Bellary Trading office along with Company's investment in 15000000 equityshares of Rs.10 each fully paid up being 50% of the total issued and paid up sharecapital of Bellary Oxygen Company Private Ltd. As informed earlier your Company hadearlier classified its investment in their Joint venture Company Bellary Oxygen CompanyPrivate Ltd. together with the asset of Bellary Trading office as "asset held forsale".

LSAS Services Private Ltd.

The Board of Directors of the Company at its meeting held on 24 March2020 approved the execution of a Joint Venture and Shareholders

Agreement ("JV&SHA") with Praxair India Private Ltd. andLSAS Services Private Ltd. Pursuant to execution of the JV&SHA your Company holds2000000 equity shares in LSAS Services Private Ltd. at Rs.10 each share being 50% ofthe total issued and paid up equity share capital of LSAS Services Private Limited withthe remaining 50% being held by Praxair India Private Ltd. LSAS Services Private Ltd. hasthus become a Joint Venture Company of your Company with effect from 24 March 2020. TheBoard of Directors of the Company had also approved of Linde India Limited entering intoan O&M Services Agreement with Joint Venture Company under which the Joint VentureCompany will render Operation and Management Services to both the joint venture partnersfor their respective functions including Procurement SHEQ Human Resources Finance ITLegal Administration Business Development Onsite account management Sales &Marketing Product Management on an arms' length basis.

Business Segments

Your Company's business has two broad segments viz. Gases and RelatedProducts and Project Engineering in line with the operating model of the Linde Pic Group.The details about these business segments together with the industry developments aregiven below:

Gases and Related Products

The gases business is capital intensive by nature as it requires largeinvestments in setting up of air separation units as well as new packaged gases sites. Thesupply chain in the gases business also requires significant investments in the form ofdistribution assets and storage networks to service bulkvolumes as well as in the form ofcylinders to service relatively smaller volumes in packaged gases business. The industrycomprises major users in steel chemicals and refinery sectors and a large number ofmerchant liquid customers primarily in metal glass automobile petrochemicals andpharmaceutical sectors besides customers for medical gases. New applications continue toprovide growth opportunities. This growth also gets supported by the outsourcing of gasesrequirement under a 'Build Own Operate' (BOO) type of supply scheme opportunities mainlyin steel and refinery sectors.

The Gases and Related Products segment comprises of pipeline gassupplies (Onsite) to very large industrial customers mainly the primary steel glass andchemical industries supply of liquefied gases through Cryogenic tankers (Bulk) to caterto mid-size demands across a wide range of industrial sectors and compressed gas supply incylinders (Packaged Gas) for meeting smaller demand for gases mainly across fabricationmanufacturing and construction industry. The primary production of gases (oxygen nitrogenand argon) is mostly achieved through cryogenic distillation of air in Air SeparationUnits (ASU). Oxygen Nitrogen and Argon may also be produced in the gaseous state andsupplied through pipeline to the Onsite customers or produced in liquid form and stored ininsulated cryogenic tanks for supply to Bulk customers or further processed in thePackaged Gas plants to bottle compressed gas in cylinders. The strategy of the bulk andpackaged gas business continues to focus on building density and sustaining marketleadership through application led gas sales and enhanced service

levels. The Healthcare business an important part of the Gasesbusiness provides high quality gases for pharmaceutical use such as medical oxygensynthetic air and nitrous oxide in addition to providing state of the art medical gasdistribution systems to major hospitals.

As informed last year the 1290 tonnes per day air separation plant atJamshedpur has been operating on a Lease and O&M model with effect from 1 July 2018.As such there is no invoicing for the variable gas cost to the customer and accordinglythe power cost in respect of such gases consumed by the customer is not an element ofcost.

Another important highlight in the accounting of the gases revenuesduring the year has been adoption of Ind AS 115on "Revenue from Contracts withCustomers". The first- time application of new accounting standard Ind AS 115onRevenue from Contracts with Customers has resulted in a negative impact on revenue as yourCompany used "Modified Retrospective Approach" for transition to Ind AS 115. TheCompany had therefore appropriately evaluated its revenue recognition policy in the gasesbusiness with effect from 1 January 2019. Accordingly power and fuel cost in respect ofonsite plants which in the previous year was disclosed gross has now been shown net ofsales related costs reimbursed by the customer. This has resulted in reduction in revenueof the gases business during the year and a reduction of an equal amount in power and fuelcost to the tune of Rs.4976.61 million for the year ended 31 December 2019. This howeverhad a positive impact on the operating margin though operating profit from the gasesbusiness remained unaffected.

The growth of the Gases business is largely driven by overall growth ofthe economy more particularly the rise in index of industrial production. During thefiscal year 2019-20 the growth in India's GDP moderated from 6.1% to about 4.2% in theprevious year. This was mainly due to weak domestic consumption and contraction of demandleading to sluggish growth in manufacturing and subdued investments. This has contributedto overall weakening of revenues in the Gases business during the year under review.Besides more specifically foryourCompany the divestmentofits"SouthRegionDivestmentBusiness" inter alia comprising of the 1800 tonnes per day onsite Air SeparationUnit atJSW Steel's steelworks at Bellary and the Company's packaged gases plants locatedat Hyderabad and Chennai with effect from 16 December 2019 in compliance with the orderissued by the Competition Commission of India also contributed to some decline in therevenues of the Gases business for the year 2019.

The total revenue from operations in the Gases business at Rs.13221.04 million recorded a decline of 26.6% as compared to Rs. 18020.78 million in theprevious year on account of adjustment for Ind AS115as mentioned above. However theunderlying growth in the gases business was achieved on the back of higher revenues inonsite and healthcare business together with pricing actions in onsite merchant andpackaged gases.

As per the report of World Steel Association the total steelproduction in India recorded a lower growth of 1.8% during the year 2019 as compared to2018. India however maintained its position of the second largest producer of crude steelin the year 2019 at 111.2 million tonnes.

While the marginally higher domestic demand during the year 2019 wasbacked by Government's thrust on infrastructure development it was largely offset bycontinued weakness in the automotive real estate and construction sector.

In view of the above the revenues in the underlying gases businessduring the year 2019 witnessed higher oxygen demand from the steel sector. Besidesopportunity business in steel sector and pricing actions in the bulk and packaged gasesbusiness contributed to higher revenues. However in view of a decline in the overallmanufacturing sector the demand for liquid nitrogen recorded a degrowth. The demand forliquid argon also decreased due to ongoing slowdown in automobile sector. The automotivesector has been facing severe contraction of demand due to combined effect of introductionof BS VI norms in India new truck axle norms and increase in third party motor insurancecost and the liquidity problems in financing of new vehicles which impacted the demand inpassenger and commercial vehicles as well as two wheelers.

The bulk business which is a major part of the merchant and packagedgases business grew nearly 3% as compared to the previous year mainly on the back ofpricing actions. The growth in the Bulk business was supported by sales to refineries andsteel mills as well as sales through distributors. The Industrial Packaged Gas Businessregistered volume degrowth mainly due to sustained downturn in the automobile industry.There has however been remarkable growth in revenues of Special Products & Chemicalsportfolio. Helium prices continued to remain very remunerative though the supplies wereunder pressure.

Linde India is consistent in its pursuit of introducing new productsand applications into the market with a view to enhance gas sales with improved margins.During the year under review your Company was able to secure a number of orders byleveraging Linde applications technology some of which are highlighted below.

Your Company achieved LIN dosing conversion on existing water lines inassociation with Varun Beverages (PepsiCo). As informed in last year your Company hadsecured its first Instant Quick freezer for shrimp freezing and in line with the same hadconducted extensive trials at its Pood Lab and Technology Centre and at the customer endto achieve 1 Shrimp freezing customer (IQT line) and 1 Cake customer (cryogenic batchfreezer). Besides we have also started implementation of locally made cryo-cooling screwto convert conventional grinding into cryogenic grinding line. The success of cryogenicgrinding would open-up untapped conventional grinding market. The packaged ready toeat/ready to cook product market is growing fast in metro cities with growing middleclass. With increasing volumes for processors right packaging solution is a must. YourCompany has been strengthening Linde's collaboration with Sealed Air for packagingmaterial & OEMs and has also added 2 more supply sites for large production of pornthoswith Linde's pre-mix gas.

Global crude prices hit an average price of $64 a barrel during 2019a fall of 8% than average price of 2018. While our transportation cost didn't change muchin 2019 as compared to 2018 our application oriented businesses didn't see much of growthin the Metals segment

as the refined products basket of Propane Naphtha and Furnace Oildidn't see the appreciation that would trigger our application solutions to brace with thecost benefit offerings. The cost economic dynamics for steel sector continued to be infavor of furnace operations on Air Fuel technology vis a vis our REBOX Oxy-fuel technology- the former being a more viable option under the low fuel prices and demand.

Your Company's application technology sales force has been makingefforts to enter some of the newer industry segments namely automotive industriesrailways powertransmission tyres heavy engineering chemical etc. leveraging Linde'ssuite of applications. We have been continuing to use applications technology such asCIRRUS CUMULUS N2 Lock etc. in the pharmaceutical industry.

The Healthcare business continues to remain a focus area for growth ofthe gases business and your Company's brand remains a leader in the healthcare gasesmarket. The Company has maintained its focus on both the LIV cylinders for medicaloxygen as well as ENTONOX an anaesthetic gas used for natural childbirth as well as forshort term pain relief in a variety of medical procedures. Your Company organized severaltraining programs for pain management in labour during 2019 which helped in makinginroads in many new hospitals and also increased revenues from Entonox as compared to theprevious year. Similarly awareness for the use of lightweight LIV medical cylinders toincrease patient safety in emergencies and ease of transport also helped gain new businessin LIV. The revenues from medical gases grew on the back of liguid medical oxygen demandfrom new customers as well as incremental demand from the existing ones such as PGIChandigarh Motilal Nehru Hospital Prayagraj Ganesh Shankar Vidyarthi Memorial HospitalKanpur and others.

Innovative Marketing Strategy:

In its focus on digitisation in marketing strategy your Company hasbeen a pioneer in adoption of best Industry practices and launched e-sale a first of itskind e-commerce portal for sale of cryogenic products. This provides your Company with afirst of its kind strategy in gases business in India where cryogenic products are beingsold through an e-commerce portal. The e-sale facilitates a quick turnaround by selling toour channel partners in an efficient smooth and faster way as compared to the traditionalmanual process. This initiative will help avoid potential high stock situations therebyimproving plant efficiency by ensuring uninterrupted operations.

As a part of its digitalization agenda Linde India identified a needfor experimental marketing for its niche product LIV™. Your Company thereforecreated an Augmented Reality mobile application with an aim to transform traditionalsee-to-feel experience. The App demonstrates the ease of use and distinctive features ofthe product which is difficult to share by videos brochures or other traditionalmarketing collaterals.

Another unigue feature of your Company's gases business is trackingcustomer experience on a defined metric system with different customer satisfactionindices (CSI). The combined analysis of the various indices gives a score for the CustomerExperience. Your Company's

CX performance is measured on 3 Key Performance Indicators (KPI) forguery/complaint resolution. During the year 2019 KPI 1 (acknowledgement) was 100% KPI 2(response) & KPI 3 (resolution) scores were at 98%. The Customer Experience programwas audited for ISO 10002:2018 & ISO 10004:2018 in December 2019. The certificationwill help Linde India in identifying the opportunity areas of perceived expected andactual service levels through benchmarking against a global standard which would beaudited every year henceforth.

Linde India also measured Customer Experience with 3 different metricsin 2019 by conducting a Customer Experience Survey. The Customer Satisfaction Score was4.0 Customer Effort Score was 3.9 & Net Promoter Score was 39% from a sample size of436 respondents.

The Distribution function which takes care of the supply chain in theGases business is key to its strategy. As mentioned earlier the supply chain requiressignificant investments in the form of distribution assets and storage networks to servicebulkvolumes as well as in the form of cylinders to service relatively smaller volumes inthe packaged gases business. During the year the Company continued its focus on improvingefficiency of the distribution function by phasing out of old 3 and 5 KL VITTs andreduction of fleet size flow meter based supply to healthcare customers improvingdelivered quantity per trip by about 9% reducing product loss in distribution by 10% andreducing return of undelivered products by about 4%. The function has also made use ofdigitation such as SMS for delivery information to bulk customers digitized pre &post departure check on vehicles & drivers driver engagement/briefing &debriefing processes centralized invoicing with digitized signature all aimed atreducing distribution related timelines and enhancing the quality of the distributionprocesses.

Transport safety across India remains challenging and the Company hasgiven high priority to this area with a view to overcome and mitigate the safety risksinvolved in distribution of products. Your Company has installed eguipment to monitorFatigue and Distraction of the driver on road on 100% of its vehicles. Your Company'sTransport Operation Center now covers 100% of its fleet for both bulk and packaged gasesbusinesses. Your Company has also given a sharp focus on driver risk profiling andcategorizing as High Medium and Low driver training need analysis digital identitycards for drivers for monitoring of service hours etc. with a view to overcome thevarious challenges in transportation which has also resulted in reduced transport relatedincidents in the Company.

Project Engineering

The Project Engineering Division (PED) comprises the business ofdesign engineering supply installation testing and commissioning of Air Separationplants and related projects on turnkey basis. The project engineering business thereforereflects the appetite for new projects in diverse core sectors of the economy.

The Project Engineering Division is having a U stamp certifiedmanufacturing works to fabricate core proprietary eguipment such as distillation columnsfor air separation plants cryogenic liguid storage

tanks ambient and steam bath vaporizers process vessels UNIT plantssmall sized cold boxes containerized micro plants for cylinder filling for in-house useas well as for sale to third party customers.

The order intake of the Division during the year 2019 was to the tuneof more than Rs 4500 million which mainly consisted of a large value order for settingup Air Separation Units at a customer's steel works on turnkey basis at Bellary in thestate of Karnataka and another order for supply of a Cryogenic N2 plant for a customer inrefinery sector. Apart from this the Division also received orders aggregating Rs.439million for supplying small capacity Cryogenic N2 plants from customer in public sectorfor their fertilizer plants.

The Division has delivered a strong performance in the year 2019 byachieving its highest ever revenue of Rs. 4396.82 million as compared to Rs. 3895.76million recorded in 2018.

During the year the Division successfully completed supply anderection of a 200 tonnes per day IMPACT 4 Air Separation Unit at Semij in Gujarat for INOXAir Products Private Ltd. The Division is engaged in the supply and erection of fivecryogenic N2 plants for its customers which would be completed during the year 2020.Besides two more IMPACT 4 Air Separation Units each of 200 tonnes per day capacity arealso expected to be completed during the year 2020 for INOX Air Products Pvt. Ltd.

The Division is also engaged in turnkey contract for supply anderection of the 2nd Air Separation Unit at JSW's Dolvi steel works with a capacity of 2200tonnes per day which would be completed in the year 2020.

During the year 2019 the Division has earned a turnkey contract fromwithin the Linde Group for supply and erection of a 629 tonnes per day Air SeparationUnit at Paradip Refinery of Indian Oil Corporation.

PED is working to receive IMS Certificate (ISO 9001 1400118001) fortheir EPC business which will enhance its ability to get more international business.This certification is expected to be received during the year 2020.

As on 31 December 2019 the Project Engineering Division's third-partyorder book stood at over Rs.6300 million.

Opportunities and Threats

The Government of India has an aspirational goal to become a USD 5trillion economy by the year 2025. Although this seems a challenging task however theresolve of the Government to focus on make in India and the new focus on Self ReliantIndia presents an excellent opportunity to participate in the growth of the manufacturingindustry in the years ahead. Besides imposition of anti-dumping duties on Chinese steelproducts to boost domestic steel production national infrastructure pipeline withprojects spread across many states over the next five years production of new vehiclesmeeting BS VI norms significant expansion of infrastructure and railways are expected toaugment demand for gases in the future.

The recent geopolitical developments may result in several globalmanufacturers in pharma chemicals and other industries shifting their operations fromChina to India.

Demand from the steel sector remains the main driver for the growth ofthe gases business in India and the expansion as well as consolidation in primary steelsector and refineries is expected to create opportunities for the Project Engineeringbusiness. The focus on application technology-based selling of gases in manufacturingfood and beverage cement paper oil and gas etc. is likely to create more demand forthe gases business.

Healthcare has become one of India's largest sectors both in terms ofrevenue & employment. The industry is growing at a tremendous pace owing to increasingexpenditure by public as well private players. The healthcare market is expected to growat a CAGR of 16-17 percent in the coming years. The spread of Covid-19 in India haspresented a great opportunity in the healthcare sector with need for addition of 3 millionbeds for India to achieve the target of 3 beds per 1000 people. This Industry offers atremendous scope of infrastructure growth across the country especially in tier 2 &tier 3 cities. Besides your Company also sees opportunity in the fast growing food andbeverages market.

The present economic conditions in India and globally and the slowingeconomies across the globe is one of the major threats to global prosperity and economicgrowth which obviously impacts all sectors including the gases industry in India. Indiahas seen contraction in almost all the core sectors with negative growth in IIP during thelast few quarters. The significant downturn in automotive sector which is one of theimportant user of industrial gases poses some challenges.

Aggressive addition of new merchant capacities by competitors in analready competitive marketplace and some of the steel majors implementing plans to set upAir Separation Units may have adverse impact on the fortunes of the gases industry andprice in certain geographies. A more detailed information on risk is covered in thisreport under the risk management section.

Last but not the least the outbreak of Covid-19 pandemic in India andindeed across the globe since early 2020 has had an unprecedented impact on the countryits people and the world economy as a whole. As a preventive measure the Government ofIndia like some of the other countries announced a nationwide lockdown from 25 March 2020to contain the spread of Covid-19. While the future impact on the business operations as aresult of Covid 19 is difficult to assess at this point as the situation is unravellingat a fast pace. The concerns on macro impact of mini lockdowns across certain states andcontainment zones remain as we continue to make progress on Unlock phase 1. Your Companyis however fully committed to working with the Government and all its partners to ensurethat we overcome this crisis together. Our portfolio of Gases customer contracts andProject Engineering capabilities our financial strength and Linde's brand and strength ofthe management team give us a competitive advantage to deal with the crisis and the newnormal.

Risk Management

Your Company's business faces various risks - strategic as well asoperational in both its segments viz. Gases and Project Engineering which arise from bothinternal and external sources. As explained in the report on Corporate Governance thecompany has an adeguate risk management system which takes care of identificationassessment and review of risks. Your Company held a refresher risk workshop on 27June2019 which was attended by the senior management team with a view to refresh the variousrisks facing the Company. The risks being addressed by the Company during the year underreview included risk relating to aggressive capacity addition by competitors risk fromnew global gas players who may have access to lower capital cost or cheaper productofferings risk of integrated Steel plants owing ASUs in future risk arising from delayin setting up new organisation structure etc.

The most significant emerging risk is the ongoing outbreak of the novelcoronavirus (Covid-19). This has presented the world with one of most challenging timesever. The outbreak of Covid-19 and its rapid acceleration across the globe are indeedconcerning and your Company's strategy is to overcome the crisis partnering with theGovernment and all its stakeholders.

Your Board of Directors provides oversight of the risk managementprocess in the Company and reviews the progress of the action plans for the identified keyrisks with a distinct focus on top 5 key risks on a quarterly basis.

The Company has a Risk Policy with a view to provide a more structuredframework for proactive management of all risks related to the business of the Company andto make it more certain that the growth and earnings targets as well as strategicobjectives are met.

Finance

Towards the end of the year 2019 your Company received a sum ofRs.13800 million from the divestment of South Region Divestment Business which was donein compliance with the order of the Competition Commission of India. The receipt of thisamount significantly changed the cash flow position of the Company prompting it to repayits high cost borrowings from banks as well as the ECB from the promoter group.

During the year 2019 your Company made full repayment of loanfacilities by way of external commercial borrowings (ECB) aggregating to Rs. 6277.76million from Linde AG through its divestment proceeds and internal accruals. 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).

Your Company also repaid two USD denominated term loan facility availedfrom Citibank aggregating to USD 23.28 million (fully hedged at Rs. 1500 million) andRupee term loan of Rs. 600 million out of divestment proceeds from the South RegionDivestment Business. Your

Company also had a Rupee term loan of Rs. 1000 million which wasrepaid in May 2020. The term loan facilities were executed to fund ongoing small capitalexpenditure and working capital reguirements.

The Company had earlier negotiated at arm's length an inter corporateloan of Rs. 1000 million from Linde Engineering India Pvt. Ltd. The facility was executedas an alternative financing mode for short-term funds. This facility was in addition tothe existing inter corporate loan of Rs. 2400 million from the same party. During theyear the Company fully repaid intercorporate borrowings of Rs. 3400 million out of itsdivestment proceeds.

Your Company also availed short term working capital demand loans fromits banks for meeting cash flow mismatches which were fully repaid during 2019.

There were no material changes and commitments affecting the financialposition of the Company which occurred between the end of the financial year to whichthese financial statements relate and the date of this report. As on 31 December 2019 theCompany had a total outstanding borrowing of Rs 1084.72 million with maturity of lessthan six months from the year end.

Credit Rating

The Company's total bank facilities- both fund-based and non-fund basedare rated by CRISIL which has reaffirmed its long-term credit rating of CRISIL AA withStable outlook on its bank facilities. The rating denotes high degree of safety regardingtimely servicing of financial obligations.

Large Corporates Disclosure for Lund raising through Debt securities

Your Company met the criteria specified by SEBI for large corporate forfund raising through debt securities. Accordingly necessary disclosure has been submittedto both BSE Ltd. and National Stock Exchange of India Ltd. where the shares of theCompany are listed.

Deposits

During the year the Company has not accepted any deposits from publicunder Chapter V of the Companies Act 2013.

Significant and Material Orders passed by the Regulators or Courts

There have been no significant and material orders passed by theRegulators or Courts or Tribunals impacting the going concern status and Company'soperations.

Particulars of loans guarantees or investments The particulars ofloans guarantees given and investments made during the year under Section 186 of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Reguirements)Regulations 2015 are annexed to this Report. [Annexure 3]

Investor Education and Protection Fund

During the year under review your Company transferred the 57th unpaid/unclaimed dividend amount of Rs.0.62 million for the financial

year ended 31 December 2011 to the Investor Education and ProtectionFund in compliance with the provisions of Sections 124 and 125 of the Companies Act 2013.In compliance with these provisions read with the Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 your Company alsotransferred 27743 shares to the Demat Account of the IEPF Authority in respect of whichdividend had remained unpaid/unclaimed for a consecutive period of 7 years. Furtherinformation in this regard is provided in the Corporate Governance Report.

Safety Health Environment and Quality (SHEQ)

Your Company continues to remain fully committed to Safety which isone of the foundation principles upon which Finde spirit has evolved and as such Safetyremains one of our topmost priority. Compliance with SHEQ rules standards procedures arepre-requisite for all employees & contractors and the management is committed toensuring that all personnel are trained and made competent before undertaking any safetycritical job for the Company.

Global Safety Commitment Day 2019 was celebrated at all Finde Operatingunits and project sites on 19 June 2019 with a sharp focus on our Safety Principles. Theevent has given an opportunity to collectively reinforce our goal of "Zero"injuries and incidents and think about our behaviours and how we can contribute toimproving our safety culture and performance. Also as an Asia Pacific initiative a weekof safety commitment was celebrated starting from 12 June 2019 at all our sites/ officesto engage our teams with various SHEQ activities focusing on topics like office safetyhome safety transport safety life-saving rules etc.

As a part of the Supply & SHEQ Improvement plan key programs wererolled out to bring more focus on risk identification & control measures reinforcingtraining & competencies for all high-risk jobs etc. Statutory compliance managementsystem was introduced to develop suitable tool for tracking the compliance of applicablestatutory permits returns and licenses for each of the Finde sites with necessaryescalation matrix. Validation of Electrical Single Fine Diagram & P&IDs for PGPplants helped consolidation of up-to-date Electrical Single Fine Diagram & P&ID inthe standard format which are stored in our global database. Contractor Managementprogram for Distribution and Operations were reinforced by regularly monitoring their SHEQperformance identifying gaps training needs and ensuring compliance to ContractorManagement standards.

Moreover in order to strengthen the SHEQ performance an IntegratedSafety Plan has been introduced covering areas of improvement in Process SafetyDistribution Safety Operational Safety Behavioral & Personnel Safety Quality &Environmental Safety and to also reinforce the SHEQ Policy & Rules.

With the increased use of Electronic & Speciality Gases the Safetyin electronics gases at Mundra Solar was reviewed by Linde Asia Pacific team. The firstAudit within one year of set-up and stability with minimum findings is testament to ourmanagement commitment and our teams knowledge and skillsets.

Transport Safety remains the biggest challenge and focus area forcontinuous improvement for our organization. According to the statistical analysis fromthe past couple of years transport related incidents are mainly due to driver fatigue& distraction. To monitor the fatigue & distraction we have installed F&D(Fatigue and Distraction) devices in 100% vehicles (Bulk & PGP). In our continuousendeavor to improve Transport Safety a Transport Operation Centre (TOC) has beenestablished at the Head Office in Kolkata. The Transport Operating Centre uses the most upto date technologies such as Artificial Intelligence (Al) Machine learning etc. anddigitalized driver risk profiling covering inputs from various technologies installed inour vehicles. It also identifies positive driving behavior of the drivers using livemonitoring data and video analytic skills and periodic trend analysis.

Further in continuation to our transport safety initiative we have introducedmonitoring of driver duty & driving hours through digitized mode. In our efforttowards improving the quality of the drivers we have taken them through variousbehavioral safety programs such as Act Safe which was reviewed by the Global BSHEQChampion and well appreciated for compliance. A special campaign on Overtaking &Fatigue Management was organized which covered 100% drivers & transport contractorsto focus on the area of improvements identified in investigation of Major TransportEvents.

Your Company continues to mandate complete transparency in reporting ofall accidents and incidents; even the minor ones are reported. Thereafter depending onthe incident the same is duly investigated; corrective actions are identified andactioned upon. The Lessons from Incidents (LFIs) of all major Incidents are circulated toprevent repeat of similar incidents.

With the help of the Major Hazards Review Programme (MHRP) all majorsites have been certified with relevant MHRP CAT1 CAT2 and CAT3 certificates. This MHRPprogram helps the organization to assess the offsite risk due to our operations; therebybased on risk categorization risk control measures are established to reduce the offsiterisk.

Your Company has successfully completed annual environmental datareporting using Credit360 for 21 sites in India including ASUs and the Cylinder fillingsites. This data collection is reflected in both the Linde Non-Financial Report andSustainable Development Report. The Environmental data collection program helps to meetour goals for environmental reporting by identifying environmental improvementopportunities prioritising environmental actions and measures in order to achievecontinuous performance improvement and monitoring environmental targets to ensureprogression towards long term goals of no harm to people and the environment.

As a part of our commitment to environment protection initiatives likerainwater harvesting water recycling recycling of waste generated continue to bereinforced. All ASU sites are certified and sustained with IS014001 certification. Theactions for certification to the latest ISO 9001:2015 & ISO 14001:2015 standards havealso been initiated.

Security vulnerability risk assessments are carried out at high risksites and effective CCTV monitoring arrangements have been made at some of the high-risklocations.

Human Resources

Employee engagement and talent retention were the focus areas of HumanResources function in 2019. We digitalized our employee engagement process by introducinga unigue Artificial Intelligence (Al) based tool called Amber. The tool which is in theform of a chatbot reaches out to employees periodically to gauge their engagement levels.Employees are encouraged to share their views openly on any aspect of their work life.Areas of concern highlighted by employees were addressed through face to face meetingswith the employee and functional heads. So far this initiative has been extended to about400 employees and we intend to extend it to a larger group in the year 2020. The opennesswith which employees have been sharing their experiences is commendable.

Our continuous efforts to build a talent pipeline for successionplanning continued in 2019 through our Young Talent Development programme. The youngtalent who were onboarded in the previous year and put through year-long orientation andinduction were confirmed on the rolls of the Company after an objective performanceassessment. Retention of critical and key talents had been on focus throughout the year.

The Human Resources team also contributed to the productivity initiativeof the organization by introducing certain policy changes.

We are committed towards creating a work environment which is safe andfree of harassment for all our employees and associates. Our commitment to safetycontinued through imparting regular training programmes on SHEQ for newly onboarded andexisting employees and associates.

During the year the Human Resource function also supported thedivestment of the South Region Divestment Business of the Company which was divestedalong with employees in compliance with the order of the Competition Commission of India.HR was instrumental in ensuring the smooth transition of both the direct and indirectmanpower of South Region Divestment Business to the buyer's organization. In the area ofindustrial relations your Company was able to arrive at an amicable settlement withworkmen union on matters that have been under protracted litigation at various courts formore than 20 years.

The Company continued to have harmonious employee relations across allits plants and offices in India. As on 31 December 2019 the Company had a manpowerstrength of 654 on its payroll.

Disclosure as per the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013

The Company remains committed to provide and promote a safe healthyand congenial atmosphere irrespective of gender caste creed or social class of theemployees. The Company's Policy on Prevention of 'Sexual Harassment' is in line with theprovisions of The Sexual Harassment of

Women at Workplace (Prevention Prohibition and Redressal) Act 2013and the Rules made thereunder. Internal Complaints Committee (ICC) has been set up toredress complaints if any received regarding sexual harassment. All employees whetherpermanent contractual temporary etc. have been covered under this Policy. The Policy isgender neutral.

During the year 2019 no complaint alleging sexual harassment wasreceived by the Company. As a preventive measure and to create awareness in this area theCompany has been conducting refresher programs for all permanent and contractualemployees.

Prescribed Particulars of remuneration

The disclosures pertaining to ratio of remuneration of each Director tothe median remuneration of all the employees of the Company percentage increase inremuneration of each director and other details as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) 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 Rule 5(2) and 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 as amended a statement containing thenames and other prescribed particulars of top 10 employees in terms of remuneration drawnand that of every employee who if employed throughout the year ended 31 December 2019 wasin receipt of remuneration aggregating to not less than Rs. 10.20 million; and if employedfor part of the said year was in receipt of remuneration not less than Rs.0.85 millionper month is annexed to and forms part of this Report. However having regard to theprovisions to the first proviso of Section 136(1) of the Companies Act 2013 the AnnualReport is being sent to all the Members of the Company excluding this information. Theaforesaid statement is available for inspection by shareholders at the Registered Officeof the Company during business hours on working days up to the date of the ensuing AnnualGeneral Meeting. Any shareholder interested in obtaining a copy of the said informationmay write to the Company Secretary at the Registered Office of the Company and thesame will be furnished on reguest and the said information is also available on thewebsite of the Company. None of the employees is covered under Rule 5(3)(viii) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended.

Corporate Social Responsibility (CSR)

As a member of the Linde pic Group your Company has been a sociallyresponsible corporate and our core values define the way we operate and create valuewithin the larger society. Linde's core principles and values form the basis of its CSRpolicy. Your Company is therefore committed to behave responsibly towards people societyand the environment for inclusive growth of the society where we operate to conservenatural resources and to develop sustainable products. In line with its CSR Policy LindeIndia's CSR commitment centres around four thematic areas- Education Health Environmentand Livelihood (skill development) and other areas specified in Schedule VII to theCompanies Act 2013.

Some of the CSR projects/initiatives taken up/sustained during the yearinclude providing special education to differently abled children at Indian Institute ofCerebral Palsy (IICP) supporting homes of underprivileged children and schools run byNGOs at Kolkata and Chennai and contribution to Odisha Chief Minister's Relief Fundtowards relief for victims of cyclone Fani organising blood donation camp in Kolkataetc. Your Company spent an amount of Rs.2.46 million during the year on various CSRprojects/activities as above against the mandated CSR spend of Rs.2.53 million as per theCompanies Act 2013. Your Directors wish to state that the CSR Committee and the Board ofyour Company had amongst others approved a CSR budget for Rs.10 lakhs during the year 2019to support Gases Industry Drivers Community Project - involving defensive driver trainingfor the drivers in the Gases industry for making the highways and the roads safer andscholarship program for their children. However the modalities of the project could notbe finalised during the year 2019 as a result of which no spend against the budgetedamount could be made during the year. This has resulted in a negligible unspent amount ofRs.0.07 million which is proposed to be spent in the year 2020.

The details of the CSR projects/ activities for the year 2019 arecovered in the Annual Report on CSR activities which is annexed to this Report. [Annexure5]

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

Business Responsibility Report

The Linde pic Group supports the United Nations Global Compact andevery year publishes a detailed Corporate Responsibility Report incorporating the GlobalCompact's ten principles and their impact into our business activities in the mannerrequired for GRI reporting.

As a member of the Linde pic Group your Company has adopted thevarious policies of its parent that relate to the 9 principles laid down by Securitiesand Exchange Board of India for business responsibility reporting by the top 500 listedentities in India based on market capitalisation. As stipulated in Regulation 34(2) of theSEBI Listing Regulations 2015 your Company has included a Business Responsibility Reportas an integral part of the Annual Report for the year 2019 briefly describing initiativestaken by it from an environment social and governance perspective during the year underreview.

Corporate Governance

As a member of the Linde pic Group your Company attaches greatimportance to sound responsible management and good corporate governance. Arising from thecompletion of the global merger between Linde AG and Praxair Inc. Linde pic acompany incorporated in Ireland has become the new holding company of both Linde AG andPraxair Inc. Linde pic now has redefined its vision mission and strategic direction andhas replaced some of its legacy codes and policies to align with the new Linde values.Your Company however remains 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 yourCompany to ensure that their actions are always based on principles of responsiblecorporate management. In the Linde pic Group corporate governance is seen as an on-goingprocess. Your company has already complied with some of the new recommendations of theKotakCommittee on Corporate Governance which were implemented in May 2018 last year andis continuing to comply with all new reguirements on an ongoing basis. Your Companyclosely follows the developments in the governance norms and has taken lead in ensuringcompliance with the same. A separate report on Corporate Governance along with thecertificate of the Auditors Deloitte Haskins & Sells LLP confirming compliance ofthe conditions of corporate governance as stipulated under SEBI (Listing Obligations andDisclosure Reguirements) Regulations 2015 forms an integral part of this annual report.

Board Meetings

A calendar of Board and Committee meetings is agreed and circulated inadvance to the Directors. The Board met eight times during the year under review detailswhere of are given in the Corporate Governance Report which forms part of this Report.

Board Membership Criteria

The Nomination and Remuneration Committee of the Company identifies andascertains the integrity qualification expertise positive attributes and experience ofpersons for appointment as Directors and thereafter recommends the candidature forelection as a Director on the Board of the Company. The Committee follows defined criteriain the process of obtaining optimal Board diversity which inter alia includes optimumcombination of executive and non-executive directors appointment based on specific needsand business of the Company qualification knowledge experience and skill of theproposed appointee etc. The Policy on appointment and removal of Directors Boarddiversity criterion and remuneration to Directors/Key Managerial Personnel/SeniorManagement forms part of the Nomination and Remuneration Policy of the Company which isavailable on the Company's website at www.linde.in.

Familiarisation Programme for Directors

In terms of Regulation 25(7) of SEBI (Listing Obligations andDisclosure Reguirements) Regulations 2015 your Company is required to conduct theFamiliarisation Programme for Independent Directors (IDs) to familiarise them about theirroles rights responsibilities in your Company nature of the industry in which yourCompany operates business model of your Company etc. through various initiatives. Thedetails of training and familiarization programmes for Directors has been provided underthe Corporate Governance Report. Apart from the initial familiarisation program as abovepresentations are made to the Board Members at almost all board meetings to enable them tofamiliarise and update themselves with the changes in the applicable legal frameworkcompetition industry specific developments etc. The details of the familiarisationprograms held during and up to the year 2019 are available on the Company's websitewww.linde.in.

Performance Evaluation

During the year pursuant to provisions of Section 134 Section 149read with Code of Independent Directors (Schedule IV) and Section 178 of the CompaniesAct 2013 and SEBI (Listing Obligations and Disclosure Reguirements) Regulations 2015the Nomination and Remuneration Committee of the Board reviewed the process and criteriaused in the previous year for evaluating the performance of the Board its CommitteesChairman of the Board and the individual directors. Arising from the review minorimprovements were made in the performance evaluation form for the year 2019. Like theprevious year an online platform was provided to the Directors for participating in theperformance evaluation process which contained a structured questionnaire for seekingfeedback from the directors on certain predefined attributes applicable to them includingsome specific ones for the Independent Directors. More details about the performanceevaluation process followed by the Board is provided in the Corporate Governance Report.

Declaration of Independent Directors The Company has receiveddeclarations from all the Independent Directors of the Company confirming that they meetthe criteria of independence as prescribed both under the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Reguirements) Regulations 2015.

Certificate for non-disqualification of Directors On an annual basisthe Company obtains from each Director details of their Board and Committee positionshe/she occupies in other companies and changes if any regarding their directorships. TheCompany has obtained a certificate dated 28 Tebruary 2020 from M/s. P Sarawagi &Associates Practicing Company Secretaries confirming that none of the Directors on theBoard of the Company have been debarred or disqualified from being appointed or continuingas directors of companies by the Securities and Exchange Board of India or Ministry ofCorporate Affairs or any such authority and the same forms part of this report.

Internal Control Systems and their adequacy

Your Company has an adequate system of internal control commensuratewith the size and the nature of its business which ensures that transactions arerecorded authorised and reported correctly apart from safeguarding its assets againstloss from wastage unauthorised use and removal.

The internal control system is supplemented by documented policiesguidelines and procedures. The Company's Internal Audit Department continuously monitorsthe effectiveness of the internal controls with a view to provide to the Audit Committeeand the Board of Directors an independent objective and reasonable assurance of theadequacy of the organization's internal controls and risk management procedures. TheInternal Audit function submits detailed reports periodically to the management and theAudit Committee. The Audit Committee reviews these reports with the executive managementwith a view to provide oversight of the internal control systems.

Your Board has in compliance with the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 approved severalpolicies on important matters such as related party transactions risk managementnomination and remuneration of directors and senior managers whistle blower mechanismCSR insider trading practices and procedures for fair disclosure of unpublished pricesensitive information materiality of events/ information preservation of documentsetc. which provide robust guidance to the management in dealing with such matters tosupport internal control. The Company reviews its policies guidelines and procedures ofinternal control on an on-going basis in view of the ever-changing business environment.

Fraud in Project Engineering Division Despite all the endeavours andfocus on internal controls during the year under review the management detected a fraudinvolving misappropriation of the Company's funds in the Project Engineering Division(PED) of the Company which was committed by an employee in connivance with twocontractual employees and certain vendors of the Division. The misappropriation of fundswas carried out by making payments to the vendor through false and unauthorized invoicesand fraudulent accounting entries passed by the employee. The amount involved in the fraudover last four years commencing from 2016 amounted to about Rs. 36 million which hasalready been charged to revenue in the accounts in respective years. This was immediatelyinformed to the Audit Committee the Board of Directors Statutory Auditors and InternalAuditors of the Company. The Internal Audit department has carried out a thoroughinvestigation of these transactions and provided their recommendation to the Board. Themanagement had in discussion with the Audit Committee and the Board appointed anindependent firm for forensic investigation of the misappropriation who have alsosubmitted their findings and recommendation to the Board.

The Management has since taken consequent management actions againstthe persons involved in the misappropriation of funds suspended transactions with thereported vendors and blacklisted them revised IT policy and reviewed all relevantinternal controls both automated and manual and implemented adequate changes in thecontrol environment and the organization structure to mitigate the risk.

During the year Ernst & Young LLP were engaged by the Company forreviewing and strengthening the framework of its existing internal financial controlsacross the Company and testing of the operating effectiveness of various internal controlsin the organisation. Ernst & Young has submitted a report to the Audit Committee andthe Board on their findings based on the testing of the key controls for the year 2019.The Statutory Auditors of the Company have also independently reviewed internal financialcontrols over financial reporting and Ernst & Young as well the Statutory Auditorshave confirmed that these controls were operating effectively as at 31 December 2019. Asstated in the Responsibility Statement your Directors have confirmed that based on thereviews performed by the internal auditors statutory auditors cost auditors secretarialauditors and the reviews undertaken by the management and the Audit Committee the Boardis of the opinion that the Company's internal financial controls have been adequate andeffective during the financial year 2019.

Directors

During the year under review there has been several changes in theBoard of Directors of the Company. Mr Sanjiv Lamba Chairman of the Board retired byrotation as a director on the Board as he did not seek re-election at the last AnnualGeneral Meeting of the Company held on 16 May 2019. Mr Moloy Banerjee also stepped downfrom the office of Managing Director with effect from close of business hours on6June2019inviewof organizational changes within the Group resulting in broadening of hisrole and responsibilities. Ms Des Bacher resigned from the Board with effect from 11November 2019 in view of changes in her role within the Group.

During the year at the Board meeting held on 6June 2019 Mr AbhijitBanerjee was appointed as an additional director and Managing Director of the Company fora term of three years subject to the approval of the Members of the Company with effectfrom 7June 2019. Mr Robert John Hughes was appointed by the Board as an additionaldirector (Non-Executive) of the Company with effect from 28June 2019 as a nominee of thepromoter group. Subseguently the Board had unanimously elected Mr Hughes as theNon-Executive Chairman of the Board with effect from 23 July 2019. Lastly Ms Cheryl Chanrepresenting the promoter group was appointed as an additional director (NonExecutive) ofthe Company with effect from 11 November 2019. The appointment of Mr Abhijit Banerjee as aDirector and Managing Director of the Company for a term of three years with effect from 7June 2019 was approved by the Members of the Company by way of postal ballot on 2 October2019. The Members of the Company had in the same postal ballot also approvedre-appointment of Mr J Mehta and Mr A Balakrishnan as Independent Directors of the Companyfor a second term of 5 years with effect from 1 October 2019 to 30 September 2024.

Notice under Section 160 of the Companies Act 2013 has been receivedfrom a Member proposing the candidatures of the additional directors for the office ofDirector of the Company.

Your Directors record their appreciation of the valuable contributionmade by the abovementioned outgoing directors to the functioning of the Company and theBoard during their respective tenures. The Board of your Company has benefited immenselyfrom their wise counsel.

Mr Abhijit Banerjee retires by rotation pursuant to the provisions ofSection 152 of the Companies Act 2013 and Article 104 of the Articles of Association ofthe Company and being eligible offers himself for re-appointment.

Necessary resolutions for approval of appointment of Mr Robert Hughesand Ms Cheryl Chan as Directors and for re-appointment of Mr Abhijit Banerjee onretirement by rotation as Director of the Company are included in the Notice of theensuing Annual General Meeting. The Board recommends the aforesaid resolutions for yourapproval.

Key Managerial Personnel

Pursuant to Section 203 of the Companies Act 2013 the present KeyManagerial Personnel of the Company are Mr Abhijit Banerjee Managing

Director Mr Subhabrata Ghosh Chief Financial Officer (CFO) and MrPawan Marda Asst. Vice President and Company Secretary. During the year there has beenchanges in the Key Managerial Personnel viz. Managing Director and the Chief FinancialOfficer of the Company with the earlier executives moving to new roles within the Lindepic Group.

Responsibility Statement

Based on the framework of internal financial controls and compliancesystems established and maintained by the Company audit and reviews performed by theinternal auditors 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 2019.

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

a. that in preparation of the annual financial statements for the yearended 31 December 2019 applicable accounting standards have been followed along withproper explanations relating to material departures if any;

b. that they had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theaforesaid financial year and of the profit of the Company for that period;

c. that they had taken proper and sufficient care for the maintenanceof adeguate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;

d. that the aforesaid annual financial statements have been prepared ona going concern basis;

e. that they have laid down internal financial controls to be followedby the Company and that such internal financial controls are adeguate and were operatingeffectively; and

f. that they had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adeguate and operatingeffectively.

There have been no instances of fraud reported by the StatutoryAuditors under Section 143(12) of the Companies Act 2013 and the Rules framed thereunder.

Secretarial Standards

The Company has proper systems in place to ensure compliance with theprovisions of the applicable standards issued by The Institute of Company Secretaries ofIndia and such systems are adequate and operating effectively.

Related Party Transactions

All related party transactions entered during the year were in ordinarycourse of business and on arm's length basis and the same have been disclosed under Note45 of the Notes to the Standalone Financial Statements. No material related partytransactions that is transactions exceeding 10% of the annual consolidated turnover asper the last audited financial statements were entered during the year by the Company.Accordingly the disclosure of related party transactions as required under Section134(3)(h) of the Companies Act 2013 in form AOC-2 is not applicable.

Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo

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

Extract of Annual Return

An extract of Annual Return as on the financial year ended on 31December 2019 in Torm No. MGT-9 as required under Section 92(3) of the Companies Act 2013read with Rule 12(1) of the Companies (Management and Administration) Rules 2014 asamended is set out as an annexure to the Directors' Report and forms part of this AnnualReport. [Annexure 7]

Outlook

The year 2019 has been somewhat difficult for the global economy withongoing tariff war between the US and China. The global economic scenario furtherdeteriorated with the Chinese economy facing a severe slowdown. The slowdown in China andthe other geo-political developments has impacted most of the developed and emergingeconomies across the globe. In these times while the Indian economy also faced signs ofslowdown in most industry segments it continued to remain the fastest growing economy inthe world. However during

large part of the year some of your Company's end user segments suchas automobiles construction etc. have been facing severe slowdown for several reasons.Added to this was the significant slide in the crude oil prices which also did not augurwell for the growth of the global economy as well as India even though India remains alarge importer of crude.

The Government of India's aspiration to attain a USD 5 trillion economyin the next five years has led to some hope which however may appear a difficultproposition at present despite the focus to grow the rural economy in the budget proposalsfor the year 2020-21.

Of late the world has been witnessing the impact of Covid-19 whichoriginally had its epicentre in Wuhan in China. The Covid-19 has been declared as apandemic by the WHO as it has already impacted nations and continents across the globe.This has already caused a grave disruption to the world economy and humanity with largenumber of loss of lives reported across the globe. The Government of India along with theState Governments had to impose a countrywide lockdown since 25 March 2020 which wasextended from time to time with varying intensity till 30 June 2020 as a strong measure toprevent the spread of Covid-19. Several other countries across the globe had to resort tosimilar lockdown for extended periods. This has caused a severe blow to the Indian economyas also the global economies which were already facing challenges due to contraction ofdemand.

The World Steel Association expects Indian steel demand to contract byabout 18% during 2020 on the back of Covid-19 induced abrupt halt of economic activities.The demand however is expected to sharply recover during 2021 led by the Government'sthrust on infrastructure and construction projects with improving consumer sentiment inother sectors.

The country is fighting the Covid-19 with all its might and yourCompany is doing what it can to overcome the severe challenge presented by this. While thelong term macro- economic fundamental of the Indian economy is still in place there isgreat deal of uncertainty about the short to medium term future outlook of diverse sectorsacross the globe and India is not an exception to the same. Your Directors and themanagement team however have immense confidence in the future of your Company.

Auditors

Statutory Audit

Messrs Deloitte Haskins & Sells LLP Chartered Accountants (firm'sRegistration No. 117366W/W-100018) was appointed as the Statutory Auditors of the Companyat its 81st Annual General Meeting from the conclusion of the said meeting and hold officeuntil the conclusion of the 86th Annual General Meeting.

The reports of the Statutory Auditors Deloitte Haskins & SellsLLP Chartered Accountants on the standalone and consolidated financial statements of theCompany for the year 2019 form part of this Annual Report. The Statutory Auditors havesubmitted an unmodified opinion on the audit of financial statements for the year 2019 andthere is no qualification reservation adverse remark or disclaimer given by the Auditorsin their Report.

Secretarial Audit

The Board of Directors of the Company had appointed M/s. S M Gupta& Co. a firm of Company Secretaries pursuant to the provisions of Section 204 of theCompanies Act 2013 and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 for undertaking the secretarial audit of the Company for the year2019. In terms of the provisions of Section 204(1) of the Companies Act 2013 aSecretarial Audit Report dated 21 Tebruary 2020 in Torm MR-3 given by the SecretarialAuditor is annexed with this Report. The observations made by the Secretarial Auditors intheir Report are self- explanatory. The Report confirms that the Company had complied withthe statutory provisions listed under Torm MR-3 and the Company also has proper boardprocesses and compliance mechanism. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark. [Annexure 8]

Cost Audit

In terms of Section 148 of the Companies Act 2013 the Company isrequired to have the audit of the cost accounting records conducted by a Cost Accountant.Messrs Bandyopadhyaya Bhaumik & Co. a firm of Cost Accountants conducted this auditfor the Company's financial year ended 31 December 2018 and submitted their report to theCentral Government in Torm CRA 4on13 May 2019. The audit of the cost records for the year2019 has been conducted by the cost auditors.

The existing Cost Auditors have been office for about five years andwith a view to get the benefits of rotation the Board of Directors of the Company have onthe recommendation of the Audit Committee appointed M/s. Mani & Co. Cost Accountantshaving registration no. 000004 as the Cost Auditor for the year ending on 31 December 2020to conduct 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.

Acknowledgements

Your Directors 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 and thank them for their dedication and commitment.

Your Directors also acknowledge the support and cooperation receivedfrom the various Government departments and agencies and look forward to their continuedsupport in the future. The Board also takes this opportunity to thank the Linde pic Groupfor their strategic inputs guidance and support in various operational and functionalareas which has enabled the Company to make continuous improvement in its performance.

Disclaimer

Certain statements in this report relating to Company's objectivesprojections outlook expectations estimates etc. may be forward looking statementswithin the meaning of applicable laws and regulations. Although the Company believes thatthe expectations reflected in such forward looking statements are reasonable no assurancecan be 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.

On Behalf of the Board

RJ Hughes A Banerjee
Chairman Managing Director
DIN: 08493540 DIN: 08456907
Thailand Kolkata
30 July 2020 30 July 2020