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Linde India Ltd.

BSE: 523457 Sector: Industrials
NSE: LINDEINDIA ISIN Code: INE473A01011
BSE 14:50 | 09 Dec 3242.75 20.00
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3295.00

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NSE 14:34 | 09 Dec 3246.90 19.10
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OPEN 3230.05
PREVIOUS CLOSE 3222.75
VOLUME 2260
52-Week high 4192.35
52-Week low 2291.00
P/E 68.75
Mkt Cap.(Rs cr) 27,654
Buy Price 3240.05
Buy Qty 6.00
Sell Price 3244.00
Sell Qty 10.00
OPEN 3230.05
CLOSE 3222.75
VOLUME 2260
52-Week high 4192.35
52-Week low 2291.00
P/E 68.75
Mkt Cap.(Rs cr) 27,654
Buy Price 3240.05
Buy Qty 6.00
Sell Price 3244.00
Sell Qty 10.00

Linde India Ltd. (LINDEINDIA) - Director Report

Company director report

#MDStart#

Management Discussion and Analysis.

The Directors have pleasure in submitting their Report together withthe Audited Financial Statements of your Company for the year ended 31 December 2021:

The Company's standalone financial performance for the year ended 31December 2021 is summarized below:

In Rupees million Year Ended 31 Dec. 2021 Year Ended 31 Dec. 2020
Revenue from operations 21119.58 14711.24
Earnings before interest tax depreciation amortisation and impairment (EBITDA) 6012.51 4074.85
Less: Depreciation and amortisation expense (including impairment) 1813.67 1760.00
Earnings before interest and tax (EBIT) 4198.84 2314.85
Less: Finance cost 30.54 62.43
Profit before tax (PBT) before exceptional item 4168.30 2252.42
Add: Exceptional items 2944.26 111.48
Profit before tax (PBT) after exceptional item 7112.56 2363.90
Tax expenses 1973.12 808.55
Net Profit for the year (after tax) (A) 5139.44 1555.35
Total Other Comprehensive Income for the year (B) (10.57) (16.95)
Total Comprehensive Income for the year (C)=(A) +(B) 5128.87 1538.40
Movement in Equity
Retained earnings opening balance brought forward 13215.88 12547.17
Add: Net Profit for the year 5139.44 1555.35
Less: Other comprehensive income recognised in retained earnings (net of taxes) (13.22) (17.05)
Less: Ind AS 116 - (16.71)
Profit available for appropriation (D) 18342.10 14068.76
Appropriations: Dividend on Equity share paid during the year# (E) (255.85) (852.88)
Retained earnings closing balance carried forward (F)= (D)-(E) 18086.25 13215.88

#Pertains to dividend for the financial year 2020 @ 30% (Previous year@ 100% for the financial year 2019) on 85284223 equity shares of Rs.10 each

Financial Performance 2021

Your Company clocked total revenues from operations of Rs. 21120million during the financial year 2021 as compared to Rs. 14711 million achieved in theprevious year recording a growth of 43.6% as compared to 2020. While the Gases revenuesgrew by 38.4% from Rs.12001 million in the year 2020 to Rs.16611 million during the yearunder review the revenues of the Project Engineering Division recorded a stupendousgrowth of about 66.4% during the year under review which rose from Rs. 2710 millionduring the financial year 2020 to Rs.4509 million in the year 2021.

The growth in the Gases revenues during the year 2021 was mainly drivenby liquid and compressed medical oxygen during the 2nd quarter due tosignificant surge in demand during the 2nd wave of Covid-19.

This huge spike in demand tapered off during the subsequent quartersand was replaced by other industrial gases including higher volumes of argon helium andspecial gases.

On the other hand the growth in the Project Engineering business wasdriven by higher revenues on the back of strong performance of the engineering businessacross steel and refinery sectors and also on account of lower revenues billed in 2020which was largely due to prolonged countrywide lockdown during the year 2020. You willrecall that this had caused disruption in almost all project sites in the previous yearresulting in deferment of revenues.

During the year under review your Company achieved earnings beforeinterest depreciation and amortisation (EBITDA) of Rs. 6013 million for the year 2021 ascompared to Rs. 4075 million in the previous year. This increase in the operating profitvis-a-vis 2020 was mainly due to reopening of the economy in the year under review andhuge demand of liquid oxygen across the country. During the year the onsite revenues werehigher on the back of significant demand for gases from customers mainly Tata Steel SAILand Jindal Stainless. The bulk volumes were higher for all the three products viz.oxygen nitrogen and argon. The Packaged Gases business especially argon volumes werehigher as well. Beside higher revenues pricing initiatives and productivity savings fromplant load optimization and operations as well as distribution efficiencies contributed tohigher EBITDA in the Gases business. The PED business also contributed to higher operatingprofits as a result of significantly higher billings as compared to 2020. The EBITDA wasfurther boosted by reduction of fixed costs and higher dividend income received fromBellary Oxygen the Joint Venture company.

During the year as a result of surplus cash the Company earned aninterest income of Rs. 189 million as against Rs.68 million in the year

2020. The depreciation for the year 2021 stood at Rs. 1814 millionwhich was marginally higher as compared to Rs. 1760 million charged during the year 2020.

Profit before tax (PBT) before exceptional item amounted to Rs. 4168million which is significantly higher as compared to Rs.2252 million in the previousyear. Your Company's total Profit before tax for the year 2021 stood at Rs.7113 millionand Profit after tax for the year under review amounted to Rs. 5139 million as comparedto Rs.1555 million for the year 2020 which was after considering exceptional profit ofRs. 2944 million from sale of Kolkata land.

Dividend

Your Board has recommended a dividend of 135% (Rs.13.50 per equityshare) on 85284223 equity shares of Rs.10.00 each in the Company for the year 2021 asagainst a dividend of 30% (Rs.3.00 per equity share) for the year ended 31 December 2020.This comprises of a normal dividend of 35% (Rs.3.50 per equity share) and a specialdividend of 100% (Rs. 10.00 per equity share) in view of the exceptional income earned bythe Company from disposal of closed factory land at Kolkata during the year under review.

The Board's recommendation for dividend has been made after consideringthe sustainability of the operating performance and cash flow position of the Company andis in line with its Dividend Distribution Policy. The dividend is subject to the approvalof the shareholders at the ensuing 86th Annual General Meeting scheduled to beheld on Thursday 23 June 2022 and will be paid to the Members whose names appear in theRegister of Members on the date of the Book Closure fixed for this purpose. This dividendwill result in cash outgo of Rs. 1151.34 million as compared to Rs. 255.85 million in theprevious year. The dividends paid or distributed by the Company shall be taxable in thehands of the shareholders. Your Company shall accordingly make the payment of theDividend after deduction of tax at source as per the provisions of the Income Tax Act1961.

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 Belloxy Divestment Business

As informed in the previous year in view of the inability of Inox AirProducts Pvt. Ltd. to acquire the Belloxy Divestment Business the Hon'ble CompetitionCommission of India (CCI) directed the extension of the "Hold Separatearrangement" for the balance tenure of the Gas Supply Agreement up to 14 November2021. During the year 2021 the Company's joint venture Bellary Oxygen Company PrivateLtd. accepted JSW Steel Ltd.'s offer for purchase of the 855 tonnes per day Air SeparationUnit and other related assets owned by it which formed part of the Belloxy Divestment. Onthe expiry of the gas supply contract with JSW Steel Ltd. on 14 November 2021 BellaryOxygen Company Private Ltd. signed and executed the Asset Sale Agreement with JSW SteelLtd. and has received the consideration amount of Rs. 500 million for the transaction. Thejoint venture company has since handed over possession of the 855 tpd ASU and otherrelated assets to JSW Steel Ltd. As a consequence of the above the Hold SeparateArrangement in respect of the Belloxy Divestment came to an end. The Company thereafterfiled a closure report of the Belloxy Divestment Business with CCI. The CCI in its orderdated 1 February 2022 took note of the closure report and has directed the parties forinforming about the liquidation of the aforesaid joint venture company.

Consolidated Financial Statements

Although the Company does not have any subsidiary as per therequirement 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 2021together with its joint venture companies viz. Bellary Oxygen Company Private Ltd. andLinde South Asia Services Private Ltd. (earlier known as LSAS Services Private Ltd.) 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 Companies

As on 31 December 2021 the Company had two joint ventures whosedetails are provided below:

Bellary Oxygen Company Private Ltd.

Bellary Oxygen Company Private Ltd. is a joint venture of the Companyin the gases business with Inox Air Products Private Ltd. as the other JV partner and bothJV partners own 50% of the issued and paid up share capital of the joint venture company.The said joint venture company operated an 855 tpd Air Separation Unit at BellaryKarnataka for supply of gases under a long-term gas supply agreement to JSW Steel Ltd.'sworks at Bellary. As mentioned earlier in the update on Belloxy Divestment Business uponthe expiry of the gas supply contract with JSW Steel Ltd. on 14 November 2021 BellaryOxygen Company Private Ltd. signed and executed the Asset Sale Agreement with JSW SteelLtd. Your Company has subsequently filed the closure report with the CCI and it isproposed to liquidate the joint venture company. Pursuant to Section 129(3) of theCompanies Act 2013 a statement containing salient features of the financial statementsof the joint venture company in the prescribed Form AOC-1 is annexed to this report.[Annexure 2]

Linde South Asia Services Private Ltd. (formerly known as LSAS ServicesPrivate Ltd.)

Linde South Asia Services Private Ltd. is a Joint Venture companybetween Linde India Ltd. and Praxair India Private Ltd. with both the JV partners owning50% each of its total issued and paid-up equity share capital. Linde South Asia ServicesPrivate Ltd. has an Operation and Management Services Agreement with both the JV partnersunder which the Joint Venture Company renders O&M Services to both Linde India Ltd.and Praxair India Private Ltd. which consists of carrying out all support servicesrelating to functions such as Procurement SHEQ Human Resources Finance IT LegalAdministration Business Development Onsite account management Sales & MarketingProduct Management etc. on an arms' length basis.

Pursuant to Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the joint venture companies inthe prescribed Form AOC-1 is annexed to this report. [Annexure 2]

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 Plc Group.The details about these business segments together with the industry developments aregiven below:

Gases and Related Products

The Gases and Related Products segment comprises of pipeline gassupplies (Onsite) to 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 can 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 Healthcarebusiness an important part of the Gases business provides high quality gases forpharmaceutical use such as medical oxygen synthetic air and nitrous oxide in addition toproviding state of the art medical gas distribution systems to major hospitals.

Industry Update

The year 2021 started on a promising note with an increasing pace invaccinations and the lifting of the countrywide lockdowns imposed during the first wave ofthe pandemic which affected both the global and the Indian economy. While the economictrajectory was getting back on the growth track the second wave of the pandemic struckwith an unprecedented magnitude and had an exponential spread.

As per the Ministry of Statistics and Program the manufacturingindustry grew by 5.5% in Q2 2021 after making a successful recovery of 49.6% in Q1 2021following a severe drop of 39.3% in the previous year. Similarly demand for electricitygas water supply and other utility services also recovered with 14.43% growth in Q12021 and 8.9% growth in Q2 2021. In both Q1 and Q2 the agriculture forestry and fishingindustries expanded at a consistent rate of 4.5% in 2021. Hotels transportationcommunication and broadcasting services all had strong recovery with a growth of 34.3%in Q1 and 8.2% in Q2 2021. The construction industry rebounded from 50.3% in Q1 last yearto grow at a rate of 68.3% in Q1 and 7.5% in Q2 in 2021.

Though the impact of the second wave of the Covid pandemic was lesssevere on the economy as compared to the first wave the industrial activity was still 17%below pre-Covid levels (as per data of September 2021). This has impacted India'sambitious goal to become a USD 5 trillion economy by 2025. As per recent estimates theIndian economy is likely to record a GDP growth of over 9% in the current fiscal which isthe highest among large economies. The Union Budget 2022-23 proposals are focused ongrowth that includes highways additional allocation of production linked incentivesincreased public capital expenditure outlay to Rs.7.50 lakh crore etc. which augur wellfor the manufacturing sector.

Steel sector: As of September 2021 India was the world's second-largest producer of steel with the production of crude steel and finished steel at 102.49million tonnes and 94.66 million tonnes respectively. On the back of rising customerdemand crude steel production in India is estimated to increase by 18% to reach 120million tonnes in FY 2022. The steel sector has been a major contributor to themanufacturing output of the country and continues to play a crucial role in the nation'sjourney towards becoming a USD 5 trillion economy by 2025. Steel companies are looking torestart expansion projects to the tune of 29 million tonnes driven by upturn in the steelindustry. Exports and imports of finished steel stood at 7.75 million tonnes and 2.37million tonnes respectively in FY 2022 (until September 2021). Introduction of favorablepolicies such as the National Steel Policy 2017 allowing 100% FDI in the sector the SteelScrap Recycling Policy 2019 aiming to reduce import the infrastructure-focused UnionBudget etc. continue to augur well for this sector. As per the National Steel Policy2017 the Government of India envisages 300 million tonnes of steel making capacity by2030-31.

Automotive sector: The year 2021 was a difficult year for theautomobile industry as it faced multiple headwinds from ongoing chip shortage risinginput costs and high fuel prices impacting consumer demand. However Indian automobileexports between April- November 2021 also saw a growth of 62% as compared to the similarperiod of 2020 which was led by the Passenger Vehicles and Two-wheeler segment.

The Government of India has encouraged 100% Foreign Direct Investment(FDI) in the automobile sector. The Union government added several advanced technologieslike alternate fuel systems such as compressed natural gas (CNG) Bharat Stage VIcompliant flex-fuel engines electronic control units (ECU) for safety advanced driverassist systems and e-quadricycles under the production-linked incentive (PLI) scheme forthe automobiles. The objective of the scheme is to enhance the manufacturing capability ofthe automobile sector.

Application Technologies: The application led gases business continuesto remain in focus. Some of the success stories of 2021 in this area have beendecarbonization and fuel saving efforts in glass frit and secondary copper segments. TheCompany has been making efforts in securing more customers in food and beverage segmentincluding food freezing and spice grinding businesses. Besides application growth insteel and manufacturing industry continues to remain strong as in earlier years. Effortsare ongoing for securing gas application sales in waste water treatment lakerejuvenation pharmaceutical heat treatment etc.

Crude oil prices: With crude oil prices at a seven-year high theIndian economy was severely impacted particularly in terms of inflation and weaking ofIndian rupee against US Dollar. Rising crude prices may however shift industrial consumerpreferences towards more energy- efficient solutions.

Gases Performance

The onsite business witnessed robust growth in volumes of oxygen andnitrogen from all steel customers primarily SAIL Tata Steel and Jindal Stainless whichwas notwithstanding these customers agreeing to reduce their oxygen off take to meet thehuge demand for medical oxygen in the country to combat Covid-19. In order to cater tostrong demand for gases from Tata Steel the Company entered into an agreement for supplyof additional gases from IGD plants at Jamshedpur. In its pursuit of profitable growththe Company has recently won an order from ESL Steel Ltd. a Vedanta Group Company and isin the process of construction of a 900 tpd air separation unit at their Bokaro steelworks. The Company is also setting up an onsite nitrogen plant at the Indian AcrylicsLtd. acrylic fibre works at Sangrur in Punjab.

The Merchant and Packaged Gases business also witnessed good growthwith the bulk business achieving a substantial growth of 66% in revenues as compared to2020. This was mainly driven by significantly higher volumes of oxygen and argon tocustomers in diverse industry segments such as steel metallurgy automotive chemicalsmanufacturing fabrication etc. The pricing actions undertaken during the year alsocontributed to better performance. There was also higher demand from distributor andresellers. The packaged gases business comprising of compressed oxygen nitrogen argonand argon mixtures such as Argoshield performed well recording revenue growth of about40% as compared to 2020.

The healthcare gases business during the year under review wasspearheaded by medical oxygen both in liquid and compressed form. Healthcare businessrevenues grew by about 45% over 2020 mainly driven by higher oxygen sales during thesecond wave of Covid-19 pandemic in 2021. Applying all the learnings from the first waveof the Covid-19 pandemic the Company pulled out all stops to supply medical oxygen acrossIndia during the second wave. The Company led from the front during the crisis resultingfrom second wave of Covid-19 by ramping up medical oxygen production up to 1700 tpd andincreasing distribution capacity by conversion of liquid argon and liquid nitrogen tankersto liquid medical oxygen service as well as conversion of inert gas cylinders and PortableCryogenic Containers to Medical Oxygen service. The Company worked closely with Centraland various State governments and Statutory bodies to monitor and make oxygen supplyavailable where it was needed leveraging technology to optimize logistic networks. TheCompany got robust support from the Government of India Indian Air Force and Navy toimport over 70 nos. of 20 tonnes ISO containers for long-distance transport of LiquidMedical Oxygen in collaboration with other industry partners such as Tata Steel ITC andthe Adani Group. With the support of Indian Railways the Company was able to fast-trackLiquid Medical Oxygen deliveries using the ISO containers which was further aided byIndian Air Force transport planes which enabled air freight of empty tankers drasticallyreducing transit time in supply of medical oxygen across the country. In the later part ofthe year the Company also exported medical oxygen to Bangladesh to help mitigate theiroxygen deficit.

The Special Gases and chemicals mainly comprise of high purity puregases and helium helium mixtures electronic gases calibration gases and rare gasessuch as neon krypton xenon and gaseous chemicals. Despite initial supply chain issuesdue to Covid the special gases revenues recorded robust growth of over 50% as compared to2020. This was mainly driven by higher volumes in helium and price increases in raregases. The demand for the special gases is driven by photovoltaic solar lighting opticfibre and healthcare sectors among others.

In 2021 Linde India has invested in new products like Pressure SwingAdsorption (PSA) plants for Healthcare. Various sites for Minibulk filling were deployedfor capability development to tap newer customer segments. Also various digitalizationinitiatives were undertaken for improving the ease of doing business. The Company focusedon geographical densification in Western India through the acquisition of business of HPSGases to augment the packaged gases capability. Your Compnay is also making investment fora new ASU in Dahej to tap into the growth markets in this region. The Company is alsosetting up a new ASU in Ludhiana for catering to growing demand in that region.

Customer Experience

Linde India Gases business is committed to providing best-in-classCustomer Experience (CX) in the industry. As a critical step in this direction theCompany measures KPIs for query/complaint resolution process and impact of the CX programby taking customer feedback via Customer survey for various CX metrics.

In 2021 the Company conducted a pan-India Customer Experience Surveyacross its various businesses to measure CX. It is an encouraging fact for us that theCustomer Effort Score (CES) improved by 3% and Net Promoter Score (NPS) by 10% over 2019survey scores for its MPG business. The NPS score of the Company was recorded at 41 whichfares much better when benchmarked against the manufacturing industry.

Linde India Gases business was audited for ISO 10002:2018 & ISO10004:2018 compliance for its Customer Experience program in December 2021. This was thethird year in a row for the Company to have successfully completed this audit for renewalof the certificate.

The Company is also focused on digitalizing various aspects of the CXprogram with the aim of enhancing "ease of doing business" for customers.

Project Engineering

The Project Engineering Division comprises the business of designengineering supply installation testing and commissioning of Air Separation plants andrelated projects on turnkey basis. The Project Engineering Division (PED) is having a Ustamp certified manufacturing works to fabricate core proprietary equipment such asdistillation columns for air separation plants cryogenic liquid 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 PED is IMS certified since 2020.

The order intake during the year 2021 was to the tune of Rs. 5026million. This includes export order of 2 cold boxes for 100 tpd ASU (LION 2) each receivedfrom Linde Engineering Munich for their ASU project in Egypt. Apart from this PED alsoreceived order worth Rs. 1234 million for 250 tpd merchant ASU at Dahej Gujarat for LindeGas division. Some of the major orders received by the Division during 2021 were fromrefineries steel and mining sectors such as 150 tpd N2 plant from Technip fortheir Nyara Refinery project 160 tpd N2 plant from JSW for their works atVasind 900 Nm3/hr. N2 generator with LOX production from Mundra Solar EnergyLtd. 120 tpd Low purity O2 VPSA from Sesa Goa Ltd 2 x cold boxes for 100 tpdASU (LION 2) received from Linde Engineering Munich for their ASU project at Giza Egypt120 tpd Low purity O2 VPSA from Group company Praxair India Pvt. Ltd. for theirScott Glass Project at Jambusar Gujarat and 250 tpd Merchant ASU from Praxair India Pvt.Ltd. at Sricity in Tamil Nadu.

During the year under review in somewhat challenging workingconditions due to Covid-19 the Division successfully commissioned several projects whichincluded compressed air and nitrogen plant package for HPCL Mumbai Refinery HMEL Bhatindanitrogen plant chain-1 BORL oxygen VPSA KIC Metalick Durgapur oxygen VPSA JSW Vasind N2& H2 plant and Meghana ghat 100 tpd ASU.

The Division is presently executing several projects which includecompressed air and nitrogen plants at JPCL Vizag refinery APL Assam refinery MRPLrefinery Air separation unit at IOCL Paradeep compressed air and nitrogen plants at HPCLRajasthan Refinery and IOCL Dumad.

As on 31 December 2021 the order book position of PED for third partyprojects was about Rs.11100 million.

Opportunities

The infrastructure sector has become one of the biggest focus areas forthe Government of India which has plans to spend USD 1.4 trillion on infrastructureduring 2019-23. The Government is eyeing an investment of Rs. 50 Lakh Crore (USD 750billion) for railways infrastructure from 2018-30. Infrastructure accounts for 25-30% ofsteel consumption and is thus expected to boost steel demand in the coming years.

The growth potential of the Automotive segment and the production ofelectric vehicles is another promising opportunity in the years to come. Under theGovernment's Rs. 4500 crore Production Linked Incentive (PLI) scheme the IndianRenewable Energy Development Agency Ltd. (IREDA) has requested bids from solar modulemanufacturers for the establishment of solar manufacturing units. Linde's expertise indelivering solutions for the photovoltaic cell is expected to benefit from the focus onsolar as an important source of renewable energy.

Higher infrastructure allocations - 34.9% in roads 8.7% in metros and33.6% in railways in FY 2022 budget estimates along with the 'PM Gati Shakti - NationalMaster Plan (NMP)' for multi-modal connectivity AMRUT Smart Cities Mission and SwachhBharat Mission are expected to boost cement demand. This surge in cement demand along withthe increased focus on low carbon cement through the process of carbon capture andutilization will boost demand for both Oxygen and CO2.

The Government of India is also focusing on manufacturing of semiconductor in the country. The Government also approved a PLI program of Rs. 18000 crores(USD 2.47 billion) for advanced chemical cell battery manufacture which will attractinvestments expand capacity in core component technologies and position India as aworldwide hub for clean energy. Such incentives will have a positive impact on theIndustrial Gases industry as the demand for various gases used in semiconductorfabrication will rise.

Steel majors are setting up new steel plants increasing theircapacity and expanding their operations in different parts of India. 'Mission Purvodaya'was launched to accelerate the development of the eastern states of India (OdishaJharkhand Chhattisgarh West Bengal and the northern part of Andhra Pradesh) through theestablishment of an integrated steel hub in Kolkata. This will result in increased demandfor Oxygen Nitrogen Argon etc. which can become a great opportunity for Linde India.

India's food processing sector is expected to reach USD 535 billion by2025-26. The Government has proposed 41 mega food parks and 325 cold chain projects todevelop the food processing supply chain. Linde India with a dedicated food lab atVijayawada has various capabilities in the areas of shrimp freezing fish glazingwaste-water treatment etc. and is positive about growth in the F&B sector.

In terms of revenue & employment Healthcare has become one ofIndia's largest sectors. The industry is growing at a tremendous pace owing to itsstrengthening coverage services and increasing expenditure by public as well as privateplayers. By 2022 the hospital industry size is estimated to touch USD 372 billion fromUSD 193.83 billion in 2020.

At Linde we remain very optimistic about the Healthcare sector andwill continue to maintain the focus it deserves.

India's public expenditure on healthcare stood at 1.2% as a percentageof the GDP. The Government of India approved the continuation of the 'National HealthMission' with a budget of Rs. 37130 crores (USD 5.10 billion) under the Union Budget2021-22. PM Ayushman Bharat Health Infrastructure Mission in the next 4-5 years is alsoexpected to improve demand for medical gases.

The Company is also setting up O2 PSA plants at hospitals onhire and O&M model on long term contract basis which continues to provide opportunityfor the healthcare business. The ongoing expansion in refineries and steel sectorcontinues to create opportunities in the Project Engineering Division.

Threats

At the macro-economic level the ongoing global semiconductor shortageis impacting the automotive and white goods output despite pent-up customer demand leadingto lower gas consumption. While the third wave of Covid-19 did not cause any meaningfuldisruption Covid -19 situation and potential future waves remain a risk in the nearfuture. Authorisation by the Government of India to a number of smaller oxygenmanufacturers since 2020 to mitigate the surge in demand for medical oxygen during thepandemic has led to more players in this segment though this does not appear to be asubstantial threat. The geo-political tensions may also pose some challenges to the globalgrowth in the near future. Supply chain disruptions and rising inflation and commodityprices may impact certain end user industry segments and could have a short to medium-termimpact. Some of the risks covered under the Risk Management section such as aggressivecompetitive activity and large investments by the competition across geographies risk ofcyber-attacks etc. may also be considered as threats in short to medium term.

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 adequate risk management system which takes care of identificationassessment and review of risks. Your Company has been holding risk workshops periodicallyto refresh its risks in line with the dynamic and ever- changing business environment andthe last refresher risk workshop was conducted on 25 October 2021 which was attended bythe senior management team with a view to refresh the various risks facing the business ofthe Company. The risks being addressed by the Company during the year under reviewincluded risk relating to the organisation structure risk of reliability issues of largeASUs risk of cyber-attacks on Linde plants and business systems competition risk and therisk arising from potential future waves of Covid-19 etc. The Company has initiatedaction to adopt a structured approach to identify the landscape of ESG risks relevant toits operations and will take mitigating actions as necessary to address the same.

Your Board of Directors provides an 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 Risk ManagementCommittee of the Board of Directors of the Company had appointed Mr Pawan Marda Director- Corporate Affairs and Company Secretary as the Chief Risk Officer of the Company w.e.f.12 November 2021.

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

During the year 2021 your Company received a sum of Rs. 2500 millionas full and final consideration to complete the transaction for sale of its factory landat Kolkata. The Company has parked its surplus cash of Rs. 8772 million in term depositswith Banks to earn interest thereon.

As on 31 December 2021 your Company had 'zero' outstanding borrowing.

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.

Credit Rating

The Company's total bank facilities - both fund-based and non-fundbased were rated by CRISIL which had reaffirmed its long-term credit rating of CRISIL AAwith Stable outlook for the aforesaid facilities.

The rating denotes high degree of safety regarding timely servicing offinancial obligations. During the year your Company decided to voluntarily withdraw thecredit ratings with effect from 1 August 2021 in view of 'zero' borrowings from any banks.

Large Corporates Disclosure for Fund raising through Debt securities

As on 31 December 2021 your Company did not have any long-termborrowing. As a result of the same your Company does not meet the criteria specified bySEBI for large corporates for fund raising through debt securities.

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 the Company'soperations.

Insolvency and Bankruptcy Code 2016

During the financial year neither any application nor any proceedinghas been initiated against the Company under the Insolvency and Bankruptcy Code 2016.

Particulars of loans guarantees or investments

The particulars of loans guarantees given and investments made duringthe year under Section 186 of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 are annexed to this Report. [Annexure 3]

Investor Education and Protection Fund

During the year under review your Company transferred the 59thunpaid/ unclaimed dividend amount of Rs.0.66 million pertaining to the financial yearended 31 December 2013 to the Investor Education and Protection Fund in compliance withthe provisions of Sections 124 and 125 of the Companies Act 2013. In compliance withthese provisions read with the Investor Education and Protection Fund Authority(Accounting Audit Transfer and Refund) Rules 2016 your Company also transferred 12351shares held by 124 shareholders to the Demat Account of the IEPF Authority on 20 and 24July 2021 in respect of which dividend had remained unpaid/unclaimed for a consecutiveperiod of 7 years. More information in this regard is provided in the Corporate GovernanceReport.

Safety Health Environment and Quality (SHEQ)

At Linde our aim truly is to avoid causing harm to people or theenvironment and as such Safety remains one of our topmost priority. Compliance with SHEQrules standards and procedures are prerequisite for all employees & contractors andthe management is committed to ensure that all personnel are trained and made competentbefore undertaking any safety critical job for the Company.

The 2nd wave of Covid-19 pandemic posed one of the biggestchallenges for our operations and distribution team was to ensure un-interrupted suppliesof medical oxygen to the hospitals and maintaining safety of people at our sites as wellas our distribution partners. The Company came with Covid-19 Health principles with therequired focus on people's health at workplace and accordingly various safetyprecautionary measures were implemented across the sites with the help of administrative& engineering controls like business continuity plan formation of crisis managementteam return to normal guidelines modification of standard operating proceduresinstallation of thermal camera at sites etc.

Global Safety Commitment Day 2021 was celebrated at all Linde operatingsites as well as project sites on 16 November 2021 with theme of Operating Discipline. Theobjective is to spend time with our colleagues to discuss on six pillars of OperatingDiscipline which helps to create a good safety culture at workplace. During the yearyour Company also ran the Safety campaigns on Life Saving rules and Contractor Management& Elevated work.

Your Company encourages site teams for increased reporting of near-miss & Process safety Tier-3 events which helps to direct our safety actions based onthe leading indicators. Also a process has been established for weekly review of allhigh-risk potential near misses by the Leadership team for improving focus on this area.

To strengthen the SHEQ performance a comprehensive SHEQ AnnualOperating plan was introduced covering the area of improvements in Process SafetyDistribution Safety Operational Safety Behavioral & Personnel Safety Quality &Environmental Safety. Even in the difficult times of Covid-19 all the functional teamsworked hard to complete the actions relating to SHEQ Annual Operating Plan. Due torestriction of travel we introduced the virtual audit & assessment communicationsession training & campaigns to keep our regular focus on safety compliance.

Use of technology helped to a great extent in improving Transportsafety performance. Your Company made use of Simulator based driver training driver riskprofiling in-cab cameras in all the vehicles for monitoring transport safety and providefeedback to the teams. These actions have resulted in reduced transport related incidentsin the Company.

Transport Safety however remains a challenge area and the Company hasgiven high priority to this with a view to overcome and mitigate the safety risks involvedin distribution of products. Taking the safety journey forward we have upgraded theTransport Operation Center to ensure any fatigue and distraction events are identified andimmediate actions are triggered to prevent any safety incident. All our bulk vehicles andPGP vehicles are equipped with 6 sets of cameras including one Fatigue & Distractiondevice and the entire journey is now captured though Digital Video Recorder from allangles which is being reviewed and used for driver training understand driver behaviorincident analysis etc. Entire driver risk profiling is now being managed digitally withminimum manual inputs and the same forms the basis for driver reward mechanism.

Human Resources

In Human resources function the focus areas for 2021 were employeeengagement talent development and diversity and inclusion.

To help employees cope with the work from home situation and thedisastrous second wave of Covid-19 we organized monthly virtual engagement initiativeswhich also had participation from family members. Apart from these the HR businesspartners connected with employees to understand their concerns and reach out to thoseworking from sites.

Robust succession planning upto one level below the functional head wasundertaken. Along with that we also focused on preparing individual development plans forsenior managers. We also introduced the assessment centre approach for deciding onpromotable talent to the next level. Learning and Development continued in the virtualmode by making use of the online learning platform.

With increased focus on diversity we aligned it with our hiringstrategy by identifying diversity exclusive roles and mandatorily evaluating diversityprofiles for various vacancies.

In our constant endeavour to maintain harmonious Industrial Relationstwo major Long Term Settlements were successfully executed for West Bengal and JamshedpurUnits. Through meaningful engagement with the Unions significant productivity increasehas also been achieved while agreeing on revised wage benefits.

Compliance remain our key focus area and vendor compliance wasspecifically targeted for considerable improvement in compliance scores.

The Company had harmonious employee relations across all its plants andoffices in India. As on 31 December 2021 the total manpower strength was 242. Thereduction in the employees on the rolls of the Company is due to transition of employeesto Linde South Asia Services in line with the organisation structure of the Company.

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 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 2021 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 Act2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended a statement containing the names and otherprescribed particulars of top 10 employees in terms of remuneration drawn and that ofevery employee who if employed throughout the year ended 31 December 2021 was in receiptof remuneration aggregating to not less than Rs. 10.20 million; and if employed for partof the said year was in receipt of remuneration not less than Rs.0.85 million per monthis annexed to and forms part of this Report. However having regard to the provisions tothe first proviso of Section 136(1) of the Companies Act 2013 the Annual Report is beingsent to all the Members of the Company excluding this information. The aforesaid statementis available for inspection by shareholders at the Registered Office of the Company duringbusiness hours 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 request 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 plc 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 including Disaster Relief as specifiedin Schedule VII to the Companies Act 2013.

Some of the CSR projects/initiatives taken up/sustained during the yearunder review included expenditure for education of underprivileged children in Yelahankain Karnataka Udaipur Kolkata Jamshedpur etc. providing education and other supportfor blind children in Rourkela. Further as a part of its endeavour to support disasterrelief during the Covid-19 pandemic the Company made a contribution through RamakrishnaSarda Mission towards renovation & revamping of operation theatres into covidoperation theatres and donation of multipara patient monitors to Sarada Matri MandirBhawan Kolkata extended online doctor support supply of essential medicines facilityof ICU Covid-19 testing food and health supplies etc. at various locations in Indiathrough Give India Foundation. Other such initiatives towards disaster relief includedcontribution towards relief work for Yaas cyclone. The Company also had two ongoingprojects which included Defensive driver training for drivers of heavy vehicles at severallocations including Gurugram Delhi Jaipur Mumbai and Hyderabad for making the highwayssafer and training program for mid-wives in Jajpur for reduction of C-section deliveries.The total spend on CSR during the year amounted to Rs.32.58 million on various CSRprojects/activities as above inclusive of the carry forward amount of Rs. 5.53 millionfrom the financial year 2020. Your Directors wish to state that the CSR Committee and theBoard of your Company had approved a total budget of Rs.32.57 million towards its variousCSR projects vis-a- vis the statutory CSR spend of Rs.27 million under the Companies Act2013.

The details of the CSR projects/activities for the year 2021 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 plc Group has published a detailed Sustainable DevelopmentReport 2020 which is prepared in accordance with GRI standards. Linde plc Group's missionof "making our world more productive" reflects its strong belief that Linde is apart of the solution to the climate change challenges faced by the world. As a member ofthe Linde plc Group your Company has adopted the various policies of its parent thatrelate 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 the AnnualReport for the year 2021 briefly describing initiatives taken by it from an environmentsocial and governance perspective during the year under review. Besides this report theCompany has initiated action to adopt a structured approach for a better understanding ofthe ESG data relevant to its operations. A brief snap shot of the ESG performance of theCompany during 2021 is presented in pages 10 to 15 of this Annual Report 2021.

Corporate Governance

As a member of the Linde plc Group your Company attaches greatimportance to sound responsible management and good corporate governance. Linde plcfollows highest standards in corporate governance and has policies and international bestpractices to build a strong governance architecture. Your Company remains committed tobusiness integrity high ethical standards and professionalism in all its activities sameas ever. As an essential part of this commitment the Board of Directors of Linde IndiaLtd. supports high standards in corporate governance.

It is the endeavour of the Company to ensure that their actions arealways based on principles of responsible corporate management.

In the Linde plc Group corporate governance is seen as an on-goingprocess. Your Company closely follows the developments in the governance norms and hastaken lead in ensuring compliance with the same. A separate report on Corporate Governancealong with the certificate of the Auditors Deloitte Haskins & Sells LLP confirmingcompliance of the conditions of corporate governance as stipulated under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 forms an integral part of thisannual 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 Requirements) 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 familarisationprograms held during and up to the year 2021 are available on the Company's website atwww.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 Requirements) 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. Like the previous year an onlineplatform was provided to the Directors for participating in the performance evaluationprocess which contained a structured questionnaire for seeking feedback from thedirectors on certain pre-defined attributes applicable to them including some specificones for the Independent Directors. More details about the performance evaluation processfollowed by the Board is provided in the Corporate Governance Report.

Declaration of Independent Directors

The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criteria of independence asprescribed both under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The declarations received from the independent directorsare aligned to the amendment made in Regulation 16(1)(b) of the SEBI Listing Regulations2015 which became applicable from 1 January 2022.

Certificate for non-disqualification of Directors

On an annual basis the Company obtains from each Director details oftheir Board and Committee positions he/she occupies in other Companies and changes if anyregarding their Directorships. The Company has obtained a certificate dated 24 February2022 from M/s.

P Sarawagi & Associates Practicing Company Secretaries confirmingthat none of the Directors on the Board of the Company have been debarred or disqualifiedfrom being appointed or continuing as Directors of companies by the Securities andExchange Board of India or Ministry of Corporate Affairs or any such authority and thesame forms part of this report.

Change of Registrar & Transfer Agents

During the year the Board of Directors of the Company appointed KFinTechnologies Pvt. Ltd. as its new Registrar & Transfer Agents (RTA) in place of LinkIntime India Pvt. Ltd. with a view to improve services to the investors and shareholdersof the Company. This transition of RTA services became effective from 28 December 2021.

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 as amatter of internal control on an on-going basis in view of the ever- changing businessenvironment.

During the year Suresh Surana & Associates LLP CharteredAccountants were engaged by the Company for reviewing the framework of its existinginternal financial controls across the Company and testing of the operating effectivenessof various internal controls in the organisation. The said firm has submitted a report tothe Audit Committee on their findings based on the testing of the key controls for theyear 2021. The Statutory Auditors of the Company have also independently reviewed internalfinancial controls over financial reporting. Both M/s. Suresh Surana & Associates LLPas well as the Statutory Auditors have confirmed that these controls were operatingeffectively as at 31 December 2021. As stated in the Responsibility Statement yourDirectors have confirmed that based on the reviews performed by the internal auditorsstatutory auditors cost auditors secretarial auditors and the reviews undertaken by themanagement and the Audit Committee the Board is of the opinion that the Company'sinternal financial controls have been adequate and effective during the financial year2021.

Directors

During the year under review Ms Cheryl Wei Ling Chan a NonExecutiveDirector of the Company stepped down from the Office of Director with effect from close ofbusiness hours on 17 June 2021. Your Directors record their appreciation of the valuablecontribution made by Ms Cheryl Chan to the functioning of the Company and the Board duringher tenure.

The Board had at its meeting held on 29 July 2021 appointed Ms MannuSanganeria as an Additional Director (Non-Executive) of the Company with effect from 29July 2021. Notice under Section 160 of the Companies Act 2013 has been received from aMember proposing the candidature of Ms Mannu Sanganeria as a Director of the Company.

Mr Abhijit Banerjee's three-year term as the Managing Director of theCompany will come to end on 06 June 2022 who is eligible for appointment for a furtherterm of three years. The Board has on the recommendation of the Nomination andRemuneration Committee and Audit Committee at their respective meetings held on 12 and 13May 2022 approved the re-appointment of Mr Abhijit Banerjee as the Managing Director ofthe Company for a second term of three years with effect from 7 June 2022 subject to theshareholders' approval on the terms and conditions and remuneration as mutually agreedbetween the Company and Mr Banerjee.

Mr R J Hughes retires by rotation at the ensuring Annual GeneralMeeting pursuant to the provisions of Section 152 of the Companies Act 2013 and Article104 of the Articles of Association of the Company and being eligible offers himself forre-appointment.

Necessary resolutions for approval of appointment of Ms MannuSanganeria as Director for re-appointment of Mr R J Hughes being the director retiringby rotation and for re-appointment of Mr Abhijit Banerjee as Managing Director areincluded in the Notice of the ensuing Annual General Meeting. The Board recommends theaforesaid resolutions for your approval.

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 AnupamSaraf Chief Financial Officer (CFO) and Mr Pawan Marda Director - Corporate Affairs andCompany Secretary. During the year under review there has been no changes in the KeyManagerial Personnel of the Company.

Directors' 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 adequate and effective during thefinancial year 2021.

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 2021 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 adequate 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 adequate 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 adequate 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]

Annual Return

A copy of Annual Return of the Company for the financial year ended 31December 2020 in Form MGT-7 has been placed on the website of the Company at www.linde.inThe Annual Return of the Company for the financial year 2021 would be updated on the samelink within the due timelines.

Outlook

The gradual unlocking of the Indian economy after the second waveduring the later part of 2021 led to a V-shape recovery on the back of pent- up demandwith several industry segments including steel automotive pharmaceutical chemicalscement food and beverages power engineering construction etc. delivering strongperformance.

The extremely successful vaccination program of the Government of Indiahas ensured that over 90% of the country's population has been vaccinated at least thefirst dose and nearly 70% of the people being fully vaccinated. The ongoing vaccination ofthe children will further strengthen India in dealing with the pandemic which willultimately result in full opening of the economy very soon.

The 'Make in India' initiative of the Government and the 2023 Budgetproposals are aimed at boosting the contribution made by the manufacturing sector to about25% of the GDP from the current level of 17%. The Government's budget proposals ofspending on infrastructure highways and giving a significant boost to public capitalexpenditure the Production linked Incentive Schemes in several industries steps to boostthe farm income and the focus on labour reforms etc. are the steps in the right directionto make India a USD 5 trillion economy by 2026.

The Indian government has planned about USD 3.5 billion in Productionlinked incentives over a five-year period until 2026 under a revamped scheme to encourageproduction and export of clean technology vehicles.

The renewable energy sector in India is the fourth most attractiverenewable energy market in the world. India was ranked fourth in wind power fifth insolar power and fourth in renewable power installed capacity as of 2020. India's targetfor 2022 for renewable energy generation is 175 GW and this mission is expected to bolsterthe process of decarbonization. These targets can unlock great potential for Linde Indiawhich has access to global expertise in solutions for the manufacture of solar PV cell.

Your Company has during the year under review successfully acquired thebusiness of HPS Gases Ltd. to increase its gases business in merchant and mini bulksegment in the western markets. Your Company has also been making new investments towardsconstruction of new merchant air separation units at Dahej and another near Ludhiana andis also constructing an onsite large ASU at ESL Ltd. steel works at Bokaro. All theseinvestments will enable your Company to sustain the rebound after the divestments of theSouth Region Divestment Business and Belloxy Divestment Business to make Linde India astronger gases player in the years ahead.

Linde India Ltd. has been able to develop capabilities by leveragingthe strengths of its divisions in both gases as well as engineering putting bestcommercial practices in place to win large tonnage gas supply contracts and grow themerchant and packaged business. With a robust business model and aggressive growth planLinde India Limited is poised to maintain its leading position in the industrial gasesbusiness. While the medium to long term outlook remains positive your directors remaincautiously optimistic about the outlook in the wake of the geo political tensions that areunfolding.

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 in the year 2022.

The reports of the Statutory Auditors Deloitte Haskins & SellsLLP Chartered Accountants on the standalone and consolidated financial statements of theCompany for the year 2021 form part of this Annual Report. The Notes on financialstatements referred to in the Auditors' Report are self-explanatory and do not call forany further comments. The Statutory Auditors have submitted an unmodified opinion on theaudit of financial statements for the year 2021 and there is no qualificationreservation adverse remark or disclaimer given by the Auditors in their Report.

It is now proposed to appoint Messrs Price Waterhouse & Co.Chartered Accountants LLP (Firm Regn. No. 304026E/E 300009) as the new Statutory Auditorsof your Company to hold office from the conclusion of 86th Annual GeneralMeeting until the conclusion of the 91st Annual General Meeting of your Companyto be held in the year 2027 in accordance with Section 139 of the Companies Act 2013 andrules made thereunder. Necessary resolution for approval of appointment of PriceWaterhouse & Co. Chartered Accountants LLP as the Statutory Auditors of the Company isincluded in the Notice of the ensuing 86th Annual General Meeting. The Boardrecommends the aforesaid resolution for your approval.

Secretarial Audit

The Board of Directors of the Company had appointed M/s. P Sarawagi 6Associates 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 year2021. In terms of the provisions of Section 204(1) of the Companies Act 2013 aSecretarial Audit Report dated 24 February 2022 in Form MR-3 given by the SecretarialAuditor is annexed with this Report. The observation made by the Secretarial Auditors intheir Report are selfexplanatory. The Report confirms that the Company had complied withthe statutory provisions listed under Form 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 7]

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.Mani & Co. a firm of Cost Accountants conducted this audit for the Company'sfinancial year ended 31 December 2020 and submitted their report to the Central Governmentin Form CRA 4 on 7 June 2021. Mani & Co. Cost Auditors have conducted the audit ofthe cost records of the Company for the financial year 2021.

The Board of Directors of the Company had on the recommendation of theAudit Committee appointed M/s. Mani & Co. Cost Accountants having registration no.000004 as the Cost Auditor for the year ended 31 December 2022 to conduct cost audit underthe Companies (Cost Records and Audit) Rules 2014 as amended from time to time. Inaccordance with the provisions of Section 148(3) of the Companies Act 2013 read with Rule14 of the Companies (Audit and Auditors) Rules 2014 the remuneration payable to the CostAuditors as recommended by the Audit Committee and approved by the Board has to beratified by the Members of the Company and appropriate resolution in this regard formspart of the Notice convening the ensuring AGM.

Acknowledgements

Your Directors wish to place on record their gratitude to the bankerscustomers dealers suppliers and all other business associates and the shareholders ofthe Company for their continued support during the year under review. The year 2021 haspresented enormous challenges for the employees of the Company at all levels who remainedsteadfast in their commitment in achieving a very satisfactory performance for theCompany. Your Directors therefore place on record their appreciation of the excellentcontribution made by the employees of the Company at all levels during the year.

Your Directors are also grateful for the valuable support andcooperation received from the various Government departments and agencies in thesechallenging times and look forward to their continued support in the future. The Board ofDirectors is very thankful to the Linde plc Group for their strategic inputs guidance andsupport in various operational and functional areas. This support has always been helpfulto deliver improved performance to the shareholders and indeed all stakeholders of theCompany.

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.

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