Moneycontrol
SENSEX NIFTY
you are here:

Deepak Nitrite Ltd.

BSE: 506401 | NSE: DEEPAKNTR |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE288B01029 | SECTOR: Chemicals

BSE Live

Jul 10, 16:00
524.35 -7.55 (-1.42%)
Volume
AVERAGE VOLUME
5-Day
150,777
10-Day
102,052
30-Day
74,852
99,117
  • Prev. Close

    531.90

  • Open Price

    528.20

  • Bid Price (Qty.)

    522.10 (50)

  • Offer Price (Qty.)

    524.35 (31)

NSE Live

Jul 10, 15:59
524.50 -6.80 (-1.28%)
Volume
AVERAGE VOLUME
5-Day
1,339,827
10-Day
924,052
30-Day
893,128
788,546
  • Prev. Close

    531.30

  • Open Price

    530.65

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    524.50 (907)

Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Dear Shareholders,

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

FINANCIAL RESULTS

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

(Rs. In Crores)

Particulars

standalone results

consolidated results

2018-19

2017-18

2018-19

2017-18

Total Revenue (Gross)

1794.52

1,490.77

2715.04

1,688.47

Less : Excise Duty on sale of Goods

-

24.25

-

24.73

Total Revenue (Net of Excise Duty)

1794.52

1,466.52

2715.04

1,663.74

Operating Profit Before Depreciation, Finance Cost, Exceptional Item and Tax

308.23

214.37

429.02

208.60

Less : Depreciation and Amortization expenses

52.88

51.95

77.79

52.60

Less : Finance Costs

42.85

40.34

83.25

45.15

Profit before Tax

212.50

122.08

267.98

110.85

Less : Tax expenses

74.46

38.62

94.32

31.83

Net Profit for the Year

138.04

83.46

173.66

79.02

Other Comprehensive Income

(2.67)

0.86

(2.84)

0.86

Total Comprehensive income for the Year

135.37

84.32

170.82

79.88

Surplus brought forward from previous year

402.32

342.02

380.61

324.76

Balance available for Appropriation

537.64

426.20

548.16

404.49

PERFORMANCE REVIEW

Standalone

In FY 2018-19, Total Revenue including Other Income stood at Rs. 1794.52 Crores as against Rs. 1490.77 Crores in FY 2017-18.

EBITDA came in at Rs. 308.23 Crores in FY 2018-19, higher by 44% as compared to Rs. 214.37 Crores in FY 2017-18. Raw material costs stood at Rs. 976.17 Crores as against Rs. 843.82 Crores in FY 2017-18, up by 16%.

Profit Before Tax (PBT) excluding Exceptional Items stood at Rs. 212.50 Crores as compared to Rs. 122.08 Crores in FY 2017-18. The Profit After Tax (PAT) excluding Exceptional Items came in at Rs. 138.04 Crores as compared to Rs. 83.46 Crores in FY 2017-18. Favourable shift in product mix, strategic modifications in geography, end-user based better customer selection, various cost leadership initiatives across business segments led to better PAT performance. The Depreciation and Finance Costs during the year stood at Rs. 52.88 Crores and Rs. 42.85 Crores respectively.

Domestic Revenues stood at Rs. 1,211.53 Crores from Rs. 968.38 Crores in FY 2017-18, representing a growth of 25% owing to strong demand trends from local customers. Your Company, apart from reasons explained above, has also been benefitted due to production and supply disruption in China. The Revenue from exports stood at Rs. 580.39 Crores compared to Rs. 510.85 Crores last year.

The Chemical Industry in India is witnessing an unprecedented growth opportunity largely due to International events. For a company like Deepak Nitrite, which is into chemical intermediates, the opportunity stands accentuated as its products support a wide range of industries. In the current scenario, Chemical Intermediates are witnessing a big jump in demand both due to growing demand from domestic end user industries and reduced availability of intermediates from China. Your Company expects the situation to remain conducive in the foreseeable future.

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

Consolidated

In FY 2018-19, Total Revenue including Other Income stood at Rs. 2,715.04 Crores as against Rs. 1,688.47 Crores in FY 2017-18.

EBITDA came in at Rs. 429.02 Crores in FY 2018-19, higher by 106% as compared to Rs. 208.60 Crores in FY 2017-18. Raw material costs stood at Rs. 1,646.70 Crores as against Rs. 1,038.79 Crores in FY 2017-18, up by 59%.

Profit Before Tax excluding Exceptional Items stood at Rs. 267.98 Crores as compared to Rs. 110.85 Crores in FY 2017-18. The Profit After Tax excluding Exceptional Items came in at Rs. 173.66 Crores as compared to Rs. 79.02 Crores in FY 2017-18. Apart from reasons cited above for better performance, the newly commissioned Phenol-Acetone manufacturing facility performed well and contributed to PBT, PAT sizably within a very short time of its operation exhibiting sustainability of this business. The depreciation and finance costs during the year stood at Rs. 77.79 Crores and Rs. 83.25 Crores respectively.

The Domestic Revenues stood at Rs. 2,106.55 Crores from Rs. 1,164.22 Crores in FY 2017-18, representing a growth of 81% owing to strong demand trends from local customers and also due to commencement of operation of Phenol - Acetone plant which are sold in domestic market, being import substitutes. The Revenue from Exports stood at Rs. 593.38 Crores compared to Rs. 511.96 Crores last year.

dividend

Based on your Company''s Performance, the Board of Directors of your Company is pleased to recommend a Dividend of Rs. 2/-(Rupees Two only) per Equity Share for the year ended March 31, 2019 on 13,63,93,041 Equity Shares of Rs. 2/- each, as against Rs. 1.30 (Rupee One and Paisa Thirty only) per Equity Share in the previous year.

The total amount of Dividend, if declared by the Members, including Dividend Tax, will be Rs. 32.89 Crores (Previous Year Rs. 21.83 Crores).

DIVIDEND DISTRIBUTION POLICY

Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations'') requires top 500 listed entities, based on market capitalization calculated as on March 31 of every Financial Year, to formulate a Dividend Distribution Policy and disclose the same in their Annual Report and on their websites.

Accordingly, the Board of Directors of your Company has adopted a Dividend Distribution Policy, which aims to ensure fairness, sustainability and consistency in distributing profits to the Shareholders. The Dividend Distribution Policy is attached as Annexure - A and is also available on the website of your Company at www.godeepak.com.

share capital

The Paid-up Equity Share Capital of your Company as on March 31, 2019 was Rs. 27.27 Crores comprising of 13,63,93,041 Equity Shares of Rs. 2/- each. Your Company has not issued any Equity shares during the Financial Year 2018-19.

transfer to reserves

Your Company proposes to transfer Rs. 5 Crores to the General Reserves out of the amount available for appropriation.

update on phenol and acetone project

The Members are aware that your Company, through its wholly owned subsidiary, Deepak Phenolics Limited (''DPL''), commenced commercial production at a state-of-the-art plant at Dahej to manufacture 200,000 MTPA of Phenol and 120,000 MTPA of its co-product Acetone on November 1, 2018. This is supported by manufacturing facility of 260,000 MT of Cumene, which is a feedstock for manufacturing Phenol and Acetone.

With this, your Company addresses the opportunity offered by the supply deficit in the domestic market which is majorly being met by imports. In addition to being cost competitiveness as a domestic supplier to domestic end users, your Company started leveraging on the latest manufacturing technologies in its state-of-the art plant which is efficient in every aspect.

The plant is expected to save approx. USD 350 - 400 mn of Foreign Exchange every year by way of value addition of petrochemicals which otherwise was being converted to low value LPG or was being exported.

With an objective of developing working relationships with major clients across India as well as establishing strong marketing and distribution channels, DPL had worked on seed marketing of Phenol to understand and penetrate in the market. The seed marketing activity helped DPL to leverage its relationship to sell large manufacturing quantities. DPL has appointed distributors across India for selling and distributing Phenol and Acetone. It also has well tied up transportation and other logistics requirements which is one of the key requirements for handling such large volume of moving inbound and outbound materials.

FINANCE

Your Company tries to strike a balance in its capital structure on a consolidated level while efficiently managing its working capital, thereby maintaining debt at a reasonable level. During the year under review, the total debt of your Company decreased due to scheduled repayments and improved working capital management. However, as your Company commissions its expansion projects, on a consolidated level, the consolidated debt level has gone up. This level is expected to normalise as the Phenol-Acetone project has started generating revenue and it shall operate for the whole year from FY 2019-20 onwards. Your Company has already provided entire committed equity to its Phenol-Acetone project. On a consolidated basis, Debt Equity Ratio of your Company is at 1.11 which is reasonably comfortable given the size of its Phenol-Acetone project and associated debt.

Interest costs increased marginally during the year due to repayment of low cost Foreign Currency debt, increase in the LIBOR and increase in market rate in Rupee borrowing. Depreciation increased due to regular growth and maintenance Capex. Your Company has an active team to manage its Foreign Exchange exposures to minimise risk arising out of imports and exports. Due to prudent fund management, your Company has been able to effectively manage its cash flows. There is always an effort to reduce the overall interest costs. On a standalone basis, Debt/Equity as on March 31, 2019 is reduced to 0.31 compared to 0.49 as on March 31, 2018, while on a consolidated level, Debt/Equity ratio stood at 1.11 times, as mentioned above.

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

Further, CRISIL Limited has assigned the Long-Term rating as CRISIL AA- Stable and Short term rating as CRISIL A1 to your Company.

directors

During the year under review, following are the changes in the composition of Directors:

Shri Umesh Asaikar (DIN: 06595059) was re-appointed as a Wholetime Director designated as the Executive Director & CEO of your Company for a period from May 9, 2018 to May 31, 2020. The said re-appointment was approved by the Members at the 47th Annual General Meeting of your Company held on August 3, 2018.

Shri Deepak C. Mehta (DIN: 00028377) was re-appointed as the Chairman & Managing Director of your Company w.e.f. December 14, 2018 for a period of five (5) years, subject to the approval by the Members.

Pursuant to Provision of Section 152 of the Companies Act, 2013, Shri Sanjay Upadhyay (DIN: 01776546), Director-Finance & Chief Financial Officer, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment for approval by the Members.

The Board of Directors of your Company appointed Shri Sanjay Asher (DIN: 00008221) and Smt. Purvi Sheth (DIN: 06449636) as Additional Directors at their meeting held on May 3, 2019, As per provisions of the Companies Act, 2013, Shri Sanjay Asher and Smt. Purvi Sheth hold office as Additional Director upto the ensuing Annual General Meeting.

Your Company has received notice from a Member proposing candidature for the appointment of Shri Sanjay Asher and Smt. Purvi Sheth as Independent Directors for a period of three (3) consecutive years alongwith requisite fees. The Resolution(s) for the appointment of Shri Sanjay Asher and Smt. Purvi Sheth as Independent Directors are given in the Notice for approval by the Members.

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

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

KEY MANAGERIAL PERSONNEL

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

I. Shri Deepak. C. Mehta, Chairman & Managing Director

2. Shri Umesh Asaikar, Executive Director & CEO

3. Shri Sanjay Upadhyay, Director-Finance & CFO

4. Shri Maulik Mehta, Whole-time Director

5. Shri Arvind Bajpai, Company Secretary

MEETINGS OF THE BOARD

During FY 2018-19, Four (4) Board Meetings were held. The details of Board Meetings with regard to their dates and attendance of each of the Directors thereat have been set out in the Report on Corporate Governance, which forms part of this Report.

independent directors

The Independent Directors of your Company have furnished the declaration that they meet the criteria of independence as provided in Section 149 (7) of the Companies Act, 2013 and Regulation 25(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

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

performance evaluation

Pursuant to the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations''), the Board of Directors have carried out annual evaluation of its own performance, Board Committees and individual Directors.

The performance of the Board / Committee was evaluated after seeking inputs from all the Directors / Committee members on the basis of the defined criteria including composition and structure, effectiveness of meetings, information and functioning.

Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated, on the basis of following evaluation criteria:

- Relevant Knowledge, Expertise and Experience.

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

- Addressing the most relevant issues for your Company.

- Discussing and endorsing your Company''s strategy

- Professional Conduct, Ethics and Integrity.

- Understanding of Duties, Roles and Function as Independent Director.

Your Directors have expressed their satisfaction to the evaluation process.

audit committee

The Audit Committee consists of all Independent Directors with Shri Sudhin Choksey as the Chairman of the Committee. The other members of the Audit Committee are Shri Sudhir Mankad and Shri S. K. Anand. The terms of reference of the Audit Committee, details of meetings held during the year and attendance of members are set out in the Report on Corporate Governance, which forms part of this Report.

STATUTORY AUDITOR’S REPORT

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

REPORTING OF FRAUD BY AUDITORS

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

SECRETARIAL AUDITOR’S REPORT

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

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

auditors

(A) statutory Auditors

The Statutory Auditor of your Company, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, (Firm Registration No.: 117366W/W-100018), were appointed for a period of five (5) years at the 46th Annual General Meeting held on June 26, 2017.

The Companies (Amendment) Act, 2017 has waived the requirement for ratification of the appointment of Statutory Auditor by the shareholders at every Annual General Meeting. Hence, the ratification of appointment of Statutory Auditors by your Company is not required. Accordingly, the Statutory Auditor will continue to hold office till the conclusion of the 51st Annual General Meeting of the Company approved by the Members at the 46th Annual General Meeting of the Company.

(B) Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit for the year ended March 31, 2019 was carried out by the Secretarial Auditors, M/s. KANJ & Co. LLP, Company Secretaries, Pune. The Board of Directors of your Company has appointed M/s. KANJ & Co. LLP, Company Secretaries, Pune to carry out Secretarial Audit of your Company for FY 2019-20.

(C) Cost Auditors

The Board of Directors of your Company has appointed M/s. B. M. Sharma & Co., Cost Accountants, to conduct audit of your Company''s cost records for FY 2019-20 at a remuneration of Rs. 7,50,000/- (Rupees Seven Lakhs Fifty Thousand only) plus applicable tax, travelling and other out of pocket expenses in connection with the said Audit. As required under the provisions of Companies Act, 2013, the remuneration of Cost Auditors as approved by the Board of Directors is subject to ratification by the shareholders at the ensuing Annual General Meeting.

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

(D) Internal Auditors

The Board of Directors has appointed M/s. Sharp & Tannan Associates, Chartered Accountants, as Internal Auditors of your Company to conduct the Internal Audit for FY 2019-20.

FIXED DEPOSITS

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

As on March 31, 2019, 37 warrants aggregating to Rs. 7,43,507 issued by your Company to the respective deposit holders towards compulsory repayment of deposits and interest thereon in accordance with the provisions of Section 74 of the Companies Act, 2013, remained uncleared. There has been no default in repayment of deposits or interest thereon during the year and there are no deposits outstanding as on March 31, 2019.

VIGIL MECHANISM

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

The Whistle Blower Policy is available on the website of your Company at https://www.godeepak.com/investor-compliances/

RELATED PARTY TRANSACTIONS

All Related Party Transactions that were entered into during the Financial Year were on an arm''s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (''the Act'') and the Listing Regulations. There were no materially significant Related Party Transactions entered into by your Company during the year that would have required shareholders'' approval under the Listing Regulations or the Act.

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

In line with the requirements of the Act and Listing Regulations, your Company has adopted a Policy on Related Party Transactions which is available on your Company''s website at www. godeepak.com.

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

SUBSIDIARY / ASSOCIATE COMPANIES AND CONSOLIDATED FINANCIAL sTATEMENTs

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

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

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

PERFORMANCE OF SUBSIDIARIES

(a) Deepak Phenolics Limited

Deepak Phenolics Ltd. (DPL), a wholly-owned subsidiary of your Company commenced commercial production at its Mega-Plant for manufacturing Phenol & Acetone on November 1, 2018.

DPL has reported Revenue from Operations of Rs. 913.50 Crores for the period ended March 31, 2019 and Net Profit for the period was Rs. 35.88 Crores.

(b) Deepak Nitrite Corporation Inc. (USA)

Deepak Nitrite Corporation Inc. (''DNC'') is a wholly owned subsidiary company incorporated in the United States of America to cater to the marketing requirements of your Company in North and South American region. DNC actively does market research and scouts for market and potential customers for your Company''s products in the North and South American region. DNC also provides warehousing, distribution and customer relationship management services.

During FY 2018-19 the Total Revenue of DNC was USD 1,78,347 and the Net Income for the period was USD 4,888.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the Financial Statements of your Company''s subsidiaries in Form AOC-1 is attached to the Financial Statements.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Particulars of Loans granted and Investments made by your Company have been disclosed in the Financial Statements, forming part of the Annual Report.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments affecting the financial position of your Company since the close of Financial Year i.e. since March 31, 2019 and the date of this Report. Further, it is hereby confirmed that there has been no change in the nature of business of your Company.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(5) of the Companies Act, 2013 (“the Act”), the Board of Directors of your Company, to the best of their knowledge and ability, confirm that:

(a) in the preparation of the Annual Accounts, the applicable accounting standards have been followed and there are no material departures;

(b) they have selected accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the Financial Year and of the profit of your Company for that period;

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

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

(e) they have laid down internal financial controls to be followed by your Company and that such internal financial controls are adequate and are operating effectively;

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

corporate governance

A separate report on Corporate Governance is provided together with a Certificate from Shri Dinesh Joshi, a Practising Company Secretary, M/s. KANJ & Co. LLP, Company Secretaries, Pune regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report on your Company''s business as required by Regulation 34(2) of the Listing Regulations, initiatives on environmental, social and governance aspects forming part of this Report is annexed as Annexure - C.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) activities of your Company are being implemented through Deepak Foundation, the group''s charitable trust encompassing social interventions in various developmental domains such as Health, Education, Livelihood, etc.

During FY 2018-19, your Company has spent Rs. 250 Lakhs on CSR activities, against the requirement of Rs. 213 Lakhs, being 2% of average of the net profits for the preceding three years.

Your Company has a policy on Corporate Social Responsibility and the same has been posted on the website of the Company at www.godeepak.com. The Report on CSR activities in terms of the requirements of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure - D, which forms part of this Report.

NOMINATION AND REMUNERATION POLICY

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

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

extracts of annual return

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

annual return

Pursuant to provisions of Section 92 (3) of the Companies Act, read with Rule 8A (1) of the Companies (Accounts) Rules, 2014 as amended from time to time, your Company has uploaded draft Annual Return for the Financial Year ended March 31, 2019 on the website of your Company at https://www.godeepak.com/investor-compliances/.

PARTICULARS OF EMPLOYEES

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

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

CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the requirement of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, the relevant data pertaining to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo are provided in Annexure - H of this Report.

STATE OF COMPANY’S AFFAIRS

The state of your Company''s affairs is given under the heading ''Performance Review'' and various other headings in this Report and in the Management Discussion and Analysis, which forms part of the Annual Report.

SIGNIFICANT OR MATERIAL ORDERS PASSED AGAINST THE COMPANY

Pursuant to the requirement of Section 134(3)(q) of the Companies Act, 2013 read with Rule 8(5)(vii) of the Companies (Accounts) Rules, 2014, it is confirmed that during FY 2018-19 there were no significant or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and your Company''s operations in future.

SECRETARIAL STANDARDS OF ICSI

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

INTERNAL CONTROL SYSTEMS

Your Company has in place adequate Internal Control Systems, including Internal Financial Controls. The Internal Control System is exercised through documented policies, guidelines and procedures to ensure compliance with various policies, practices and statutes, and that all assets are safeguarded and protected against loss from unauthorised use or disposition and that those transactions are authorised, recorded and reported correctly.

The Internal Auditor carries out extensive audits throughout the year across all locations and across all functional areas.

The audit observations and corrective actions taken thereon are periodically reviewed by the Audit Committee to ensure effectiveness of the Internal Control System. The Internal Control system is designed to ensure that the financial and other records are reliable for preparing Financial Statements and other data, and for maintaining accountability of persons.

RISK MANAGEMENT

Your Company has in place a Risk Management framework to identify, evaluate and monitor business risks and challenges across your Company. The Risk Management Policy, pursuant to Section 134 of the Companies Act, 2013 has been adopted based on this framework. The Risk Management Policy provides for creation of a Risk Register, identification of risks and formulating mitigation plans. The enterprise risks for your Company are identified by the respective Risk Managers and presented to the Board for review. Your Company has duly constituted Risk Management Committee. The Committee reviews your Company''s performance against identified risks, formulates strategies towards identifying new and emergent risks that may materially affect your Company''s overall risk exposure and reviews the Risk Management Policy and structure.

The Board of Directors reviews the risk assessment and minimization procedures regularly. The Risk Register gets updated periodically, to ensure that the risks remain relevant at any point in time and corresponding mitigation measures are effective. This provides a proactive and value adding review process which enables maintaining the risk profile at an acceptable level in a rapidly changing environment.

RESEARCH & DEVELOPMENT

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

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

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

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

Your Company is a knowledge led entity and has spruced up its R&D facility for innovation and to collaborate with its customers to understand consumer preference and develop new product applications to cater to the needs of its customers. Your Company focuses its R&D efforts to develop cost effective, cleaner technologies to improve profitability. Through its R&D capabilities, your Company has been successful in developing and enhancing its portfolio of cutting edge products. Your Company believes that its ability to develop new product applications and ability to customize products to suit customer needs have helped in expanding its customer base, thereby enabling it to establish leadership position.

SAFETY, HEALTH & ENVIRONMENT

Your Company believes in responsible chemistry for sustainable future through its commitment to the principles of Responsible Care. The continual improvement of safety, health, environment protection, energy and resources efficiency and social responsibility is inbuilt in the strategy of your Company.

Your Company has laid down policies, principles and standards which are mandatory for all its manufacturing units for adherence. It aims to achieve excellence in environment protection, health management and safety across its businesses. Your Company''s Environment, Health and Safety (EHS) Policy also specifies the EHS requirements to be observed by its suppliers, contractors & others.

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

Your Company has system to ensure compliance to the requirements of applicable laws and regulations. Manufacturing locations of your Company has facilities for the proper treatment of effluents. Your Company''s emissions, effluents and wastes are within the permissible limits.

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

All manufacturing plants and corporate office of your Company has Quality, Environment & Occupational Health & Safety Management Systems as per revised standards for ISO 9001, ISO 14001 & OHSAS 18001.

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

Your Company had zero lost time incidents during the year. Good engineering practices, preventive checking systems, safety awareness and training has helped your Company in maintaining its operations and workplace free from incidents.

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

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

Your Company is founder member of Nicer Globe initiative. It takes utmost care during transportation and ensures compliance with all checks and measures for a safe and secured delivery. All raw materials and products within supply chain framework of your Company are transported in a secure manner, for the safety of its customers, carriers, suppliers, distributors and contractors.

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

human resources

Your Company considers its employees as most valuable resource and ensures strategic alignment of Human Resource practices to business priorities and objectives. Your Company''s constant endeavour is to invest in people and processes to improve human capital for the organisation and service delivery to its customers. Attracting, developing and retaining the right talent will continue to be a key strategic initiative and the organisation continues to be focussed on building up the capabilities of its people. Given growth plans of your Company, an important strategic focus of your Company is to continue not only to nurture its human capital, but also proactively focus on preparing all employees for the challenges of the future. Your Company strives to provide a healthy, conducive and competitive work environment to enable the employees excel and create new benchmarks of productivity, efficiency and customer delight. Your Company always believes in maintaining mutually beneficial industrial relations with the Union, which are of paramount importance for success of any organisation and hence the industrial relations have always been smooth, cordial and trusting.

Insurance

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

DISCLOSURE AS REQUIRED UNDER SECTION 22 OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Your Company has in place an Anti-Discrimination and Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress the complaints received regarding sexual harassment at workplace. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. No complaint was received from any employee during FY 2018-19 and hence no complaint is outstanding as on March 31, 2019 for redressal.

ACKNOWLEGDEMENT

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

For and on behalf of the Board

Deepak C. Mehta

Place: Vadodara Chairman & Managing Director

Date : May 3, 2019 (DIN: 00028377)

Director’s Report