Deepak 19 PDF
Deepak 19 PDF
Promises Delivered
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Contents
Corporate Financial
Overview 01-44 Statements 129-238
Deepak Nitrite Limited - At a Glance 04 Standalone
Our Substantive Value Proposition 06 Independent Auditor’s Report 129
Our Manufacturing Prowess 08 Balance Sheet 136
Research & Development - 10 Statement of Profit and Loss 137
Our Strength and Differentiator Cash Flow Statement 138
Our Global Footprint 12 Statement of Changes in Equity 140
Message from the Chairman & 14
Managing Director
Notes to the Financial Statements 141
Consolidated
CEO’s Communique 18
CFO’s Communique 20 Independent Auditor’s Report 185
Our Board and Leadership Team 22 Balance Sheet 190
Our Strategic Business Units 26 Statement of Profit and Loss 191
Delivering our Promise of… Cash Flow Statement 192
Reducing Import Dependence 28 Statement of Changes in Equity 194
Leveraging our Strategy for 30 Notes to the Financial Statements 195
Stable Growth
Strengthening our Segmental 32
Performance
Forty-Eighth Annual General Meeting
Generating New Platforms for 34 Day & Date : Friday, June 28, 2019
Sustainable Growth
Time : 10:30 a.m.
Our Performance Scorecard - Standalone 36 Venue : Grand Mercure Vadodara Surya Palace,
Opposite Parsi Agiyari, Sayajigunj,
Financial Highlights for the last 37 Vadodara - 390 020
Ten Years
Being Recognised Across the World 38
Committed to Safety Quotient 40
Cautionary Statement Regarding Forward-Looking Statement
Committed to Make a Difference 42 This Report may contain certain forward-looking statements relating to the
future business, development and economic performance. Such Statements
Statutory may be subject to a number of risks, uncertainties and other important
Reports 45-128 factors, such as but not limited to (1) competitive pressure; (2) legislative and
regulatory developments; (3) global, macro-economic and political trends;
(4) fluctuations in currency exchange rates and general market conditions;
(5) delay or inability in obtaining approvals from authorities; (6) technical
Notice 45 developments; (7) litigations; (8) adverse publicity and news coverage, which
Management Discussion & Analysis 64 could cause actual developments and results to differ materially from the
statements made in this Report. Deepak Nitrite Limited assumes no obligation
Directors’ Report 73 to update or alter forward-looking statements whether as a result of new
information, future events or otherwise.
Corporate Governance Report 114
www.godeepak.com
Visit Company’s official website to download the Annual Report.
Corporate OVERVIEW
statutory reportS
financial statements
Corporate Information
CHAIRMAN EMERITUS STAKEHOLDERS’ RELATIONSHIP & COST AUDITORS
Shri C. K. Mehta INVESTORS’ GRIEVANCE COMMITTEE B. M. Sharma & Co.,
Shri S. K. Anand Cost Accountants
Chairman
BOARD OF DIRECTORS
Shri Deepak C. Mehta Shri Ajay C. Mehta INTERNAL AUDITORS
Member
Chairman & Managing Director Sharp & Tannan Associates,
Shri Umesh Asaikar Shri Umesh Asaikar Chartered Accountants
Member
Executive Director & Chief Executive Officer
Shri Sanjay Upadhyay Prof. Indira Parikh CORPORATE IDENTIty Number
Member
Director-Finance & Chief Financial Officer L24110GJ1970PLC001735
Shri Maulik D. Mehta NOMINATION & REMUNERATION
Whole-Time Director CORPORATE & rEGISTERED OFFICE
COMMITTEE
Shri Ajay C. Mehta Aaditya-I, Chhani Road,
Non-Executive Director
Shri Sudhir Mankad
Chairman Vadodara – 390 024, Gujarat
Shri Nimesh Kampani Tel: +91-265-2765200/3960200
Independent Director
Shri Sudhin Choksey
Member Fax: +91-265-2765344
Shri Sudhin Choksey Email: investor@godeepak.com
Independent Director
Shri S. K. Anand
Member Website: www.godeepak.com
Shri Sudhir Mankad
Independent Director Prof. Indira Parikh
Member PLANTS
Shri S. K. Anand Nitrite & Nitroaromatics Division
Independent Director
COMPANY SECRETARY & 4-12, GIDC Chemical Complex,
Dr. Richard H. Rupp COMPLIANCE OFFICER Nandesari – Dist., Vadodara – 391 340
Independent Director
Shri Arvind Bajpai Gujarat
Dr. Swaminathan Sivaram
Independent Director REGISTRAR AND Taloja Chemical Division
Prof. Indira Parikh SHARE TRANSFER AGENT Plot Nos. K/9-10, MIDC Taloja,
Independent Director
Link Intime India Private Limited Dist. Raigad – 410 208, Maharashtra
Shri Sanjay Asher C-101, 247 Park, L.B.S Marg,
Additional Director
Vikhroli (W), Mumbai – 400 083. Roha Division
Smt. Purvi Sheth Plot Nos. 1, 2, 26 & 27
Additional Director
BANKERS MIDC Dhatav, Roha,
State Bank of India Dist. Raigad – 402 116, Maharashtra
AUDIT COMMITTEE Bank of Baroda
Shri Sudhin Choksey Axis Bank Ltd. Hyderabad Specialties Division
Chairman Standard Chartered Bank Plot Nos. 70-A & B, 90-F/70-A and 22,
Shri Sudhir Mankad ICICI Bank Ltd. Phase I, Industrial Development Area,
Member DBS Bank Ltd. Jeedimetla, Tal. Quthbullapur Mandal,
Shri S. K. Anand The Hongkong and Shanghai Banking Dist. Ranga Reddy, Hyderabad – 500 055
Member Corporation Ltd. Telangana
Today, we are on an
accelerated growth
path, with sustainable
competitive advantages
and best positioned to
leverage the changing
market dynamics.
` 2,700+ Crores
Fuel Additives Detergents Textiles Paper Consolidated Revenue
` 268 Crores
Consolidated Profit Before Tax
Laminates Automobiles Paint Adhesives
142%
Our Responsible and Sustainable Growth in Consolidated PBT
Growth Engine
A diversified portfolio of value-added intermediates reduces
dependency on any single product
Deepak Phenolics Ltd.
Driven by product and application diversity and strengthened
by strategically located manufacturing facilities 100%
Achieved upto 100% Capacity
Exports to over 30 countries across 6 continents Utilisation in Phenol-Acetone
and Cumene Plants
New products – Phenol and Acetone to cater to almost 20
end-user ` 914 Crores
Revenue
Some of Our Key Customers
` 56 Crores
PBT
Our 6 State-of-the-Art
our state-of-the-art Manufacturing Facilities
manufacturing facilities,
we are building best-in-class
infrastructure and
fostering innovation and
in turn, powering the Indian
economy. Our primary goal is
to align ourselves with India’s
fundamental growth drivers
and the “Make in India” initiative
AND HELP INDIA TO BECOME a
global manufacturing hub
Nandesari, Gujarat
Dahej, Gujarat
Our Objectives
Keep adding new and innovative products to our portfolio to sustain and augment growth
Recognised by Department
State-of-the-art R&D facility at
of Scientific and Industrial
Nandesari, Gujarat
Research, Government of India
Over the years, we have built enduring relationships with leading global
companies. We have established our presence in over 30 countries across the
globe, including USA, Europe, Japan, Latin America, South East and Far-East Asia
Canada
USA
Mexico
NORTH
aMERICA
Brazil
Argentina
SOUTH
aMERICA
ASIA
Europe
AFRICA
AUSTRALIA
Israel
South Africa
Dear Stakeholders,
We are pleased to present to
you our Annual Report for
FY 2018-19. This year marks
a significant landmark for
our stakeholders, who have
shared this journey with us and
contributed to our success.
Recalling our journey since the
beginning, I remember every
single year to be fulfilling in
each respect. The year has
been a remarkable one for
us not just financially, but
for some of the significant
milestones we achieved.
World Economy industry are immense. Moreover, we Our consistent performance, focus
FY 2018-19 was a turbulent year for remain confident that efficient producers on profitable growth and a calibrated
the global economy, characterised by that prioritise R&D and innovation strategy towards expansion serves
geopolitical uncertainties and trade wars. with a focus on scaling via sustainable in the best long-term interest of our
Softening of commodity prices, demand operations will succeed in the long run. shareholders as it leads to better
deflation and the effect of escalating An essential reminder to this approach valuation. Our relentless focus on faster
trade tensions moderately impacted served as the recent crackdown on execution and operational excellence has
the pace of global growth. While the US polluting industries in China, which been one of the Company’s key strengths.
witnessed a moderate increase in GDP resulted in supply disruption of necessary It helps improve margins as well as
growth, this was more than offset by chemicals manufactured and exported sustain and gain free cash flows to create
other large economies such as China, from there. Due to this unforeseen new investments.
Euro area economies and some of development, most large customers
the Latin American nations. are on the path to de-risk their China Our Legacy gives us Pride
This had a spiralling impact on exposure and have been increasingly Today, Deepak Nitrite Limited is proud
interconnected economies, and in turn, seeking alternative channels, including to state that it has been carrying the
on global growth. India. It has provided a tailwind to growth legacy of responsible chemistry for about
and enhanced opportunities to chemical 50 years. We have built our corporate
Amidst all these, India continues to producers in India. strength by unshackling opportunities
be one of the fastest-growing major with enormous patience, determination,
economies in the world backed by We made Promises. and perseverance.
healthy domestic consumption. We Delivered them.
Successful implementation of the We are on a journey of planned Despite having started as a bulk
Government’s structural initiatives transformation. Our transformational commodity manufacturer, your Company
towards improving the ease of doing expansion, in terms of product portfolio has transformed its operations over the
business such as enhancing transparency, and geographical presence, is already years. It has expanded its offerings to
speeding up approvals, resolving policy taking shape and showing early signs include high-value fine and speciality
issues and fostering more significant of bearing fruit. Today, we are a robust chemicals, based on our core expertise
levels of value addition also played a and diversified institution, with a strong and the lateral and vertical integration
crucial role in sustaining performance. position in India’s chemical industry. of the existing products. Our robust
R&D capabilities have been stepped
India’s Chemical Industry – Rising In an uncertain business environment, up across the value chain, in-line with
Opportunities your Company delivered a resilient the expansion in product categories.
The global chemical industry has been performance in FY 2018-19. We delivered Additionally, our healthy client
a healthy contributor to the world GDP. on our promises made on the existing relationships have enabled us to create
It contributed USD 5.7 trillion or 7% lines of business as well as the recently deeper inroads into the existing markets,
to the world’s GDP. Due to uncertainty commissioned Phenol and Acetone widen our product portfolio and enter
on interest rates, trade tensions and project. On the back of a robust business newer markets. At the foundation of
slowing economic growth, global M&As model, diverse product portfolio and our transformational journey is our firm
in the chemical industry slowed down. geographies and a competitive operating commitment to being completely and
However, transactions undertaken profile, we created a superior position squarely aligned with reinforcing India’s
are being consolidated and absorbed, in the global chemicals market. Our positioning as a superpower and doing
and these are likely to pursue vast strategic and focus initiatives - such good for society.
opportunities in the global as reorienting of geographical focus,
chemicals market. strengthening product portfolio and Our Triple Bottomline Approach:
brownfield expansion - positively PEOPLE
Within this backdrop, we believe the impacted our verticals and enabled us to Our employees have been our most
opportunities for the Indian chemical deliver improved performance. significant assets. We believe that
We take immense pride in stating that in record time – and with no cost or time Today, we are in a position to take
during the year we over-delivered on over-runs. This not only demonstrates advantage of market dynamics through
our promises of creating a global- our preparedness, it also indicates our our diversified portfolio and credibility
scale manufacturing plant within the elevated manufacturing and marketing among the customers and confident
envisaged cost and scheduled time. This capabilities. Our robust execution has of continuing our growth momentum.
was made possible through our qualities been a result of the seed marketing Being on a steep growth path, we are
of meticulous planning and precise efforts undertaken during the pre- confident about our growth prospects
execution. These attributes gave us the commissioning phase. With this, we have and building market share gains. We
confidence to leverage our key strengths enabled the country to become self- are ready for a promising future with
and capabilities and create massive reliant in the production of Phenol and
value for all our stakeholders. We also the multiple business drivers that will
Acetone and resulting in import savings. enable us to achieve our goals. We also
believe that our investments in cutting- The plant is well capacitated to address
edge research & development is not only believe our growth will be sustainable
India’s demand for Phenol and Acetone
altering our competitive capabilities, as it is predicated on the strengths of
and reduce its import dependence on
but also sustaining and bettering our our organisation. Some of these are
these chemical intermediates, based
performance in the future years. – an able and competent leadership,
on its cutting-edge technology as well
deep customer relationships, ability to
as resource and energy efficiency. Our
In light of a spirited performance innovate and develop new products,
philosophy of import substitution has
reported by your Company, the Board of expertise in complex chemistry, ability
Directors have recommended a dividend been converted into further action as
we succeeded in replacing the bulk of to cope up with change, globally
of ` 2 per equity share (100%) on a face
imports of Phenol and Acetone in the competitive manufacturing capabilities,
value of ` 2 each on an expanded capital
domestic market. and an efficient supply chain and
base. This is compared to a dividend of
distribution infrastructure.
` 1.30 per equity share (65%) declared in
the previous financial year. This project has undoubtedly added
another feather in our cap. We are of Vote of Thanks
Making India Self-reliant in the firm belief that this will enable On behalf of the Board, I thank the
Chemical Imports a quantum leap in your Company’s entire team at Deepak Nitrite Limited
FY 2018-19 has been a milestone year revenues and profits, and subsequently and Deepak Phenolics Limited and our
for the Company, as we commissioned open new avenues of growth from valued shareholders for their continued
our mega Greenfield project for forward-integration into value-added support and encouragement. We thank
manufacturing of Phenol and Acetone at derivatives. you for having your continued faith
Dahej in Gujarat in November 2018. More in our strength and capabilities and
importantly, we successfully ramped up Moving Ahead our employees for their tireless efforts
its capacity utilisation above 80% within Your Company’s strategic focus on the towards achieving our goals.
first few months of commissioning, performance of People, Planet and Profit
which in itself is a positive achievement. have built a formidable foundation We are on an exciting journey towards
I congratulate the entire team at Deepak that will serve multiple growth levers in becoming a diversified chemical
Phenolics Limited for their tireless efforts the years ahead. We are traversing the powerhouse. We are proud to have been
in achieving the above. I am also happy journey forward with an unwavering associated with you as we continue on
to highlight that our dedicated logistics faith in our conviction, as we continue to our voyage of responsible growth and
team has been successful in despatching innovate with vigour and passion value creation.
approximately 75% of the average for taking your Company to a higher
capacity utilisation in the first quarter horizon of excellence. We remain
of commissioning. focussed on executing our clear-cut Best Regards,
strategies on cost optimisation, adding
We delivered on our promise of executing new products, tapping new markets and Deepak C. Mehta
the plant and getting it commissioned expanding our capacities. Chairman and Managing Director
Dear Stakeholders,
I am glad to share with all of you the
accomplishments of your Company during
Fiscal Year 2019 as well as the progress
towards its strategic plan. The year gone
by has been memorable on several fronts.
Not only did we demonstrate a robust all-
around performance which surpassed our
internal operational targets, but we also
commissioned our mega-greenfield facility
of Phenol and Acetone at Dahej, Gujarat,
on November 1, 2018. This marks the
successful culmination of a three-year
project that had been meticulously
planned and seamlessly executed.
We have achieved capacity utilisation
of over 80% in Phenol and Acetone
since the commencement of
operations, which is not a simple
feat. In addition to high usage,
the Company seamlessly
managed a sophisticated
logistics and distribution
network which exhibits the
depth of our operational
preparedness.
EVOLUTION AND STRATEGIC DIRECTION Today, I take pride in saying that your With this, we are not only delivering
Those of you who know Deepak Nitrite’s Company has worked hard to elevate its growth, but also building a stronger,
(DNL) history would be aware that the operational capabilities. This has been more resilient company which can
origin of the company was based on the possible through the tireless efforts of all continue to grow sustainably.
fact of desire to substitute imports and our associates to execute the business
to adopt the ‘Make in India’ concept. The strategy devised by the management I genuinely believe that Deepak Nitrite’s
vision, which had first given shape with team and guided by our accomplished future is even brighter. We have multiple
Sodium Nitrite and Sodium Nitrate nearly Board. Your Company has created a businesses driving our growth. We have
half a century ago and the commissioning robust platform and invested in the right unique capabilities that are becoming
of this Phenol and Acetone plant housed ingredients to ensure continued earnings increasingly vital. We are serving
within Deepak Phenolics, marks the momentum in the years ahead. customers that are benefiting from
coming of a full circle for your Company. strong demand for their products. Our
The focus, within DNL, has been relationships, product innovations,
Over the years, DNL has demonstrated to persevere in carefully selected consistent delivery of high-quality
its ability to add value by forward products, elevate competencies and products and services are unlocking new
integration. It first understands and aspire for cost leadership. It creates opportunities. With a proven track record,
creates strong capabilities around basic an obsession towards enhancing hunger for growth, extensive product
chemical compounds. Later, it aims to operating efficiencies which are attained range, and capacities based on the latest
elevate its operational excellence to by optimising production processes technological innovations, amplified by
their forward uses to deliver growth through debottlenecking initiatives committed employees, we are confident
and capture more value by moving up and re-evaluating the value chain on an of surpassing more milestones, as we
the chain. We have done this earlier too ongoing basis to explore opportunities move ahead.
to emerge as the only fully integrated for backward integration. Our cost
producer of Fluorescent Whitening leadership position in key building blocks Last, but not the least, our pool of talent
Agents. The addition of sizeable unlocks new avenues for growth such as is our wealth which helps us propel our
capacities for Phenol and Acetone new products, new customers and new growth into the higher orbits. We highly
within our fold opens up new avenues markets. This enables us to scale our appreciate and respect the value of our
of growth for your Company, based on offerings by enhancing capacities through human resources. We continue to
its strategy of value-added products by expansion, which further elevates our expand, nurture and retain our pool of
forward integration, which our country is competitive positioning. human ability.
currently importing.
ENVIRONMENT AND SUSTAINABILITY
Thank you for being on this journey
PERFORMANCE AND OPERATIONAL As a signatory of Responsible Care, DNL
with us.
EXCELLENCE assigns the highest importance to safety,
During the year under review, we environment, and health. Adherence
witnessed good progress in each of our to the most stringent pollution control
Strategic Business Units, driven by a norms at all of its manufacturing facilities
combination of management initiatives supporting various initiatives in the Best Regards,
to grow these units and the ability to areas of reduction in carbon footprints
capitalise on opportunities arising from and energy efficiency enhancement to Umesh Asaikar
shifts in the global industry landscape. preserve and protect the environment. Executive Director & Chief Executive Officer
Dear Stakeholders,
FY 2018-19 has been an
exciting one for Deepak Nitrite
Limited (DNL) amidst a range
of micro and macro-economic
events, including those across
geographies. While we have
seen regional protectionism,
tension around energy
resources, a clear change in
industry scenario in China,
and growth in the USA and EU
economies, your Company
has reported its highest-ever
turnover and profit. This
performance has been driven
by a passionate and energetic
team and supported by sound
corporate governance and a
prudent capital structure.
EFFICIENT HANDLING OF PROJECT & Phenol plant through its wholly-owned ENHANCED CREDIT RATING
TEAM BUILDING subsidiary DPL within envisaged project It gives us pleasure in informing you that
In a significant development for your cost of ` 1,400 crore. Your Company has your Company has been assigned a long-
Company, its greenfield facility for the fully funded the committed equity into term rating of AA- Stable and a short-term
manufacture of Phenol and Acetone this project. Apart from commissioning rating of A1+ by CRISIL Limited, while
at Dahej, Gujarat, through the wholly- the Phenol plant, your Company also the credit rating of Deepak Phenolics
owned subsidiary Deepak Phenolics spent on capital expenditure towards Limited has also undergone a significant
Limited (DPL), was commissioned on enhancing capacities in the existing SBUs upgradation assigned by ICRA Limited :
November 1, 2018. The Greenfield facility of Basic Chemicals and Fine & Speciality long-term rating from ICRA BBB Stable to
has made excellent progress in a short Chemicals segment. This was aimed ICRA A- Stable and short-term rating from
period of time. One, we have efficiently at capitalising on the ensuing demand A3+ to A2+.
handled the project through successful available across crucial products.
stabilisation and optimal capacity Moreover, we have further plans of SHAREHOLDER VALUE CREATION
utilisation during the first few months growth across SBUs, given the buoyant Our foremost objective of all our above
after commissioning; and two, we also demand expected in the near future. initiatives and our business plan is to
delivered positive EBITDA and PBT within generate value for our shareholders on
a very short span of commissioning. After all such initiatives, your Company a sustainable basis. In this backdrop, I
has been able to reduce the intensity in am delighted to share that our Board has
The credit for this, undoubtedly, goes to working capital. The capital structure also recommended a Dividend of 100%, i.e.,
the entire team of DPL which undertook remains healthy with standalone gearing ` 2 per share on a Face Value of ` 2 each,
the project with seamless planning and at around 0.30X and consolidated gearing in light of the improved performance of
execution. Care was taken to identify and at around 1.10X. We may keep in mind the Company.
invest in an experienced and capable that the entire investment of the Phenol
team at DPL to ensure timely completion plant shall yield its first complete year of We take this opportunity to convey
of the plant, rapid scale-up of operations, result in FY 2019-20, which should make that with untiring efforts, we have
and smooth conduct of complicated the cacapital structure even healthier. been able to deliver on our promises
logistics. Our seed marketing Having said this, I take this opportunity – turning around the Performance
initiative undertaken during the pre- to convey that your Company has clear Product business segment, flawless
plans of growth commencing in the commissioning of the Phenol project
commissioning phase also played a vital
current financial year, both in existing within cost, retaining a healthy capital
role in establishing DPL in a leadership
products and in new products. Once structure, and a rapid ramp-up of the
position in the domestic market.
operationalised, the contributions Phenol facility.
This project goes a long way to support out of such growth plans are also
Let me assure you that we endeavour to
the ‘Make in India’ initiative of the expected to make the Company’s capital
build onto this momentum and create
Government. It has a capacity of structure healthier.
further value for all our stakeholders.
producing 2,00,000 MTPA of Phenol and
1,20,000 MTPA of its co-product Acetone, A NEW BUSINESS SEGMENT -
supported by an in-house facility to PHENOLICS Best Regards,
manufacture 2,60,000 MT of Cumene for Upon commencement of the operations
captive consumption. of the Phenol plant, we have created Sanjay Upadhyay
a separate segment “Phenolics” in our Director-Finance & Chief Financial Officer
CAPITAL STRUCTURE consolidated results. This segment shall
During the financial year under review, report operational numbers of both
your Company commissioned the Phenol and Acetone.
SHRI S. K. Anand
Independent Director
Shri S. K. Anand has a rich experience of 46 years in the field of Project Management,
Operations, Corporate Planning, Quality Management, Health, Safety and Environment
Management, Energy Management and Strategic Planning in Petrochemicals, refining
and other allied industries. He is a Bachelor of Engineering (Chemical) from Delhi
University and has done a Petrochemical Course from I.I.P., Dehradun. He has also done
an advanced management course from IIM Ahmedabad.
Smt. Purvi helps create business opportunities and competitive advantage via Strategic
HR management. She has helped several businesses effectively cultivate talent
engagement through advanced leadership processes and implementation in impacting
business performance and productivity.
Despite market challenges, we pursued selective opportunities in the domestic and export markets, which enabled us to grow volumes
across all our business segments. While we achieved brownfield expansions in Basic Chemicals and Fine & Speciality Chemicals, the
Performance Products segment has turned around and became profitable. Today, all our established business segments continue to
benefit from a positive demand environment, firm realisations and increasing market opportunities.
We delivered the global-scale Phenol and Acetone plant within costs. The plant,
commissioned during the year, is aligned with India’s journey to become self-reliant
in chemical intermediates and reduce import dependence. With this, we not only
delivered our promise of enabling India address its current demand for Phenol and
Acetone, we also enabled the country earn long-term savings on imports
Driving our goal of being the fastest-growing Created robust supply chain infrastructure
Indian chemical intermediates manufacturer and logistics
Going Forward…
As we move ahead, we will be building on our market share gains by further adding on capacities, customers, geographies and new
products, heading onto a stable growth path. Today, we are well placed to leverage the growing opportunities in India’s chemicals
industry. The established business segments continue to benefit from a positive demand environment and firm realisations.
We are confident of continuing the growth momentum backed by our growth strategy.
We are not only holding onto our gains, we are also building on them
by improving our market share positions. Strong growth in the base
business and commencement of the Phenol-Acetone plant resulted in
better RoCE and free cash flows in the medium-term
12% 12%
Revenue (` in Lakhs)
1,79,192
1,47,923
1,33,573
1,32,716
1,31,527
1,26,963
1,21,153
1,01,940
96,838
84,729
82,445
81,040
76,907
56,893
58,039
51,085
51,676
51,128
50,056
46,798
45,047
21,437
21,250
16,822
15,240
14,017
12,208
11,354
9,133
8,122
7,392
6,774
5,815
5,258
2018-19 2017-18 2016-17 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10
Total ` in
1 271504 179451 1,49,077 1,32,442 1,33,727 1,32,922 1,27,140 1,03,010 79,273 67,742 54,646
Income Lakhs
YoY Growth % 60.80 20.38 12.56 (0.96) 0.61 4.55 23.42 29.94 17.02 23.97 (6.25)
` in
2 EBITDA 42902 30823 21,437 15,240# 16,822 14,017 11,354 8,122 5,811 6,217 5,449
Lakhs
Profit /
` in
3 (Loss) Before 26798 21250 12,208 7,392# 9,133 6,774 5,815 5,258 3,159 3,696 3,032
Lakhs
Taxation
Percentage
to Total % 9.87 11.84 8.19 5.58 6.83 5.10 4.57 5.10 3.98 5.46 5.55
Income
Profit /
` in
4 (Loss) After 17366 13804 8,346 5,194# 6,515 5,344 3,833 3,782 2,308 2,580 2,001
Lakhs
Taxation
Percentage
to Total % 6.40 7.69 5.60 3.92 4.87 4.02 3.01 3.67 2.91 3.81 3.66
Income
` in
5 Equity 2728 2728 2,728 2,614 2,326 2,091 1,045 1,045 1,045 1,045 1,045
Lakhs
` in
6 Net Worth 107158 105785 94,384 73,213 47,589 34,683 30,752 28,060 25,278 23,791 21,944
Lakhs
` in
7 Debt 118652 32761 46,153 57,355 49,520 54,451 50,504 33,546 17,096 5,958 9,256
Lakhs
Dividend
` in
8 on Equity 2728## 2728## 1,773 1,569 1,395 1,045 1,045 837 628 628 523
Lakhs
Capital
9 EPS ` 12.73 10.12 6.34 4.43 6.07 5.11 36.63 36.15 22.06 24.65 21.82
Book
10 ` 79 78 72 62 44 34 294 268 242 235 210
Value**
Net Debt/
11 % 110.73 30.97 48.90 78.34 104.06 157.00 164.23 119.55 67.63 25.04 30.33
Equity Ratio
Shri Maulik Mehta, Whole Time Director of Deepak Nitrite Limited receiving award from Shri Nitin
Patel, Hon. Deputy Chief Minister, Gujarat
NATIONAL BEST EMPLOYER BRANDS 2018 received by (Second from left to right) Shri Rajesh Palkar,
Dr Prashant Rao and Shri Mahesh Phadke
The Gujarat Brand Leadership Awards 2018 was conferred in presence of Dr. R.L. Bhatia, Founder of
World CSR Day and World Sustainability Day
Shram Award by
Government
of Gujarat
Marking Deepak Nitrite’s unwavering
commitment toward employee
health and safety, the Government of
Gujarat conferred Shri Jaydeep Patel
from HAS Plant, Shram Award on
February 17, 2019.
The Government of Gujarat conferred Shri Jaydeep Patel from HAS Plant, Shram Award
on February 17, 2019.
Environmental Sustainability
We see environmental sustainability as a creative opportunity to fundamentally strengthen our business, while
contributing to the society and creating a social, environmental and economic impact.
Winning Accolades:
Shram Award by Government of Gujarat – Won Training to Contract Workers
by Jaydeep Patel of HAS Plant o Training to Contract Supervisor
o External and Internal Training to DPL
Various Safety Activities:
o Training to Contract Workers
National Fire Service Week o Safety Talk with Workers
o Flag Hoisting
o Fire Martyrs Homage Safety Activities
o Safety Quiz HSE Training o Certified First Aiders Training by
Red Cross
Road Safety Week 2019 o Safety Committee Meetings
o Road Safety Rally o Safety Promotional Activity
o Road Safety Training to Drivers
o Road Safety Quiz Fire Training to Contract Workers
Product Safety
30th National Road Safety Week
While we are committed to make a difference in the lives of people around the world, we are
also committed to being responsive towards our key stakeholders – the communities. We
aim to especially support those from the socially and economically backward groups – the
underprivileged and marginalised sections. We have identified the CSR priorities where we
are confident of making the greatest impact. We continue to carry out activities based on our
chosen pillars for Corporate Social Responsibility.
OUR KEY CSR PILLARS To promote facility as teaching facility for maternal and child
health courses, such as CPS and DNB
1. Comprehensive Emergency Obstetric &
New Born Care 2. Mobile Health Units
The project aims to provide primary healthcare services to
This public-private partnership has been set up with the
people residing in remote and tribal areas at Dahej in Gujarat
objective of serving as a comprehensive emergency medical
and Roha in Maharashtra through Universal Health Coverage.
unit for maternal and newborn care for over 1 Lakh tribal
population. This initiative is spread across 5 tribal blocks of Key Objectives:
Chota Udepur district in Gujarat. It seeks to increase the
To reduce out-of-pocket expenses on treatment by
number of beneficiaries receiving free-of-cost services in
beneficiaries
order to reduce their out-of-pocket expenses on
health services. To reach out to at least 50% of the households in the
catchment through mobile health services
Key Aim:
To ensure that 80% of those needing referral are linked to
To link health facility with tertiary care facility to provide
tertiary care facilities
immediate and timely referral of complicated cases
Link facility with 3 Mobile Health Units to reach out to To develop
beneficiaries in remote areas the location as
Demographic
Surveillance Site to
assess the impact
To link services
with Government
health facility
for promotion of
immunisation and
family planning
services
Beneficiary Coverage
Dahej Roha Total
OPD Patients 18,258 16,021 34,279
Health Awareness Beneficiaries 3,304 8,480 11,784
Health Camp 4 4 8
Average OPD/Month 1,521 1,335 2,857
Average OPD/Day 73 63 137
10
enable environment protection.
Key Objectives:
100% internship to all registered beneficiaries to provide them
hands-on training in healthcare services
At least 80% of trained youth secure certification from National
Skill Development Corporation at the completion of course
At least 80% of certified trainees secure wage employment as
per the Minimum Wages Act
Key Activities:
To provide access to age appropriate story books in regional
language to children
To assess literacy level of children out-of-school within specific
age groups
To increase regularity in attendance amongst school-going
children
To impart skills amongst local youths in the art of story telling
143
Undergoing Rehabilitation
20
Fully Rehabilitated
Key Objectives:
To create awareness and educate around 25,000 people annually on
ill-effects of alcoholism on the individual, family and society at large
Notice
NOTICE is hereby given that the Forty Eighth Annual General Meeting RESOLVED FURTHER THAT where in any financial year
of Members of DEEPAK NITRITE LIMITED will be held at Grand during the tenure of Shri Deepak C. Mehta, the Company
Mercure Vadodara Surya Palace, Opposite Parsi Agiyari, Sayajigunj, incurs a loss or its profit are inadequate, the Company shall
Vadodara – 390 020 on Friday, June 28, 2019 at 10:30 a.m. to continue to pay to Shri Deepak C. Mehta, the remuneration
transact the following businesses: as set out in the Explanatory Statement, by way of salary,
perquisites, incentives and other allowances, as a “minimum
ORDINARY BUSINESS: remuneration” subject to the limits and condition specified
1) To receive, consider, approve and adopt the Standalone and in Schedule V of the Companies Act, 2013 and rules made
Consolidated Audited Balance Sheet, Statement of Profit thereunder or such other limits as may be prescribed by the
and Loss, Cash Flow Statement and Changes in Equity for Central Government and approval of Members and/or Central
the Financial Year ended March 31, 2019, together with the Government required, if any.
Directors’ Report and the Auditor’s Report thereon.
RESOLVED FURTHER THAT the Board be and is hereby
2) To consider declaration of Dividend on Equity Shares for the authorized to do all such acts, deeds and things as it may
Financial Year ended March 31, 2019. deem necessary and authorise executives of the Company
for the purpose of giving effect to the re-appointment of Shri
3) To appoint a Director in place of Shri Sanjay Upadhyay (DIN:
Deepak C. Mehta as Chairman and Managing Director of the
01776546), who retires by rotation at this Annual General
Company as mentioned above.”
Meeting, in terms of Section 152(6) of the Companies Act, 2013
and, being eligible, has offered himself for re-appointment.
5) Re-appointment of Shri Sudhin Choksey (DIN: 00036085)
as an Independent Director of the Company for a second
SPECIAL BUSINESS:
term of 3 consecutive years.
4) Re-appointment of Shri Deepak C. Mehta (DIN: 00028377)
To consider and if thought fit, to pass with or without
as Chairman & Managing Director of the Company.
modification(s), the following Resolution as a Special
To consider and if thought fit, to pass with or without
Resolution:
modification(s), the following Resolution as an Ordinary
Resolution:
“RESOLVED THAT pursuant to provisions of Sections 149, 152
“RESOLVED THAT in accordance with the provisions of
and any other applicable provisions, if any, of the Companies
Sections 196, 197 and 203 read with Schedule V and all other Act, 2013 (“the Act”) read with Schedule IV to the Act and the
applicable provisions of the Companies Act, 2013 (“the Act”) Companies (Appointment and Qualification of Directors) Rules,
and the Companies (Appointment and Remuneration of 2014 and those contained in the Securities and Exchange Board
Managerial Personnel) Rules, 2014 (including any statutory of India (Listing Obligations and Disclosure Requirements)
modification(s) or re-enactment thereof, for the time being in Regulations, 2015 (“Listing Regulations”) (including any
force), approval of the Company be and is hereby accorded for statutory modification(s) or re-enactment(s) thereof for the
the re-appointment of Shri Deepak C. Mehta (DIN: 00028377) time being in force), Shri Sudhin Choksey (DIN: 00036085),
as Chairman & Managing Director of the Company, for further Independent Non-Executive Director of the Company who
period of five (5) years with effect from December 14, 2018, on has submitted a declaration under Section 149(7) of the Act
the terms and conditions including remuneration as set out in and Regulation 25(8) of the Listing Regulations that he meets
the Explanatory Statement annexed to the Notice convening the criteria for independence as provided in the Act and the
this Meeting. Listing Regulations and who is eligible for re-appointment, be
and is hereby re-appointed as an Independent Non-Executive
RESOLVED FURTHER THAT the Board of Directors of the
Director of the Company to hold office for a second term of
Company (hereinafter referred to as “the Board” which term three (3) consecutive years with effect from August 8, 2019 till
shall be deemed to include any Committee of the Board) be August 7, 2022.
and is hereby authorized to alter and/or vary the terms and
conditions of the said re-appointment in accordance with RESOLVED FURTHER THAT the Board of Directors of the
the provisions of the Act including remuneration within the Company be and is hereby authorised to do all such acts,
overall limits prescribed under Section 197 read with Schedule deeds and things as it may deem necessary and authorise
V to the Act, or any statutory modification(s) or re-enactment executives of the Company for the purpose of giving effect to
thereof. this Resolution.”
(c) exceeding one percent (1%) of Net Profits of the Company To consider and if thought fit, to pass with or without
to all Directors who are neither Managing Director nor modification(s), the following Resolution as a Special
Whole Time Director of the Company. Resolution:
Arvind Bajpai 3.
Corporate Members intending to send their authorised
Place: Vadodara Company Secretary representative(s) to attend the Meeting are requested to
Date : May 3, 2019 Membership No.: FCS-6713 send to the Company a certified copy of the Board resolution
Address: A/2/202, Labh Exotica, authorising their representative(s) to attend and vote on their
Nr. Pratham Vatika, Gotri, behalf at the Meeting.
Vadodara - 390 021
Registered Office: 4. Members / Proxies are requested to bring duly filled Attendance
Aaditya-I, Chhani Road Slip to attend the Meeting, along with their copy of Annual
Vadodara – 390 024, Gujarat Report.
Tel: +91-265-2765200, 396 0200 5. The relevant documents referred to in this Notice requiring
Fax: +91-265-2765344
approval by the Members at the Meeting shall be available
Email: investor@godeepak.com
for inspection by the Members at the Registered Office of the
Website: www.godeepak.com
Company on all working days, except Saturdays and Sundays,
CIN: L24110GJ1970PLC001735
during business hours, up to the date of the Meeting. This
Notice and the Annual Report will also be available on the
Company’s website www.godeepak.com for download.
Regulations’), the Company is pleased to provide the facility iii. Now Enter your User ID :
to Members, to exercise their right to vote on Resolutions a. For CDSL: 16 digits beneficiary ID,
proposed to be considered at the Meeting by electronic means
b. For NSDL: 8 Character DP ID followed by 8 Digits Client ID,
and the business may be transacted through such voting.
c. Members holding shares in Physical Form should enter
18. Members, whose names appear in the Register of Members / Folio Number registered with the Company.
list of Beneficial Owners as on Friday, June 21, 2019 (“Cut-off
Date”) are entitled to vote on the Resolutions set forth in this iv. Enter the Image Verification as displayed and Click on Login.
Notice. A person who is not a Member as on the Cut-off Date
should treat this Notice for information purposes only. v. If you are holding shares in demat form and had logged on to
www.evotingindia.com and voted on an earlier voting of any
19. The Company has entered into an arrangement with Central company, then your existing password is to be used.
Depository Services (India) Limited (“CDSL”) for facilitating
remote e-Voting for the Meeting. The Members may cast their vi. If you are a first time user follow the steps given below:
votes on electronic voting system to be provided by CDSL from
For Members holding shares in Demat Form and Physical
place other than the venue of the Meeting (“remote e-Voting”). Form
The remote e-Voting will commence on Tuesday, June 25, PAN Enter your 10 digit alpha-numeric PAN
2019 (9:00 a.m.) and will end on Thursday, June 27, 2019 issued by Income Tax Department
(5:00 p.m.). The remote e-Voting module shall be disabled (Applicable for both demat
by CDSL for voting thereafter. Once the vote on a Resolution shareholders as well as physical
is cast by the Member, he/she shall not be allowed to change shareholders)
it subsequently. The Members desiring to vote through remote • Members who have not updated
e-Voting are requested to refer to the detailed procedure given their PAN with the Company/
herein in the Notice. Depository Participant are
requested to use the sequence
20. In addition, the facility for voting through Polling Paper shall be number which is printed on
made available at the Meeting and the Members attending the Address Sticker.
Meeting who have not cast their vote by remote e-Voting shall Dividend Bank Enter the Dividend Bank Details or Date
be able to exercise their right at the Meeting through Polling Details of Birth (in dd/mm/yyyy format) as
Paper. OR recorded in your demat account or in
Date of Birth the Company records in order to login.
21. Members who have cast their vote by remote e-Voting prior (DOB)
• If both the details are not recorded
to the Meeting may also attend the Meeting but shall not be with the Depository Participate
entitled to cast their vote again. or Company, please enter the
Member ID/ Folio Number in the
22. In case of joint holders attending the Meeting, only such joint Dividend Bank Details filed as
holder who is higher in the order of names will be entitled to mentioned in instruction (iii).
vote.
After entering these details appropriately, click on “SUBMIT”
23. The voting rights of Members shall be in the proportion of their tab.
shareholding in the Company as on Cut-off Date.
vii. Members holding shares in physical form will then directly
24. The Company has appointed Shri Dinesh Joshi, Practising reach the Company selection screen. However, members
Company Secretary (Membership No.: FCS-3752), Designated holding shares in demat form will now reach ‘Password
Partner, M/s. KANJ & Co. LLP, Company Secretaries, Pune, as Creation’ menu wherein they are required to mandatorily
the Scrutinizer, to scrutinize the entire voting process including enter their login password in the new password field. Kindly
remote e-Voting in a fair and transparent manner. note that this password is to be also used by the demat holders
for voting for resolutions of any other company on which they
PROCEDURE FOR REMOTE E-VOTING are eligible to vote, provided that company opts for e-voting
I. The instructions for shareholders voting electronically are as through CDSL platform. It is strongly recommended not to
under: share your password with any other person and take utmost
care to keep your password confidential
i.
The Members should log on to the e-voting website
www.evotingindia.com.
viii. For Members holding shares in physical form, the details can be
ii. Click on Shareholders. used only for e-voting on the Resolutions contained in this Notice.
xii. After selecting the Resolution you have decided to vote on, III.
Members can cast their vote online from June 25, 2019
click on “SUBMIT”. A confirmation box will be displayed. If you (9:00 a.m.) till June 27, 2019 (5:00 p.m.). Remote e-Voting shall
wish to confirm your vote, click on “OK”, else to change your not be allowed beyond the said period.
vote, click on “CANCEL” and accordingly modify your vote.
IV. Any person, who acquires shares of the Company and become
xiii. Once you “CONFIRM” your vote on the Resolution, you will not
Member of the Company after dispatch of the notice and
be allowed to modify your vote.
holding shares as of the Cut-off Date i.e. June 21, 2019, may
xiv. You can also take a print of the votes cast by clicking on “Click obtain the login ID and password by sending a request at
here to print” option on the Voting page. helpdesk.evoting@cdslindia.com or at vadodara@linkintime.
co.in. However, if he/she is already registered with CDSL for
xv. If a demat account holder has forgotten the login password remote e-Voting then he/she can use his/ her existing User ID
then Enter the User ID and the image verification code and and password for casting vote. If you forgot your password,
click on Forgot Password & enter the details as prompted by you can reset your password by using “Forgot User Details/
the system. Password” option available on www.evotingindia.com or
contact CDSL at the Toll Free No.: 1800-22-5533.
xvi. Shareholders can also cast their vote using Mobile app - “m
- Voting”. Shareholders may log in to m-Voting using their
V. A person, whose name is recorded in the Register of Members or
e-voting credentials to vote for the company resolution(s).
in the list of Beneficial Owners maintained by the Depositories
xvii. Note for Non – Individual Shareholders and Custodians: as on Cut-off Date only shall be entitled to avail the facility
of remote e-Voting as well as voting at the Meeting through
• on-Individual Shareholders (i.e. other than Individuals,
N
Polling Paper.
HUF, NRI etc.) and Custodian are required to log on
to www.evotingindia.com and register themselves as
VI. The result of voting at the Meeting including remote e-Voting
Corporates.
shall be declared after the Meeting but not later than Forty
• scanned copy of the Registration form bearing stamp
A Eight Hours of the conclusion of the Meeting.
and sign of the entity should be emailed to helpdesk.
evoting@cdslindia.com. VII. The result declared along with the Report of the Scrutinizer shall
be placed on the website of the Company www.godeepak.com
• fter receiving the login details, user would be able to link
A
and on the website of CDSL immediately after the declaration
the account(s) for which they wish to vote on.
of result by the Chairman or a person authorised by him in
• he list of accounts linked in the login should be emailed
T writing. The Company shall simultaneously forward the results
to helpdesk.evoting@cdslindia.com and on approval of to BSE Limited and National Stock Exchange of India Limited
the accounts they would be able to cast their vote. where the shares of the Company are listed.
Item No.: 4 subject to and in accordance with the provisions of Section 197
The Board of Directors of the Company at their meeting held on and other relevant provisions of the Companies Act, 2013 (the
October 26, 2018 approved the re-appointment of Shri Deepak “Act”) (including any statutory modifications or re-enactments
C. Mehta as the Chairman & Managing Director of the Company thereof, for the time being in force).
for further period from December 14, 2018 to December 13, 2023,
subject to approval of Members of the Company, at the remuneration (D) The aggregate remuneration inclusive of Salary, Commission,
recommended by the Nomination and Remuneration Committee of Perquisites, Allowances and other benefits payable to Shri
the Board and approved by the Board. Deepak C. Mehta, shall always be subject to and in accordance
with the provisions of Section 197 read with Schedule V of the
The Nomination and Remuneration Committee, at their meeting Act (including any statutory modifications or re-enactments
held on May 3, 2019, reviewed the remuneration payable to Shri thereof, for the time being in force).
Deepak C. Mehta as the Chairman & Managing Director of the
Company and recommended the revision in remuneration payable (E) The aforesaid remuneration payable to Shri Deepak C. Mehta
to Shri Deepak C. Mehta effective from April 1, 2019. shall be reviewed by the Board after close of each Financial
Year, and based on the Profits made by the Company in
The terms of appointment including remuneration of Shri Deepak that Financial Year, Shri Deepak C. Mehta shall be paid such
C. Mehta as the Chairman & Managing Director, as recommended by enhanced remuneration as the Board may decide subject to
the Nomination and Remuneration Committee are as under: and in accordance with the provisions of Section 197 and other
applicable provisions of the Act read with Schedule V of the
(A) Salary and Perquisites Act (including any statutory modifications or re-enactments
Shri Deepak C. Mehta shall be paid fixed amount of ` 323 thereof, for the time being in force).
Lakhs (Rupees Three Hundred Twenty Three Lakhs only) per
(F) Shri Deepak C. Mehta shall not be entitled to sitting fees for
annum, with effect from December 14, 2018 till March 31, 2019,
attending meetings of the Board or any Committee thereof.
proportionately and ` 650 Lakhs (Rupees Six Hundred Fifty
Lakhs only) per annum from April 1, 2019, by way of salary, (G) Shri Deepak C. Mehta as the Chairman & Managing Director,
house rent allowance, other allowances, and retirement shall perform such duties and exercise such powers bestowed
benefits including but not limited to Company’s contribution on him from time to time by the Board of Directors of the
to provident fund, superannuation fund or annuity fund, Company.
gratuity or such remuneration as may be determined by the
Board or Committee thereof from time to time. (H) Shri Deepak C. Mehta shall not be liable to retire by rotation as
a Director of the Company.
(B)
The perquisites, allowances and other benefits shall
include but not be limited to the following: The details of Shri Deepak C. Mehta as required under the provisions
1) Rent free furnished residential accommodation in lieu of Regulation 36(3) of the Listing Regulations and other applicable
of House Rent Allowance as may be agreed between the provisions are provided in Annexure – I to this Notice.
Company and Shri Deepak C. Mehta.
Shri Deepak C. Mehta satisfies all the conditions set out in Part-I of
2) Re-imbursement of gas, electricity, water charges and Schedule V to the Act as also conditions set out under Sub-Section
furnishings. (3) of Section 196 of the Act for being eligible for re-appointment.
3) Re-imbursement of medical expenses incurred for self He is not disqualified from being appointed as Director in terms of
and members of his family, as per rules of the Company. Section 164 of the Act.
4) Leave travel concession for self and members of his
A copy of the Agreement entered into between the Company and
family, as per rules of the Company.
Shri Deepak C. Mehta is open for inspection by the Members at the
5) Fees of clubs subject to maximum of two clubs. Registered Office of the Company during normal business hours on
6) Medical insurance, as per rules of the Company. any working day, excluding Saturday.
7) Personal Accident Insurance, as per rules of the Company. Shri Deepak C. Mehta and his relatives Shri Ajay C. Mehta and Shri
8) Provision of car and telephone at residence. Maulik Mehta are interested in the Ordinary Resolution set out at
Item No. 4 of the Notice, which pertains to the re-appointment and
(C) In addition to the remuneration as stated in (A) above, Shri remuneration payable to Shri Deepak C. Mehta.
Deepak C. Mehta shall also be paid a Commission, calculated
with reference to the Net Profits of the Company in a particular Save and except the above, none of the other Directors / Key
Financial Year, as may be determined by the Board of Directors, Managerial Personnel of the Company / their relatives are, in any
The Board recommends the Ordinary Resolution set out at Item No. Item No.: 6
4 of the Notice for approval by the Members. Shri Sudhir Mankad (DIN: 00086077) is an Independent Non-
Executive Director of the Company. He is also the Chairman of the
Item No.: 5 Nomination & Remuneration Committee and member of the Audit
Shri Sudhin Choksey (DIN: 00036085) is an Independent Non- Committee and Corporate Social Responsibility Committee of
Executive Director of the Company. He is also the Chairman of the Directors of the Company.
Audit Committee and a member of the Nomination & Remuneration
Committee of the Board of Directors of the Company. Pursuant to the requirement of Companies Act, 2013 (“the Act”) and
Clause 49 of erstwhile Listing Agreement, Shri Sudhir Mankad was
Pursuant to the requirement of Companies Act, 2013 (“the Act”) and appointed as an Independent Director at the 43rd Annual General
Clause 49 of erstwhile Listing Agreement, Shri Sudhin Choksey was Meeting of the Company held on August 8, 2014 for a term of five (5)
appointed as an Independent Director at the 43rd Annual General consecutive years upto August 7, 2019.
Meeting of the Company held on August 8, 2014 for a term of five (5)
consecutive years upto August 7, 2019. As per Section 149(10) of the Act, an Independent Director can hold
office for a term upto five (5) consecutive years on the Board of a
As per Section 149(10) of the Act, an Independent Director can hold Company and may be re-appointed for another term upto five (5)
office for a term upto five (5) consecutive years on the Board of a consecutive years, with the approval Members of the Company by
Company and may be re-appointed for another term upto five (5) way of Special Resolution.
consecutive years, with the approval Members of the Company by
way of Special Resolution. In the opinion of the Board of Directors of the Company, Shri Sudhir
Mankad fulfils the conditions for appointment of Independent
In the opinion of the Board of Directors of the Company, Shri Sudhin
Director as specified in the Act and the SEBI (Listing Obligations and
Choksey fulfils the conditions for appointment of Independent
Disclosure Requirements) Regulations, 2015 (“Listing Regulations”)
Director as specified in the Act and the SEBI (Listing Obligations and
and is independent of the management.
Disclosure Requirements) Regulations, 2015 (“Listing Regulations”)
and is independent of the management. The Board of Directors at its meeting held on May 3, 2019, on
the recommendation of the Nomination and Remuneration
The Board of Directors at its meeting held on May 3, 2019, on the
Committee and based on the performance evaluation, considers
recommendation of the Nomination and Remuneration Committee
that given his background and experience and contributions
and based on the performance evaluation, considers that given
made by him during his tenure, the association of Shri Sudhir
his background and experience and contributions made by him
Mankad would be beneficial to the Company and it is desirable
during his tenure, the association of Shri Sudhin Choksey would
to re-appoint Shri Sudhir Mankad as an Independent Director
be beneficial to the Company and it is desirable to re-appoint Shri
for another term of three (3) consecutive years with effect from
Sudhin Choksey as an Independent Director for another term of
August 8, 2019.
three (3) consecutive years with effect from August 8, 2019.
Copy of the draft letter of appointment of Shri Sudhin Choksey Further, as per requirement of Regulation 17(1A) of the Listing
setting out the terms and conditions of appointment are available Regulations, which are effective from April 1, 2019, a person who
for inspection by the Members of the Company without any fee at has attained the age of 75 years, can continue the directorship
the Registered Office of the Company. in a company with the approval of Members by way of Special
Resolution. Since Shri Sudhir Mankad is approaching the age of 72
The details of Shri Sudhin Choksey as required under the provisions years and in order to continue his directorship upon his attaining
of Regulation 36(3) of the Listing Regulations and other applicable the age of 75 years, during the second term of his appointment,
provisions are provided in Annexure – I to this Notice. the Board also recommends the continuation of directorship of
Shri Sudhir Mankad beyond the age of 75 years, for approval by the
Shri Sudhin Choksey does not hold by himself or for any other Members of the Company.
person on a beneficial basis, any shares in the Company. Shri
Sudhin Choksey has given a declaration that he meets the criteria Copy of the draft letter of appointment of Shri Sudhir Mankad
of independence as provided in Section 149(6) of the Act and setting out the terms and conditions of appointment are available
Regulation 16(1)(b) of the Listing Regulations. for inspection by the Members of the Company without any fee at
the Registered Office of the Company.
None of the Directors or Key Managerial Personnel of the Company
or their relatives except Shri Sudhin Choksey are, in any way, The details of Shri Sudhir Mankad as required under the provisions
concerned or interested, financially or otherwise, in the Special of Regulation 36(3) of the Listing Regulations and other applicable
Resolution set out at Item No. 5 of the Notice. provisions are provided in Annexure – I to this Notice.
Shri Sudhir Mankad does not hold by himself or for any other person has attained the age of 75 years, can be appointed or continue the
on a beneficial basis, any shares in the Company. Shri Sudhir Mankad directorship in a company with the approval of Members by way of
has given a declaration that he meets the criteria of independence Special Resolution. Since Shri Sandesh Kumar Anand has attained
as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the age of 75 years, the Board also recommends the approval for the
the Listing Regulations. appointment of Shri Sandesh Kumar Anand, who has attained the
age of 75 years, by the Members of the Company.
None of the Directors or Key Managerial Personnel of the Company or
their relatives except Shri Sudhir Mankad are, in any way, concerned Copy of the draft letter of appointment of Shri Sandesh Kumar
or interested, financially or otherwise, in the Special Resolution set Anand setting out the terms and conditions of appointment are
out at Item No. 6 of the Notice. available for inspection by the Members of the Company without
any fee at the Registered Office of the Company.
The Board recommends the Special Resolution set out at Item No. 6
of the Notice for approval by the Members. The details of Shri Sandesh Kumar Anand as required under the
provisions of Regulation 36(3) of the Listing Regulations and other
Item No.: 7 applicable provisions are provided in Annexure – I to this Notice.
Shri Sandesh Kumar Anand (DIN: 00001792) is an Independent Non-
Executive Director of the Company. He is also a member of the Audit None of the Directors or Key Managerial Personnel of the Company
Committee and Stakeholders’ Relationship & Investors Grievance or their relatives except Shri Sandesh Kumar Anand are, in any way,
Committee of Directors of the Company. concerned or interested, financially or otherwise, in the Special
Resolution set out at Item No. 7 of the Notice.
Pursuant to the requirement of Companies Act, 2013 (“the Act”)
and Clause 49 of erstwhile Listing Agreement, Shri Sandesh Kumar The Board recommends the Special Resolution set out at Item No. 7
Anand was appointed as an Independent Director at the 43rd Annual of the Notice for approval by the Members.
General Meeting of the Company held on August 8, 2014 for a
Item No.: 8
consecutive term of five (5) consecutive years upto August 7, 2019.
Dr. Swaminathan Sivaram (DIN: 00009900) is an Independent Non-
As per Section 149(10) of the Act, an Independent Director can hold Executive Director of the Company. He is also a member of the
office for a term upto five (5) consecutive years on the Board of a Corporate Social Responsibility Committee and Risk Management
Company and may be re-appointed for another term upto five (5) Committee of the Board of Directors of the Company.
consecutive years, with the approval Members of the Company by
way of Special Resolution. Pursuant to the requirement of Companies Act, 2013 (“the Act”) and
Clause 49 of erstwhile Listing Agreement, Dr. Swaminathan Sivaram
The Board of Directors at its meeting held on May 3, 2019, on the was appointed as an Independent Director at the 43rd Annual
recommendation of the Nomination and Remuneration Committee General Meeting of the Company held on August 8, 2014 for a term
and based on the performance evaluation, considers that given his of five (5) consecutive years upto August 7, 2019.
background and experience and contributions made by him during
his tenure, the association of Shri Sandesh Kumar Anand would As per Section 149(10) of the Act, an Independent Director can hold
be beneficial to the Company and it is desirable to re-appoint Shri office for a term upto five (5) consecutive years on the Board of a
Sandesh Kumar Anand as an Independent Director for another term Company and may be re-appointed for another term upto five (5)
of three (3) consecutive years with effect from August 8, 2019. consecutive years, with the approval Members of the Company by
way of Special Resolution.
Shri Sandesh Kumar Anand does not hold by himself or for any other
person on a beneficial basis, any shares in the Company. Shri Anand The Board of Directors at its meeting held on May 3, 2019, on the
has given a declaration that he meets the criteria of independence recommendation of the Nomination and Remuneration Committee
as provided in Section 149(6) of the Companies Act, 2013 (“the and based on the performance evaluation, considers that given his
Act“) and Regulation 16(1)(b) of the SEBI (Listing Obligations and background and experience and contributions made by him during
Disclosure Requirements) Regulations, 2015 (“Listing Regulations”). his tenure, the association of Dr. Swaminathan Sivaram would
be beneficial to the Company and it is desirable to re-appoint Dr.
In the opinion of the Board of Directors of the Company, Shri Sandesh Swaminathan Sivaram as an Independent Director for another term
Kumar Anand fulfils the conditions for appointment of Independent of three (3) consecutive years with effect from August 8, 2019.
Director as specified in the Act and the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) Dr. Sivaram does not hold by himself or for any other person on a
and is independent of the management. beneficial basis, any shares in the Company. Dr. Sivaram has given a
declaration that he meets the criteria of independence as provided
Further, as per requirement of Regulation 17(1A) of the Listing in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing
Regulations, which are effective from April 1, 2019, a person who Regulations.
Copy of the draft letter of appointment of Dr. Swaminathan Sivaram The details of Dr. Richard H. Rupp as required under the provisions
setting out the terms and conditions of appointment are available of Regulation 36(3) of the Listing Regulations and other applicable
for inspection by the Members of the Company without any fee at provisions are provided in Annexure – I to this Notice.
the Registered Office of the Company.
None of the Directors or Key Managerial Personnel of the Company or
The details of Dr. Swaminathan Sivaram as required under the their relatives except Dr. Richard H. Rupp are, in any way, concerned
provisions of Regulation 36(3) of the Listing Regulations and other or interested, financially or otherwise, in the Special Resolution set
applicable provisions are provided in Annexure – I to this Notice. out at Item No. 9 of the Notice.
None of the Directors or Key Managerial Personnel of the Company The Board recommends the Special Resolution set out at Item No. 9
or their relatives except Dr. Swaminathan Sivaram are, in any way, of the Notice for approval by the Members.
concerned or interested, financially or otherwise, in the Special
Resolution set out at Item No. 8 of the Notice. Item No.: 10
Shri Sanjay Asher (DIN: 00008221) has been appointed by the
The Board recommends the Special Resolution set out at Item No. 8
Board of Directors as an Additional Director on the Board of the
of the Notice for approval by the Members.
Company w.e.f. May 3, 2019. As per the provisions of Section 161 of
the Companies Act, 2013 (“the Act”), he holds office as an Additional
Item No.: 9
Director upto the ensuing Annual General Meeting of the Company.
Dr. Richard H. Rupp (DIN: 02205790) is an Independent Non-
Executive Director of the Company. The Company has received a notice under Section 160 of the Act
together with a deposit of ` 1,00,000/- from a Member proposing
Pursuant to the requirement of Companies Act, 2013 (“the Act”) and his candidature as an Independent Non-Executive Director of
Clause 49 of erstwhile Listing Agreement, Dr. Richard H. Rupp was the Company. In accordance with the provisions of the Act, it is
appointed as an Independent Director at the 43rd Annual General proposed to appoint Shri Sanjay Asher as an Independent Non-
Meeting of the Company held on August 8, 2014 for a term of five (5) Executive Independent Director of the Company for a term of three
consecutive years upto August 7, 2019. (3) consecutive years upto June 27, 2022.
As per Section 149(10) of the Act, an Independent Director can hold Shri Sanjay Asher has given a declaration to the Board that he
office for a term upto five (5) consecutive years on the Board of a meets the criteria of independence as provided under Section
Company and may be re-appointed for another term upto five (5) 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations.
consecutive years, with the approval Members of the Company by In the opinion of the Board, Shri Sanjay Asher fulfils the conditions
way of Special Resolution. specified in the Companies Act, 2013 and rules made thereunder for
his appointment as an Independent Director of the Company and
The Board of Directors at its meeting held on May 3, 2019, on the is independent of the management. The Board considers that his
recommendation of the Nomination and Remuneration Committee association would be of immense benefit to the Company and it is
and based on the performance evaluation, considers that given his desirable to avail services of Shri Sanjay Asher as an Independent
background and experience and contributions made by him during Director.
his tenure, the association of Dr. Richard H. Rupp would be beneficial
to the Company and it is desirable to re-appoint Dr. Richard H. Rupp The details of Shri Sanjay Asher as required under the provisions
as an Independent Director for another term of three (3) consecutive of Regulation 36(3) of the Listing Regulations and other applicable
years with effect from August 8, 2019. provisions are provided in Annexure – I to this Notice.
A copy of the draft Letter of Appointment of Shri Sanjay Asher as an Item No.: 12
Independent Director will be available for inspection without any As per the provisions of Section 197 of the Companies Act, 2013
fee for the members at the Registered Office of the Company during (“the Act”) the overall managerial remuneration to Directors shall
normal business hours on any working day, excluding Saturdays. not exceed 11 per cent (11%) of the net profits of the Company
calculated in accordance with Section 198 of the Act (“Net Profit”)
None of the Directors or Key Managerial Personnel of the Company and should be within the sub-limits as prescribed under the second
or their relatives except Shri Sanjay Asher are, in any way, concerned proviso to Sub-Section (1) of Section 197 of the Act.
or interested, financially or otherwise, in the Ordinary Resolution set
out at Item No. 10 of the Notice. Prior to the amendments brought in by Companies (Amendment)
Act, 2017 in Section 197, the Company may, with the approval
The Board recommends the Ordinary Resolution set out at Item No. of the Members at the general meeting, pay remuneration to the
10 of the Notice for approval by the Members. Managing Director, Whole Time Director or Manager, in excess of
5 per cent (5%) of the Net Profit for a particular financial year and
Item No.: 11 where there is more than one such Directors, in excess of 10 per
Smt. Purvi Sheth (DIN: 06449636) has been appointed by the Board cent (10%) of the Net Profit to all of them together and to the Non-
of Directors as an Additional Director on the Board of the Company Executive Directors in excess of 1 per cent (1%) of the Net Profit of
w.e.f. May 3, 2019. As per the provisions of Section 161 of the the Company. Accordingly, the Company had obtained the approval
Companies Act, 2013 (“the Act”), she holds office as an Additional of Members of the Company by way of Ordinary Resolution at the
Director upto the ensuing Annual General Meeting. 44th Annual General Meeting of the Company held on August 7, 2015
for payment of managerial remuneration in excess of the sub-limits
The Company has received a notice under Section 160 of the Act prescribed under the erstwhile second proviso to Sub-Section (1) of
together with a deposit of ` 1,00,000/- from a Member proposing Section 197 of the Act.
her candidature as an Independent Non-Executive Director of However, as per the amendments made by the Companies
the Company. In accordance with the provisions of the Act, it is (Amendment) Act, 2017 in the second proviso to Sub-Section (1) of
proposed to appoint Smt. Purvi Sheth as an Independent Non- Section 197 of the Act, which were made effective from September
Executive Director for a term of three (3) consecutive years upto 12, 2018, the said approval of the Members of the Company has to
June 27, 2022. be obtained by way of Special Resolution.
Smt. Purvi Sheth has given a declaration to the Board that she Accordingly, approval of the Members is being sought for the Special
meets the criteria of independence as provided under Section Resolution as set out under Item No. 12 of the Notice for payment of
149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations. remuneration to Directors in excess of sub-limits prescribed under
In the opinion of the Board, Smt. Purvi Sheth fulfils the conditions the provisions of Section 197 of the Act for the Financial Year 2019-20
specified in the Companies Act, 2013 and rules made thereunder for and subsequent years.
her appointment as an Independent Director of the Company and Further, the total managerial remuneration to all the Directors shall
is independent of the management. The Board considers that her be within the limit of 11% of the Net Profit as prescribed under
association would be of immense benefit to the Company and it is Section 197 of the Companies Act, 2013, except as may be authorized
desirable to avail services of Smt. Purvi Sheth as an Independent by the Company in general meeting, subject to the provisions of
Director. Schedule V to the Act.
None of the Key Managerial Personnel of the Company / their
The details of Smt. Purvi Sheth as required under the provisions of
relatives, other than the Directors to the extent of remuneration
Regulation 36(3) of the Listing Regulations and other applicable
which may be paid to them in accordance with the provisions of
provisions are provided in Annexure – I to this Notice.
Section 197 of the Companies Act, 2013, are concerned or interested,
financially or otherwise, in the Special Resolution set out at Item No.
A copy of the draft Letter of Appointment of Smt. Purvi Sheth as an
12 of the Notice.
Independent Director will be available for inspection without any
fee for the members at the Registered Office of the Company during The Board recommends the Special Resolution as set out at Item
normal business hours on any working day, excluding Saturdays. No. 12 of the Notice for approval by the Members.
None of the Directors or Key Managerial Personnel of the Company Item No.: 13
or their relatives except Smt. Purvi Sheth are, in any way, concerned The Members had, at the 43rd Annual General Meeting of the
or interested, financially or otherwise, in the Ordinary Resolution set Company held on August 8, 2014, approved the payment of
out at Item No. 11 of the Notice. remuneration by way of commission to Non-Executive Directors
of the Company, for a period of five (5) years commencing with
The Board recommends the Ordinary Resolution set out at Item No. Financial Year 2014-15, not exceeding 1% (one per cent) of the
11 of the Notice for approval by the Members. net profits of the Company as determined in accordance with
Annexure – I
Name of the Director Shri Deepak C. Mehta Shri Sanjay Upadhyay
Date of Birth December 12, 1956 July 20, 1961
Age 62 Years 57 Years
Director Identification Number 00028377 01776546
Qualifications Bachelor of Science from University of Bombay. Associate Member of the Institute of Cost Accountants
of India and Fellow Member of the Institute of Company
Secretaries of India. Advanced Management Programme
from Wharton, USA.
Terms and Conditions of As detailed in the Explanatory Statement of Item No. 4. As per Ordinary Resolution passed at the 46th Annual
appointment or re-appointment General Meeting of the Company held on June 26, 2017
along with details of remuneration
sought to be paid
Remuneration paid / payable for ` 906.60 Lakhs ` 294.40 Lakhs
the Financial Year 2018-19
Expertise in specific functional Management & Leadership Finance, Taxation & Management
areas
Date of first appointment on the June 14, 1978 April 28, 2017
Board
Shareholdings in the Company as 2,12,16,331 Equity Shares Nil
on March 31, 2019
Disclosure of relationships Father of Shri Maulik D. Mehta and Brother of Shri Ajay Not related to any of the Directors or Key Managerial
between directors inter-se. C. Mehta Personnel of the Company.
The number of Meetings of the No. of Board Meetings Board Meetings No. of Board Meetings Board Meetings
Board attended during the held Attended held Attended
F.Y. 2018-19 4 4 4 4
Directorship in other Companies Listed Companies Listed Companies
as on March 31, 2019 Nil Nil
Non- Listed Companies Non- Listed Companies
Deepak Novochem Technologies Limited Deepak Novochem Technologies Limited
Deepak Phenolics Limited Deepak Phenolics Limited
Lakaki Works Private Limited
Forex Leafin Private Limited
Pranawa Leafin Private Limited
Greypoint Investments Private Limited
Hardik Leafin Private Limited
Sundown Finvest Private Limited
Stigma Credits and Capital Private Limited
Checkpoint Credit and Capital Private Limited
Skyrose Finvest Private Limited
Stepup Credits and Capital Private Limited
Stiffen Credits and Capital Private Limited
Deepak Cybit Private Limited
Sofotel Infra Private Limited
BAIF Institute for Sustainable Livelihoods and
Development
Deepak Research and Development Foundation
Kawant Development Corporation
Chairmanship/Membership of Audit Committee Audit Committee
Committees of other Board Deepak Phenolics Limited- Member Deepak Novochem Technologies Limited - Chairman
Deepak Novochem Technologies Limited - Member Nomination & Remuneration Committee
Nomination & Remuneration Committee Deepak Phenolics Limited - Member
Deepak Phenolics Limited- Member Deepak Novochem Technologies Limited - Chairman
Deepak Novochem Technologies Limited - Member Corporate Social Responsibility Committee
Corporate Social Responsibility Committee Deepak Novochem Technologies Limited - Member
Deepak Novochem Technologies Limited - Member Deepak Phenolics Limited - Member
Grand Mercure
Vadodara Surya Palace
GLOBAL ECONOMIC SCENARIO China is projected to run a current account deficit in 2019, which
The Financial Year 2018-19 was characterised by fears of sharp will be after decades of witnessing a surplus situation. Also, it has
slowing down of global economic growth due to an increasing changed its forecast to a range of 6-6.5% and further targeted to go
degree of deglobalisation. World economic growth is projected down to 5.5%, the slowest since 2009. Its erstwhile robust economic
to moderate from 3% in 2018 to 2.9% in 2019 on an annualised growth engine seems to have slowed down as it faces pressures
basis, as consumer and business spending weakened, such as the trade war with the U.S., a global economic slowdown
advanced-economy growth decelerated, and recovery in major and a decline in domestic consumption. A modest weakening of
commodity-exporting emerging market and developing economies China’s industrial sector is likely owing to softening of export growth
levelled off. This deceleration is due to a combination of tariff and a crackdown on the polluting industry. The structural slowdown
wars, quantitative barriers impeding the free movement of people, is expected to be offset partly by a moderate pick-up in other large
products and services, and geo-political protectionism, such as economies, including India.
Brexit, and its associated impact.
INDIAN ECONOMIC SCENARIO
Even as the U.S. economy has demonstrated an uptick recently it
is believed the trade war with China will lead to slower growth. The The Central Statistics Office revised the growth rate for India in Fiscal
growth in the Eurozone slipped to a 4 year low in the second half of 2018-19 from 7.2% to 7%. While the first half witnessed strong growth
Calendar Year 2018 and a forecast by the European Commission has trends, growth in the second half was impacted by a liquidity crisis
revised the estimate downward to 1.3% in 2019 owing to softening in the BFSI sector as well as global macro-economic events. Even as
exports and slowing external demand. growth moderated, India remained the fastest growing large economy
in the world. Further, growth has been quite broad-based and domestic
Economic Growth in 2019 macro-economic indicators have remained largely stable.
The International Monetary Fund (IMF) has predicted that over the Domestic demand has strengthened as the benefits of structural
next decade, reverse globalisation will make the playing field of reforms such as the Goods & Services Tax harmonisation,
global economies uneven, resulting in reduced ability to leverage improvement in governance in PSU banks and their recapitalisation
existing competitive advantages. The consequences of escalating take effect. Growth remained healthy despite multiple external
trade actions are undeniable: higher prices in China and the U.S., challenges including volatile oil prices and rupee volatility which
less purchasing power for consumers in these countries, higher served to place pressures on demand, inflation, current account,
input costs, heightened financial market volatility, and possibly
and public finances. However, business investment and exports
higher interest rates. These effects are likely to spill over from these
remained fairly robust.
countries into integrated markets. There are considerable downside
risks which includes the possibility of disorderly financial market According to US-based rating agency Moody’s report “Global Macro
volatility and rising vulnerability of some emerging markets and Outlook for 2019 and 2020”, India is less exposed to a slowdown in
developing economies to such disruption. There are also signs global manufacturing trade growth if compared with other major
of a deteriorated risk appetite among investors and a potential Asian economies and the emerging markets, and it is poised to grow
slowdown in China. at a relatively stable pace over the next two years. Announcement of
the direct cash transfer program for farmers and the middle-class tax
Moreover, with no let-up in the US-China trade war, growth forecast
relief measures will also contribute to the fiscal stimulus. With the
point to more pain ahead, not just for the developed economies, but
on-going reforms beginning to impact the economy now positively,
for the emerging market economies too. Trade tensions, including
there is renewed optimism about India’s growth prospects in the
the imposition of tariffs by large economies, have resulted in a
upcoming years. It’s believed that improvement in the governance
material impact on global commodity markets, leading to trade
of public banks will help avoid a new wave of non-performing loans
diversion and widening price differentials among countries.
and support the investment recovery.
Asia to drive Global Economic Growth Private consumption is projected to remain firm, and investment
Asia is seen driving the global economy in 2019, with high-growth growth is also expected to continue as the benefits of recent policy
economies such as India, Indonesia, Malaysia, China, Philippines, reforms begin to materialise and credit rebounds. Strong domestic
and Turkey leading the way. India is expected to be one of the fastest demand and resumption of investment cycle will boost demand for
growing economies in the world, with structural reforms and higher crude, metals, materials and other imports which may widen India’s
investments driving economic activity. Growth in Emerging Markets current account deficit. Inflation is projected to rise somewhat above
and Developing Economies, is projected to mature during the latter the midpoint of the Reserve Bank of India’s (RBI) target range of 2%
part of 2019. to 6%, mainly owing to energy and food prices. Economic growth
is seen moderately accelerating on the back of steady government and overseas markets, following plant shutdowns in China, currently
expenditure, largely stable rural incomes, faster private consumption, the world’s largest producer and exporter. The decline in supply
and investment growth. from China offers opportunities for Indian players to ramp up their
supply to the world market and explore new markets for sustained
Economic growth in India is expected to accelerate moderately to
exports. Meanwhile, competitive cost of labour and accommodative
7.5% in FY 2019-20, according to a World Bank forecast, attributing
government policies are also set to help the chemical sector in India.
it to an upswing in consumption and investment pick-up. India
Besides, most large chemical companies maintain adherence to
will continue to retain its tag as the world’s fastest-growing large
strict pollution norms, especially in Gujarat and Maharashtra.
economy.
Key Growth Enablers
INDUSTRY OUTLOOK AND TRENDS
The chemical industry is expected to be the key contributor and
The calendar Year 2018 represents the 6th year of an extended
a catalyst in achieving the target of US$ 1 Trillion manufacturing
upcycle in the global chemical markets, characterised by robust
economy by 2028, from the current US$ 380 Billion.
demand, tight supply, and strong profitability. This extended period
of profitability caused a surge in reinvestment planning activities in The country’s consumption growth story largely drives the chemical
North America, the Middle East, China, and other Asian locations. industry in India. The per capita consumption of chemicals in India
At the same time, many risks represent potential drags on global is 1/10th of the world average with India being a low consumption
growth, including rising crude oil prices, domestic fiscal policy and country even among the developing nations. With nearly US$ 15
currency fluctuations, geopolitical tensions, and realignment of Trillion of Chinese exports in chemicals and plastics subject to
trade barriers. US tariffs, India is set to gain market share in the global chemical
industry, estimated to be around US$ 4.7 Trillion. Significant
Additionally, trade barriers and imposition of tariffs announced
opportunities lie ahead for Indian chemical companies arising
by the US on imported Chinese products are likely to have spill-
out of emerging possibilities in US-China trade war as well as
over effects, several customers are keen to de-risk the supply
shutting down of capacities in China. The domestic industry is also
chain reliance on the Chinese market and are seeking alternative tapping the intermediates opportunity and exploiting meaningful
suppliers, which is favorable for India. Innovation and elevation of demand. Given the mature market conditions of China, India is
product suites will be an important factor as many companies will expected to be the next engine of growth rendering opportunities
consider this as their key competitive advantage. Depreciation of to players engaged in the chemical value chain – extending from
INR vs USD will be an added advantage for Indian enterprises who agrochemicals, dyes, pigments, and specialty chemicals, which sees
are seeking to replace China’s market share in global trade due to the strongest tailwinds along with petrochemicals at the same time.
these tariffs.
Further, Indian chemical companies are enhancing capabilities and
Domestic Chemical Industry investing greater amounts in R&D to elevate their offerings. India
The domestic chemical industry is forecasted to grow at a CAGR of continues to gain traction from major countries and is likely to grow
9% to touch US$ 304 Billion by FY 2024-25 from US$ 163 Billion in multifold in the coming decade. Specialty chemical companies
FY 2017-18, according to the India Chem Strategy Report by FICCI. have witnessed a sharp increase in demand for their products over
Growth is likely to be driven by rising demand in end-use segments the last few years. In the Specialty Chemicals segment, production
picked up by 3.7% in 2018 and is expected to witness another 2.2%
for specialty chemicals and petrochemicals. India’s chemical
rise in 2019. Gains led by an improvement in oilfield chemicals,
industry is one of the fastest growing in the world, currently ranked
electronic chemicals, coatings, adhesives, cosmetic chemicals, and
the 3rd largest in Asia and 6th largest globally concerning output,
flavors and fragrances. In the years ahead, the demand for Specialty
after US, China, Germany, Japan and Korea, stated the Report. The
Chemicals is expected to grow in line with gains in the industrial
domestic chemical industry is said to have attracted FDI investment
and construction sectors. Specialty chemical players, with presence
of US$ 1.3 Billion during FY 2017-18, about 3% of the total FDI inflows
across the value chain, have observed significant improvement in
into India.
their operating margins.
The chemical sector continued to maintain its strong performance
trajectory, driven by the increasing competency of Indian players Future Industry Outlook
across the globe as disruption in China’s chemical market continues The Government has announced plans to ensure robust market size
to persist. The basic chemical players stand to benefit from high for Indian players through the implementation of a new policy in the
demand volumes and strong commodity chemical prices globally, Indian chemical space to strengthen domestic production and curb
aiding them to sustain higher margins and higher volumes. imports. A complete revamp of the current Petroleum, Chemicals &
Petrochemicals Investment Regions (PCPIRs) policy will encourage
Increasing Capacities effective and long-term investments in the sector and boost margins
The domestic chemical companies are set to invest the highest ever for Indian chemical players. The industry will also see some global
on capacity expansions to cater to rising demand from domestic companies investing in the Indian chemicals space.
chemicals but also making available the intermediates to the your Company manufactures Specialty Chemicals such as
downstream units. Thus, in addition to its own efforts of saving Xylidines, Oximes, Cumidines etc amongst others. Products in
precious foreign exchange resources for the country it will also act the respective, segment are customised as per requirements
as an enabler for other enterprises to do so. of the client and typically manufactured in low volumes, as
they enjoy higher value. Emphasis is on quality, the stickiness
PERFORMANCE OF BUSINESS UNITS of relationships, sustainable operations as well as global best
Deepak Nitrite is a multi-product company that manufactures a practices for suppliers and customers.
diversified product portfolio of Basic Chemicals (BC), Fine and
User Industries for Fine & Specialty Chemicals:
Specialty Chemicals (FSC), and Performance Products (PP), while its
manufacturing facilities located at Nandesari and Dahej in Gujarat; • Agro-chemicals
Roha and Taloja in Maharashtra; and Hyderabad in Telengana. • Colorants
Your Company is the market leader in almost all the products it • Pigment
manufactures. Even as the operations are now predominantly • Pharmaceuticals and personal wellness
domestic, it enjoys significant footprint offshore, especially into
Your Company’s revenues from this segment in FY 2018-19
Europe, USA, Japan, Latin America, South East, and Far-East Asia
stood at ` 536 Crore, higher by 16% year-on-year, while EBIT
- an export network spanning over 30 countries. Your Company is improved by 10%. This segment reported steady performance
focused on expanding its footprint in high-value intermediates. during the year on the back of firm realisation gains in select
Multiple levers and strategic initiatives are fueling the steep and products as well as positive demand scenario. This was
sustainable growth trajectory. further aided by benefits accruing from backward integration
initiatives and capacity expansion for established products.
1. Basic Chemicals FSC segment is on track to demonstrate strong performance
Under Basic Chemicals, your Company manufactures in the ensuing years as your Company has expanded its
Nitrites, Nitro Toluidines, Fuel Additives. Cost leadership is product offerings and also enhanced certain capacities which
the foremost competitive advantage required here to drive will allow it to expand its basket of products and cater to the
growth and profitability as these chemicals are high-margin robust demand environment.
high-volume products with greater price sensitivity. These
chemicals are manufactured as per standard specifications 3. Performance Products
and are dependent on raw material availability and pricing. Performance Products are application chemicals, it consists
of two products - Optical Brightening Agent (OBA) and its pre-
User Industries for Basic Chemicals:
cursor, DASDA. Your Company is the world’s only fully-integrated
• Colorants manufacturer of OBA, with vertical integration from Toluene to
• Rubber chemicals PNT and further into DASDA and OBA. These products have
• Explosives stringent requirements in terms of performance and technical
specifications. Your Company has developed an extensive
• Dyes
network of global clientele and undertaken meticulous efforts
• Pigments to position its products into right geographies, cater to high-
• Food colors value end-users and elevate operational efficiencies.
• Pharmaceuticals User Industries for Performance Products:
• Petrol & diesel blending • Paper
• Agrochemicals • Detergents
In FY 2018-19, Basic Chemicals reported sales of ` 893 Crore, an • Textiles
increase of 17% YoY owing to improved product-mix as well as The Performance Products segment demonstrated excellent
higher realisations. The performance of Basic Chemicals has to performance in FY 2018-19 with revenues of ` 403 Crore,
be seen in light of heightened volatility in both crude oil prices recording 35% growth YoY with positive EBIT of ` 83 Crore.
and related petrochemical intermediates and also disruption Performance of this segment is driven by a combination of
caused in Chinese Chemical Industry . The EBIT increased by factors such as focused re-orientation of customer industries
36% during the year. and geographies by the Company, shutdown of capacities in
China and enhanced operational performance. Our position
2. Fine & Speciality Chemicals as a fully integrated supplier of OBA have enabled us to
The Fine & Specialty Chemicals segment consists of specialised capitalise on shifts in the industry landscape resulting in the
and niche products created from various processes and elevation of performance. This segment now contributes 22%
requiring technical skills and expertise. Under this segment, to the Company’s total revenues.
600 Phenolics Limited, return of which for full year is to come in FY 2019-20.
the plant. Your Company has demonstrated its leadership position increase in operating leverage, higher operating margins, and better
in this space and will now explore opportunities in downstream return ratios.
derivatives to further elevate its performance.
SWOT ANALYSIS
Phenol is a versatile industrial organic chemical and it is used
to produce a wide variety of chemical intermediates including Strengths
bis-phenol-A, phenolic resins, cyclohexanone etc. It is consumed Extensive Product Portfolio with Application Diversity: Over
in a large range of end-use segments such as laminates, the years, your Company has widened its product offerings to have
automobile, foundry, paints, rubber, surfactants, pharma, and a diversified product portfolio and insulate itself from any slowdown
agro-chemicals, among others. On the other hand, Acetone in a particular product or category to de-risk itself. Its diversified
is predominantly used in the production of pharmaceuticals product portfolio caters to multiple end-user industries such as
apart from its significant applications in paints, adhesives, and agrochemicals, rubber, pharmaceuticals, colorants, and textiles,
thinners among others. Acetone, as we know, is a co-product of amongst others. Additionally, superior infrastructure at various
the phenol manufacturing process. locations and balanced contribution from domestic and export
markets have resulted in steady growth for your Company. Further,
Considering the cross-country movement of over 6 Lakhs MT most of the products are contracted with pass through clauses
of explosive/hazardous materials, DPL is committed towards enabling the company to be remunerated for its value addition
improving the safety standards for road transportation. DPL has while minimising adverse impact from raw material fluctuation.
interfaced with Loss Control Services (LCS) for ‘First Respondents’
services with an aim to minimise the environmental and social Expanding Global Footprint and Long-term Customers:
impact of in-transit incidents. LCS has a strong network of First Your Company has an emerging presence across the key export
Respondents stationed every 120 kms between the facility and geographies e.g. the US, Europe and China, among others. Today,
DPL’s sources/destinations. LCS’s teams possess adequate know- it exports to more than 30 countries across 6 continents and is
how and experience in handling materials and are equipped with a further expanding its wings. Moreover, your Company’s customer-
24-hour central control room. centric approach has led to a long-standing association with most
large customers across the globe. Customer stickiness, as well as
ON A SOLID AND SUSTAINABLE GROWTH PATH a diversified portfolio, ensures that it is not dependent on a single
With a rich legacy, history of manufacturing excellence, application to drive growth.
diversified product portfolio, loyal customer base, experienced
Driving Sustainability across Value Chain: Your Company
leadership and a robust financial position, your Company has the
works relentlessly towards reducing its carbon footprint through
key ingredients in place for sustained growth. Commissioning of
socially responsible initiatives. Being the accredited members of
the new plant for manufacturing Phenol and Acetone, launch of
‘Responsible Care’ and ‘Together for Sustainability,’ your Company
new products, small capacity expansions and debottlenecking in
has successfully created a benchmark for other chemical companies
Basic Chemicals and Fine & Specialty Chemicals are seen driving
through its sustainability initiatives and innovative spirit.
earnings, going forward. This will be supported by the improving
performance trajectory of the Performance Products segment. Strong Supply Chain Capability: Your Company’s strong supply
With a strong platform in place, capacities offering headroom for chain can offer quality servicing and in-market execution by creating
growth, a roadmap for further value addition, your Company is stronger ties with its suppliers and customers. This is enabling your
favorably positioned for capturing the rising opportunities in the Company to get closer to a diverse set of consumers and suppliers
global chemicals & specialty chemicals space. across geographies.
THE 5 Ms OF EFFICIENCY Strong Technical Skills: Your Company possesses high levels
Your Company enjoys the strategic advantage of attaining of technical expertise in the areas of Nitration, Hydrogenation,
sustainability across the 5 Ms of efficiency – Man, Material, Oxidation, and Diazotisation. An experienced team keenly focuses
Machines, Methods, and Money – resulting in lean manufacturing on managing these skills efficiently and in a manner that results in
operations and performing with high efficiency. Also, it is investing higher plant utilisation.
in environmental sustainability throughout its business operations
Your Company’s presence in the chemical industry for several
by optimising resource use and appropriate treatment of effluents.
decades has facilitated it to develop multiple technical capabilities
In addition, it has undertaken steps to process joint products and by
products in its operations to derive further value and provide niche chemistries to its customers. As a practice, it
continues to work on complex and hazardous chemical processes
Your Company has high potential for business scalability with by leveraging its expertise in indigenous development and also its
limited incremental capital intensity. Its steady shift to value-added capability in developing, managing, storing and handling various
products enables enriched margins. It remains poised to reap the types of chemicals in quantities ranging from few kilos to several
benefits from increasing capacity utilisation that will lead to an tons. Technical expertise is a strong competitive advantage of your
and key initiatives for the benefit of the industry has created Phenol and Acetone
multiple growth opportunities for domestic chemical companies, Your Company’s foray into the “Phenol-Acetone” market is resonant
such as yours. with its core expansion strategy of entering products that are import
dependent, scalable and aligned with its existing product portfolio.
Your Company remains well positioned to harness new
With a global scale plant, key capabilities to replace the import-
opportunities from our comprehensive domain knowledge, decades
dependent market, coupled with a strong demand environment,
of experience, and continuous innovation that have enabled us to
your Company is expected to be a leader in these as well as
deliver a consistent performance. The Company intends to keep
downstream products.
driving growth by repeatedly winning in the chosen geographies and
markets and creating enhanced value for all the stakeholders. With RISK MANAGEMENT
an enhanced focus on development, it is confident of continuing on Being a diversified and prudent enterprise, your Company
its promising growth trajectory in the times to come. continues to focus on a system-based approach to manage risks.
Its risk management and mitigation processes are embedded in
Basic Chemicals to Maintain Growth Momentum its key corporate strategies of developing a portfolio of world-class
In the fiscal year of FY 2019-20, Basic Chemicals is projected to products matching organisational capabilities, with ample market
continue the positive growth momentum, backed by stable demand opportunities.
visibility across key end-user industries. The underlying strategy for
Your Company remains focused on building distributed leadership
the segment is to focus on cost leadership. As a result, it is well placed
and succession planning processes and is coming up with ways to
to capitalise on the supply disruption in China and subsequent de-
enhance organisational capabilities. Accordingly, risk management
risking by customers which is creating further growth opportunities. has always been an integral part of your Company. Backed by strong
This, along with benefits reaped from Brownfield expansions, will internal control systems, existing Risk Management Framework and
drive your Company’s growth and enable it to improve profitability policies have laid down the roles and responsibilities of various
in a sustainable manner. business segments regarding the managing of risks, covering a
range of responsibilities, right from strategic to operational. These
Improving Penetration and Backward Integration of FSCs to responsibilities today offer a strong foundation for appropriate risk
drive growth and profitability management procedures, their effective implementation as well
Your Company’s strong in-house R&D team has successfully as the independent monitoring and reporting handled by Internal
developed several various products and optimise processes Audit and the top management team.
enabling your Company to enjoy a clear leadership position in
Your Company has set appropriate structures to monitor and manage
the market. Today, these products are widely used as chemical inherent business risks proactively. A strong and independent
intermediaries across industries such as agrochemicals, Internal Audit function at the corporate level carries out risk-focused
pharmaceuticals and personal care, among others. The Fine & audits across all the product segments and points out identified and
Specialty Chemcials segment will always focus on a constant supply constantly strengthened. Accordingly, raw material pricing risks,
of new high value molecules to cater to newer opportunities. The commodity risks and currency fluctuation risk effectively managed
segment has demonstrated its nimbleness in the past and will by its proficient and capable team. It also has appropriate checks
continue to demonstrate this strength. and balances in place and aims to minimise the adverse impact of
these risks on its operations.
Performance Products – Sustaining the momentum in
Performance INTERNAL CONTROL FRAMEWORK
The vertical of Performance Products, which derives most of its Your Company’s Corporate Governance policy guides its conduct
demand from paper, detergents and textile products, is projected of affairs, while its management team remains committed to
to witness a marked improvement in scale. As informed earlier, your the financial and accounting policies, as well as systems and
Company’s various strategies like change in product mix, modifying processes. Your Company’s Planning & Review Processes and the
new geographical reach, changing customer blend, increasing Risk Management Framework provide the requisite foundation
operational efficiencies - have worked favourably for the company. for internal financial controls concerning its Financial Statements.
Improvised customer relationships and sustainable supply of high The preparation is based on significant accounting policies that
quality product have steered DNL into becoming a preferred partner are carefully selected by the Management and approved by the
and this has been supported by re-orientation of product portfolio Audit Committee and the Board. These policies are reviewed and
and target markets all of which have resulted in better performance. updated from time to time. The key Management reviews these
DISCLAIMER: This Report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words ‘anticipate,’ ‘belief,’
‘estimate,’ ‘expect,’ ‘intend,’ ‘will’ and other similar expressions as they relate to the Company and its Businesses are intended to identify such forward-looking
statements. The Company undertakes no obligation to update or revise any forward-looking statements publicly, whether as a result of new information,
future events, or otherwise. Actual results, performances or achievements could differ materially from those expressed or implied in such forward-looking
statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be
read in conjunction with the financial statements included herein and the notes to it.
Directors’ Report
Dear Shareholders,
Your 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:
(` In Crores)
Standalone Results Consolidated Results
Particulars
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 308.23 214.37 429.02 208.60
and Tax
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 supply disruption in China. The Revenue from exports stood at
Standalone ` 580.39 Crores compared to ` 510.85 Crores last year.
In FY 2018-19, Total Revenue including Other Income stood at The Chemical Industry in India is witnessing an unprecedented
` 1794.52 Crores as against ` 1490.77 Crores in FY 2017-18. growth opportunity largely due to International events. For a
EBITDA came in at ` 308.23 Crores in FY 2018-19, higher by 44% company like Deepak Nitrite, which is into chemical intermediates,
as compared to ` 214.37 Crores in FY 2017-18. Raw material costs the opportunity stands accentuated as its products support a wide
stood at ` 976.17 Crores as against ` 843.82 Crores in FY 2017-18, range of industries. In the current scenario, Chemical Intermediates
up by 16%. are witnessing a big jump in demand both due to growing demand
from domestic end user industries and reduced availability of
Profit Before Tax (PBT) excluding Exceptional Items stood at ` 212.50 intermediates from China. Your Company expects the situation to
Crores as compared to ` 122.08 Crores in FY 2017-18. The Profit After
remain conducive in the foreseeable future.
Tax (PAT) excluding Exceptional Items came in at ` 138.04 Crores
as compared to ` 83.46 Crores in FY 2017-18. Favourable shift in At this backdrop, Your Company was able to ensure peak
product mix, strategic modifications in geography, end-user based performance amidst fluctuating pricing of Raw Materials and
better customer selection, various cost leadership initiatives across volatility in Foreign Exchange.
business segments led to better PAT performance. The Depreciation
and Finance Costs during the year stood at ` 52.88 Crores and Consolidated
` 42.85 Crores respectively. In FY 2018-19, Total Revenue including Other Income stood at
` 2,715.04 Crores as against ` 1,688.47 Crores in FY 2017-18.
Domestic Revenues stood at ` 1,211.53 Crores from ` 968.38 Crores
in FY 2017-18, representing a growth of 25% owing to strong demand EBITDA came in at ` 429.02 Crores in FY 2018-19, higher by 106% as
trends from local customers. Your Company, apart from reasons compared to ` 208.60 Crores in FY 2017-18. Raw material costs stood at
explained above, has also been benefitted due to production and ` 1,646.70 Crores as against ` 1,038.79 Crores in FY 2017-18, up by 59%.
manage its cash flows. There is always an effort to reduce the overall re-appointment of Shri Sudhin Choksey, Shri Sudhir Mankad, Shri
interest costs. On a standalone basis, Debt/Equity as on March 31, Sandesh Kumar Anand, Dr. Swaminathan Sivaram and Dr. Richard
2019 is reduced to 0.31 compared to 0.49 as on March 31, 2018, while H. Rupp as Independent Directors of your Company for second term
on a consolidated level, Debt/Equity ratio stood at 1.11 times, as of three (3) consecutive years are given in the Notice for approval by
mentioned above. the Members.
ICRA Limited re-affirmed the long-term rating of [ICRA] A+ and Short Shri Nimesh Kampani and Prof. Indira Parikh, Independent
Term rating of [ICRA] A1+ assigned to the fund based limits and Directors of the Company have expressed their desire not to be re-
non-fund based limits of your Company. ICRA also re-affirmed the appointed as Independent Directors of the Company for second
short-term rating of [ICRA] A1+ assigned to the Commercial Paper term. Accordingly, the Board of Directors do not recommend their
programme. The outlook on the long-term rating has been revised re-appointment as Independent Directors of the Company for
from Stable to Positive. second term. The first term of appointment of Shri Nimesh Kampani
Further, CRISIL Limited has assigned the Long-Term rating as CRISIL and Prof. Indira Parikh is upto August 7, 2019 and August 8, 2019,
AA- Stable and Short term rating as CRISIL A1+ to your Company. respectively.
VIGIL MECHANISM The annual Financial Statements of the subsidiaries and related
Your Company has adopted a Whistle Blower Policy, to provide a detailed information will be kept at the Registered Office of your
formal vigil mechanism to the Directors and employees to report Company, as also at the Registered Offices of the respective
their concerns about unethical behaviour, including actual or Subsidiary Companies and will be available to investors seeking
suspected leak of unpublished price sensitive information, actual or information at any time. They are also available on the website
suspected fraud or violation of your Company’s Code of Conduct or of your Company. The Consolidated Financial results reflect the
ethics policy. The Policy provides for adequate safeguards against operations of subsidiary Companies, Deepak Phenolics Limited and
victimisation of employees who avail of the mechanism and also Deepak Nitrite Corporation Inc. Your Company has adopted a Policy
provides for direct access to the Chairman of the Audit Committee. for determining Material Subsidiaries in terms of Regulation 16(1)(c)
It is affirmed that no personnel of the Company has been denied of the Listing Regulations. The Policy, as approved by the Board, is
access to the Audit Committee. uploaded on your Company’s website.
The Whistle Blower Policy is available on the website of your PERFORMANCE OF SUBSIDIARIES
Company at https://www.godeepak.com/investor-compliances/ (a) Deepak Phenolics Limited
Deepak Phenolics Ltd. (DPL), a wholly-owned subsidiary
RELATED PARTY TRANSACTIONS of your Company commenced commercial production
All Related Party Transactions that were entered into during the at its Mega-Plant for manufacturing Phenol & Acetone on
Financial Year were on an arm’s length basis, in the ordinary November 1, 2018.
course of business and were in compliance with the applicable
DPL has reported Revenue from Operations of ` 913.50 Crores
provisions of the Companies Act, 2013 (‘the Act’) and the Listing
for the period ended March 31, 2019 and Net Profit for the
Regulations. There were no materially significant Related Party
period was ` 35.88 Crores.
Transactions entered into by your Company during the year that
would have required shareholders’ approval under the Listing (b) Deepak Nitrite Corporation Inc. (USA)
Regulations or the Act. Deepak Nitrite Corporation Inc. (‘DNC’) is a wholly owned
subsidiary company incorporated in the United States of
All Related Party Transactions are placed before the Audit
America to cater to the marketing requirements of your
Committee for approval. Prior omnibus approval of the Audit
Company in North and South American region. DNC actively
Committee is obtained for the transactions which are repetitive
does market research and scouts for market and potential
in nature. A statement of all Related Party Transactions is placed
customers for your Company’s products in the North and
before the Audit Committee for its review on a quarterly basis,
South American region. DNC also provides warehousing,
specifying the name of the Related Party, nature and value of the
distribution and customer relationship management
transactions.
services.
In line with the requirements of the Act and Listing Regulations, During FY 2018-19 the Total Revenue of DNC was USD 1,78,347
your Company has adopted a Policy on Related Party and the Net Income for the period was USD 4,888.
Transactions which is available on your Company’s website
Pursuant to the provisions of Section 129(3) of the Companies
at www. godeepak.com.
Act, 2013 read with Rule 5 of the Companies (Accounts) Rules,
Details of transactions with Related Parties are provided in the 2014, a statement containing salient features of the Financial
accompanying Financial Statements. There were no transactions Statements of your Company’s subsidiaries in Form AOC-1 is
with Related Parties during the year which would require to be attached to the Financial Statements.
reported in Form AOC-2.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
SUBSIDIARY / ASSOCIATE COMPANIES AND CONSOLIDATED UNDER SECTION 186 OF THE COMPANIES ACT, 2013
FINANCIAL STATEMENTS The Particulars of Loans granted and Investments made by your
As required under Rule 8(1) of the Companies (Accounts) Rules, Company have been disclosed in the Financial Statements, forming
2014, the Board’s Report has been prepared on a Standalone basis. part of the Annual Report.
The Consolidated Financial Statements of your Company and MATERIAL CHANGES AND COMMITMENTS
its subsidiaries, prepared in accordance with Indian Accounting There have been no material changes and commitments affecting
Standards notified under the Companies (Indian Accounting the financial position of your Company since the close of Financial
Standards) Rules, 2015 (‘Ind AS’), forms part of the Annual Report Year i.e. since March 31, 2019 and the date of this Report. Further, it
and are reflected in the Consolidated Financial Statements of your is hereby confirmed that there has been no change in the nature of
Company. business of your Company.
SIGNIFICANT OR MATERIAL ORDERS PASSED AGAINST THE in time and corresponding mitigation measures are effective.
COMPANY This provides a proactive and value adding review process which
Pursuant to the requirement of Section 134(3)(q) of the Companies enables maintaining the risk profile at an acceptable level in a
Act, 2013 read with Rule 8(5)(vii) of the Companies (Accounts) Rules, rapidly changing environment.
2014, it is confirmed that during FY 2018-19 there were no significant
or material orders passed by the Regulators or Courts or Tribunals RESEARCH & DEVELOPMENT
impacting the going concern status and your Company’s operations Your Company has a Research & Development (R&D) facility at
in future. Nandesari, Gujarat with pilot plants at Roha, Maharashtra and
Nandesari, Gujarat. The Department of Scientific and Industrial
SECRETARIAL STANDARDS OF ICSI Research (DSIR), New Delhi, on behalf of Government of India vide
Your Company is in compliance with the Secretarial Standards on letter August 10, 2017 has recognized your Company’s in-house R&D
Meetings of the Board of Directors (SS - 1) and General Meetings facilities for further period of 3 years i.e. upto March 31, 2020.
(SS - 2) issued by The Institute of Company Secretaries of India and
Your Company continues to invest in a comprehensive Research &
approved by the Central Government.
Development programme leveraging its world-class infrastructure,
benchmarked processes, state-of-the-art technology and a
INTERNAL CONTROL SYSTEMS
business-focused R&D strategy.
Your Company has in place adequate Internal Control Systems,
including Internal Financial Controls. The Internal Control System is Your Company’s R&D center at Vadodara focuses on innovation of
exercised through documented policies, guidelines and procedures new compounds in order to substitute imports of pharmaceutical
to ensure compliance with various policies, practices and statutes, and agrochemical intermediates, innovation and development
and that all assets are safeguarded and protected against loss from of specality chemicals and personal care intermediates and value
unauthorised use or disposition and that those transactions are added products from by-products.
authorised, recorded and reported correctly.
Your Company continues to focus its R&D efforts on process
The Internal Auditor carries out extensive audits throughout the year improvement of its existing products, recovery of products from
across all locations and across all functional areas. effluents. The R&D departments also helps in troubleshooting in
manufacturing departments.
The audit observations and corrective actions taken thereon
are periodically reviewed by the Audit Committee to ensure Your Company is a knowledge led entity and has spruced up its
effectiveness of the Internal Control System. The Internal Control R&D facility for innovation and to collaborate with its customers
system is designed to ensure that the financial and other records to understand consumer preference and develop new product
are reliable for preparing Financial Statements and other data, and applications to cater to the needs of its customers. Your Company
for maintaining accountability of persons. focuses its R&D efforts to develop cost effective, cleaner technologies
to improve profitability. Through its R&D capabilities, your Company
RISK MANAGEMENT has been successful in developing and enhancing its portfolio of
Your Company has in place a Risk Management framework to cutting edge products. Your Company believes that its ability to
identify, evaluate and monitor business risks and challenges develop new product applications and ability to customize products
across your Company. The Risk Management Policy, pursuant to to suit customer needs have helped in expanding its customer base,
Section 134 of the Companies Act, 2013 has been adopted based thereby enabling it to establish leadership position.
on this framework. The Risk Management Policy provides for
creation of a Risk Register, identification of risks and formulating SAFETY, HEALTH & ENVIRONMENT
mitigation plans. The enterprise risks for your Company are Your Company believes in responsible chemistry for sustainable
identified by the respective Risk Managers and presented future through its commitment to the principles of Responsible
to the Board for review. Your Company has duly constituted Care. The continual improvement of safety, health, environment
Risk Management Committee. The Committee reviews your protection, energy and resources efficiency and social responsibility
Company’s performance against identified risks, formulates is inbuilt in the strategy of your Company.
strategies towards identifying new and emergent risks that
may materially affect your Company’s overall risk exposure and Your Company has laid down policies, principles and standards
reviews the Risk Management Policy and structure. which are mandatory for all its manufacturing units for adherence.
It aims to achieve excellence in environment protection, health
The Board of Directors reviews the risk assessment and management and safety across its businesses. Your Company’s
minimization procedures regularly. The Risk Register gets updated Environment, Health and Safety (EHS) Policy also specifies the EHS
periodically, to ensure that the risks remain relevant at any point requirements to be observed by its suppliers, contractors & others.
Annexure - A
Dividend Distribution Policy
1. INTRODUCTION 4.3. “Dividend” includes any interim dividend.
The Securities and Exchange Board of India (SEBI) on July 8, 4.4. “Financial Year” a consecutive period of 12 months
2016 has notified the SEBI (Listing Obligations and Disclosure ending March 31.
Requirements) (Second Amendment) Regulation, 2016.
4.5. “Policy” means this Dividend Distribution Policy.
Vide these Regulations, SEBI has inserted Regulation 43A
after Regulation 43 of SEBI (Listing Obligations and Disclosure 4.6. “Regulations” shall mean SEBI (Listing Obligations and
Requirements) Regulation, 2015, which requires top five Disclosure Requirements) Regulation, 2015, including
hundred listed entities (based on market capitalization any amendments, modifications, clarifications or re-
calculated as on March 31 of every Financial Year) to formulate enactment thereof, for the time being in force.
a Dividend Distribution Policy, which shall be disclosed in its
Annual Report. 5. DECLARATION OF DIVIDEND
5.1
Subject to provisions of the Act, Dividend may be
Deepak Nitrite Limited (‘the Company’), being one of the five
declared and paid out of:
hundred companies as per the criteria mentioned above; the
Board of Directors has approved and adopted this Dividend (a) Profits of the Company for the Financial Year for
Distribution Policy at their meeting held on May 4, 2018, being which the Dividend is to be paid after setting off
the effective date of the Policy. carried over losses of the previous Financial Year
and depreciation not provided in the previous
2. OBJECTIVES AND SCOPE Financial Year(s);
This Policy lays down the broad framework which will
(b)
Undistributed profits of the previous Financial
act as a guiding principle for the purpose of declaring or
Years remaining undistributed after providing for
recommending Dividend during or for any Financial Year, by
depreciation in accordance with the Act and/or
the Company.
Regulations; or
The intent of the Policy is to broadly specify the external and
(c) Out of (a) and (b) both.
internal factors including financial parameters that shall be
considered while declaring Dividend and the circumstances
5.2
Before declaration of Dividend, the Company may
under which shareholders of the Company may or may not
transfer a portion of its profits to reserves of the Company
expect Dividend and how the retained earnings shall be
as may be considered appropriate by the Board at its
utilized etc.
discretion.
The Policy, however, is not an alternative to the decision
making process of the Board for recommending Dividend and 6. PARAMETERS FOR DECLARATION OF DIVIDEND
the Board may take into consideration other factors as well in 6.1
The Board of Directors may consider the following
addition to those numerated in this Policy. financial parameters, internal and external factors while
recommending or declaration of the Dividend:
3. APPLICABILITY
A. Financial Parameters / Internal Factors
This Policy shall apply to the Dividend on the Equity Shares of
• Operating cash flow of the Company
the Company. Presently, the Company has only one class of
Equity Shares. • Profit earned during the Financial Year and
available for distribution.
This Policy shall not apply to determination and declaration
of Dividend on preference shares, as and when issued by the • Earnings Per Share (EPS)
Company, as the same will be as per the terms of issue of such
preference shares, approved by the shareholders. • Gross Dividend payout ratio
• Financial Ratios
4. DEFINITIONS
• Business expansion and growth
“Board of Director” or “Board” shall mean the Board of
4.1.
Directors of the Company, as constituted from time to time. • Company’s liquidity position and future cash flow
need
4.2. “Companies Act” or “Act” shall mean the Companies
• Stipulation / covenants in loan Agreements
Act, 2013 and Rules framed thereunder, including
any amendments, modifications, clarifications or re- • Such other factors as the Board may deem fit from
enactment thereof, for the time being in force. time to time
Annexure - B
To, (v)
Foreign Exchange Management Act, 1999 and the rules
The Members, and regulations made thereunder to the extent of Foreign
Deepak Nitrite Limited, Direct Investment, Overseas Direct Investment and External
Aaditya-I, Chhani Road, Commercial Borrowings.
Vadodara 390 024,
(vi) The following Regulations and Guidelines prescribed under the
Gujarat.
Securities and Exchange Board of India Act, 1992 (‘SEBI Act’):-
We have conducted the Secretarial Audit of the compliance a. The Securities and Exchange Board of India (Substantial
of applicable statutory provisions and the adherence to good Acquisition of Shares and Takeovers) Regulations, 2011;
corporate practices by Deepak Nitrite Limited (hereinafter called
b. Securities and Exchange Board of India (Prohibition of
the “Company”). Secretarial Audit was conducted in a manner
Insider Trading) Regulations, 2015;
that provided us a reasonable basis for evaluating the corporate
conducts/statutory compliances and expressing our opinion c. The Securities and Exchange Board of India (Issue of
thereon. Capital and Disclosure Requirements) Regulations,
2018: There were no events occurred during the period
Based on our verification of the Company’s books, papers, minute which attracts provisions of these Regulations, hence not
books, forms and returns filed and other records maintained applicable.
by the Company and also the information provided by the
Company, its officers, agents and authorized representatives d.
The Securities and Exchange Board of India (Share
during the conduct of Secretarial Audit, we hereby report that in Based Employee Benefits) Regulations, 2014: There were
our opinion, the Company has, during the audit period covering no events occurred during the period which attracts
the Financial Year ended on March 31, 2019, complied with the provisions of these Regulations, hence not applicable.
statutory provisions listed hereunder and also that the Company e. The Securities and Exchange Board of India (Issue and
has proper Board-processes and compliance-mechanism in Listing of Debt Securities) Regulations, 2008: There were
place to the extent, in the manner and subject to the reporting no events occurred during the period which attracts
made hereinafter: provisions of these Regulations, hence not applicable.
We have examined the books, papers, minute books, forms and f. The Securities and Exchange Board of India (Registrars
returns filed and other records maintained by the Company for to an Issue and Share Transfer Agents) Regulations,
the Financial Year ended on March 31, 2019 according to the 1993: There were no events occurred during the period
provisions of: which attracts provisions of these Regulations, hence not
applicable.
(i)
The Companies Act, 2013 (the Act) and the rules made
thereunder; g. The Securities and Exchange Board of India (Delisting of
Equity Shares) Regulations, 2009: There were no events
(ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA’) and
occurred during the period which attracts provisions of
the rules made thereunder;
these Regulations, hence not applicable; and
(iii) The Depositories Act, 1996, and the Regulations and Bye-laws
h. The Securities and Exchange Board of India (Buyback
framed thereunder;
of Securities) Regulations, 2018 : There were no events
(iv) The Depositories Act, 2018, and the Regulations and Bye-laws occurred during the period which attracts provisions of
framed thereunder; these Regulations, hence not applicable.
To,
The Members,
Deepak Nitrite Limited,
Aaditya-I, Chhani Road,
Vadodara 390024,
Gujarat.
1. Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion
on these secretarial records based on our audit.
2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the
contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records.
We believe that the processes and practices, we followed provide a reasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.
4. Wherever required, we have obtained the management representation about the compliance of laws, rules and regulations and
happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of
management. Our examination was limited to the verification of procedures on test basis.
6. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with
which the management has conducted the affairs of the Company.
Dinesh Joshi
Date: May 3, 2019 Designated Partner
Place: Pune Membership No: FCS- 3752 CP No: 2246
SECTION D: BR INFORMATION
1. Details of Director/Directors responsible for Business Responsibility
a Details of the Director/Directors responsible for a DIN Number : 06595059
implementation of the BR policy/policies b Name : Shri Umesh Asaikar
c Designation : Executive Director & CEO
b Details of the BR head a DIN Number : 06595059
b Name : Shri Umesh Asaikar
c Designation : Executive Director & CEO
d Telephone Number : 0265-3960200
e Email ID : umesh@godeeepak.com
2. Principle-wise (as per National Voluntary Guidelines (NVGs)) Business Responsibility (BR) Policy/policies
At Deepak Nitrite Limited, Business Responsibility is guided by “National Voluntary Guidelines (NVGs) on Social, Environmental and
Economic Responsibilities of Business” released by the Ministry of Corporate Affairs, which articulates nine principles as below:
P1 Businesses should conduct and govern themselves with Ethics, Transparency and Accountability.
P2 Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle.
P3 Businesses should promote the well-being of all employees.
P4 Businesses should respect the interests of, and be responsive towards all stakeholders, especially those who are disadvantaged,
vulnerable and marginalised.
P5 Businesses should respect and promote Human Rights.
P6 Business should respect, protect and make efforts to restore the environment.
P7 Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner.
P8 Businesses should support inclusive growth and equitable development.
P9 Businesses should engage with and provide value to their customers and consumers in a responsible manner.
S.
Question(s) P1 P2 P3 P4 P5 P6 P7 P8 P9
No.
1 Do you have a policy/ policies for Y Y Y Y Y Y Y Y Y
2 Has the policy being formulated in consultation with Yes
the relevant stakeholders?
3 Does the policy conform to any national / Most of the policies are aligned to various standards such as Responsible
international standards? If yes, specify? care principles, Together for Sustainability System, ISO 9001, ISO 14001 &
OHSAS 18001 system.
4 Has the policy being approved by the Board? Is yes, Policies mandated under the Companies Act, 2013 and the SEBI (LODR)
has it been signed by MD/ owner/ CEO/ appropriate Regulations, 2015 are approved by the Board and other policies are
Board Director? approved by the Executive Director & Chief Executive Officer of the
Company and signed by the Executive Director & Chief Executive Officer
of the Company.
5 Does the Company have a specified committee The Company has Audit Committee, Corporate Social Responsibility
of the Board/ Director/ Official to oversee the Committee to oversee implementation of respective policies. For
implementation of the policy? other policies, the Functional Heads are authorized to oversee the
implementation thereof.
6 Indicate the link for the policy to be viewed online? The policies which are mandatorily required to be placed on the website
of the Company can be viewed on https://www.godeepak.com/investor-
compliances/. All other policies are available on the Company’s internal
network.
3. Governance related to BR
a. Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the
Company. Within 3 months, 3-6 months, Annually, More than 1 year
The Chairman & Managing Director, the Executive Director & CEO, the Director - Finance & CFO, the Whole-time Director review
the Business Responsibility performance of the Company during the monthly review meetings. The action points that emerge
from the discussions at these meetings are recorded, implemented wherever necessary and reviewed in the subsequent meet-
ings. Besides, the CSR Committee of the Board reviews the social performance of the Company on yearly basis.
b. Does the Company publish a BR or a Sustainability Report? What is the hyperlink for viewing this report? How frequently it is
published?
The Business Responsibility Report forms part of the Directors’ Report. The Report can be viewed on the website of the Company
at www.godeepak.com.
Principle 2 : Businesses should provide goods and services that are safe and contribute to sustainability throughout their life cycle
1. List up to 3 of your products or services whose design has Sodium Nitrite
incorporated social or environmental concerns, risks and/or Optical Brightening Agent
opportunities. Ethyl Hexyl Nitrate
2. For each such product, provide the following details in respect The Company is in process to establish the procedures for sustainable
of resource use (energy, water, raw material etc.) per unit of sourcing including transportation. Currently, the Company expects
product (optional): its suppliers to abide by Responsible Care, ISO 9001 and ISO 14001
a. Reduction during sourcing/production/ distribution Standard.
achieved since the previous year throughout the value
chain?
b. Reduction during usage by consumers (energy, water)
has been achieved since the previous year?
3. Does the Company have procedures in place for sustainable Company is in process to implement system for sustainable sourcing.
sourcing (including transportation)? If yes, what percentage of Environmental concerns are being assessed while Supplier evaluation.
your inputs was sourced sustainably?
4. Has the Company taken any steps to procure goods and The Company gives preference to the manufacturers and service
services from local & small producers, including communities providers located near-by. The Company provides feedback to them
surrounding their place of work? If yes, what steps have been to improve their quality in compliance to its requirement, enhance
taken to improve their capacity and capability of local and capacity and capability particularly in the areas of manufacturing and
small vendors? fabrication and safety, health and environment.
5. Does the Company have a mechanism to recycle products Yes. Mechanism is in place to ensure sale /reuse/recycle waste
and waste? material, wherever feasible.
2. How many stakeholder complaints have been received in The Company has not received any stakeholder complaints in the
the past Financial Year and what percent was satisfactorily Financial Year 2018-19 related to Human Rights.
resolved by the management?
Principle 6: Business should respect, protect, and make efforts to restore the environment
1. Does the policy related to Principle 6 cover only the Company or The policy related to Principle 6 covers the Company, its Subsidiaries,
extends to the Group / Joint Ventures / Suppliers / Contractors Joint Ventures, Suppliers, Contractors and NGOs.
/ NGOs / others?
2. Does the Company have strategies/initiatives to address global The Company practices global principles of sustainable development
environmental issues such as climate change, global warming, and principles of Responsible Care. It includes global environmental
etc? If yes, please give hyperlink for webpage etc. issues such as climate change, global warming etc.
3. Does the Company identify and assess potential environmental Yes. The Company identifies and assess potential environmental risk
risks? relating to its business, if any.
4. Does the Company have any project related to Clean Company adopts clean development mechanism wherever feasible.
Development Mechanism? If Yes, whether any environmental However, such projects was not undertaken during the year.
compliance report is filed?
5. Has the Company undertaken any other initiatives on – clean The Company is continuously improving its environmental
technology, energy efficiency, renewable energy, etc. If yes, performance for its existing products and do thorough analysis for
please give hyperlink for web page etc. new products.
6. Are the Emissions / Waste generated by the Company within Yes. The effluents, emissions and wastes generated by the
the permissible limits given by CPCB/SPCB for the Financial manufacturing facilities of the Company are within the permissible
Year being reported? limits given by SPCB.
7. Number of show cause / legal notices received from CPCB/ There are no show cause / legal notices received from Central and
SPCB which are pending (i.e. not resolved to satisfaction) as at State Pollution Control Boards which are pending as at the end of
the end of Financial Year. Financial Year 2018-19.
Principle 7: Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner
1. Is the Company a member of any trade and chamber or As on March 31, 2019, your Company is a member of the following
association? If Yes, Name only those major ones that your trade associations:
business deals with. a. FICCI: The Federation of Indian Chambers of Commerce and
Industry
b. FGI: Federation of Gujarat Industries
c. GEO: Gujarat Employees Orgranisation
d. ICC: Indian Chemical Council
2. Have you advocated/lobbied through above associations for The Company supports the initiatives taken by above associations in
the advancement or improvement of public good? If yes specify their endeavor for the advancement or improvement of public good.
the broad areas (drop box: Governance and Administration,
Economic Reforms, Inclusive Development Policies, Energy
security, Water, Food Security, Sustainable Business Principles,
Others).
Principle 9: Businesses should engage with and provide value to their customers and consumers in a responsible manner
1. What percentage of customer complaints/consumer cases are There were no customer complaints / consumer cases pending as at
pending as on the end of Financial Year. the end of Financial Year 2018-19.
2. Does the Company display product information on the product Yes, the Company adheres to all the applicable statutory laws
label, over and above what is mandated as per local laws? regarding product labeling and displays relevant information on
product label.
3. Is there any case filed by any stakeholder against the Company There have been no cases relating to unfair trade practices,
regarding unfair trade practices, irresponsible advertising and/ irresponsible advertising and/or anti-competitive behavior against
or anti-competitive behavior during the last five years and the Company during the last five years and as at the end of Financial
pending as at end of Financial Year. Year 2018-19.
4. Did the Company carry out any consumer survey/ consumer Customer satisfaction surveys are being conducted frequently for
satisfaction trends? feedback, betterment of the products and improving delivering
mechanism.
Deepak C. Mehta
Place : Vadodara Chairman & Managing Director
Date : May 3, 2019 (DIN: 00028377)
2. The Composition of CSR Committee: The CSR Committee comprises of Shri Sudhir Mankad as Chairman and Dr. S. Sivaram, Shri Deepak
C. Mehta and Shri Umesh Asaikar as members.
3. Average Net Profit of the Company for the last three Financial Years: ` 10,648 Lakhs
4. Prescribed CSR Expenditure (two percent of the amount as in item 3 above): ` 213 Lakhs.
(a) Total amount to be spent for the Financial Year: ` 213 Lakhs
(c) Manner in which the amount was spent during the Financial Year is detailed below:
(` In Lakhs)
(1) (2) (3) (4) (5) (6) (7) (8)
Sr. CSR project Sector in Projects or programs Amount Amount spent on the Cumulative Amount
No. or activity which the (1) Local area or other outlay projects or programs expenditure Spent: Direct
identified project is (2) Specify the State (budget) Sub-heads up to the or through
covered and District Where project or 1. Direct reporting Implementing
projects or programs was programs Expenditure On period Agency
undertaken wise projects or programs
2. Overheads
1 CEmONC1 Health care Jabugam 39.00 50.14 138.63 Implementing
Dist.: Vadodara 0.00 (88.49) Agency
State: Gujarat
50.14
2 English & Maths Skill Nandesari 3.00 2.31 3.43 Implementing
Education at Development/ Dist: Vadodara 0.10 (1.02) Agency
Nandesari School Education State: Gujarat
2.41
3 Mobile Health Unit Health Dahej 26.51 25.00 128.13 Implementing
Care Dist: Bharuch 1.59 (101.54) Agency
State: Gujarat
26.59
4 Help Desk Project Health Care Vadodara 15.00 12.38 50.03 Implementing
Dist: Vadodara 1.26 (36.39) Agency
State: Gujarat 13.64
5 Mobile Health Unit Health Care Roha 22.70 20.44 84.13 Implementing
Dist: Raigad 2.01 (61.68) Agency
State: Maharashtra 22.45
(` In Lakhs)
(1) (2) (3) (4) (5) (6) (7) (8)
Sr. CSR project Sector in Projects or programs Amount Amount spent on the Cumulative Amount
No. or activity which the (1) Local area or other outlay projects or programs expenditure Spent: Direct
identified project is (2) Specify the State (budget) Sub-heads up to the or through
covered and District Where project or 1. Direct reporting Implementing
projects or programs was programs Expenditure On period Agency
undertaken wise projects or programs
2. Overheads
6 ICDS2 Health Care Nandesari 29.00 26.78 110.44 Implementing
Dist: Vadodara 1.87 (81.79) Agency
State: Gujarat 28.65
7 DOHC3 Health Care Nandesari - - 74.15 Implementing
Dist: Vadodara (74.15) Agency
State: Gujarat
8 Home Health Aide Skill Vadodara 40.00 33.24 112.53 Implementing
Course Development/ Dist: Vadodara 2.15 (77.14) Agency
Education State: Gujarat 35.39
Hyderabad
Dist: Hyderabad
State: Telangana
6. The CSR Committee of the Company hereby confirms that the implementation and monitoring of CSR Policy is in compliance with CSR
objectives and policy of the Company.
Place : Vadodara
Date : May 3, 2019
(iv) “Company” means “Deepak Nitrite Limited.” 4.2. Unless the context otherwise requires, words and expressions
used in this Policy and not defined herein but defined in
(v)
“Director” shall mean a member of the Board of
the Companies Act, 2013 and/or Listing Regulations as
Directors of the Company appointed from time to time
may be amended from time to time shall have the meaning
in accordance with the Articles of Association of the
Company and provisions of the Act. respectively assigned to them therein.
(x) “Key Managerial Personnel” or “KMP” shall have the (b) Formulating the criteria for determining qualifications,
meaning ascribed to it in the Act. positive attributes and independence of a Director
and recommend to the Board, a policy, relating to the
(xi) “Listing Regulations” shall mean Securities and Exchange
Board of India (Listing Obligations and Disclosure remuneration for the Directors, Key Managerial Personnel
Requirements) Regulations, 2015 as amended from time and Senior Management employees.
to time and for the time being in force. (c) Formulating the criteria for evaluation of Independent
(xii) “Managing Director” means a Director who, by virtue Directors and the Board.
of the Articles of Association of the Company or an
(d) Devising a policy on Board diversity.
agreement with the Company or a resolution passed
in its general meeting, or by its Board of Directors, is (e)
Ensuring that the Board comprises of a balanced
entrusted with substantial powers of management of the combination of Executive Directors and Non-Executive
affairs of the Company and includes a Director occupying Directors.
the position of Managing Director, by whatever name
called. (f)
The Committee shall take into consideration and
ensure the compliance of provisions under Schedule
(xiii)
“Policy” or “this Policy” means, “Nomination and V of the Companies Act, 2013 for appointing and
Remuneration Policy.”
fixing remuneration of Managing Directors / Executive
(xiv)
“Remuneration” means any money or its equivalent Directors.
given or passed to any person for services rendered
(g) While approving the remuneration, the Committee shall
by him and includes perquisites as defined under the
take into account financial position of the Company,
Income-tax Act, 1961.
trend in the industry, qualification, experience and past
(xv) “Senior Management” means officers/personnel of the performance of the appointee.
Company who are members of its core management
team excluding Board of Directors and shall comprise (h) any other role as may be specified by the Board.
all members of management one level below Chief
Executive Officer / Managing Director / Whole-time 6.2. Composition of the Committee
Director including Chief Executive Officer and shall (a)
The Committee shall comprise of at least three (3)
specifically include Chief Financial Officer and Company Directors, all of whom shall be non-executive Directors
Secretary. and at least half shall be Independent Directors.
6.4. Frequency of the Meetings of the Committee 7.5. Criteria for appointment of Independent Director:
The meeting of the Committee shall be held at such intervals 7.5.1. The proposed appointee shall comply with the criteria
as may be required. specified in the relevant provisions of the Act and/or
the Listing Regulations. He or she shall not, directly or
6.5. Committee Member’s Interest indirectly, represent the interest of any specific vendor
or customer or stakeholder and shall have business
(a)
A member of the Committee is not entitled to be
reputation and strong ethical standards and possess
present when his or her own remuneration is discussed
leadership skills and business experience including
at a meeting or when his or her performance is being
board procedures.
evaluated.
7.5.2. The Independent Director shall fulfill the qualification
(b)
The Committee may invite such executives, as it
and requirements specified under the Act and Listing
considers appropriate, to be present at the meetings of
Regulations.
the Committee.
7.5.3. He or she shall also declare his or her independent status
6.6. Quorum prior to their appointment to the Board and maintain
The quorum necessary for transacting business at a meeting the same during his or her tenure as an Independent
of the Committee shall be two (2) members or one-third of the Director. Being a Director of the Company, he or she
members of the Committee, whichever is greater. shall adhere to the Code of Conduct stipulated for the
Director.
6.7. Voting at the Meeting
7.6. Criteria for appointment of Managing Director / Executive
(a) Matters arising for determination at Committee meetings
Director:
shall be decided by a majority of votes of members
7.6.1.
The Company can have more than one Managing
present. Any such decision shall for all purposes be
Director or Executive Director.
deemed a decision of the Committee.
7.6.2.
The appointee(s) shall have good educational
(b) In the case of equality of votes, the Chairman of the
background, preferably with specialization in the field.
meeting will have a casting vote.
He shall have exemplary skills and leadership qualities
to lead the Company or as the case may be the function
assigned to him.
7.6.3. Depending on the role and responsibility, he shall have depending upon the requirement of the relevant
hands on experience in the relevant field. For example position.
as ED (Operations) is expected to have adequate
7.8.2.
The Committee has discretion to decide whether
knowledge and experience about the plant operations
qualification, expertise and experience possessed by
and related issues. The suitability of the candidate shall
a person are sufficient / satisfactory for the concerned
be determined on a case to case basis by the Committee.
position.
Being a Director of the Company, Managing Director /
Executive Director shall adhere to the Code of Conduct 7.8.3. Senior Management employees shall adhere to the Code
stipulated for the Director. of Conduct stipulated for the Senior Management.
7.6.4. He shall fulfill the conditions as specified under Part I of
7.9. Term / Tenure
Schedule V of the Act. However, in case the conditions
specified under Part I of Schedule V of the Act is not 7.9.1. Managing Director and Executive Director
fulfilled, such appointments shall be subject to the The Company shall appoint or re-appoint any person
approval of the Central Government. as its Managing Director / Executive Director for a term
not exceeding five years at a time. No re-appointment
7.7. Criteria for appointment of KMPs: shall be made earlier than one year before the expiry
7.7.1. Pursuant to the requirement of Section 203 of the Act, of the term.
the Company is required to appoint a Managing Director
7.9.2. Independent Director
/ Manager / Chief Executive Officer and in their absence
an Executive Director as Whole Time KMP. (a) An Independent Director shall hold office for a term
up to five consecutive years on the Board of the
7.7.2.
The Company may also appoint a Chief Executive Company and will be eligible for re appointment
Officer (CEO) who may or may not be a Director. The on passing of a special resolution by the Company
qualification, experience and stature of the CEO could and disclosure of such appointment in the Board’s
be in line with that of the Executive Director. Where the report.
CEO is designated as KMP, he shall act subject to the
superintendence and control of the Board. (b) No Independent Director shall hold office for more
than two consecutive terms, but such Independent
7.7.3. The Company is also required to appoint a Chief Financial Director shall be eligible for appointment after
Officer (CFO) as KMP as per the requirement of the Act. expiry of three years of ceasing to become an
The CFO shall preferably be a Chartered Accountant or a Independent Director.
Cost & Management Accountant or holds an equivalent
qualification and have relevant work experience. He Provided that an Independent Director shall not,
shall be well versed with finance function including but during the said period of three years, be appointed
not limited to funding, taxation, forex and other core in or be associated with the Company in any other
matters. As required under the Listing Regulations, the capacity, either directly or indirectly.
appointment of CFO shall be subject to approval of the (c) The Independent Director shall comply with the
Audit Committee. requirement of number of directorships he or she
7.7.4. As required under the said Section of the Act, a Company can hold as prescribed under the provisions of
Secretary (CS) is also required to be appointed by the the Act or the Listing Regulations including any
Company as a KMP. The CS shall have the prescribed amendment thereto from time to time.
qualification and requisite experience to discharge the
duties specified in law and as may be assigned by the 7.10. Familiarization Programme for Independent Directors
Board / Managing Director / Executive Director from time The Company shall familiarize the Independent Directors
to time. with the Company, their roles, rights, responsibilities in
the company, nature of the industry in which the company
7.7.5. KMPs, other than Managing Director and/or Executive
operates, business model of the company, etc., through
Director shall adhere to the Code of Conduct stipulated
various programmes.
for the Senior Management.
7.8. Criteria for appointment of Senior Management 7.11. Evaluation
employees: 7.11.1. Subject to Schedule IV of the Companies Act, 2013 and
7.8.1.
Senior Management employees shall possess the Listing Regulations, the Committee shall carry out the
requisite qualifications, expertise and experience evaluation of Directors periodically.
7.13. Retirement (x) Retirement and other benefits, as per rules of the
Company.
The Director, KMP and Senior Management employees shall
retire as per the applicable provisions of the Act and/or the
8.1.4. The remuneration and commission to be paid to the
prevailing policy of the Company. The Board will have the
Managing Director shall be as per the statutory provisions
discretion to retain the Director, KMP, Senior Management
of the Act and the rules made thereunder for the time
employees in the same position / remuneration or otherwise
being in force and shall be subject to the approval of the
even after attaining the retirement age, in the interest and for
shareholders of the Company and Central Government,
the benefit of the Company, in accordance with the provisions
wherever required.
of the Act and approval of members, wherever required.
8.1.6. The Managing Director shall not be entitled to sitting
8. REMUNERATION fees for attending the meetings of the Board or any
8.1. Remuneration to Managing Director: Committee thereof.
8.1.1.
The remuneration comprising of salary, allowance,
perquisites and other benefits payable to Managing 8.2. Remuneration to Executive Director:
Director will be determined by the Committee and 8.2.1. Fixed Pay
recommended to the Board for approval. (a) Executive Director shall be eligible for a monthly
remuneration as may be approved by the Board
8.1.2. In addition to the remuneration as stated in 8.1.1. above, on the recommendation of the Committee in
Managing Director shall also be paid a Commission, accordance with the provisions of the Act and rules
calculated with reference to the Net Profits of the made thereunder for the time being in force.
(b) The Fixed Pay of Executive Director shall comprise existing remuneration structure of Executive
of salary, perquisites, allowances and other Director shall be recommended by the Chairman
benefits. The perquisites, allowances and other & Managing Director of the Company to the
benefits to the Executive Director shall include but Committee based upon the individual performance
not be limited to the following: and also the Company’s performance as per policy
of the Company.
(i) Re-imbursement of medical expenses incurred
for self and members of his family, as per policy (b)
The Committee shall review the payment of
of the Company. Variable component of the remuneration of the
Executive Director for a particular Financial Year and
(ii) Leave travel concession for self and members of
increments to the existing remuneration structure
his family, as per policy of the Company.
of Executive Director as recommended by the
(iii) Medical and other insurances, as per policy of Chairman & Managing Director of the Company and
the Company. recommend the same to the Board for its approval.
Such Variable component and proposed enhanced
(iv) Company Car with Driver.
remuneration as recommended by the Committee
(v)
Company’s contribution to provident fund, to the Board should be within the overall limits of
superannuation fund or annuity fund, gratuity managerial remuneration as prescribed under the
and encashment of leave, as per the policy of Act and rules made thereunder.
the Company. (c)
The Executive Director shall also be entitled
(vi) Retirement and other benefits, as per policy of to reimbursement of all legitimate expenses
the Company. incurred by him while performing his duties and
such reimbursement will not form part of his
(vii) Hardship Allowance as applicable in accordance remuneration.
with the policy of the Company.
8.2.5. Executive Director shall not be entitled to sitting fees
(c) The break-up of the pay scale and quantum of for attending meetings of the Board or any Committee
perquisites including, employer’s contribution to thereof.
P.F., pension scheme, medical expenses etc. shall
be decided and approved by the Board on the 8.3. Minimum Remuneration
recommendation of the Committee and approved Where, in any financial year, the Company has no profits or its
by the shareholders and Central Government, profits are inadequate, the Company shall pay remuneration
wherever required.
to its Managing Director(s) and Executive Director(s) in
8.2.2. Variable Pay accordance with the provisions of Schedule V of the Act and if
In addition to the salary, perquisites, allowances it is not able to comply with such provisions, with the previous
and other benefits as mentioned above, Executive approval of the Central Government.
Director will also be entitled to a Variable Pay by way
of Performance Linked Incentive. This amount shall be 8.4. Remuneration to Independent Director and Directors
paid annually after the end of each Financial Year. The other than Managing Director/ Executive Director:
Performance Linked Incentive shall be in the range of 8.4.1. Sitting Fees
0% to 20% of cost to the Company, which will be entirely The Independent Director / Directors other than
based on the individual’s performance and Company’s Managing Director and Executive Director may receive
performance as per policy of the Company. remuneration by way of fees for attending meetings of
Board or Committee thereof.
8.2.3. Loyalty Bonus
Provided that the amount of such fees shall not exceed
In addition to the above, Executive Director shall also
the maximum amount as provided in the Act, per
be entitled for the Loyalty Bonus as per policy of the
meeting of the Board or Committee or such amount as
Company.
may be prescribed by the Central Government from time
to time.
8.2.4. Payment of Variable component / Increments
(a)
Payment of Variable component of the The Sitting Fee paid to Independent Directors, shall
remuneration of the Executive Director for a not be less than the Sitting Fees payable to other
particular Financial Year and increments to the Directors.
Deepak C. Mehta
Place : Vadodara Chairman & Managing Director
Date : May 3, 2019 (DIN: 00028377)
IV. SHAREHOLDING PATTERN (Equity share Capital Break up as percentage of Total Equity):
(i) Category-wise Share Holding
Category of Shareholders No. of Shares held at the Beginning of the No. of Shares held at the End of the % change
Financial Year 2018-19 Financial Year 2018-19 during the
Demat Physical Total % of total Demat Physical Total % of total year
Shares Shares
A. Promoters1 Indian
Individuals/ H.U.F 22867361 - 22867361 16.77 22847361 - 22847361 16.75 (0.02)
Central/State Government(s) - - - - - - - - -
Financial Institutions/ Banks - - - - - - - - -
Bodies Corporate 38031106 - 38031106 27.88 38325107 - 38325107 28.10 0.22
Any Other (specify) - - - - - - - - -
Sub-Total (A)(1) 60898467 - 60898467 44.65 61172468 - 61172468 44.85 0.20
Foreign
Non Resident Individuals/ - - - - - - - - -
Foreign Nationals
Bodies Corporate - - - - - - - - -
Institutions - - - - - - - - -
Qualified Foreign Investor - - - - - - - - -
Any Other (specify) - - - - - - - - -
Sub Total (A)(2) - - - - - - - - -
Total holding of Promoter 60898467 - 60898467 44.65 61172468 - 61172468 44.85 0.20
(A)=(A)(1)+(A)(2)
B. Public Shareholding
Non Institutions
Mutual Fund/UTI 17051856 9000 17060856 12.51 20384369 9000 20393369 14.95 2.44
Financial Institutions/ Banks 731449 1100 732549 0.54 701224 1100 702324 0.52 (0.02)
Central/State Government(s) - - - - - - - - -
Venture Capital Funds - - - - - - - - -
Alternate Investment Funds 905651 - 905651 0.66 86600 - 86600 0.06 (0.60)
Insurance Companies 132575 - 132575 0.10 - - - - (0.10)
Foreign Portfolio Investor 15199212 - 15199212 11.14 14023615 - 14023615 10.28 (0.86)
Foreign Venture Cap. Inv - - - - - - - - -
Qualified Foreign Investor - - - - - - - - -
Any Other (specify)
Foreign Banks 1350 - 1350 0.00 1350 - 1350 0.00 -
Sub-Total (B)(1) 34022093 10100 34032193 24.95 35197158 10100 35207258 25.81 0.86
Central Government/ State
Government(s)/ President of
India
Central Government / State 225040 - 225040 0.16 225040 - 225040 0.16 -
Government(s)
Sub Total (B)(2) 225040 - 225040 0.16 225040 - 225040 0.16 -
Non Institutions
Bodies Corporate 13184875 - 13184875 9.67 9272433 - 9272433 6.80 (2.87)
Individuals
i) Holding nominal Share 19236371 1439780 20676151 15.16 20415467 1210495 21625962 15.86 0.70
Capital upto ` 1 Lakh
ii) Holding nominal Share 4732438 158540 4890978 3.59 5944459 108170 6052629 4.44 0.85
Capital in excess of ` 1 Lakh
Qualified Foreign Investor - - - - - - - - -
Any Other(specify)
Trusts 1292 - 1292 0.00 8186 - 8186 0.01 0.01
Hindu Undivided Family 1458508 - 1458508 1.07 1504262 - 1504262 1.10 0.03
Individual NRI- Rep.- Non Rep. 759718 6050 765768 0.56 1049315 6050 1055365 0.77 0.21
Clearing Member 259769 - 259769 0.19 208355 - 208355 0.16 (0.03)
NBFC registered with RBI - - - - 61083 - 61083 0.04 0.04
Sub-Total (B)(3) 39632971 1604370 41237341 30.24 38463560 1324715 39788275 29.18 (1.06)
Total Public shareholding 73880104 1614470 75494574 55.35 73885758 1334815 75220573 55.15 (0.20)
(B)=(B)(1)+(B)(2)+(B)(3)
TOTAL = (A)+(B) 134778571 1614470 136393041 100.00 135058226 1334815 136393041 100.00 -
C. Shares held by - - - - - - - - -
Custodians and against
which Depository Receipts
have been issued
GRAND TOTAL = (A)+(B)+(C) 134778571 1614470 136393041 100.00 135058226 1334815 136393041 100.00 -
(iv) Shareholding of Top Ten Shareholders (Other than Directors, Promoters and Holders of GDRs and ADRs)
Sr No. Name & Reason of Increase/ Shareholding at the Transactions during the year Cumulative Shareholding at
Decrease Beginning of the the end of the
Financial Year 2018-19 Financial Year 2018-19
* Includes A/c Aditya Birla Sun Life Small Cap Fund and Aditya Birla Sun Life Pure Value Fund
Sr No. Name & Reason of Increase/ Shareholding at the Transactions during the year Cumulative Shareholding at
Decrease Beginning of the the end of the
Financial Year 2018-19 Financial Year 2018-19
Sr No. Name & Reason of Increase/ Shareholding at the Transactions during the year Cumulative Shareholding at
Decrease Beginning of the the end of the
Financial Year 2018-19 Financial Year 2018-19
Deepak C. Mehta
Place: Vadodara Chairman & Managing Director
Date: May 3, 2019 (DIN: 00028377)
1. In the Financial Year 2018-19, there was an increase of 13.74% in the median remuneration of employees.
2. There were 1,362 permanent employees on the rolls of the Company as on March 31, 2019.
3. Average Percentile increase already made in the salaries of employees other than Managerial Personnel in the last Financial Year
was 10% and average percentile increase in remuneration of Managerial Personnel was 52.58%.
Average increase in remuneration of both, managerial and non-managerial personnel were determined based on the overall
performance of the Company and individual performance as per policy of the Company.
Key result areas of the Managerial Personnel are broadly to achieve Company’s growth and performance target, achieving the same
against various adverse externalities globally, devising sustenance strategy to combat global forces like competition, exchange
rate etc, which, in turn, enhance shareholders’ value. Remuneration of the Managerial Personnel is based on the Nomination &
Remuneration Policy of the Company and as recommended by the Nomination & Remuneration Committee and approved by the
Board of Directors.
As against above, Remuneration for non-managerial personnel is based on an internal evaluation of assigned target area which
are derived from the key result area of their superiors / managerial personnel.
4. It is affirmed that the Remuneration is as per the Nomination & Remuneration Policy of the Company.
Deepak C. Mehta
Place: Vadodara Chairman & Managing Director
Date: May 3, 2019 (DIN: 00028377)
Annexure - H
Information required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies
(Accounts) Rules, 2014 pertaining to Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
(A) Conservation of Energy
(i) Steps taken or impact on conservation of energy:
- Improvements in - Flash stream and condensate recovery, column packings, boiler & chilling units efficiency improvements,
air leakage survey in plant.
- Processes improved to reduce utility and improve energy conservation.
(ii) Steps taken for utilizing alternate sources of energy:
- Power generation by using back pressure turbine
- Power trading through open access and bilateral agreements
(iii) Capital Investment on energy conservation equipments: ` 272.69 Lakhs
1. COMPANY’S PHILOSOPHY ON CODE OF GOVERNANCE: Director & CEO of the Company for a period from May
Your Company’s philosophy on Corporate Governance 9, 2018 to May 31, 2020. The said re-appointment was
envisages the attainment of a high level transparency and approved by the Members at the 47th Annual General
accountability in the functioning of the Company and the Meeting of the Company held on August 3, 2018.
efficient conduct of its business, including its interaction with (2) Shri Deepak C. Mehta (DIN: 00028377) was re-appointed
employees, shareholders, depositors, creditors, consumers, as the Chairman & Managing Director of the Company
financial institutions and other lenders. Accountability w.e.f. December 14, 2018 for a period of five (5) years,
improves decision making and transparency helps to explain subject to the approval of Members of the Company.
the rationale behind decisions which in turn helps in building
confidence in the Company. The composition of the Board of Directors of the Company as
on March 31, 2019 was as under:
Your Company firmly believes that for a company to succeed
on a sustained basis, it must maintain global standards of Sr. No. Category Name of Director
Corporate Conduct. It also believes that Corporate Governance I. Promoter and Shri Deepak C. Mehta
is not simply a matter of creating checks and balances; it is Executive Director
about creating an outperforming organisation, which leads to II. Promoter and Non- Shri Ajay C. Mehta
increasing employee and customer satisfaction. Executive Director
III. Executive Directors Shri Umesh Asaikar
2. BOARD OF DIRECTORS: Shri Maulik D. Mehta
(i) Composition and Category of Directors Shri Sanjay Upadhyay
The Board of Directors of the Company comprises of an IV. Non-Executive Shri Nimesh Kampani
optimum combination of executive and non-executive and Independent Shri Sudhin Choksey
directors, which is in conformity with the requirements of SEBI Directors
Shri Sudhir Mankad
(Listing Obligations Disclosure Requirements) Regulations,
Dr. Richard H. Rupp
2015 (‘LODR or Listing Regulations’). As of the year ended
Shri Sandesh Kumar Anand
March 31, 2019, the Board consisted of twelve (12) Directors
comprising of four (4) Executive Directors, one (1) Non- Dr. Swaminathan Sivaram
Executive Director and seven (7) Independent Directors. The Prof. Indira Parikh
Chairman of the Board is an Executive Director.
(ii) Board Meetings
The Directors of the Company are highly experienced
During the Financial Year 2018-19, four (4) Board Meetings
professionals in their fields and brings in a wide range of skills
were held on May 4, 2018, August 2, 2018, October 26, 2018 and
and experience to the Board.
February 1, 2019. The maximum time gap between the two
During the year under review: Board Meetings was not more than one hundred twenty (120)
days as prescribed under the (‘Listing Regulations’).
(1) Shri Umesh Asaikar (DIN: 06595059) was re-appointed
as a Whole-time Director designated as the Executive
The attendance of Directors at the Board Meetings held during the year ended March 31, 2019, and at the last Annual
General Meeting and the directorship, chairmanship and membership in committees of the Directors in other companies as
on March 31, 2019:
Name of the Director Director No. of Board Meetings No. of Board Attendance No. of other No. of Committee
Identification held during the year/ Meetings at Last AGM Directorship position in other Public
Number (DIN) tenure of Director Attended Held (including Companies [Chairman
listed entities) (C)/ Member (M)]
Shri Deepak C. Mehta 00028377 4 4 YES 2 2(M)
Shri Ajay C. Mehta 00028405 4 4 YES 2 1(C) & 2(M)
Shri Maulik D. Mehta 05227290 4 4 YES - -
Name of the Director Director No. of Board Meetings No. of Board Attendance No. of other No. of Committee
Identification held during the year/ Meetings at Last AGM Directorship position in other Public
Number (DIN) tenure of Director Attended Held (including Companies [Chairman
listed entities) (C)/ Member (M)]
Shri Nimesh Kampani 00009071 4 4 YES 7 6(M)
Shri Sudhin Choksey 00036085 4 3 YES 2 1(C)
Shri Sudhir Mankad 00086077 4 3 YES 6 1(C) & 2(M)
Dr. Richard H. Rupp 02205790 4 2 NO - -
Shri S. K. Anand 00001792 4 4 YES 2 2(C)
Dr. S. Sivaram 00009900 4 4 YES 6 2(C)
Shri Umesh Asaikar 06595059 4 4 YES - -
Prof. Indira Parikh 00143801 4 1 NO 7 4(M)
Shri Sanjay Upadhyay 01776546 4 4 YES 2 1(C)
Note:
(1) Number of other directorships held by Directors as mentioned above excludes directorships in Private Limited Companies, Section 8 companies,
Foreign Companies, Membership of Managing Committee of various chambers/bodies and alternate directorships.
(2) In accordance with the provisions of the Listing Regulations, Memberships / Chairmanships of only Audit Committee and Stakeholders’ Relationship
Committee in all public limited companies (excluding Deepak Nitrite Limited) have been considered.
As required under the Listing Regulations as amended w.e.f. April 1, 2019, the names of the listed entities (Including Deepak
Nitrite Limited) where the Director of the Company is a director and the category of directorship as on March 31, 2019 is
provided hereunder:
Name of Director Name of Listed Entity Category of Directorship
Shri Deepak C. Mehta Deepak Nitrite Limited Chairman & Managing Director
Shri Ajay C. Mehta Deepak Nitrite Limited Non-Executive Director
Tribhovandas Bhimji Zaveri Limited Independent Director
Shri Umesh Asaikar Deepak Nitrite Limited Executive Director & CEO
Shri Sanjay Upadhyay Deepak Nitrite Limited Director -Finance & CFO
Shri Maulik D. Mehta Deepak Nitrite Limited Whole-time Director
Shri Nimesh Kampani Deepak Nitrite Limited Independent Director
Britannia Industries Limited Independent Director
Chambal Fertilisers and Chemicals Limited Independent Director
Apollo Tyres Limited Independent Director
JM Financials Limited Non-Executive Chairman
Shri Sudhin Choksey Deepak Nitrite Limited Independent Director
Gujarat Ambuja Exports Limited Independent Director
GRUH Finance Limited Managing Director
Shri Sudhir Mankad Deepak Nitrite Limited Independent Director
Navin Fluorine International Limited Independent Director
Swaraj Engines Limited Non-Executive Chairman
GRUH Finance Limited Independent Director
Dr. Richard H. Rupp Deepak Nitrite Limited Independent Director
Shri S. K. Anand Deepak Nitrite Limited Independent Director
Dr. S. Sivaram Deepak Nitrite Limited Independent Director
Supreme Petrochem Limited Independent Director
Asian Paints Limited Independent Director
GMM Pfaudler Limited Independent Director
APCOTEX Industries Limited Independent Director
Prof. Indira Parikh Deepak Nitrite Limited Independent Director
Johnson Controls- Hitachi Air-conditioning India Limited Independent Director
Force Motors Limited Independent Director
the Chairperson of the Company and to assess the quality, before submission to the Board for approval, with
quantity and timeliness of flow of information between the particular reference to:
management and the Board. • M
atters required to be included in the
director’s responsibility statement to 76 be
3. COMMITTEES OF BOARD OF DIRECTORS: included in the Board’s Report in terms of
The Board committees are set up to carry out clearly defined clause (c) of sub-section (3) of Section 134 of
roles which are considered to be performed by members of the Companies Act, 2013;
the Board, as a part of good governance practice. Minutes • C
hanges, if any, in accounting policies and
of proceedings of committee meetings are circulated to the practices and reasons for the same;
directors and placed before Board meetings for noting. The
• M
ajor accounting entries involving estimates
Board has currently established the following Committees:
based on the exercise of judgment by
management;
(A) Audit Committee:
(i) Composition of Audit Committee • S
ignificant adjustments made in the Financial
Statements arising out of Audit findings;
The Audit Committee comprises of the following
members: • C
ompliance with listing and other legal
Name of Member Designation Category
requirements relating to Financial Statements;
Shri Sudhin Choksey Chairman Independent Director • Disclosure of any Related Party Transactions; and
Shri Sudhir Mankad Member Independent Director • Modified opinion(s) in the draft Audit Report.
Shri S. K. Anand Member Independent Director
5) Reviewing, with the management, the quarterly
The Committee’s composition meets with requirements financial statements before submission to the
of Section 177 of the Companies Act, 2013 and Listing board for approval;
Regulations. All members of the Audit Committee are
6) Reviewing and monitoring, with the management,
financially literate and Shri Sudhin Choksey possesses
the statement of uses/ application of funds
financial / accounting expertise.
raised through an issue (public issue, rights issue,
The Statutory Auditors, Internal Auditors and other preferential issue, etc.), the statement of funds
relevant senior management persons are invited to utilized for purposes other than those stated in the
attend the meetings of Audit Committee. offer document / prospectus / notice and the report
submitted by the monitoring agency monitoring
Shri Sudhin Choksey, Chairman of the Audit Committee,
the utilisation of proceeds of a public or rights
was present at the last Annual General Meeting held on
issue, and making appropriate recommendations
August 3, 2018.
to the board to take up steps in this matter;
The Company Secretary acts as a Secretary to the 7)
Reviewing and monitoring the auditor’s
Committee. independence and performance, and effectiveness
(ii) Brief Description of Terms of Reference of the Audit of audit process;
Committee 8)
Approval or any subsequent modification of
In accordance with the provisions of the Companies Act, transactions of the Company with related parties;
2013 and Listing Regulations, the terms of reference for
9) Scrutiny of inter-corporate loans and investments;
the Audit Committee of Directors are as under:
10) Valuation of undertakings or assets of the listed
1)
Oversight of the Company’s financial reporting
entity, wherever it is necessary;
process and the disclosure of its financial
information to ensure that the financial statement 11) Evaluation of internal financial controls and risk
is correct, sufficient and credible; management systems;
2) Recommendation for appointment, remuneration 12) Reviewing, with the management, performance of
and terms of appointment of auditors of the statutory and internal auditors, adequacy of the
Company; internal control systems;
3) Approval of payment to Statutory Auditors for any 13) Reviewing the adequacy of internal audit function,
other services rendered by the Statutory Auditors; if any, including the structure of the internal audit
department, staffing and seniority of the official
4)
Reviewing, with the management, the annual heading the department, reporting structure
financial statements and Auditor’s report thereon coverage and frequency of internal audit;
All the recommendations of the Audit Committee were 7) Such other terms as may be required under the
accepted by the Board of Directors of the Company. Companies Act, 2013 or the Listing Regulations.
(iii) Meetings and Attendance thereat (C) Stakeholders’ Relationship & Investors Grievance
Two (2) meetings of the Nomination and Remuneration Committee:
Committee were held during the Financial Year 2018-19 (i) Composition
on May 4, 2018 and October 25, 2018. The Stakeholders’ Relationship & Investors Grievance
The attendance at the Nomination and Remuneration Committee comprises of the following Directors:
Committee meetings held during financial year 2018-19 Name of Member Designation Category
was as under:
Shri S. K. Anand Chairman Independent Director
Name of Member No. of No. of Nomination
Shri A. C. Mehta Member Non-Executive Director
Nomination and and Remuneration
Remuneration Committee Shri Umesh Asaikar Member Executive Director & CEO
Committee Meetings attended Prof. Indira Parikh* Member Independent Director
Meetings held
* Prof. Indira Parikh inducted as a member with effect from
Shri Sudhin Choksey 2 2 February 1, 2019.
Shri Sudhir Mankad 2 2
Shri Arvind Bajpai, Company Secretary, is the Compliance Officer.
Shri S. K. Anand 2 2
Prof. Indira Parikh 2 0
(ii) Terms of Reference
Shri Sudhir Mankad, Chairman of the Nomination and In accordance with the provisions of the Companies Act,
Remuneration Committee, was present at the last Annual 2013 and Listing Regulations, the terms of reference for
General Meeting of the Company held on August 3, 2018. the Stakeholder’s Relationship & Investors’ Grievances
All the recommendations of the Nomination and Committee of Directors are as under:
Remuneration Committee were accepted by the Board 1) Resolving the grievances of the security holders
of Directors of the Company. of the listed entity including complaints related
to transfer/transmission of shares, non-receipt of
(iv) Performance evaluation criteria for Independent annual report, non-receipt of declared dividends,
Directors issue of new/duplicate certificates, general
The criteria for performance evaluation of Independent meetings etc.;
Directors has been disclosed in the Directors’ Report.
2) Review of measures taken for effective exercise of
(v) Remuneration Policy voting rights by shareholders;
The Company has adopted a Nomination and
3)
Review of adherence to the service standards
Remuneration Policy for Directors, Key Managerial
adopted by the listed entity in respect of various
Personnel and Senior Management and is annexed
services being rendered by the Registrar & Share
to the Directors’ Report. The said Policy is directed
Transfer Agent;
towards rewarding performance, based on review of
achievements periodically and is in consonance with the 4)
Review of the various measures and initiatives
existing industry practice. The key factors considered in taken by the listed entity for reducing the quantum
formulating the Policy are as under: of unclaimed dividends and ensuring timely receipt
a)
The level and composition of remuneration is of dividend warrants/annual reports/statutory
reasonable and sufficient to attract, retain and notices by the shareholders of the company; and
motivate Directors to run the Company successfully; 5) Such other terms as may be required under the
b)
Relationship of remuneration to performance Companies Act, 2013 or Listing Regulations.
is clear and meets appropriate performance
benchmarks; and (iii) Investors Grievance
c)
Remuneration to Directors, Key Managerial Continuous efforts are being made to ensure that
Personnel and Senior Management involves a investor’s grievances are expeditiously redressed to the
balance between fixed and incentive pay reflecting satisfaction of the investors.
short and long-term performance objectives The Company and Link Intime India Pvt. Ltd. (Registrar
appropriate to the working of the Company and its & Share Transfer Agent) attend to all the grievances of
goals. the investors promptly on their receipt, whether received
The Company does not have any Employee Stock Option directly or through SEBI, Stock Exchanges, Ministry of
Scheme. Corporate Affairs etc.
Number of complaints pending at the end of the 00 The Project Committee comprises of the following
Financial Year Directors:
Number of complaints not solved to the satisfaction 00 Name of Member Designation Category
of shareholders Shri S. K. Anand Chairman Independent Director
Dr. R. H. Rupp Member Independent Director
(D) Corporate Social Responsibility Committee:
Dr. S. Sivaram Member Independent Director
(i) Composition
Pursuant to the requirement of Section 135 of the (ii) Terms of Reference
Companies Act, 2013, a duly constituted Corporate The Project Committee is constituted inter alia to
Social Responsibility Committee is in place. evaluate the proposed projects / expansion plans and
recommend them to the Board for approval and also to
The Corporate Social Responsibility Committee review the progress of ongoing projects.
comprises of the following members:
(F) Risk Management Committee:
Name of Member Designation Category (i) Composition
Shri Sudhir Mankad Chairman Independent Director The Company has a comprehensive Risk Management
Dr. S. Sivaram Member Independent Director Framework and the same is periodically reviewed by the
Shri Deepak C. Mehta Member Chairman & Managing Board of Directors of the Company. A Risk Management
Director Committee has been constituted by the Board to
Shri Umesh Asaikar Member Executive Director & monitor and review the Risk Management Framework of
CEO the Company.
2) To review the adequacy of the existing measures to mitigate risks covering various functions of the Company;
3) To evaluate and approve mitigation measures that may be recommended by the Risk Manager(s) in respect of any function
and review the action taken for its implementation on an on-going basis;
4) To review and recommend to the Board, amendment of any of the provisions of the Risk Management Framework;
5) Monitoring and reviewing the risk mitigation plan related to cyber security; and
6) Such other terms as may be required under the Listing Regulations.
All the recommendations of the Risk Management Committee were accepted by the Board of Directors of the Company.
4. REMUNERATION OF DIRECTORS:
(A) Chairman & Managing Director / Executive Directors
The remuneration of Chairman & Managing Director comprises of salary, allowances, perquisites and other benefits. In addition, the
Chairman & Managing Director is also paid a commission, calculated with reference to the Net Profits of the Company in a particular
Financial Year, as may be determined by the Board of Directors, subject to the overall ceiling stipulated in Section 197 and other relevant
provisions of the Companies Act, 2013.
The remuneration of Executive Directors comprise of fixed pay and variable pay which ranges from 0% to 20% of their respective costs
to company for a particular Financial Year based on the performance rating depending upon their individual and also the Company’s
performance as per policy of the Company.
The details of remuneration of Chairman & Managing Directors and Executive Directors for the Financial Year 2018-19 are as under:
(` In Lakhs)
Salary & Perquisites Retirement Commission /
Name Total
Allowances Benefits Variable Pay
Shri Deepak C. Mehta 236.83 31.60 38.17 600.00 906.60
Shri Umesh Asaikar 365.70 55.71 53.83 113.62 588.86
Shri Maulik D. Mehta 74.81 16.90 13.47 65.88 171.06
Shri Sanjay Upadhyay 158.57 31.61 24.89 79.33 294.40
Shri Ajay C. Mehta, Shri Umesh Asaikar, Shri Sanjay Upadhyay and Shri Maulik Mehta are liable to retire by rotation.
There is no provision for payment of severance fees.
(ii) Postal Ballot conducted during the year and procedure thereof:
During the year under review and upto the date of this Report, Postal Ballot exercise was undertaken by the Company in the month of
March 2019 and result of the Postal Ballot was declared on April 1, 2019. The details and voting pattern of the Special Resolutions passed
through the said Postal Ballot exercise are as under:
Sr. Resolution Special / No. of Valid No. and % of No. and % of
No. Ordinary Votes received Votes in Favour Votes Against
1 Approval for continuation of Shri Special 99041139 99034953 6186
Sandesh Kumar Anand (DIN: 00001792) (99.99%) (0.01%)
as Non- Executive and Independent
Director, who has attained the age of
seventy five (75) years.
2 Approval for continuation of Prof. Special 99041141 97991148 1049993
Indira Parikh (DIN: 00143801) as Non- (98.94%) (1.06%)
Executive and Independent Director,
who has attained the age of seventy
five (75) years.
Shri Dinesh Joshi, Practicing Company Secretary, Designated Partner of M/s. KANJ & Co., LLP, Company Secretaries, Pune was appointed
as the Scrutinizer for carrying out the above Postal Ballot process in a fair and transparent manner.
The Company has followed the procedure prescribed for conducting Postal Ballot under the provisions of the Companies Act, 2013 and
rules made thereunder read with Listing Regulations.
No Special Resolution is proposed to be conducted through Postal Ballot
6. MEANS OF COMMUNICATION:
The Quarterly and Half yearly results are published in widely circulating national and local dailies such as, The Business Standard
(English); The Indian Express and The Financial Express (English and Gujarati). These are not sent individually to the shareholders.
The Company’s results are displayed on the Company’s website at www.godeepak.com. The website also displays official news releases.
Presentation(s) were made to the institutional investors and to the Analysts during the year under review.
BSE NSE
Month
High (`) Low (`) High (`) Low (`)
April, 2018 281.50 245.00 281.85 244.10
May, 2018 273.65 235.00 273.40 238.75
June, 2018 258.00 215.00 258.60 215.50
July, 2018 252.65 216.00 253.30 215.50
August, 2018 292.50 233.30 292.00 232.40
September, 2018 305.00 250.00 305.00 249.00
October, 2018 292.35 225.00 289.20 212.50
November, 2018 285.85 241.65 286.50 245.50
December, 2018 262.95 204.60 263.20 205.05
January, 2019 233.00 206.05 232.50 206.00
February, 2019 235.00 211.00 235.20 211.40
March, 2019 282.70 232.25 282.50 233.05
Source: Respective Websites of BSE and NSE.
300 39000
DNL Share Price (`)
38000
250
BSE Sensex
37000
200 36000
150 35000
34000
100
33000
50
32000
0 31000
Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19
The Company does not have any outstanding global depository receipts or American depository receipts or warrants or any convertible
instruments.
(xii) Commodity Price risk or Foreign Exchange risk and hedging activities:
The Company has adequate risk assessment and minimisation system in place including foreign exchange. The foreign exchange risk is
managed through the hedging strategy of the Company which is reviewed periodically.
The Company does not have material exposure of any commodity and accordingly, no hedging activities for the same is carried
out. Therefore, there is no disclosure to offer in terms of SEBI circular no. SEBI/HO/CFD/CMD1/ CIR/P/2018/0000000141 dated
November 15, 2018.
To,
The Members,
Deepak Nitrite Limited,
Aaditya-I, Chhani Road,
Vadodara – 390 024
Gujrat
We have examined the compliance of conditions of Corporate Governance by DEEPAK NITRITE LIMITED (“the Company”) having
CIN L24110GJ1970PLC001735 for the financial year ended March 31, 2019 as per the relevant provisions of the Securities and Exchange
Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’).
The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to
procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of Corporate
Governance. It is neither an audit nor an expression on financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied
with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Regulations, as applicable.
We further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency or effectiveness with
which the management has conducted the affairs of the Company.
For KANJ & CO. LLP
Company Secretaries
Dinesh Joshi
Date: May 3, 2019 Designated Partner
Place: Pune Membership No: FCS- 3752 CP No: 2246
To,
The Members
DEEPAK NITRITE LIMITED
Aaditya-I, Chhani Road,
Vadodara -390 024
Gujarat
This is to certify that on verification of declarations made by the Directors and records maintained by DEEPAK NITRITE LIMITED
(“the Company”), none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or
continuing as Directors of the companies by the Securities Exchange Board of India (SEBI) /Ministry of Corporate Affairs or any such
Statutory Authority, as per the requirements of point 10(i) of Part C of Schedule V of the Securities Exchange Board of India (Listing
Obligations and Disclosure Requirement) Regulations, 2015.
Dinesh Joshi
Date: May 3, 2019 Designated Partner
Place: Pune Membership No: FCS- 3752 CP No: 2246
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements
give the information required by the Companies Act, 2013 (“the Act”) in the manner so required and give a true and fair view in conformity with
the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015,
as amended, (“Ind AS”) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2019,
and its profit, total comprehensive income, its cash flows and the changes in equity for the year ended on that date.
Revenue recognition
Revenue recognition is significant audit risk across all units within the Company. Risk exists that revenue is recognized without substantial
transfer of control and is not in accordance with Ind AS-115 “Revenue from Contracts with Customers”.
Auditor’s Response
Principal Audit Procedures
Our audit consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
• We evaluated the design of internal controls relating to revenue recognition.
• We selected sample of Sales transactions and tested the operating effectiveness of the internal control relating to revenue recognition.
We carried out a combination of procedures involving enquiry and observation, reperformance and inspection.
• We have tested sample of Sale transactions to their respective customer contracts, underlying invoices and related documents.
• We have performed cut-off procedures for sample of revenue transactions at year-end in order to conclude on whether they were
recognised in accordance with Ind-AS 115.
Information Other than the Financial Statements and Auditor’s Report Thereon
• The Company’s Board of Directors is responsible for the other information. The other information comprises the information included
in the Management Discussion and Analysis report, but does not include the consolidated financial statements, standalone financial
statements and our auditor’s report thereon.
quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to
evaluate the effect of any identified misstatements in the standalone financial statements.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the
audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in
our auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be
expected to outweigh the public interest benefits of such communication.
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section
143 of the Companies Act, 2013 (“the Act”)
We have audited the internal financial controls over financial reporting of Deepak Nitrite Limited (“the Company”) as of March 31, 2019 in
conjunction with our audit of the standalone Ind AS financial statements of the Company for the year ended on that date.
Auditor’s Responsibility
Our responsibility is to express an opinion on the Company’s internal financial controls over financial reporting of the Company based on our
audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the
“Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing prescribed under Section 143(10) of
the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal
financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over
financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining
an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the
auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company’s
internal financial controls system over financial reporting.
Opinion
In our opinion, to the best of our information and according to the explanations given to us, the Company has, in all material respects, an
adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating
effectively as at March 31, 2019, based on the internal control over financial reporting criteria established by the Company considering the
essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued
by the Institute of Chartered Accountants of India.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a regular program for verification of property, plant and equipment at every 2 years which, in our opinion,
is reasonable having regarding to the size of the Company and nature of its assets. The property, plant and equipment were
physically verified during the current year in accordance with this program. According to information and explanations given to us,
no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examined by us and based on the examination of
the registered sale deed / transfer deed / conveyance deed provided to us, we report that, the title deeds, comprising all the
immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date. Immovable
properties of land and buildings whose title deeds have been pledged as security for loans are held in the name of the Company
based on the confirmations directly received by us from lenders. In respect of immovable properties of land and buildings that
have been taken on lease and disclosed as fixed asset in the financial statements, the lease agreements are in the name of the
Company, where the Company is the lessee in the agreement.
(ii) As explained to us, the inventories were physically verified during the year by the Management at reasonable intervals and no material
discrepancies were noticed on physical verification.
(iii) The Company has not granted any loans, secured or unsecured, to companies, firms, Limited Liability Partnerships or other parties
covered in the register maintained under section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections
185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as
applicable.
(v) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of
Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014,
as amended, with regard to the deposits accepted. According to the information and explanations given to us, no order has been passed
by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any Court or any other Tribunal.
(vi) The maintenance of cost records has been specified by the Central Government under section 148(1) of the Companies Act, 2013.
We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Records and Audit) Rules,
2014, as amended, prescribed by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and are of
the opinion that, prima facie, the prescribed cost records have been made and maintained. We have, however, not made a detailed
examination of the cost records with a view to determine whether they are accurate or complete.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees’ State
Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Goods and Service Tax, cess and other
material statutory dues applicable to it to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employees’ State Insurance, Income-tax, Sales Tax,
Service Tax, Customs Duty, Excise Duty, Value Added Tax, Goods and Service Tax, cess and other material statutory dues in arrears
as at March 31, 2019 for a period of more than six months from the date they became payable.
(c) Details of dues of Sales Tax , Excise Duty, Central Sales Tax, Value Added Tax and other statutory dues which have not been
deposited as on March 31, 2019 on account of disputes are given below:
Name of Statute Nature of Dues Forum where Dispute Period to which the Amount Amount
is Pending Amount Relates Involved Unpaid
(` in lakhs) (` in lakhs)
Central Excise Act 1944 Excise Duty Central Excise Asst. FY 2011 to FY 2017 76.65 71.62
Commissioner
Central Excise Act 1944 Excise Duty Central excise FY 1998 to FY 2016 54.73 32.35
commissioner
Central Excise Act 1944 Excise Duty Central excise FY 2008 to FY 2014 27.40 16.44
commissioner Appeals
Central Excise Act 1944 Excise Duty Central Excise & Service FY 2004 to FY 2015 127.78 104.89
Tax Appellate Tribunal
Central Sales Tax Act Sales Tax Sales Tax commissioner FY 2005 to FY 2014 115.05 109.05
(Appeal)
Gujarat Vat Act, 2004 VAT Assistant Commissioner FY 2010 to FY 2013 43.92 43.92
Appeals
Finance Act 1994 Service Tax Assistant Commissioner, FY 2015 to FY 2017 5.64 5.64
GST
Hyderabad Metropolitan Water Sewerage Cess High Court of FY 2008 to FY 2013 27.13 27.13
Supply & Sewerage Act 1989 Andhra Pradesh
The Gujarat Panchayats Law Property Tax Gram Panchayat FY 2013 to FY 2017 170.00 170.00
(Amendment) Act, 1963
here are no dues of Income-tax, Service Tax, Customs Duty, Goods and Service Tax and Value Added Tax that have not been deposited
T
as at 31st March, 2019 on account of disputes.
(viii) In our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans
or borrowings to financial institutions, banks and government. The Company has not issued any debentures.
(ix) In our opinion and according to the information and explanations given to us, the Company has not raised money by way of initial
public offer/ further public offer (including debt instruments) and the term loans have been applied by the Company during the year for
the purposes for which they were raised.
(x) To the best of our knowledge and according to the information and explanations given to us, no material fraud by the Company and no
material fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration
in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of paragraph 3 of the Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 188 and 177
of the Companies Act, 2013, where applicable, for all transactions with the related parties and the details of related party transactions
have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) During the year, the Company has not made any preferential allotment or private placement of shares and debentures and hence
reporting under clause (xiv) of CARO 2016 is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any
non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013
are not applicable.
(xvi) The Company is not required to be registered under section 45-IA of the Reserve Bank of India Act, 1934.
For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
Statement of Profit and Loss for the year ended March 31, 2019
` in Lakhs
Notes For the year For the year
March 31, 2019 March 31, 2018
I. Revenue from Operations 25 1,79,191.87 1,47,922.97
II. Other Income 26 259.52 1,153.57
III. Total Income (I+II) 1,79,451.39 1,49,076.54
IV. Expenses:
(a) Cost of Materials Consumed 27 1,02,784.87 83,992.79
(b) Changes in Inventories of Finished Goods and Work-in-Progress 28 (5,167.39) 389.15
(c) Excise Duty on Sale of Goods - 2,425.24
(d) Employee Benefits Expense 29 15,860.30 13,205.93
(e) Power & Fuel Expenses 30 14,093.72 11,987.90
(f) Finance Costs 31 4,284.57 4,034.00
(g) Depreciation and Amortisation Expense 32 5,287.82 5,194.92
(h) Other Expenses 33 21,057.53 15,638.19
Total Expenses (IV) 1,58,201.42 1,36,868.12
V. Profit Before Tax (III-IV) 21,249.97 12,208.42
VI. Tax Expense:
(a) Current Tax 4,864.34 2,594.99
(b) Deferred Tax 2,581.42 1,556.44
(c) Excess Provision of Earlier Years - (288.51)
VII. Profit for the Year (V-VI) 13,804.21 8,345.50
VIII. Other Comprehensive Income
(A) Items that will not be Reclassified to Profit and Loss:
(a) Remeasurement of Defined Benefit Obligations (Net) (416.94) 108.83
(b) Tax Effect of Remeasurement of Defined Benefit Liabilities / 145.26 (37.01)
(Assets)
(B) Items that will be Reclassified to Profit and Loss:
(a) Fair Value Gains on Investments 7.84 20.97
(b) Tax effect of Fair Value Gains on Investments (2.73) (7.13)
Total Other Comprehensive Income for the Year (VIII) (266.57) 85.66
IX. Total Comprehensive Income for the Year (VII+VIII) 13,537.64 8,431.16
Earnings Per Equity Share
(a) Basic (Nominal Value per Share ` 2) 10.12 6.34
(b) Diluted (Nominal Value per Share ` 2) 10.12 6.34
The accompanying notes form an integral part of the Financial Statements.
As per our report of even date For and on behalf of the Board
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
(C) CASH FLOW FROM FINANCING ACTIVITIES
1. Proceeds from Issue of Equity Shares including Securities Premium - 14,627.98
2. Proceeds from Non-Current Borrowings 5,000.00 9,950.00
3. Repayment of Non-Current Borrowings (10,451.59) (16,812.08)
4. Net Proceeds from Current Borrowings (7,964.10) (4,346.12)
5. Interest paid (4,372.91) (4,015.98)
6. Dividend paid on Equity Shares (1,764.15) (1,560.31)
7. Tax on Equity Dividend paid (364.47) (319.32)
8. Margin Money Deposit (203.12) (0.11)
Net Cash Outflow from Financing Activities (C) (20,120.34) (2,475.94)
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) 162.64 (1.79)
Cash and Cash Equivalents at the Beginning of the Financial Year 118.65 120.44
Cash and Cash Equivalents at the end of the Financial Year 281.29 118.65
Reconciliation of Cash and Cash Equivalents
Balances with Banks:
In Current Accounts 120.47 105.73
In EEFC Accounts 151.02 11.45
Cash on Hand 9.80 1.47
Total Cash and Cash Equivalents as per Note 12 A 281.29 118.65
The Cash Flow Statement has been prepared under the ‘Indirect Method’ set out in Ind AS 7 ‘Cash Flow Statement’.
The accompanying Notes form an integral part of the Financial Statements.
As per our report of even date For and on behalf of the Board
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
As per our report of even date For and on behalf of the Board
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
Company overview
Deepak Nitrite Limited (‘DNL’ or ‘the Company’) is a prominent chemical manufacturing public limited company incorporated and domiciled
in India. Its registered office is located at Aaditya-I Chhani Road, Vadodara- 390 024, Gujarat, India and its manufacturing facilities are located
in the states of Gujarat, Maharashtra and Telangana.
The Company manufactures Basic Chemicals, Fine & Speciality Chemicals and Performance Products.
The Companies (Indian Accounting Standards) Amendment Rules, 2019 also notified amendments to the following accounting standards.
The amendments would be effective from April 1, 2019
1. Ind AS 12, Income taxes – Appendix C on uncertainty over income tax treatment
2. Ind AS 12, Income Taxes - Accounting for Dividend Distribution Taxes.
3. Ind AS 23, Borrowing costs
4. Ind AS 28 – investment in associates and joint ventures
5. Ind AS 103 and Ind AS 111 – Business combinations and joint arrangements
6. Ind AS 109 – Financial instruments
7. Ind AS 19 – Employee benefits
The Company is in the process of evaluating the impact of such amendments.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to
which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement
in its entirety, which are described as follows:
• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at
the measurement date;
• Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either
directly or indirectly; and
• Level 3 inputs are unobservable inputs for the asset or liability.
(d) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
As a lessor
Rental income from operating leases is generally recognised on a straight line basis over the term of the relevant lease.
As a lessee
Assets acquired under finance leases are initially recognised at fair value or present value of Minimum Lease payments at the
inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line
basis in net profit in the Statement of Profit and Loss over the lease term.
(e) Foreign Currency Transactions
In preparing the financial statements of the Company, transactions in currencies other than the entity’s functional currency
(foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting
period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary
items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when
the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not
retranslated.
Exchange differences on monetary items are recognised in Statement of profit and loss in the period in which they arise.
Exchange difference arising either on settlement or on translation, in case of long-term foreign currency borrowings, in so far as
they relate to property, plant and equipment are capitalised.
Foreign exchange differences regarded as an adjustment to borrowing costs are presented in the Statement of Profit and Loss,
within finance costs.
The Company enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign exchange
rate risks, including foreign exchange forward contracts, option contracts and interest rate swaps.
Derivatives are initially recognised at fair value at the date the derivative contracts are entered into and are subsequently
remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in the Statement of profit
and loss immediately.
(f) Borrowing Costs
General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset are capitalised during the period of time that is required to complete and prepare the asset for its intended use or sale.
Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale. Investment
income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted
from the borrowing costs eligible for capitalisation. Other borrowing costs are recognised in the Statement of Profit and Loss in the
period in which they are incurred.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to
arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in
the Statement of Profit and Loss.
In respect of depreciable assets for which Impairment Loss is recognised, depreciation/amortisation is charged on the revised
carrying amount over the remaining useful life of the assets computed on the basis of the life prescribed in schedule II to the
Companies Act, 2013.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year
end and adjusted prospectively, if appropriate.
(k) Intangible Assets
Intangible assets are stated at their original cost of acquisition, less accumulated amortisation and impairment losses, if any.
An Intangible Asset is recognised, where it is probable that the future economic benefits attributable to the Asset will flow to the
enterprise and where its cost can be reliably measured.
The cost of intangible assets is amortised over the estimated useful life, in any case, not exceeding ten years, on a straight-line
basis. A detail of estimated useful life is given below:
Impairment loss, if any, is recognised whenever carrying amount exceeds the recoverable amount. The impairment loss recognised
in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.
(n) Inventories
Raw materials and components, stores and spares are valued at cost determined on period-moving weighted average basis and
are net of Cenvat, VAT & GST. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventory to the present location and condition. Due allowances are made for slow moving and obsolete inventories based on
estimates made by the Company. Items such as spare parts, stand-by equipment and servicing equipment which is not plant and
equipment gets classified as inventory.
Finished Goods and Stock-in-process are valued at cost of purchase of raw materials and conversion thereof, including the cost
incurred in the normal course of business in bringing the inventories up to the present condition or at the net realisable value,
whichever is lower. The inventories of joint products are valued by allocating the costs to the joint products by `Relative Sales
Value’ method. By-products are valued at net realisable price.
Financial Assets
All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases
or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or
convention in the market place.
All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the
classification of the financial assets.
(i) Classification of Financial Assets
Debt instruments that meet the following conditions are subsequently measured at amortised cost (except for debt
instruments that are designated as at fair value through profit or loss on initial recognition)
• the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows; and
• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
Debt instruments that meet the following conditions are subsequently measured at fair value through other comprehensive
income (except for debt instruments that are designated as at fair value through profit or loss on initial recognition)
• the asset is held within a business model whose objective is achieved both by collecting contractual cash flows and
selling financial assets; and
• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal
and interest on the principal amount outstanding.
(ii) Effective interest method
The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest
income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on
initial recognition. Income is recognised on an effective interest basis for debt instruments other than those financial assets
classified as at FVTPL. Interest income is recognised in Statement of Profit and Loss and is included in the “Other Income” line
item.
However, financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the
continuing involvement approach applies, financial guarantee contracts issued by the Company, and commitments issued
by the Company to provide a loan at below-market interest rate are measured in accordance with the specific accounting
policies set out below.
a) Financial Liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial liability is held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of repurchasing it in the near term; or
• on initial recognition it is part of a portfolio of identified financial instruments that the Company manages together
and has a recent actual pattern of short-term profit-taking; or
• it is a derivative that is not designated and effective as a hedging instrument
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise;
• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or
investment strategy, and information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined
contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in
Statement of Profit and Loss. The net gain or loss recognised in Statement of Profit and Loss incorporates any interest
paid on the financial liability and is included in the ‘Other income’ line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the
fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other
comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive
income would create or enlarge an accounting mismatch in Statement of Profit and Loss, in which case these effects of
changes in credit risk are recognised in Statement of Profit and Loss. The remaining amount of change in the fair value
of liability is always recognised in Statement of Profit and Loss. Changes in fair value attributable to a financial liability’s
credit risk that are recognised in other comprehensive income are reflected immediately in retained earnings and are not
subsequently reclassified to Statement of Profit and Loss.
154
` in Lakhs
Owned assets Capital
Freehold Leasehold Building Plant and Furniture Vehicle Office Road Total Work-in-
Land Land Equipment and Fixture Equipment Progress
Net Carrying Amount as at March 578.68 1,597.01 9,053.59 43,725.78 422.42 494.38 158.79 194.38 56,225.03 4,072.77
31, 2017
Additions during the year 2017-18 - 314.24 289.06 4,796.63 60.92 21.97 56.65 10.24 5,549.71 5,101.73
Deductions during the year 2017-18 - - (87.02) (199.07) (0.34) (29.07) (6.08) - (321.58) (5,549.71)
Depreciation for the year 2017-18 - (20.12) (434.39) (4,231.67) (67.15) (102.01) (64.08) (104.40) (5,023.82) -
Notes:
1 Property, Plant and Equipment hypothecated/mortgaged as security for borrowings are disclosed under note 17 and note 20.
2 Building includes ` 1,080.00 Lakhs (` 1,080.00 Lakhs at March 31, 2018) in respect of ownership of premises in a co-operative housing society by way of 10 Shares.
3 The useful lives of Plant & Machinery have been changed from Financial Year 2017-18 which is based on technical evaluation done by the Management experts which are in accordance
to the useful life prescribed in Part C of Schedule II to the Act, in order to reflect the actual usage of the assets.
4 Capitalised borrowing costs
Addition to Property, Plant & Equipment include borrowing costs (including exchange difference considered as adjustments to borrowings cost) amounting to ` 168.90 Lakhs
(Previous year, ` 5.31 Lakhs)
` in Lakhs
Capitalised during the Capitalised during the
Current Year Previous Year
Exchange loss/(Gain) Capitalised (Refer note below)
(a) Plant & Machinery 159.28 5.01
(b) Factory & Other Building 9.62 0.30
Total 168.90 5.31
Note: Pursuant to the provisions contained in the Companies (Accounting Standards) Amendment Rules, 2009, and related notifications of Ministry of Corporate Affairs, the Company
in 2018-19 has adjusted to Property, Plant & Equipment, foreign exchange differences amounting to ` 168.90 Lakhs (Previous year, ` 5.31 Lakhs) on revaluation of long term foreign
currency borrowing for acquisition of Property, Plant & Equipment as an adjustment to borrowing costs.
5 Capital Work in Progress
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Capital Work in Progress (Building) - 397.88
(b) Capital Work in Progress (Others) 2,891.79 3,226.91
Capital Work in Progress 2,891.79 3,624.79
financial statements
155
4. Non-Current Investments
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Investments in equity instruments of subsidiary companies measured at cost 28,047.68 28,047.68
(b) Investments in Preference shares of subsidiary companies measured at cost 28,000.00 15,100.00
Subtotal 56,047.68 43,147.68
(a) Investments in equity instruments of other companies measured at FVTPL 7.30 10.71
(b) Investments in equity instruments of other companies measured at FVOCI 232.11 224.27
(c) Investments in Government or Trust Securities measured at amortised cost 0.01 0.01
Subtotal 239.42 234.99
Total 56,287.10 43,382.67
` in Lakhs
As at March 31, 2019 As at March 31, 2018
Face Value No. of Amount No. of Amount
Shares Shares
(a) Investment in Equity Instruments (fully paid-up)
(i) Subsidiary Companies measured at cost (Unquoted)
In Indian subsidiary company measured at cost
Deepak Phenolics Limited ` 10/- 28,00,00,000 28,000.00 28,00,00,000 28,000.00
In Foreign subsidiary company measured at cost
Deepak Nitrite Corporation, Inc. US $ 10/- 7,500 47.68 7,500 47.68
(ii) Other Companies measured at FVTPL
Quoted
IDBI Bank ` 10/- 6,240 2.91 6,240 4.51
Dena Bank (Refer Note 1 below) ` 10/- 29,400 3.72 29,400 5.53
Unquoted
Nandesari Environment Control Limited ` 10/- 800 0.08 800 0.08
Baroda Co-operative Bank Ltd. ` 50/- 10 0.01 10 0.01
Shamrao Vitthal Co-op Bank Ltd. ` 25/- 2,000 0.50 2,000 0.50
New India Co-op Bank Ltd. ` 10/- 798 0.08 798 0.08
(iii) Other Companies measured at FVOCI
Unquoted
Jedimetla Effluent Treatment Ltd. ` 100/- 52,342 84.56 52,342 80.08
Deepak International Limited GBP 1/- 73,706 66.72 73,706 68.01
Deepak Gulf LLC Omani 45,000 80.83 45,000 76.18
Riyal 1/-
(b) Investment in Preference Shares(fully paid-up)
Subsidiary Company measured at cost
Unquoted
Deepak Phenolics Limited
7% Non- Cumulative Optionally Convertible Preference Shares ` 100/- 2,80,00,000 28,000.00 1,51,00,000 15,100.00
(c) Investments in Government or Trust Securities measured at
amortised cost
National Savings Certificate - 0.01 - 0.01
Total 308,217,796 56,287.10 295,317,796 43,382.67
Notes:
1. The Company has received 3,234 shares of Bank of Baroda in the scheme of amalgamation against 29,400 shares of the Dena Bank
in the month of April 2019.
2. ` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Aggregate amount of Unquoted Investments 56,280.47 43,372.63
(b) Aggregate amount of Quoted Investments 6.63 10.04
5. LOANS
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
Loans to Employees
Unsecured, considered good
(a) Key Managerial Personnel and Directors 0.27 0.89
(b) Others 135.24 130.12
Total 135.51 131.01
Security Deposits from related parties for the previous year include Deposit towards lease of residential premises of ` 400.00 Lakhs
accounted at Fair Value using appropriate discount rate.
12b. BANK BALANCES OTHER THAN CASH AND CASH EQUIVALENTS ABOVE
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Earmarked Balances with Bank 72.26 64.33
(b) Deposits with banks with maturity less than 3 months - 3,026.22
(c) Margin Money Deposits 204.93 1.81
Total 277.19 3,092.36
(a) Reconciliation of number of Equity Shares outstanding at the beginning and at the end of the period:
` in Lakhs
As at March 31, 2019 As at March 31, 2018
No. of Amount No. of Amount
Shares Shares
Equity Shares
Shares outstanding at the beginning of the period 13,63,93,041 2,727.86 13,07,11,266 2,614.23
Issued during the year- issued to QIB
- - 56,81,775 113.63
(Refer Note (b) (iv) below)
Shares outstanding at the end of the period 13,63,93,041 2,727.86 13,63,93,041 2,727.86
(c) Details of shares held by each shareholder holding more than 5% Equity shares of ` 2 each fully paid in the Company :
Name of the Shareholder As at March 31, 2019 As at March 31, 2018
No. % Holding No. % Holding
Shri Deepak Chimanlal Mehta 2,12,16,331 15.56 2,12,36,331 15.57
Stiffen Credits & Capital Pvt. Ltd. 83,79,940 6.14 83,79,940 6.14
Reliance Capital Trustee Co. Ltd. 74,97,953 5.50 64,21,199 4.71
Aditya Birla Sun Life Trustee Private Limited 73,58,733 5.40 40,88,798 3.00
Checkpoint Credits & Capital Pvt. Ltd. 72,06,050 5.28 72,06,050 5.28
Stepup Credits & Capital Pvt. Ltd. 69,15,580 5.07 69,15,580 5.07
(d) During the year 2014-15, Company has allotted 52,269,095 Bonus Equity Shares of ` 2/- (Rupees Two Only) each, fully paid up, in
the ratio of 1:1 (one Bonus Equity Shares of ` 2/- each).
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Retained Earnings
Balance at beginning of year 40,231.79 34,202.32
Add: Profit attributable to owners of the Company (Profit for the year) 13,532.53 8,417.32
Less: Payment of Dividend on Equity Shares 1,773.11 1,568.53
Less: Payment of Dividend Distribution Tax 364.47 319.32
Less: Transferred to General Reserve 500.00 500.00
Balance at end of year 51,126.74 40,231.79
Retained earnings represents the Company’s undistributed earnings after taxes.
(b) General Reserve
Balance at beginning of year 7,890.13 7,390.13
Add: Transferred from Surplus Balance in the Statement of Profit and Loss 500.00 500.00
Balance at end of year 8,390.13 7,890.13
The general reserve is used for purposes as specified under the Companies Act, 2013. As
the general reserve is created by transfer from one component of equity to another and
is not an item of other comprehensive income, items included in the general reserve will
not be reclassified subsequently to the statement of profit and loss.
(c) Capital Reserve
Balance at beginning of year 71.27 71.27
Balance at end of year 71.27 71.27
(d) Capital Redemption Reserve
Balance at beginning of year 15.00 15.00
Balance at end of year 15.00 15.00
Capital redemption reserve has been created pursuant to the requirements of the Act
under which the Company is required to transfer certain amounts on redemption of the
debentures. The Company has redeemed the underlying debentures in the earlier years.
The capital redemption reserve can be utilised for issue of bonus shares.
(e) Securities Premium
Balance at beginning of year 43,416.56 28,902.22
Add: Receipt of Securities Premium from issue of Equity Shares to QIBs - 14,886.25
Less: Share issue Expenses - 371.91
Balance at end of year 43,416.56 43,416.56
Securities premium reserve represents the amount received in excess of the face value
of the equity shares. The utilisation of the securities premium reserve is governed by the
Section 52 of the Companies Act, 2013. Share issue expenses includes fees of Statutory
Auditors of ` 15.00 Lakhs in the previous year for work related to Qualified Institutions
Placement.
18. PROVISIONS
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
Non-current
Provision for Employee Benefit Obligations
Provision for Leave Benefits (Refer Note 37 (B)) 1,072.90 783.50
Total-Non-Current 1,072.90 783.50
Current
Provision for Employee Benefit Obligations
Provision for Leave Benefits (Refer Note 37 (B)) 326.35 298.04
Provision for Gratuity (Refer Note 37 (A)(iii)) 379.93 2.76
Total-Current 706.28 300.80
(i) Working Capital borrowings from banks represent Cash Credit, Working Capital Demand Loan, Export Packing Credit with rate of
interest as MCLR of respective banks plus spread ranging from 0% -1.25% p.a., Packing Credit in Foreign Currency, Buyers’ Credit
against Letter of Undertaking with rate of interest ranging from LIBOR/EURIBOR plus spread ranging from 0.30% p.a. to 1.50% p.a.
These borrowings are repayable on demand.
(ii) Working Capital borrowings are secured by way of first Hypothecation charge over Company’s Raw Materials, Semi-Finished
and Finished Goods, Consumable Stores and Book Debts and second charge on all Property, Plant & Equipment by way of
hypothecation and mortgage.
(iii) Commercial Paper placed by the Company during the year are unsecured and carries interest rate ranging from 7.20% p.a. to
8.60% p.a., tenure of each placement ranging from 55 days to 90 days.
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
(p) Bad Debts written off 1,036.61 9.57
(q) Vehicle Expenses 353.21 299.89
(r) Legal & Professional Expenses 1,012.16 947.53
(s) General Expenses 2,782.06 2,181.29
(t) Payment to Auditor 59.11 57.29
(u) Director's Sitting Fees 15.45 18.00
(v) Provision for Inventory Obsolescence 574.67 3.73
(w) Foreign Exchange Loss 607.96 -
21,057.53 15,638.19
(iii) Entities over which Key Managerial Personnel or their Relatives are able to Exercise Significant Influence
Check Point Credits & Capital Private Limited * Deepak Cybit Private Limited * Deepak Fertilizers and Petrochemicals
Corporation Limited *Deepak Gulf LLC, Sultanate of Oman* Deepak Foundation * Deepak International Limited * Deepak
Medical Foundation * Deepak Research and Development Foundation * Deepak Novochem Technologies Limited. * Forex
Leafin Private Limited * Hardik Leafin Private Limited * Pranawa Leafin Private Limited * Skyrose Finvest Private Limited *
Sofotel Infra Private Limited * Stepup Credits & Capital Private Limited * Stiffen Credits and Capital Private Limited * Stigma
Credit & Capital Private Limited * Storewell Credits and Capital Private Limited* Sundown Finvest Private Limited
168
` in Lakhs
March 31, 2019 March 31, 2018
Sr. Nature of Transaction Subsidiary Key Entities over Relative TOTAL Subsidiary Key Entities over Relative TOTAL
No. Companies Management which key of Key Companies Management which key of Key
Personnel managerial Management Personnel managerial Management
personnel or Personnel personnel or Personnel
their relatives their relatives
are able to are able to
exercise exercise
significant significant
Influence Influence
financial statements
169
35. Contingent Liabilities and Commitments (to the extent not provided for)
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
I.
Claims against the Company not acknowledged as debts in respect of
(a) Matters relating to Income Tax from AY 2012-13 is being contested at various levels 58.64 98.60
of Tax authorities.
(b) Matters relating to Sales Tax/VAT from AY 2005-06 to FY 2013-14 is being contested at 158.97 86.41
various level of Indirect Tax authorities.
(c) Matters relating to Excise duty from FY 1998-99 to FY 2016-17 is being contested at 292.20 479.33
various level of Indirect Tax authorities.
(d) Bank Guarantees:
Financial 1,702.90 1,479.06
Performance 1,593.73 2,717.92
(e) Disputed Labour Matters Amount Not Amount Not
ascertainable ascertainable
Management is not expecting any future cash outflow in respect of (a) to (c) & (e)
Total (I) 3,806.44 4,861.32
II. Commitments
Capital Commitments (Net of Advances) 2,349.72 1,335.18
Total (II) 2,349.72 1,335.18
B. The reconciliation between the provision of income tax and amounts computed by applying the Indian statutory
income tax rate to profit before taxes is as follows
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
Profit before taxes 21,249.97 12,208.42
Enacted income tax rate in India 34.94% 34.61%
Computed expected tax expense 7,425.57 4,225.09
Effect of
Weighted deduction for R&D Expenditure (172.56) (155.66)
Income taxed at higher/ (lower) rates - (21.48)
Others (Net) 192.75 103.48
Excess provision of earlier years - (288.51)
Total income tax expense 7,445.76 3,862.92
(ii) Reconciliation of Opening and Closing Balances of Fair Value of Plan Assets
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
Balance at the beginning of the year 1,824.23 1,673.13
Interest Income 143.01 122.91
Return on Plan Assets (32.62) 8.21
Contribution by the Company 155.06 131.26
Benefits Paid (150.37) (111.28)
Balance at the end of the year 1,939.30 1,824.23
Actual Return on Plan Assets 7.54% to 7.88% 7.12% to 7.88%
GOI Securities - - - -
Public Securities - - - -
State Government Securities - - - -
Insurance Policies 1,939.30 100.00 1,824.23 100.00
Others - - - -
Risk exposure
The Company is exposed to a number of risks, the most significant of which are detailed below:
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability
requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on
the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members.
As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined
by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this
rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government
securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of
Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not
have any longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a
default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory
guidelines.
The Interest Coverage Ratio for the reporting period was as follows
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
EBITDA (excluding other income) 30,562.84 20,283.77
Interest 4,284.57 4,034.00
Interest Coverage Ratio 7.13 5.03
The Carrying Value of Financial Instruments by Categories as of March 31, 2018 is as follows
` in Lakhs
Fair Value through Fair Value Amortised Cost
Other Comprehensive through Profit
Income or Loss
Financial Assets
Cash and Cash Equivalents - - 118.65
Other Balances with Banks - - 3,092.36
Quoted Investments (Level 1) - 2,150.34 -
Unquoted Investments (Level 3) 224.27 0.67 43,147.68
Government Securities - - 0.01
Trade Receivables - - 36,921.13
Loans - - 255.70
Other Financial Assets - - 7,639.97
Total 224.27 2,151.01 91,175.50
Financial Liabilities
Current Borrowings - - 26,406.01
Non-Current Borrowings (including current maturities) - - 19,747.45
Trade Payables - - 31,404.46
Other Financial Liabilities - 14.02 542.88
Total - 14.02 78,100.80
Market risk - interest rate risk Change in market interest rates Maintaining a combination of fixed and floating rate Note 39.4.2
debt; interest rate swaps for long-term borrowings;
cash management policies
Credit risk Ability of customers or counterparties to Credit approval and monitoring practices; Note 39.5.
financial instruments to meet contractual counterparty credit policies and limits; arrangements
obligations. with financial institutions
Liquidity risk Fluctuations in cash flows Preparing and monitoring forecasts of cash flows; Note 39.6.
cash management policies; multiple-year credit and
banking facilities
The Company has a forex policy in place whose objective is to mitigate foreign exchange risk by deploying the appropriate hedging
strategies through combination of various hedging instruments such as foreign currency forward contracts, options contracts and
has a dedicated forex desk to monitor the currency movement and respond swiftly to market situations. The Company follows
netting principle for managing the foreign exchange exposure.
(a) The carrying amounts of the Company’s foreign currency denominated monetary assets and liabilities based on
gross exposure at the end of the reporting period is as under:
Currency Liabilities Assets
As at As at As at As at
March 31, 2019 March 31, 2018 March 31, 2019 March 31, 2018
USD (Lakhs) 212.66 319.66 101.70 280.66
` (Lakhs) 14,709.65 20,609.06 7,034.72 18,162.49
GBP (Lakhs) - 1.29 - -
` (Lakhs) - 110.71 - -
JPY (Lakhs) - 7.09 - -
` (Lakhs) - 4.35 - -
EURO (Lakhs) 15.10 17.30 13.99 11.14
` (Lakhs) 1,173.30 1,388.19 1,087.05 893.45
The foreign currency risk on above exposure is mitigated by derivative contracts. The outstanding contracts as at the Balance
Sheet date are as follows
(b) Foreign currency forward, option contracts and interest rate swaps outstanding as at the Balance Sheet date
As at As at
March 31, 2019 March 31, 2018
Buy Sell Buy Sell
Forward Contracts (USD Lakhs) - - - 60.00
Forward Contracts (EURO Lakhs) 7.50 - - -
Option Contracts (USD Lakhs) - - - 35.00
Interest rate Swaps ECB (USD Lakhs) - - - 36.00
The forward and option contracts have been entered into to hedge the foreign currency risk on trade receivables and trade
payables. The swap contracts have been entered into to hedge the interest rate risks on the external commercial borrowings
of the Company.
The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on the
provision matrix. The expected credit loss allowance is based on the ageing of the days the receivables are due and the rates as
given in the provision matrix. The provision matrix at the end of the reporting period is as follows:
Ageing
Expected Credit Loss (%)
Within the Credit period 0.42%
91 to <=180 days 48.15%
>180 days 100.00%
Age of receivables
As at As at
March 31, 2019 March 31, 2018
Within the Credit period 34,488.05 32,619.02
91 to <=180 days 193.70 2,008.27
>180 days 441.26 2,888.40
The table below provides details regarding the contractual maturities of financial (liabilities)/assets including estimated interest
payments as at March 31, 2019
` in Lakhs
Amount Upto 1 year 1-3 year More than Total Cash
3 year Flows
Trade Payables (32,485.41) (32,485.41) (32,485.41)
Borrowings (32,761.08) (24,601.91) (7,159.17) (1,000.00) (32,761.08)
Other Financial Liabilities (6,633.27) (6,633.27) (6,633.27)
Foreign Currency Forward Contracts, option (8.98) (8.98) (8.98)
contracts and interest swaps
Trade Receivables (Gross) 35,123.01 35,123.01 - - 35,123.01
The table below provides details of financial assets as at March 31, 2019
` in Lakhs
Carrying Amount
Loans 212.42
Other financial assets 670.67
Total 883.09
The table below provides details of financial assets as at March 31, 2018
` in Lakhs
Carrying Amount
Loans 255.70
Other financial assets 7,639.97
Total 7,895.67
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
IV) Segment Assets
(a) Basic Chemicals 45,853.23 41,046.49
(b) Fine & Speciality Chemicals 37,964.85 43,321.63
(c) Performance Products 37,964.49 36,668.46
(d) Un- allocable 60,990.66 59,013.31
TOTAL 1,82,773.23 1,80,049.89
V) Segment Liabilities
(a) Basic Chemicals 16,863.03 17,587.81
(b) Fine & Speciality Chemicals 8,289.43 7,932.09
(c) Performance Products 6,419.66 6,538.65
(d) Un- allocable 45,416.56 53,606.85
TOTAL 76,988.68 85,665.40
VI) Capital Expenditure
(a) Basic Chemicals 3,380.79 1,125.52
(b) Fine & Speciality Chemicals 3,388.96 2,940.25
(c) Performance Products 661.40 1,251.27
(d) Un- allocable 443.23 286.62
TOTAL 7,874.38 5,603.66
VII) Depreciation
(a) Basic Chemicals 1,914.22 1,638.38
(b) Fine & Speciality Chemicals 1,337.44 1,403.54
(c) Performance Products 1,602.97 1,720.26
(d) Un- allocable 433.19 432.74
TOTAL 5,287.82 5,194.92
` in Lakhs
Carrying Amount of Segment Assets For the year For the year
March 31, 2019 March 31, 2018
In India 1,74,456.40 1,60,718.66
Outside India 8,316.83 19,331.23
Total 1,82,773.23 1,80,049.89
As at As at
March 31, 2019 March 31, 2018
Basic and Diluted Earnings per Share
Number of Shares at the beginning (Nos. in Lakhs) 1,363.93 1,307.11
Number of Shares at the end (Nos. in Lakhs) 1,363.93 1,363.93
Weighted Average Number of Shares considered for Basic Earnings Per Share 1,363.93 1,316.45
(Nos. in Lakhs)
Weighted Average Number of Shares considered for Diluted Earnings Per Share 1,363.93 1,316.45
(Nos. in Lakhs)
Net Profit after Tax available for Equity Shareholders (` in Lakhs) 13,804.21 8,345.50
Basic Earnings (in Rupees) Per Share of ` 2/- each 10.12 6.34
Diluted Earnings (in Rupees) Per Share of ` 2/- each. 10.12 6.34
43. Disclosures under Micro, Small and Medium Enterprise Development Act, 2006
To the extent, the company has received intimation from the “suppliers” regarding their status under the Micro, Small and Medium
Enterprises Development Act, 2006, the details are provided as under
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
(i) Principal amount remaining unpaid 775.13 104.43
(ii) Interest due thereon remaining unpaid
(iii) Interest paid by the Company in terms of Section 16 of the Micro, Small and - 0.07
Medium Enterprises Development Act, 2006, along with the amount of the
payment made to the supplier beyond the appointed day during the year.
(iv) Interest due and payable for the period of delay in making payment (which have - -
been paid but beyond the appointed day during the year) but without adding the
interest specified under the Micro, Small and Medium Enterprises Development
Act, 2006
(v) Interest accrued and remaining unpaid (net of tax deducted at source) - -
(vi) Interest remaining due and payable even in the succeeding years, until such date - -
when the interest dues as above are actually paid to the small enterprise.
44. During FY 2018-19, the Company has spent ` 250.00 Lakhs on Corporate Social Responsibility activities, against the requirement of
` 213.00 Lakhs, being 2% of average of the net profits for the preceding three years.
45. The Income Tax Department has conducted search operations during the year at the premises of the Company. The Company believes
that the search operations will not have any material adverse impact on its performance.
46. Events occurring after the balance sheet date: The Board of Directors has recommended, subject to the approval of shareholders,
dividend of ` 2/- (Rupees Two only) per equity share of face value of ` 2/- (Rupees Two only) each for the year ended March 31, 2019 on
13,63,93,041 equity shares amounting to ` 3,288.58 Lakhs (including tax on dividend of ` 560.72 Lakhs)
47. The Financial Statements were approved for issue by the Board of Directors on May 03, 2019.
For and on behalf of the Board
1 Name of the subsidiary Deepak Phenolics Limited Deepak Nitrite Corporation, Inc.
2 Reporting period for the subsidiary concerned, if different 2018-19 2018-19
from the holding company’s reporting period
3 Reporting currency and Exchange rate as on the last ` US$
date of the relevant Financial year in the case of foreign 1 US$ = ` 69.17
subsidiaries.
4 Share Capital (` in Lakhs) 56,000.00 47.68
5 Reserves & Surplus (` in Lakhs) 1,831.82 30.47
6 Total Assets (` in Lakhs) 1,66,784.95 82.81
7 Total Liabilities (` in Lakhs) 1,08,953.13 3.53
8 Investments (` in Lakhs) - -
9 Turnover (` in Lakhs) 91,350.22 125.28
10 Profit before Tax (` in Lakhs) 5,572.88 4.76
11 Provision for Tax (` in Lakhs) 1,984.58 1.35
12 Profit after Tax (` in Lakhs) 3,588.30 3.41
13 Total Comprehensive Income (` in Lakhs) 3,570.95 3.41
14 Proposed Dividend (` in Lakhs) - -
15 % of Shareholding 100% 100%
Information Other than the Financial Statements and Auditor’s Report Thereon
• The Parent’s Board of Directors is responsible for the other information. The other information comprises the information included
in the Management Discussion and Analysis report, but does not include the consolidated financial statements, standalone financial
statements and our auditor’s report thereon.
• Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of assurance
conclusion thereon.
• In connection with our audit of the consolidated financial statements, our responsibility is to read the other information, compare with
the financial statements of the subsidiaries, to the extent it relates to these entities and, in doing so, place reliance on the work of the
other auditors and consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained during the course of our audit or otherwise appears to be materially misstated. Other information so far as it relates
to the subsidiaries, is traced from their financial statements audited by the other auditors.
• We have nothing to report in this regard.
Other Matters
We did not audit the financial statements of two subsidiaries, whose financial statements reflect total assets of Rs. 166,856.40 lacs as at
31st March, 2019, total revenues of Rs. 92,811.36 lacs and net cash outflows amounting to Rs. 813.41 lacs for the year ended on that date, as
considered in the consolidated financial statements. These financial statements have been audited by other auditors whose reports have
been furnished to us by the Management and our opinion on the consolidated financial statements, in so far as it relates to the amounts and
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) of Sub-section 3 of Section 143 of the
Companies Act, 2013 (“the Act”)
In conjunction with our audit of the consolidated Ind AS financial statements of the Company as of and for the year ended March 31, 2019, we have audited the
internal financial controls over financial reporting of Deepak Nitrite Limited (hereinafter referred to as “Parent”) and its subsidiary company which is company
incorporated in India, as of that date.
Management’s Responsibility for Internal Financial Controls
The respective Board of Directors of the Parent and its subsidiary company, which is company incorporated in India, are responsible for establishing and
maintaining internal financial controls based on the internal control over financial reporting criteria established by the respective Companies considering the
essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute
of Chartered Accountants of India (ICAI). These responsibilities include the design, implementation and maintenance of adequate internal financial controls
that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to the respective company’s policies, the
safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely
preparation of reliable financial information, as required under the Companies Act, 2013.
Auditor’s Responsibility
Our responsibility is to express an opinion on the internal financial controls over financial reporting of the Parent and its subsidiary company, which is company
incorporated in India, based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial
Reporting (the “Guidance Note”) issued by the Institute of Chartered Accountants of India and the Standards on Auditing, prescribed under Section 143(10) of
the Companies Act, 2013, to the extent applicable to an audit of internal financial controls. Those Standards and the Guidance Note require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial
reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and
their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained and the audit evidence obtained by the other auditors of the subsidiary company, which is company
incorporated in India, in terms of their reports referred to in the Other Matters paragraph below, is sufficient and appropriate to provide a basis for our audit
opinion on the internal financial controls system over financial reporting of the Parent and its subsidiary company, which is company incorporated in India.
Meaning of Internal Financial Controls Over Financial Reporting
A company’s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance
regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management
override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial
controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion to the best of our information and according to the explanations given to us and based on the consideration of the report of the other auditor
referred to in the Other Matters paragraph below, the Parent and its subsidiary company, which is company incorporated in India, have, in all material respects,
an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as
at March 31, 2019, based on the criteria for internal financial control over financial reporting established by the respective companies considering the essential
components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered
Accountants of India.
Other Matter
Our aforesaid report under Section 143(3)(i) of the Act on the adequacy and operating effectiveness of the internal financial controls over financial reporting
insofar as it relates to one subsidiary company, which is company incorporated in India, is based solely on the corresponding report of the auditor of such
company incorporated in India.
Our opinion is not modified in respect of the above matter.
For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm’s Registration No. 117366W/W-100018)
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
` in Lakhs
2018-19 2017-18
(A) CASH FLOW FROM OPERATING ACTIVITIES
Profit for the year 17,366.13 7,901.57
Add: Income Tax Expense recognised in the consolidated statement of Profit and Loss 9,431.68 3,183.60
Profit Before Tax 26,797.81 11,085.17
Non-cash adjustment to reconcile Profit Before Tax to net Cash Flows
1. Depreciation / Amortisation 7,779.27 5,275.97
2. Loss on Sale of Fixed Assets 428.46 547.34
3. Provision for Doubtful Debts 73.28 314.57
4. Gain on redemption of investment (46.96) (395.37)
5. Interest expenses 8,324.54 4,514.74
6. Interest Income (147.77) (155.88)
7. Dividend Income (0.01) (0.01)
8. Fair Value Gains (0.37) (9.64)
9. Amortisation Expense 1.05
Operating Profit Before Change in Operating Assets and Liabilities 43,208.25 21,177.94
Movements in Working Capital :
1. (Increase)/Decrease in Inventories (8,517.08) (15,825.23)
2. (Increase)/Decrease in Trade Receivables (16,185.75) (5,304.06)
3. (Increase)/Decrease in Non Current Loans (4.50) 4.93
4. (Increase)/Decrease in Other Financial Assets 212.80 508.13
5. (Increase)/Decrease in Other Assets 1,025.19 (7,982.04)
6. Increase/(Decrease) in Trade Payables 1,277.14 26,612.13
7. Increase/(Decrease) in Other financial liabilities (9,429.86) (6.28)
8. Increase/(Decrease) in Other liabilities 77.25 1,834.03
9. Increase/(Decrease) in Provisions 315.18 66.29
Cash Generated from Operations 11,978.62 21,085.84
Less: Income Tax paid (net of refund) 5,609.28 2,785.90
Net Cash Inflow from Operating Activities (A) 6,369.34 18,299.94
(B) CASH FLOW FROM INVESTING ACTIVITIES
1. Purchase of Property, Plant & Equipment, including Capital Work in Progress, (24,273.80) (62,174.28)
Capital Advances & Payable for Capital Expenditure
2. Purchase of Intangible Assets (1,279.20) (53.95)
3. Proceeds from Sale of Property, Plant & Equipment 169.90 111.96
4. Insurance claims received 1,782.71 750.00
5. Proceeds from Redemption of Investment - 527.96
6. Purchase of Current Investments (10,777.79) (29,664.77)
7. Proceeds from sale/maturity of Current Investments 13,765.30 38,194.47
8. Deposit with bank 1,807.37 (3,026.22)
9. Interest received 157.04 155.44
10. Dividend received 0.01 0.01
11. Increase/(Decrease) in Liabilities related to Capital Assets 2,393.34 2,706.62
Net Cash Outflow from Investing Activities (B) (16,255.12) (52,472.77)
` in Lakhs
2018-19 2017-18
(C) CASH FLOW FROM FINANCING ACTIVITIES
1. Proceeds from issue of Equity Shares including Securities Premium - 14,627.98
2. Proceeds from Non-Current Borrowings 38,077.28 47,575.75
3. Repayment of Non-Current Borrowings (10,451.59) (16,812.08)
4. Net Proceeds from Current Borrowings (7,641.92) (4,336.32)
5. Proceeds/(repayment) from/of Short-Term Borrowings - (169.10)
6. Interest paid (8,412.87) (4,496.72)
7. Dividend paid on Equity Shares (1,764.15) (1,560.31)
8. Tax on Equity Dividend paid (364.47) (319.32)
9. Margin Money Deposit (203.12) 21.58
Net Cash Outflow from Financing Activities (C) 9,239.16 34,531.46
Net Increase/(Decrease) in Cash and Cash Equivalents (A+B+C) (646.62) 358.64
Cash and Cash Equivalents at the Beginning of the Financial Year 942.66 584.02
Cash and Cash Equivalents at the end of the Financial Year 296.04 942.66
Reconciliation of Cash and Cash Equivalents
Balances with Banks:
In Current Accounts 135.22 929.74
In EEFC Accounts 151.02 11.45
Cash on Hand 9.80 1.47
Total Cash and Cash Equivalents as per Note 12 A 296.04 942.66
The Cash Flow Statement has been prepared under the ‘Indirect Method’ set out in Ind AS 7 ‘Cash Flow Statement’.
The accompanying Notes form an integral part of the Consolidated Financial Statements.
As per our report of even date For and on behalf of the Board
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
As per our report of even date For and on behalf of the Board
For DELOITTE HASKINS & SELLS LLP D.C. MEHTA UMESH ASAIKAR SUDHIN CHOKSEY
Chartered Accountants Chairman & Managing Director Executive Director & CEO Director
DIN: 00028377 DIN: 06595059 DIN: 00036085
Kartikeya Raval SANJAY UPADHYAY ARVIND BAJPAI SUDHIR MANKAD
Partner Director-Finance & CFO Company Secretary Director
DIN: 01776546 Membership No: F6713 DIN: 00086077
SANDESH ANAND
Director
DIN: 00001792
Ahmedabad: May 03, 2019 Vadodara: May 03, 2019
Company overview
Deepak Nitrite Limited (‘DNL’ or ‘the Company’) is a prominent chemical manufacturing public limited company incorporated and domiciled
in India. Its registered office is located at Aaditya-I Chhani Road, Vadodara- 390 024, Gujarat, India and its manufacturing facilities are located
in the states of Gujarat, Maharashtra and Telangana.
The Company with its two subsidiaries namely Deepak Phenolics Limited and Deepak Nitrite Corporation Inc. are referred to as the Group
here under.
The Group manufactures Basic Chemicals, Fine & Speciality Chemicals, Performance Products and Phenolics.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.
Based on the nature of business and its activities, the Group has ascertained its operating cycle as twelve months for the purpose
of Current & Non-Current classification of assets and liabilities.
Interest Income
Interest income from Financial Assets is recognised when it is probable that the economic benefits will flow to the Group and the
amount of income is measured reliably. Interest income is accrued on time basis, by reference to the principle outstanding and
using the effective interest rate method. The effective interest rate is the rate that exactly discounts estimated future cash receipts
through the expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the effective
interest rate, the Group estimates the expected cash flows by considering all the contractual terms of the financial instrument (for
example, prepayment, extension, call and similar options) but does not consider the expected credit losses.
Eligible export incentives are recognised in the year in which the conditions precedent is met and there is no significant
uncertainty about the collectability.
Revenue in respect of other income is recognised to the extent that the Group is reasonably certain of its ultimate realisation.
(d) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases.
The Group as a lessor
Rental income from operating leases is generally recognised on a straight line basis over the term of the relevant lease.
The Group as a lessee
Assets acquired under finance leases are initially recognised at fair value or present value of Minimum Lease Payments at the
inception of the lease, whichever is lower. Lease payments under operating leases are recognised as an expense on a straight line
basis in net profit in the Statement of Profit and Loss over the lease term.
Minimum Alternate Tax (‘MAT’) under the provisions of the Income Tax Act, 1961 is recognised as deferred tax in the Consolidated
Statement of Profit and Loss. The credit available under the Act in respect of MAT paid will be recognised as an asset only when and
to the extent there is convincing evidence that the Group will pay normal income tax during the period for which the MAT credit can
be carried forward for set off against the normal tax liability. Such an asset is reviewed at each Consolidated Balance Sheet date.
Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the Consolidated
Financial Statements and the corresponding tax bases used in the computation of taxable profits.
However, deferred tax liabilities are not recognised if they arise from the initial recognition of Goodwill. Deferred tax is also not
accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting profit nor taxable profit /(tax loss).
Deferred tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the Balance Sheet date
and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised for all deductible temporary differences and unused tax losses only if it is probable that future
taxable amounts will be available to utilise those temporary differences and losses.
Deferred tax assets and liabilities are classified as non-current assets and liabilities. Deferred tax assets and liabilities are offset
when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the
same taxation authority.
Dividend distribution tax arising out of payment of dividends to shareholders under the Income Tax Act, 1961 regulation are
recognised in Consolidated Statement of Changes in Equity as part of associated dividend payment.
Subsequent costs are included in the carrying amount of asset or recognised as a separate asset, as appropriate, only when it is
probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured
reliably. All other repairs and maintenance expenses are charged to the Consolidated Statement of Profit and Loss during the
period in which they are incurred.
Spare parts, stand-by equipment and servicing equipment are recognised as property, plant and equipment if they are held for use
in the production or supply of goods or services and are expected to be used during more than one period.
Property, plant and equipment which are not ready for intended use as on the date of Consolidated Balance Sheet are disclosed
as ‘Capital work-in-progress’.
Depreciation Methods, Estimated Useful Lives and Residual Value
Depreciation on all tangible assets is provided at the rates and in the manner prescribed by Schedule II to the Companies Act,
2013 and certain components of plant & equipment such as Reactors, Centrifuge, Cooling towers, Air Compressor etc. which are
(n) Inventories
Raw materials and components, stores and spares are valued at cost determined on period-moving weighted average basis and
are net of Cenvat, VAT & GST. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the
inventory to the present location and condition. Due allowances are made for slow moving and obsolete inventories based on
estimates made by the Group. Items such as spare parts, stand-by equipment and servicing equipment which is not plant and
equipment gets classified as inventory.
Finished Goods and Stock-in-process are valued at cost of purchase of raw materials and conversion thereof, including the cost
incurred in the normal course of business in bringing the inventories up to the present condition or at the net realisable value,
whichever is lower. The inventories of joint products are valued by allocating the costs to the joint products by ‘Relative Sales
Value’ method. By-products are valued at net realisable price.
If the Group measured loss allowance for a financial instrument at life-time expected credit loss model in the previous period,
but determines at the end of a reporting period that the credit risk has not increased significantly since initial recognition due
to improvement in credit quality as compared to the previous period, the Group can again measure the loss allowance based
on 12-month expected credit losses.
When making the assessment of whether there has been a significant increase in credit risk since initial recognition, the
Group uses the change in the risk of a default occurring over the expected life of the financial instrument instead of the
change in the amount of expected credit losses. To make that assessment, the Group compares the risk of a default occurring
on the financial instrument as at the reporting date with the risk of a default occurring on the financial instrument as at the
date of initial recognition and considers reasonable and supportable information, that is available without cost or effort that
is indicative of significant increases in credit risk since initial recognition.
Further, for the purpose of measuring lifetime expected credit loss allowance for trade receivables, the Group has used a
practical expedient as permitted under Ind AS 109. This expected credit loss allowance is computed based on a provision
matrix which takes into account historical credit loss experience and adjusted for forward-looking information.
The impairment requirements for the recognition and measurement of a loss allowance are equally applied to debt
instruments at FVTOCI except that the loss allowance is recognised in other comprehensive income and is not reduced from
the carrying amount in the Consolidated Balance Sheet.
On derecognition of a financial asset in its entirety, the difference between the asset’s carrying amount and the sum of the
consideration received and receivable and the cumulative gain or loss that had been recognised in other comprehensive
income and accumulated in equity is recognised in Consolidated Statement of Profit and Loss if such gain or loss would have
otherwise been recognised in Consolidated Statement of Profit and Loss on disposal of that financial asset.
On derecognition of a financial asset other than in its entirety, the Group allocates the previous carrying amount of the
financial asset between the part it continues to recognise under continuing involvement, and the part it no longer recognises
on the basis of the relative fair values of those parts on the date of the transfer. The difference between the carrying amount
allocated to the part that is no longer recognised and the sum of the consideration received for the part no longer recognised
and any cumulative gain or loss allocated to it that had been recognised in other comprehensive income is recognised
in Consolidated Statement of Profit and Loss if such gain or loss would have otherwise been recognised in Consolidated
Statement of Profit and Loss on disposal of that financial asset.
A cumulative gain or loss that had been recognised in other comprehensive income is allocated between the part it continues
to be recognised and the part that is no longer recognised on the basis of the relative fair values of those parts.
A financial liability other than a financial liability held for trading may be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise
arise;
• the financial liability forms part of a group of financial assets or financial liabilities or both, which is managed and
its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management or
investment strategy, and information about the grouping is provided internally on that basis; or
• it forms part of a contract containing one or more embedded derivatives, and Ind AS 109 permits the entire combined
contract to be designated as at FVTPL in accordance with Ind AS 109.
Financial liabilities at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in
Consolidated Statement of Profit and Loss. The net gain or loss recognised in Consolidated Statement of Profit and Loss
incorporates any interest paid on the financial liability and is included in the ‘Other income’ or ‘Other Expenses’ line item.
However, for non-held-for-trading financial liabilities that are designated as at FVTPL, the amount of change in the
fair value of the financial liability that is attributable to changes in the credit risk of that liability is recognised in other
comprehensive income, unless the recognition of the effects of changes in the liability’s credit risk in other comprehensive
income would create or enlarge an accounting mismatch in Consolidated Statement of Profit and Loss, in which case
these effects of changes in credit risk are recognised in Consolidated Statement of Profit and Loss. The remaining amount
of change in the fair value of liability is always recognised in Consolidated Statement of Profit and Loss. Changes in fair
value attributable to a financial liability’s credit risk that are recognised in other comprehensive income are reflected
immediately in retained earnings and are not subsequently reclassified to Consolidated Statement of Profit and Loss.
209
4. Non-Current Investments
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Investments in equity instruments of other companies measured at FVTPL 7.30 10.71
(b) Investments in equity instruments of other companies measured at FVOCI 232.11 224.27
(c) Investments in Government or Trust Securities measured at amortised cost 0.01 0.01
Total 239.42 234.99
` in Lakhs
As at March 31, 2019 As at March 31, 2018
Face Value No. of Amount No. of Amount
Shares Shares
(a) Investment in Equity Instruments (fully paid-up)
(i) Other Companies measured at FVTPL
Quoted
IDBI Bank ` 10/- 6,240 2.91 6,240 4.51
Dena Bank (Refer Note 1 below) ` 10/- 29,400 3.72 29,400 5.53
Unquoted
Nandesari Environment Control Limited ` 10/- 800 0.08 800 0.08
Baroda Co-operative Bank Ltd. ` 50/- 10 0.01 10 0.01
Shamrao Vitthal Co-op Bank Ltd. ` 25/- 2,000 0.50 2,000 0.50
New India Co-op Bank Ltd. ` 10/- 798 0.08 798 0.08
(ii) Other Companies measured at FVOCI
Unquoted
Jedimetla Effluent Treatment Ltd. ` 100/- 52,342 84.56 52,342 80.08
Deepak International Limited GBP 1/- 73,706 66.72 73,706 68.01
Deepak Gulf LLC Omani 45,000 80.83 45,000 76.18
Riyal 1/-
(b) Investments in Government or Trust Securities measured at
amortised cost
National Savings Certificate - 0.01 - 0.01
Total 2,10,296 239.42 2,10,296 234.99
Note:
1. The Group has received 3,234 shares of Bank of Baroda in the scheme of amalgamation against 29,400 shares of the Dena Bank in
the month of April 2019.
2. ` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Aggregate amount of Unquoted Investments 232.79 224.95
(b) Aggregate amount of Quoted Investments 6.63 10.04
5. LOANS
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
Loans to Employees
Unsecured, considered good
(a) Key Managerial Personnel and Directors 0.27 0.89
(b) Others 135.24 130.12
Total 135.51 131.01
Security Deposits from related parties for the previous year include Deposit towards lease of residential premises of ` 400.00 Lakhs
accounted at Fair Value using appropriate discount rate.
12b. BANK BALANCES OTHER THAN CASH AND CASH EQUIVALENTS ABOVE
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Earmarked Balances with Bank 72.26 64.33
(b) Deposits with banks with maturity less than 3 months - 3,026.22
(c) Deposits with banks with maturity more than 3 months but less than 12 months 2,003.76 -
(Refer Note below)
(d) Margin Money Deposits
- Maturity less than 3 months 204.93 707.43
- Maturity more than 3 months but less than 12 months - 79.30
Total 2,280.95 3,877.28
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
(a) Retained Earnings
Balance at beginning of year 38,061.12 32,475.72
Add: Profit attributable to owners of the Company (Profit for the year) 17,077.11 7,973.25
Less: Payment of Dividend on Equity Shares 1,773.11 1,568.53
Less: Payment of Dividend distribution tax 364.47 319.32
Less: Transferred to General Reserve 500.00 500.00
Balance at end of year 52,500.65 38,061.12
Retained earnings represents the Company’s undistributed earnings after taxes.
(b) General Reserve
Balance at beginning of year 7,890.13 7,390.13
Add: Transferred from Surplus Balance in the Statement of Profit and Loss 500.00 500.00
Balance at end of year 8,390.13 7,890.13
The general reserve is used from time to time to transfer profits from retained earnings
for appropriation purposes as per Companies Act, 2013. As the general reserve is
created by transfer from one component of equity to another and is not an item of other
comprehensive income, items included in the general reserve will not be reclassified
subsequently to the statement of profit and loss.
(c) Capital Reserve
Balance at beginning of year 71.27 71.27
Balance at end of year 71.27 71.27
(d) Capital Redemption Reserve
Balance at beginning of year 15.00 15.00
Balance at end of year 15.00 15.00
Capital redemption reserve has been created pursuant to the requirements of the Act
under which the Company is required to transfer certain amounts on redemption of the
debentures. The Company has redeemed the underlying debentures in the earlier years.
The capital redemption reserve can be utilised for issue of bonus shares.
(e) Securities Premium
Balance at beginning of year 43,416.56 28,902.22
Add: Receipt of Securities Premium from issue of Equity Shares to QIBs - 14,886.25
Less: Share issue Expenses - 371.91
Balance at end of year 43,416.56 43,416.56
Securities premium reserve represents the amount received in excess of the face value
of the equity shares. The utilisation of the securities premium reserve is governed by the
Section 52 of the Companies Act, 2013. Share issue expenses includes fees of Statutory
Auditors of ` 15.00 Lakhs in the previous year for work related to Qualified Institutions
Placement.
(f) Reserve for equity instruments through other comprehensive income
Balance at beginning of year 31.88 18.04
Add: Gain on revaluation of Equity Instruments 5.11 13.84
Balance at end of year 36.99 31.88
This reserve represents the cumulative gains and losses arising on the revaluation of
equity instruments measured at fair value through other comprehensive income, net of
amounts reclassified to retained earnings when those assets have been disposed off.
18. PROVISIONS
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
Non-current
Provision for Employee Benefit Obligations
Provision for leave benefits (Refer Note 39 B) 1,144.23 793.73
Total-Non-Current 1,144.23 793.73
Current
Provision for Employee benefit obligations
Provision for leave benefits (Refer Note 39 B) 334.26 341.39
Provision for Gratuity (Refer Note 39 (A)(iii)) 427.83 12.43
Total-Current 762.09 353.82
(i) Working Capital borrowings from banks represent Cash Credit, Working Capital Demand Loan, Export Packing Credit with rate of
interest as MCLR of respective banks plus spread ranging from 0% - 1.30% p.a., Packing Credit in Foreign Currency, Buyers’ Credit
against Letter of Undertaking with rate of interest ranging from LIBOR/EURIBOR plus spread ranging from 0.20% p.a. to 1.50% p.a.
These borrowings are repayable on demand.
(ii) Working Capital borrowings are secured by way of first Hypothecation charge over Company’s Raw Materials, Semi-Finished
and Finished Goods, Consumable Stores and Book Debts and second charge on all Property, Plant & Equipment by way of
hypothecation and mortgage.
(iii) Commercial Paper placed by the Company during the year are unsecured and carries interest rate ranging from 7.20% p.a. to
8.60% p.a., tenure of each placement ranging from 55 days to 90 days.
(iv) Short term Borrowings from Related parties includes unsecured loan taken from related parties carrying interest rate of 10.50% p.a.
(v) Buyers Credit for capital goods against Letter of Undertaking carrying rate of interest ranging from 0.27% p.a. to 0.40 % p.a. availed
against sublimit of project loan of ` 84,000.00 Lakhs.
(iii) Entities over which Key Managerial Personnel or their Relatives are able to Exercise Significant Influence
Check Point Credits & Capital Private Limited * Deepak Cybit Private Limited * Deepak Fertilizers and Petrochemicals
Corporation Limited * Deepak Gulf LLC, Sultanate of Oman* Deepak Foundation * Deepak International Limited * Deepak
Medical Foundation * Deepak Research and Development Foundation * Deepak Novochem Technologies Limited. * Forex
Leafin Private Limited * Hardik Leafin Private Limited * Pranawa Leafin Private Limited * Skyrose Finvest Private Limited *
Sofotel Infra Private Limited * Stepup Credits & Capital Private Limited * Stiffen Credits and Capital Private Limited * Stigma
Credit & Capital Private Limited *Storewell Credits and Capital Private Limited * Sundown Finvest Private Limited
financial statements
223
` in Lakhs
224
March 31, 2019 March 31, 2018
Sr. Nature of Transaction Key Entities over Relative of Key TOTAL Key Entities over Relative of Key TOTAL
No. Management which key Management Management which key Management
Personnel managerial Personnel Personnel managerial Personnel
personnel or personnel or
their relatives their relatives
are able to are able to
exercise exercise
significant significant
Influence. Influence.
37. Contingent Liabilities and Commitments (to the extent not provided for)
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
I. Claims against the Company not acknowledged as debts in respect of:
(a) Matters relating to Income Tax from AY 2012-13 is being contested at various levels of Tax 58.64 98.60
authorities
(b) Matters relating to Sales Tax/VAT from AY 2005-06 to FY 2013-14 is being contested at 158.97 86.41
various level of Indirect Tax authorities.
(c) Matters relating to Excise duty from FY 1998-99 to FY 2016-17 is being contested at various 292.20 479.33
level of Indirect Tax authorities.
(d) Bank Guarantees:
- Financial 1,702.90 3,060.55
- Performance 1,593.73 2,717.92
(e) Disputed Labour Matters Amount Not Amount Not
ascertainable ascertainable
Management is not expecting any future cash outflow in respect of (a) to (c) & (e)
Total (I) 3,806.44 6,442.81
II. Commitments
Capital Commitments (Net of Advances) 3,422.65 16,239.18
Total (II) 3,422.65 16,239.18
B. The reconciliation between the provision of income tax and amounts computed by applying the Indian statutory
income tax rate to profit before taxes is as follows
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
Profit before taxes 26,797.81 11,085.17
Enacted income tax rate in India 34.94% 34.61%
Computed expected tax expense 9,364.23 3,836.36
Effect of
Weighted deduction for R&D Expenditure (172.56) (155.66)
Income taxed at higher/ (lower) rates - (21.48)
Others (Net) 240.01 (187.11)
Excess provision of earlier years - (288.51)
Total income tax expense 9,431.68 3,183.60
(ii) Reconciliation of Opening and Closing Balances of Fair Value of Plan Assets
` in Lakhs
As at As at
March 31, 2019 March 31, 2018
Balance at the beginning of the year 1,850.27 1,673.13
Interest Income 145.06 122.91
Return on Plan Assets (32.39) 9.25
Contribution by the Company 164.73 156.25
Benefits Paid (154.07) (111.27)
Balance at the end of the year 1,973.59 1,850.27
Actual Return on Plan Assets 7.54% to 7.88% 7.12% to 7.88%
GOI Securities - - - -
Public Securities - - - -
State Government Securities - - - -
Insurance Policies 1,973.59 100.00 1,850.27 100.00
Others - - - -
Risk exposure
The Group is exposed to a number of risks, the most significant of which are detailed below:
Interest rate risk: A fall in the discount rate which is linked to the G.Sec. Rate will increase the present value of the liability
requiring higher provision. A fall in the discount rate generally increases the mark to market value of the assets depending on
the duration of asset.
Salary Risk: The present value of the defined benefit plan liability is calculated by reference to the future salaries of members.
As such, an increase in the salary of the members more than assumed level will increase the plan’s liability.
Investment Risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined
by reference to market yields at the end of the reporting period on government bonds. If the return on plan asset is below this
rate, it will create a plan deficit. Currently, for the plan in India, it has a relatively balanced mix of investments in government
securities, and other debt instruments.
Asset Liability Matching Risk: The plan faces the ALM risk as to the matching cash flow. Since the plan is invested in lines of
Rule 101 of Income Tax Rules, 1962, this generally reduces ALM risk.
Mortality risk: Since the benefits under the plan is not payable for life time and payable till retirement age only, plan does not
have any longevity risk.
Concentration Risk: Plan is having a concentration risk as all the assets are invested with the insurance company and a
default will wipe out all the assets. Although probability of this is very less as insurance companies have to follow regulatory
guidelines.
The Interest Coverage Ratio for the reporting period was as follows
` in Lakhs
For the year For the year
March 31, 2019 March 31, 2018
EBITDA (excluding other income) 41,389.62 19,630.61
Interest 8,324.54 4,514.74
Interest Coverage Ratio 4.97 4.35
Comparative Market Multiples method has been used for estimating the fair value of such Investment. The fair valuation estimates
are based on historical annual accounts/annual reports and based on information collected from public domain. Information
pertaining to future expected performance of investee companies including projections about their profitability, balance sheet
status and cash flow expectations are not available.
Market risk - interest rate Change in market interest rates Maintaining a combination of fixed and floating Note 41.4.2
risk rate debt; interest rate swaps for long-term
borrowings; cash management policies
Credit risk Ability of customers or counterparties Credit approval and monitoring practices; Note 41.5.
to financial instruments to meet counterparty credit policies and limits;
contractual obligations. arrangements with financial institutions
Liquidity risk Fluctuations in cash flows Preparing and monitoring forecasts of cash flows; Note 41.6.
cash management policies; multiple-year credit
and banking facilities
41.4. Market Risk
The Group’s financial instruments are exposed to market rate changes. The Group is exposed to the following significant market risks:
• Foreign currency risk
• Interest rate risk
Market risk exposures are measured using sensitivity analysis. There has been no change to the Group’s exposure to market risks
or the manner in which these risks are being managed and measured.
(b) Foreign currency forward, option contracts and interest rate swaps outstanding as at the Balance Sheet date
As at As at
March 31, 2019 March 31, 2018
Buy Sell Buy Sell
Forward Contracts (USD Lakhs) - 3.00 110.72 60.00
Forward Contracts (EURO Lakhs) 7.50 - 6.39 -
Option Contracts (USD Lakhs) - - - 35.00
Interest rate Swaps ECB (USD Lakhs) - - - 36.00
The forward and option contracts have been entered into to hedge the foreign currency risk on trade receivables and trade
payables. The swap contracts have been entered into to hedge the interest rate risks on the external commercial borrowings
of the Company.
profit where the Rupee strengthens by ` 1 against the US Dollar. For a ` 1 weakening against the US Dollar, there would be a
comparable impact on the profit before tax.
` in Lakhs
Currency USD Impact on Profit or Loss As at As at
March 31, 2019 March 31, 2018
Impact of ` 1 strengthening against US Dollar 110.90 33.70
Impact of ` 1 weakening against US Dollar (110.90) (23.70)
The above sensitivity analysis does not include effect of Foreign Exchange (loss)/gain capitalised as the same does not affect
profit or loss or total equity.
41.4.2 Interest Rate Risk Management
The Group issues commercial papers, draws working capital demand loans, avails cash credit, foreign currency borrowings
including buyers credit, Packing Credit etc. for meeting its funding requirements.
Interest rates on these borrowings are exposed to change in respective benchmark rates. The Group manages the interest rate risk
by maintaining appropriate mix/portfolio of the borrowings.
(a) Interest rate swap contract
The Company had entered into the swap contracts to hedge the interest rate risks on the external commercial borrowings.
Using interest rate swap, Company agrees to exchange LIBOR floating interest rate to LIBOR fixed interest rate on agreed
notional principal amounts. Such contracts enable the company to mitigate the interest rate risk. Refer details of the principal
and interest rate swaps under Note 41.4.1(b).
(b) Interest rate sensitivity analysis
The sensitivity analysis in para below has been determined for borrowings assuming the amount of borrowings outstanding
at the end of the reporting period was outstanding for the whole year. A 10 basis points increase or decrease in case of foreign
currency borrowings and 25 basis points increase or decrease in case of rupee borrowings is used when reporting interest
rate risk internally to key management personnel and represents management’s assessment of the reasonably possible
change in interest rates.
If interest rate had been 10 basis points higher/ lower in case of foreign currency borrowings and 25 basis points higher/ lower
in case of rupee borrowings and all other variables were held constant, the Company’s profit for the year ended March 31,
2019 would decrease/ increase by ` 296.34 Lakhs (` 230.80 Lakhs)
41.5. Credit Risk management
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.
The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities,
including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
Customer credit risk is managed by each business unit subject to the Group’s established policy, procedures and control relating
to the customer credit risk management. The Group uses financial information and past experience to evaluate credit quality of
majority of its customers and individual credit limits are defined in accordance with this assessment through third party experts.
Outstanding receivables and the credit worthiness of its counterparties are periodically monitored and taken upon case to case
basis. The Group evaluates the concentration of risk with respect to trade receivables as low, as its customers are located in several
jurisdictions representing large number of minor receivables operating in independent markets.
The credit risk on cash and bank balances, derivative financial instruments is limited because the counterparties are banks with
high credit ratings assigned by international credit rating agencies.
Historical experience of collecting receivables of the Company is supported by low level of past default and hence the credit risk is
perceived to be low.
Age of receivables
As at As at
March 31, 2019 March 31, 2018
Within the Credit period 57,492.52 37,806.37
91 to <=180 days 241.32 2,008.27
>180 days 481.56 2,940.75
The table below provides details of financial assets as at March 31, 2019
` in Lakhs
Carrying Amount
Loans 212.42
Other financial assets 789.42
Total 1,001.84
The table below provides details regarding the contractual maturities of financial (liabilities)/assets including estimated interest
payments as at March 31 2018
` in Lakhs
Amount Upto 1 year 1-3 year More than Total Cash
3 year Flows
Trade payable (48,995.97) (48,995.97) - - (48,995.97)
Borrowings (98,654.39) (43,608.59) (12,655.86) (42,389.94) (98,654.39)
Other Financial Liabilities (11,069.47) (11,069.47) - - (11,069.47)
Foreign Currency Forward Contracts, option contracts (14.02) (14.02) - - (14.02)
and interest swaps
Trade Receivables (Gross) 41,822.91 41,822.91 - - 41,822.91
The table below provides details of financial assets as at March 31, 2018
` in Lakhs
Carrying Amount
Loans 443.60
Other financial assets 2,550.50
Total 2,994.10
` in Lakhs
Carrying Amount of Segment Assets For the year For the year
March 31, 2019 March 31, 2018
In India 2,84,033.78 2,39,713.65
Outside India 8,744.67 19,342.36
Total 2,92,778.45 2,59,056.00
` in Lakhs
Addition to Fixed Assets For the year For the year
March 31, 2019 March 31, 2018
In India
- Tangible 1,19,911.53 5,601.38
- Intangible 1,279.20 53.95
Outside India
- Tangible - -
- Intangible - -
Total 1,21,190.73 5,655.33
As at As at
March 31, 2019 March 31, 2018
Basic and Diluted Earnings per Share
Number of Shares at the beginning (Nos. in Lakhs) 1,363.93 1,307.11
Number of Shares at the end (Nos. in Lakhs) 1,363.93 1,363.93
Weighted Average Number of Shares considered for Basic Earnings Per Share (Nos. in 1,363.93 1,316.45
Lakhs)
Weighted Average Number of Shares considered for Diluted Earnings Per Share (Nos. 1,363.93 1,316.45
in Lakhs)
Net Profit after Tax available for Equity Shareholders (` in Lakhs) 17,366.13 7,901.57
Basic Earnings (in Rupees) Per Share of ` 2/- each 12.73 6.00
Diluted Earnings (in Rupees) Per Share of ` 2/- each 12.73 6.00
44. During FY 2018-19, the Company has spent ` 250.00 Lakhs on Corporate Social Responsibility activities.
45. The Income Tax Department has conducted search operations during the year at the premises of Deepak Nitrite Limited and Deepak
Phenolics Limited. The Companies believe that the search operations will not have any material adverse impact on the performance.
46. Events occurring after the balance sheet date: The Board of Directors has recommended, subject to the approval of shareholders,
dividend of ` 2/- (Rupees Two only) per equity share of face value of ` 2/- (Rupees Two only) each for the year ended March 31, 2019 on
13,63,93,041 equity shares amounting to ` 3,288.58 Lakhs (including tax on dividend of ` 560.72 Lakhs)
47. The Financial Statements were authorised for issue by the Board of Directors on May 03, 2019.
Notes
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I. COVERAGE:
a. Death
b. Permanent (total/partial) disablement
EXPLANATION:
i. Permanent Total Disablement:
Loss of sight of both eyes or of actual loss by physical separation of the two entire hands or two entire feet.
IV. BENEFITS:
The benefits available under the Group Personal Accident Insurance Policy are as under:
1. Fatal Accident (Death) : Sum Insured*
2. Permanent Total Disablement : Sum Insured*
3. Loss of two limbs or two eyes or one limb and one eye : Sum Insured*
4. Loss of one limb or one eye : 50% of the Sum Insured
5. Permanent Partial Disablement : Specific percentage of the Sum Insured*
depending on the extent of disablement.
[* Sum Insured as explained in para (III) above]
Note:
1. Temporary disablement, medical / hospitalisation expenses are out of the purview of the scheme.
2. Members who have not filed the Nomination Form earlier in respect of Personal Accident Policy may approach the Company for
obtaining the Nomination Form and return the same duly filled in and signed for registration with the Company.
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