Deepak Fertilizers & Petrochemicals Corp Ltd

To the Members

Your Directors have pleasure in presenting the Forty-Fourth Annual Report together with Audited Accounts of the Company for the Financial Year ended 31st March, 2024.

FINANCIAL RESULTS

The summarized financial results for the year are as under:

(Rs. in lakhs)

STATE OF AFFAIRS OF THE COMPANY

Your Company has achieved a total revenue of Rs. 1,923 Crores (including Rs. 83 Crores from trading operations) during the year under review as against previous year's level of Rs. 2,350 Crores (including Rs. 230 Crores from trading operations). Profit Before Tax (PBT) for the year under review was Rs. 413 Crores as against Rs. 390 Crores in the previous year.

Net Profit for the current year was recorded at Rs. 313 Crores as against Rs. 291 Crores in the previous year.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis (MDA), which forms part of this Report, inter alia, deals adequately with the operations and also current and future outlook of the Company on a consolidated basis.

ISSUE OF COMPULSORILY CONVERTIBLE DEBENTURES (CCDS) BY MATERIAL SUBSIDIARY I.E., MAHADHAN AGRITECH LIMITED (FORMERLY KNOWN AS SMARTCHEM TECHNOLOGIES LIMITED)

As reported in the previous Annual Reports, Mahadhan AgriTech Limited (MAL), Wholly Owned Material Subsidiary had issued CCDs, on a private placement basis to International Finance Corporation Limited. The details of CCDs issued are as given below:

During the year under review, the Company has purchased the aforesaid CCDs issued to IFC by MAL with mutual agreement.

ISSUE OF EQUITY SHARES THROUGH QUALIFIED INSTITUTIONS PLACEMENT (QIP)

During the year under review, no shares were issued through qualified institutions placement.

DIVIDEND

Considering the performance of the Company, the Board of Directors of the Company recommends a dividend @ 85% i.e., Rs. 8.50/- (Eight Rupees and Fifty Paise) per Equity Share (Previous year '10 per Equity Share) of Rs. 10 each of the Company for the year ended 31st March, 2024.

The proposed dividend is in line with the 'Dividend Distribution Policy' adopted by the Board at its meeting held on 30th June, 2017. The Policy is available on the Company's website: DividendDistributionPolicyDFPCL30June2017.pdf.

TRANSFER TO RESERVE

The closing balance of retained earnings of the Company for Financial Year 2023-24 after all appropriations and adjustments was Rs. 1,85,417 Lakhs. During the year, the Company has not transferred any amount to general reserve.

SHARE CAPITAL

During the year under review, the Company has neither issued any equity shares of the Company, nor, shares with differential voting rights or sweat equity shares or any stock options.

The paid-up equity share capital of the Company as on 31st March, 2024 was Rs. 126.24 Crores.

Re-appointment of Independent Director

During the year under review, the Board of Directors, based on the recommendation of Nomination and Remuneration Committee, had approved the re-appointment of Smt. Varsha Purandare as an Independent Director of the Company for the Second Term for 2 consecutive years w.e.f. 31st January, 2024, pursuant to applicable provisions of the Companies Act, 2013 ("Act") and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, subject to the approval of shareholders.

Further, the shareholders of the Company through Postal Ballot have provided their approval for the aforesaid re-appointment. The results of Postal Ballot have been intimated to the Stock Exchanges on 26th March, 2024. All the relevant details of the Postal Ballot have been provided in the General Shareholder Information, which is part of this Annual Report.

Cessation

The shareholders of the Company at their Annual General Meeting held on 14th August, 2019 had approved the appointment of Mr. Partha Sarathi Bhattacharyya as Independent Director of the Company for the first term of 5 consecutive years with effect from 1st April, 2019.

Subsequently, on the completion of first term of 5 consecutive years on 31st March, 2024, Mr. Bhattacharyya has ceased to be an Independent Director of the Company.

The Board places on record its sincere appreciation to the valuable guidance provided by Mr. Bhattacharyya during his tenure as Director of the Company.

Re-appointment - retiring by rotation

Mr. M. P. Shinde retires by rotation at the ensuing Annual General Meeting pursuant to provisions of Section 152 of the Act and rules made thereunder and being eligible, offers himself for re-appointment at the ensuing Annual General Meeting.

NUMBER OF MEETINGS OF BOARD OF DIRECTORS

A calendar of meetings is prepared and circulated in advance to the Directors. During the year under review, seven board meetings were held. These meetings were held on 17th May, 2023, 20th May, 2023,26th July, 2023,9th August, 2023, 2nd November, 2023, 1st February, 2024 and 27th March, 2024.

CHANGES IN KEY MANAGERIAL PERSONNEL (KMP)

During the year under review, Mr. Deepak Rastogi was appointed as the Chief Financial Officer of the Company in place of Mr. Amitabh Bhargava, w.e.f. 1st August, 2023 as a part of planned rotation initiative of the Company.

A STATEMENT REGARDING THE OPINION OF THE BOARD WITH REGARD TO INTEGRITY, EXPERTISE AND EXPERIENCE (INCLUDING THE PROFICIENCY) OF THE INDEPENDENT DIRECTORS APPOINTED DURING THE YEAR

During the year under review, Smt. Varsha Purandare was re-appointed as an Independent Director of the Company.

The Board is of the opinion that Smt. Purandare is a person of high integrity and reputation and has the requisite expertise and experience including the proficiency.

COMPOSITE SCHEME OF ARRANGEMENT BETWEEN SUBSIDIARIES OF THE COMPANY

The Board of Directors of the Company has approved Composite Scheme of Arrangement between Mahadhan AgriTech Limited (MAL) (Formerly Known as Smartchem Technologies Limited) (Demerged Company or Transferee Company), Deepak Mining Solutions Limited (DMSL) (Formerly Known as Deepak Mining Solutions Private Limited) (Resulting Company) and Mahadhan Farm Technologies Private Limited (MFTPL) (Transferor Company) and their respective shareholders in accordance with the provisions of Sections 230 to 232 read with Section 52 and other applicable provisions of the Act and the rules framed thereunder.

The Scheme provides for demerger of the TAN Business from Demerged Company to the Resulting Company and Amalgamation of the Transferor Company with the Demerged Company.

This will result into creating holistic business entities housed in identified corporate entities. The Company is awaiting approval of the Hon'ble National Company Law Tribunal (NCLT), Mumbai.

GREENFIELD AMMONIA PROJECT

The greenfield Ammonia plant, set up through the step-down subsidiary of the Company i.e. Performance Chemiserve Limited, began commercial production on 4th August, 2024 and the production has now been stabilised. The successful backward integration into Ammonia will provide a long-term risk mitigation for all the three businesses of the group.

Besides, it will significantly reduce dependency on imported ammonia, which will enhance our operational efficiencies and eliminate global price volatility impacts. The installed production capacity of the new plant is 1500 MT per day.

LONG-TERM TIE UP FOR SUPPLY OF LIQUEFIED NATURAL GAS (LNG) WITH NORWEGIAN GIANT - EQUINOR

Your Company has entered into a 15 year contract for supply of LNG with Equinor ASA, Norway. With this tie-up, the Company strengthens its value chain with an attractive long-term LNG contract to solidify its value chain from Gas to Ammonia to various downstream Fertilisers, Industrial Chemicals and Mining Chemicals. This end-to-end tie- up shall establish a strong long-term foundation for all of Company's product segments.

Equinor, erstwhile Statoil, is amongst the established leaders in the oil & gas sector over the last 50 years, with a market cap of USD 75 Billion wherein majority shares are owned by the Norwegian Government.

AGREEMENT WITH ISRAEL BASED HAIFA GROUP

Mahadhan AgriTech Limited (MAL) (formerly known as Smartchem Technologies Limited), Wholly Owned Subsidiary of the Company has entered into an agreement with Israel- based Haifa Group to promote high performing Specialty fertilizers to improve quality and productivity of crops in India and other countries.

The MAL-Haifa offerings will support agricultural practices that counter the vicious trend of water scarcity and also hugely enhance Nutrient uptake & Use Efficiency in the plants. In addition, these initiatives will also help reduce groundwater and air pollution. We believe this collaboration will bring positive change in the agricultural sector, thereby empowering farmers.

SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS / STATUTORY AUTHORITIES

As disclosed in the last year's report, effective 15th May, 2014, domestic gas supply to the Company was arbitrarily stopped by the Ministry of Petroleum and Natural Gas. The Company successfully challenged the same before the Hon'ble Delhi High Court, which, by its Orders dated 7th July, 2015 and 19th October, 2015 directed the Government of India (GoI) to restore the supply of gas. Against the cited order, a review petition filed by the GoI, challenging the said Orders was rejected by the said Court. Further, the GoI also filed the Special Leave Petition (SLP) before the Hon'ble Supreme Court of India against the Order of Hon'ble Delhi High Court, which was also disposed without granting any relief to the GoI. The GoI has filed an affidavit before the Hon'ble Delhi High Court stating that Inter Ministerial Committee (IMC) has decided to recommend supply of pooled gas to the Company, subject to approval of the Competent Authority. Gol has further filed an application in the Hon'ble Delhi High Court seeking dismissal of the matter. The Company is contesting the said application since the Competent Authority has not decided based on the recommendation of the said IMC and the application so filed is pre-mature. The Hon'ble Delhi High Court asked GoI to bring the IMC decision/ report on record, if not filed then the matter will be proceeded further without the report. The hearing in the Delhi High Court is now posted on 9th July, 2024.

INDIAN ACCOUNTING STANDARDS, 2015

The annexed financial statements for the Financial Year 2023-24 and corresponding figures for 2022-23 comply in all material aspects with Indian Accounting Standards notified under section 133 of the Act, the Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

CONSOLIDATED FINANCIAL STATEMENTS

The audited consolidated financial statements incorporating the duly audited financial statements of the subsidiaries, and prepared in compliance with the Act, applicable Accounting Standards and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 form part of this Annual Report.

A separate statement containing the salient features of Company's subsidiaries, associates and joint venture in the form AOC-1 is annexed separately and forms part of this Annual Report.

DIRECTORS' RESPONSIBILITY STATEMENT

To the best of their knowledge and based on the guidance and insights from the Auditors and pursuant to the provisions of sub-section (5) of Section 134 of the Act, your Directors confirm that:

i. in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. the accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year on 31st March, 2024 and of the profit and loss of the Company for that period;

iii. proper and sufficient care have been taken for maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the annual accounts are prepared on a going concern basis;

v. internal financial controls, to be followed by the Company are duly laid down and these controls are adequate and were operating effectively; and

vi. systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143 (12) OF THE ACT

During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under Section 143(12) of the Act.

STATUTORY AUDITORS AND THEIR REPORT

The Shareholders of the Company at the Forty-First Annual General Meeting held on 26th August, 2021 had accorded their approval pursuant to the provisions of Sections 139, 141 and other applicable provisions of the Act and Rules made thereunder to appoint, M/s. P G BHAGWAT LLP, Chartered Accountants as the Statutory Auditors of the Company for a period of five years commencing from the conclusion of Forty-First Annual General Meeting until the conclusion of Forty-Sixth Annual General Meeting.

The Auditors' Report to the Shareholders for the year under review does not contain any qualification, reservation or adverse remark or disclaimer.

SECRETARIAL AUDITORS & SECRETARIAL STANDARDS

The Secretarial Auditor, Mr. Ashish Garg, Practising Company Secretary, has issued Secretarial Audit Report (Form MR-3) for the Financial Year 2023-24 pursuant to Section 204 of the Act and pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 which is annexed to Directors' Report (Refer Annexure-1). The report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Act.

Pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, M/s. Jog Limaye & Associates, Practising Company Secretary, the Secretarial Auditor of Mahadhan AgriTech Limited (Formerly known as Smartchem Technologies Limited] and Performance Chemiserve Limited, material subsidiaries, have issued Secretarial Audit Report (Form MR-3) for the Financial Year 2023-24. The said reports thereon are annexed as Annexure 8 and Annexure 9 to the Board's Report.

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

COST AUDITORS

Your Directors, at their meeting held on 29th May, 2024, based on the recommendation of the Audit Committee, have appointed M/s Harshad S. Deshpande & Associates, Cost Accountants, as the Cost Auditors for the Financial Year 2024-25 at a remuneration of Rs. 2,25,000 /- (Rupees Two Lakhs Twenty Five Thousand only) plus GST as applicable and reimbursement of travel and out-of-pocket expenses, which shall be subject to the approval of the shareholders at the ensuing Annual General Meeting.

The Cost Audit Report for the Financial Year ended 31st March, 2023 was duly filed with the Central Government (Ministry of Corporate Affairs) on 20th October, 2023.

In accordance with the provisions relating to maintenance of cost records as specified by the Central Government under sub-section (1) of Section 148 of the Act, the Company is required to maintain respective cost records and accordingly, such accounts and records were made and maintained.

INTERNAL AUDITORS

Ernst & Young LLP (EY) are the Internal Auditors of the Company since Financial Year 2016-17.

Further, the Board, on the recommendation of the Audit Committee, has re-appointed EY as the Internal Auditors of the Company for the Financial Year 2024-25.

PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES

Details of investments made, loans advanced and guarantees given by the Company are given in the notes to the Financial Statements.

RELATED PARTY TRANSACTIONS

All contracts/arrangement/transactions entered by the Company during the period under review with related parties were in compliance with the applicable provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Prior omnibus approval of the Audit Committee is obtained for all related party transactions which are foreseen and of repetitive nature. Pursuant to the said omnibus approval, details of transaction entered into is also reviewed by the Audit Committee on a quarterly basis.

All related party transactions entered during the financial year 2023-24 were in the ordinary course of business, at arm's length and not material under the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. None of the transactions required members' prior approval under the Act or SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Details of transactions with related parties during financial year 2023-24 are provided in the notes to the financial statements. There were no transaction requiring disclosure under section 134(3)(h) of the Act. Hence, the prescribed Form AOC-2 does not form a part of this Report.

CORPORATE GOVERNANCE

Pursuant to provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section titled 'Corporate Governance' is attached to this Annual Report.

Further, a certificate form the Statutory Auditors of the Company regarding compliance with the requirements of Corporate Governance as required under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 also forms part of this report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES

Report on the performance and financial position of subsidiaries, associates and joint venture company in Form AOC-1 is annexed to Board's Report (Refer Annexure-2).

AWARDS AND ACCOLADES

Please refer to section "Awards and Accolades" in this Annual Report for details of the awards received by the Company during the year under review.

NOMINATION AND REMUNERATION COMMITTEE

The Board of Directors of the Company has constituted Nomination and Remuneration Committee and also approved the Nomination and Remuneration Policy which inter- alia contains appointment criteria, qualifications, positive attributes and independence of Directors, removal, retirement and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel of the Company.

The Board of Directors of the Company, on the recommendation of the Nomination and Remuneration Committee, have revised the Nomination and Remuneration Policy of the Company, at their meeting held on 25th May, 2022. The modified Nomination and Remuneration Policy is enclosed as Annexure 3 and is also available on the website of the Company at https://www.dfpcl.com/wp-content/ uploads/2021/07/Nomination-and- Remuneration-Policy

RISK MANAGEMENT COMMITTEE

The Board of Directors of the Company has constituted a Risk Management Committee to assess risks in the operations of business units of the Company, to mitigate and minimize risks assessed in the operations of business units, periodic monitoring of risks in the operations of business units, to look after cyber security and other matters delegated to the Committee by Board of Directors of the Company from time to time.

Information on the development and implementation of Risk Management Policy of the Company including identification therein of elements of risk which, in the opinion of the Board may threaten the existence of the Company is given in the Corporate Governance Report and Management Discussion and Analysis.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

Your Company as a responsible Corporate Citizen, is engaged in concerted CSR initiatives through Ishanya Foundation, as Implementing Agency for CSR activities.

The details of the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 is given in Annexure forming part of this report (Refer Annexure-4).

The Board of Directors of the Company has approved a comprehensive CSR Policy as per the amended provisions of the Act. The CSR policy as also the CSR Projects as approved by the Board of Directors are available on the website of the Company at the following links: https://www.dfpcl.com/ uploads/2021/05/CSR-Policy DFPCL. pdf

The details of composition of Corporate Social Responsibility Committee and other details are provided in the Corporate Governance Report.

AUDIT COMMITTEE COMPOSITION

The details of composition of Audit Committee and other details are provided in the Corporate Governance Report.

ANNUAL RETURN

In terms of Section 92(3) of the Act and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the website of the Company at the link: https://www.dfpd. com/investors/ annual-return/

PERFORMANCE EVALUATION OF CHAIRMAN, DIRECTORS, BOARD AND COMMITTEES

Information on the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors is given in the Corporate Governance Report.

INDEPENDENCE OF DIRECTORS

All the Independent Directors of the Company have given declaration that they meet the criteria of independence as provided in Sub-Section (6) of Section 149 of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and they are not aware of any circumstances or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board of Directors have taken on record the declaration and confirmation received from the Independent Directors and verified the veracity of such disclosures.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company follows the practice of conducting familiarisation programme of the independent directors as detailed in the Corporate Governance Report which forms part of the Annual Report.

WHISTLE BLOWER POLICY

The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity and ethical conduct. The Company has a Whistle Blower Policy under which the employees are free to report violations of the applicable laws and regulations and the Code of Conduct. Further, as per the provisions of Regulation 18 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 (Listing Regulations) read with Part C of Schedule II to Listing Regulations, the Audit Committee on a quarterly basis reviewed the functioning of whistle blower mechanism of the Company and found the same satisfactory.

A copy of the Whistle Blower Policy is available on the website of the Company at the following weblink: https://www.dfpd. com/uploads/2018/12/WhistleBlowerPolicy.pdf.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Your Company's internal financial control systems are commensurate with the nature, size and complexity of the businesses and operations. These are periodically tested and certified by Statutory as well as Internal Auditors. Significant audit observations and the follow up actions are reported to the Audit Committee.

MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company and the date of this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Pursuant to the provisions of Section 136 (1) of the Act and as advised, the statement containing particulars of employees as required under Section 197 (12) of the Act read with Rule 5 (1) and 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be available for inspection. Members interested in obtaining a copy of the same may write to the Company Secretary at investorgrievance@dfpcl.com and the same will be furnished on request. Hence, the Annual Report is being sent to all the Members of the Company excluding the aforesaid information.

The details of remuneration drawn by Mr. Sailesh C. Mehta, Chairman and Managing Director from the Company is provided in the Corporate Governance Report.

COMPANIES WHICH HAVE BECOME OR CEASED TO BE THE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

During the year under review, there were no such instances.

FIXED DEPOSITS

Your Company has not accepted any deposits, covered under Chapter V of the Act and hence no details pursuant to Rule 8 (5) (v) and 8 (5) (vi) of the Companies (Accounts) Rules, 2014 are reported.

DISCLOSURE AS PER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act). The Company has a policy on Prevention of Sexual Harassment at Workplace and the same has been uploaded on the internal portal of the Company for information of all employees.

Pursuant to Section 22 of the POSH Act read with Rules made thereunder, the Company during the year has received two complaints and the same have been investigated and resolved as per the provisions of the POSH Act.

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

As required by the Companies (Accounts) Rules, 2014, the relevant data pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo are annexed to Board's Report (Refer Annexure - 5)

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, inter alia, provides that the annual report of the top 1,000 listed entities based on market capitalisation (calculated as on 31st March of every financial year), shall include a Business Responsibility And Sustainability Report.

As the Company is one of the top 1,000 listed entities, the Company has presented its Business Responsibility And Sustainability Report (BRS) for the financial year 2023-24, which is part of this Annual Report.

As a green initiative, the BRS Report has been hosted on the Company's website i.e. www.dfpcl.com

MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT INCLUDING PEOPLE EMPLOYED

The overall industrial relations in the Company were cordial. The manpower employed is around 995 employees.

ACKNOWLEDGEMENT

Your Directors wish to place on record their sincere appreciation to the Company's bankers, customers, vendors, investors and all other stakeholders for their continued support during the year. Your Directors are also pleased to record their appreciation for the dedication and committed contribution made by employees at all levels who, through their competence and hard work, have enabled your Company to achieve good performance amidst challenging times and look forward to their support in the future as well.