Black Rose Industries Ltd

Dear Members,

Your Directors takes pleasure in presenting the 34th Annual Report on the business and operations performance of the Company, together with the Audited Financial Statements, for the financial year ended March 31,2024.

1. Financial Results - Extract

The Company's standalone and consolidated performance during the financial year ended March 31, 2024, as compared to the previous financial year is summarised below:

Rs. in Lakhs

2. Nature of Business

The Company is primarily engaged in the business of chemical manufacturing and chemical distribution. The Company also owns windmills for the production and sale of renewable energy.

The chemical manufacturing division focuses on the production and sale of acrylamide liquid, polyacrylamide liquid, and N-methylol acrylamide ("NMA"). Additionally, the Company is the only producer of acrylamide powder outside of China. The R&D team is currently working on adding polyacrylamide solid to the production portfolio in the future. Meanwhile, the Company has applied for Environmental Clearance for a specialty chemicals project in collaboration with a Japanese partner at its existing site in Jhagadia. The chemical distribution division primarily handles the sales of specialty and performance chemicals produced by overseas manufacturers. The renewable energy division supplies electricity generated from wind power to the State Electricity Boards of Rajasthan and Gujarat.

3. Performance Review

In the 2023-24 financial year, the Company successfully increased its sales volume by nearly 20% by expanding its customer base and geographical reach, despite challenges such as fluctuating demand and economic slowdowns in key markets. Our effective management of higher international freight costs, longer transit times, strategic handling of raw materials and inventory, and focus on exports resulted in an impressive standalone EBITDA of '31.5 crores. This achievement underscores our robust market understanding, effective cost management, and diversified product portfolio.

Throughout the year, we further solidified our position as the domestic market leader in our key distribution products and acrylamide. The sales of recent additions to our product portfolio, including acrylamide powder and n-methylol acrylamide ("NMA") in the second half of the year, alongside our strong R&D capabilities and upcoming projects, bode well for sustained financial growth in the next fiscal year.

4. Dividend

For FY 2023-24, based on the Company's performance, the Directors have recommended a final dividend of Rs. 0.55 per equity share (i.e. @ 55 % on the paid-up share capital) and also considering an exceptional year for the Company the Directors pleased to recommend Rs. 0.10 per equity share (i.e. @ 10% on the paid-up share capital) as Special Dividend for the financial year ended March 31,2024 subject to approval of the shareholders at the ensuing Annual General Meeting of the Company for the Financial Year 2023-24.

After closing of FY 2023-24, on July 31, 2024 the Board of Directors has declared Rs. 2.00 per equity share (i.e, @200% on the paid-up share capital) as the Special Interim Dividend for the FY 2024-25.

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is uploaded on the Company's website at www.blackrosechemicals.com.

5. Transfer to Reserves

The Directors have not proposed to transfer any amount to the general reserve and have decided to transfer Rs. 2,054.35 lakhs to retained earnings for the FY 2023-24. The closing balance of retained earnings of the Company as at March 31, 2024, after all appropriation and adjustments, was '12,641.06.

6. Business Scenario

The financial year 2023-2024 concluded with a stable topline but significantly higher sales volumes and profitability compared to the previous year. This growth was driven by strong support and improved allocation from principals, increased local chemical demand, strategic inventory planning, and effective management of international logistics. Additionally, a diversified product portfolio and a range-bound Indian rupee against the US Dollar reduced risk in procurement and sales. While subdued demand from the US oil and gas sector impacted merchant exports, this was balanced by other strengths in our business operations.

Despite a weak first quarter, fluctuating demand, subdued chemical prices, and economic slowdowns in key markets, the Company solidified its position as a market leader in key distribution and manufactured products. It also established itself as a reliable procurement source for large chemical Companies in both domestic and European markets. The focus on exports for the manufacturing division opened new markets and customers, boosting revenues and profits. Prudent inventory management in the last quarter enabled the Company to overcome international logistics challenges and serve its customers without interruption.

The business scenario is discussed in more detail in the Management Discussion and Analysis Report.

7. Acrylamide Plant at Jhagadia, Gujarat

The Company's acrylamide plant achieved its highest capacity utilization due to stable demand, the addition of new markets and customers, stable raw material prices, the Company's EU REACH registration, and a focus on strategic marketing and exports. The acrylamide powder business also expanded during the year with sales picking up in both domestic and international markets.

A detailed explanation of the acrylamide plant operations can be found in the Management Discussion and Analysis Report.

8. Polyacrylamide Liquid Plant at Jhagadia, Gujarat

The ceramic tile industry in Morbi, Gujarat, where the Company sells its polyacrylamide liquid ceramic binder, BRILBIND CE01, has been severely impacted by the global demand slowdown, inventory buildup, and the spread of small unorganized binder producers. These factors have affected overall revenue and capacity utilization during the year.

A detailed explanation of the polyacrylamide liquid plant operations can be found in the Management Discussion and Analysis Report.

9. N-Methylol Acrylamide (NMA) Plant at Jhagadia, Gujarat

Since FY23, the Company has been producing two grades of n-Methylol Acrylamide (NMA), a specialty monomer used in the coatings and adhesive industry, with an installed capacity of 2,000 MTPA. The Company sells the product to both domestic and multinational companies.

An in-depth explanation about the polyacrylamide liquid plant operations is given in the Management Discussion and Analysis Report.

9. Subsidiary - B.R. Chemicals Co., Ltd., Japan

The Company has one subsidiary as on March 31, 2024. There are no associate or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act").

The nature of business of the Subsidiary Company remained unchanged during the year.

During the year under review, the turnover of the Company's wholly owned subsidiary increased to Rs. 99 crores.

The performance and financial position of the Company's subsidiary B.R. Chemicals Co., Ltd. for the year ended March 31,2024 is attached to the financial statements hereto.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company's subsidiary in Form No. AOC-1 is attached to the financial statements of the Company.

10. 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 to which the financial statements relate and the date of the report.

11. Directors and Key Managerial Personnel

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Ambarish Daga (DIN 07125212), Whole-time Director of the Company, retires by rotation at the ensuing

Annual General Meeting and being eligible, offers himself for re-appointment.

Brief Profile of Mr. Daga is provided in the Notice convening the 34th Annual General Meeting of the Company for reference of the members.

During the financial year following changes took place in the Directors and Key Managerial Personnel of the Company:

a. Mr. Sandeep Chokhani resigned w.e.f. May 11,2023.

b. Mr. Ratan Kumar Agrawal was appointed as Additional Director w.e.f. May 11,2023 and resigned w.e.f. July 26, 2023.

c. Mr. Ambarish Daga was appointed as Whole-Time Director w.e.f. July 26, 2023 and the same was approve by the members of the Company in the Annual General Meeting held on September 29, 2023.

d. Mr. Abhishek Murarka was appointed as Non-Executive Independent Director w.e.f. July 26, 2023 and the same was approve by the members of the Company in the Annual General Meeting held on September 29, 2023.

e. Mr. Bhavesh Shah, General Manager Sales, was appointed as Key Managerial Personnel of the Company w.e.f. July 26, 2023.

f. Mr. Sanket Desai, Associate Vice President - Manufacturing, was appointed as Key Managerial Personnel of the Company w.e.f. July 26, 2023.

g. Mr. Anup Jatia was re-classified as Non-Executive Director w.e.f July 26, 2023.

h. Mrs. Garima Tibrawalla, Non-Executive Independent Director of the Company resigned w.e.f. September 02, 2023.

i. Mrs. Shruti Jatia was appointed as Whole-Time Director of the Company w.e.f. September 03, 2023 and the same was approve by the members of the Company in the Annual General Meeting held on September 29, 2023.

j. Mrs. Deepa Poncha was appointed as Non-Executive Independent Director of the Company w.e.f. September 03, 2023 and the same was approve by the members of the Company in the Annual General Meeting held on September 29, 2023.

k. Mr. Sanket Desai, Associate Vice President - Manufacturing resigned w.e.f. January 18, 2024.

l. Mr. Anup Jatia, Non-Executive Director, appointed as the Chairperson of the Company w.e.f. January 31,2024.

m. Mrs. Harshita Shetty, Company Secretary and Compliance Officer of the Company resigned w.e.f. February 29, 2024.

n. After the end of the financial year the Board of Directors appointed Mr. Ankit Kumar Jain, as the Company Secretary and Compliance Officer of the Company w.e.f. May 28, 2024.

Apart from the above, no other Director or Key Managerial

Personnel were appointed or ceased.

12. Declaration from Independent Directors

The Company has received following declarations from all the Independent Directors confirming that:

a) They meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Rules made thereunder, as well as of Regulation 16 of the Listing Regulations.

b) In terms of Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, they have registered themselves with the Independent Director's database maintained by the Indian Institute of Corporate Affairs.

c) In terms of Regulation 25(8) of the Listing Regulations, 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.

a. Board Meetings

7 meetings of the Board of the Directors were held during the year under review. The Corporate Governance Report, which is part of this report, contains the details of the meetings of the Board.

b. Committees

Pursuant to Section 177 and 178 of the Companies Act, 2013 and the rules made thereunder and in accordance with Listing Regulations, the Board of Directors has constituted five Committees, viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee.

All details pertaining to the composition of the Board and its committees are provided in the Corporate Governance Report, which is a part of this report.

The Company has been employing women employees in various grades within its offices and factory premises. The Company has constituted an Internal Compliant Committee as required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 to redress any complaints received from employee(s) of the Company. The Company is strongly oppose to sexual harassment and all the employees are made aware about the consequences of such acts and the constitution of the Internal Compliant Committee.

During the year there was no complaint received from any employee and hence no compliant is outstanding as on March 31, 2024.

c. Evaluations

The Board of Directors has carried out an annual evaluation of its own performance, board committees, and individual directors pursuant to the provisions of the Act and Listing Regulations.

The performance of the board was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc. The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of criteria such as the composition of committees, effectiveness of committee meetings, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of Executive Directors and Non-Executive Directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual Director on the basis of criteria such as the contribution of the individual director's to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

d. Policy on Directors' Appointment and Remuneration and other details

The policy on Directors' remuneration is available on the website of the Company at www.blackrosechemicals. com. The remuneration paid to the Directors is as per the terms laid out in the said policy.

a. Statutory Auditor

Members of the Company at the AGM held on September 29, 2022, approved the appointment of M/s. M M Nissim & Co LLP, Chartered Accountants LLP (Registration No. 107122W/ W100672), Chartered Accountants, as the statutory auditors of the Company for a period of five years from the conclusion of 32nd Annual General Meeting till the conclusion of the 37th Annual General Meeting to be held in the year 2027.

The report of the Statutory Auditor forms part of this Annual Report. The said report does not contain any qualification, reservation, adverse remark or disclaimer.

b. Cost Auditor

Pursuant to the provisions of the Section 148(1) of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to have the audit of its cost records.

M/s. Poddar & Co., Cost Accountants, Mumbai, was appointed as Cost Auditor of the Company for conducting the cost audit for the financial year 2023-24.

c. Secretarial Auditor

Secretarial Audit for the financial year 2023-24 was conducted by M/s. Shiv Hari Jalan & Co., Company Secretaries in Whole - Time Practice in accordance with the provisions of Section 204 of the Act. The Secretarial Auditors' Report forms part of this Annual Report.

15. Extract of Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31,2024 is available on the Company's website at www.blackrosechemicals.com.

16. Loans, Guarantees and Investments

The particulars of loans, guarantee or investments given/ made during the financial year under review and governed by the provisions of Section 186 of the Companies Act, 2013 have been furnished in Annexure I which forms part of this Annual Report.

17. Deposits

The Company has not accepted any deposits from public in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the Balance Sheet.

18. Consolidated Financial Statements

In accordance with the provisions of Companies Act, 2013 (hereinafter referred to as 'the Act'), Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as 'Listing Regulations') and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the financial year 2023-24, together with the Auditor's Report, form part of this Annual Report. A statement containing the salient features of the Company's subsidiaries, associate and joint venture Company in the prescribed Form AOC- 1.

19. Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that:

i) the annual financial statements for the year ended March 31,2023 have been prepared in accordance with the applicable accounting standards along with proper explanation relating to material departures, if any;

ii) have selected such accounting policies and applied them consistently and made judgements 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 and of the profit of the Company for that period;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts have been prepared on a going concern basis;

v) have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively;

vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively;

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management and the relevant Board committees, including the audit committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY 2023-24.

20. Internal Financial Controls and Compliance Framework

Internal financial control over financial reporting have been designed to provide reasonable assurance with regards to recording and providing reliable financial information and complying with applicable accounting standards. These controls are reviewed periodically, and the Company continuously tries to verify these controls to increase its reliability.

The Company has documented its internal financial controls considering the essential components of various critical processes, physical and operational. This includes its design, implementation and maintenance, along with periodical internal review of operational effectiveness and sustenance, which are commensurate with the nature of its business and the size and complexity of its operations. This ensures orderly and efficient conduct of its business, including adherence to the Company's policies, safeguarding of its assets, prevention of errors, accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

The internal financial controls with reference to the financial statements were adequate and operating effectively.

The Board has also put in place requisite legal compliance framework to ensure compliance of all the applicable laws and that such systems were adequate and operating effectively.

21. Risk Management

In compliance with Regulation 21 of the Listing Regulations, a Risk Management Committee has been constituted by the Board. The Risk Management Committee, also known as Risk Management Oversight Committee, is entrusted with roles and powers as specified in Part D of Schedule II of Listing Regulations. The Company has laid out a risk management policy for identification and mitigation of risks. The Risk Management Committee identifies the key risks for the Company, develops and implements the risk mitigation plan, reviews and monitors the risks and corresponding mitigation plans on a regular basis and prioritises the risks, if required, depending upon the effect on the business/reputation.

The other details in this regard are provided in the Report on Corporate Governance which forms a part of this Annual Report.

22. Vigil Mechanism and Reporting of Frauds

The Company has framed Vigil Mechanism/Whistle Blower Policy ("Policy") to enable Directors and employees to report genuine concerns or grievances, unethical behavior and irregularities, fraud, if any, which could adversely affect the Company's operations to the Audit Committee Chairman.

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

23. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with rules made thereunder is provided in Annexure II which forms part of this Annual Report.

24. Contracts and Arrangements with Related Parties

All the contracts, arrangements and transactions entered by the Company during the financial year with related parties were in the ordinary course of business and were on arm's length basis, hence Section 188(1) is not applicable and consequently no particulars in Form AOC - 2 are required to be furnished. During the year, the Company had not entered into any contract, arrangements or transactions with related parties which could be considered material. All the contracts, arrangements and transactions with related parties are placed before the Audit Committee as also the Board, as may be required, for approval.

25. Business Responsibility and Sustainability Report ("BRSR")

The Company has provided Business Responsibility and Sustainability Report, in lieu of the Business Responsibility Report which indicates the Company's performance against the principles of the 'National Guidelines on Responsible Business Conduct'. This would enable the Members to have an insight into environmental, social and governance initiatives of the Company which forms part as a separate section of this Annual Report.

26. Orders passed by Regulators or Courts or Tribunals

No significant and material orders have been passed by any regulators or courts or tribunals which can have an impact on the going concern status of the Company and its future operations.

27. Listing

The Company's shares are listed on the BSE Limited and the applicable listing fees for the same have been paid.

28. Managerial Remuneration and Particulars of Employees

The Statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013, read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable as none of the employees of the Company are covered under the provisions of the said rules.

The ratio of the remuneration of each director to the median employees' remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in Annexure III which forms part of this Annual Report.

29. Corporate Social Responsibility (CSR)

Corporate Social Responsibility ("CSR") forms an integral part of an overall business policy aligned with its business goals. The Company, from time to time, endeavors to utilize allocable CSR budget for the benefit of society.

Salient features of the CSR policy and the details of activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is provided in Annexure IV forming part of this report. The CSR Policy is available on the website of the company.

30. Service of Documents through Electronic Means

All documents, including the Notice and Annual Report shall be sent through electronic transmission in respect of members whose e-mail IDs are registered in their demat account or are otherwise provided by the members. A member shall be entitled to request for physical copy of any such documents.

31. Employees' Stock Option Scheme

The Company has implemented BRIL Employee Stock Option Scheme 2020 [formulated under the SEBI (Share Based Employee Benefit) Regulations, 2014], approved by the Shareholders of the Company on Septembe 29, 2020 and thereafter, Board of Directors of the Company vide its resolution by circulation dated October 26, 2021 approved the amendment in the BRIL ESOS 2020 Scheme in order to align the same with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB & SE Regulations").

The Company has obtained a Certificate from the Secretarial Auditors stating that ESOP Scheme has been implemented in accordance with the SEBI SBEB & SE Regulations. The said Certificate will be made available for inspection through electronic mode by writing to the Company at investor? blackrosechemicals.com from the date of circulation of the AGM Notice till the date of the AGM.

The applicable disclosures as stipulated under Regulation 14 of SEBI SBEB & SE Regulations with regard to Employees Stock Option Scheme of the Company are available on the website of the Company www.blackrosechemicals.com.

32. Disclosure Requirements

As per Listing Regulations, the Corporate Governance Report with the Auditors' Certificate thereon, and the Management Discussion and Analysis including the Business Responsibility and Sustainability Report are attached, which form part of this report.

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

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

i. The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

ii. During the year under review, there are no shares required to be transferred to the demat suspense account or unclaimed suspense account of the Company.

iii. During the year under review, in accordance with the provisions of the Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 and the Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, no amounts of unpaid or unclaimed dividends were transferred to the Investor Education and Protection Fund during the financial year.

iv. During the year under review, there were no instance of one-time settlement with banks or financial institutions and hence the differences in valuation as enumerated under Rule 8(5)(xii) of Companies (Accounts) Rules, 2014, as amended, do not arise.

v. During the Financial year no application has been made and no proceeding is pending under the Insolvency and Bankruptcy Code, 2016.

33. Acknowledgements

The Board of Directors place on record sincere gratitude and appreciation to all the employees at all levels for their hard work, solidarity, cooperation, and dedication during the year.

The Board conveys its appreciation to its principal's, customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory, and government authorities for their continued support.

Cautionary Statement

Certain statements in this Directors' Report and in the Management Discussion and Analysis Report describing the Company's objectives, estimates, and projections may be forward-looking statements and are based on certain expectations. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference in the Company's operations include the availability of raw material/product, cost of raw material/product, changes in demand from customers, fluctuations in exchange rates, changes in government policies and regulations, changes in tax structure, economic developments within India and the countries in which business is conducted, and various other incidental factors. We cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in making any assumptions. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.