NGL Fine Chem Ltd

The Board of Directors are pleased to present the Company's Forty Third Annual Report and the Company's audited financial statements (consolidated and standalone) for the financial year ended 31^st March, 2024.

1. OPERATING RESULTS

The operating results of the Company for the year ended 31^st March, 2024 are as follows:

(Ruoees In Lakh)

2. TRANSFER TO RESERVES

There are no transfers to any specific reserves during the year.

3. THE STATE OF THE COMPANY'S AFFAIRS

During the year under review, your company achieved total revenue from operations of ' 32,897.29 Lakh (previous year ' 27,505.25 Lakh) resulting in increase of 19.60% over the previous year. The profit after tax (including other comprehensive income) is at ' 3,836.62 Lakh (previous year ' 2,003.68 Lakh resulting in increase of 91.48%.

Demand for the Company's products has recovered during the current year, which is reflected in the sales growth. Various issues faced during the prior year such as de-stocking of inventories by customers, recessionary trends, etc. have been resolved. However geo-political issues continue along with foreign exchange scarcities in certain economies which affects the ability to buy for some customers.

4. SHARE CAPITAL

During the year under review, there has been no change in the Share Capital of the Company. The authorised share capital of the Company, as on 31^st March, 2024 aggregates ' 5,00,00,000/- (Rupees Five Crores) which is divided into 1,00,00,000 (One Crore) Equity Shares of ' 5/- each, whereas the issued share capital of the Company comprises of 61,78,024 equity shares of ' 5/- each aggregating to ' 3,08,90,120 /- (Rupees Three Crores Eight Lakhs Ninety Thousand One Hundred and Twenty).

5. DIVIDEND

Your directors recommend dividend of ' 1.75 per fully paid up equity share of ' 5/- each per fully paid up equity share aggregating to ' 108.12 Lakh.

Further, as per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations"), the top 1,000 listed entities based on market capitalisation are required to formulate a Dividend Distribution Policy. Accordingly, your Company has formulated its Dividend Distribution Policy, which is available on the Company's website at https://www.nglfinechem.com/images/pdf/dividend- distribution-p22.pdf

6. CASH FLOW AND CONSOLIDATED FINANCIAL STATEMENTS

As required under Regulation 34 of the Listing Regulations, a Cash Flow Statement and consolidated Financial Statement is part of the Annual Report.

7. FUTURE PROSPECTS

The greenfield expansion at Tarapur is under erection. While the investment had been slowed down in the previous year, the recovery in demand for the Company's products has given rise to accelerate the pace of erection and installation Civil work has been largely completed for the entire plant though machinery installation will proceed in planned phases to spread the capital expenditure over the next eighteen months. Demand recovery was seen during the current year though price realisations were lower as compared to earlier years. Demand volume growth funnelled the increase in sales during the current year. API demand in the veterinary sector continues to demonstrate positive signals in view of the expanding livestock industry, focus on preventive care, digital transformation and telemedicine, rising pet ownership and spending and market expansion and penetration. The outlook for the coming years is positive and the Company hopes to utilise the opportunities offered.

8. THE CHANGE IN THE NATURE OF BUSINESS, IF ANY;

There is no change in the nature of business of the Company.

9. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND.

There was no transfer during the year to the Investor Education and Protection Fund in terms of Section 125 of the Companies Act, 2013.

10. CONSERVATION OF ENERGY-TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE ETC.

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished as Annexure A to Directors' Report.

11. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed also discussed at the meetings of the Risk Management Committee and the Board of Directors of the Company. The Company has constituted Risk Management Committee and its risk management policy is available on the website of the Company https://www.nglfinechem.com/images/pdf/risk- management-policy.pdf

12. INTERNAL CONTROL SYSTEM

The Company's internal controls system has been established on values of integrity and operational excellence and it supports the vision of the Company "To be the most sustainable and competitive Company in our industry". The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations.

These are routinely tested and certified by Statutory as well as Internal Auditors and their significant audit observations and follow up actions thereon are reported to the Audit Committee.

13. DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company has constituted a Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013 read with Companies Corporate Social Responsibility (Policy) Rules, 2014. As per provision of Section 135 of the Companies Act, 2013 read with Rule 8 of Companies Corporate Social Responsibility (Policy) Rules, 2014, the Board has approved CSR Policy and the Company has spent towards CSR activities, details of which are provided in attached Annexure B to Directors' Report.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The particulars of investments made and loans given to subsidiaries has been disclosed in the financial statements in notes 5 and 6 of the standalone financial statements. Also, Company has not given any guarantee during the year under review.

15. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All the related party transactions are entered on arm's length basis, in the ordinary course of business and are in compliance with the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel etc. which may have potential conflict with the interest of the Company at large or which warrants the approval of the shareholders. The transactions are being reported in Form AOC-2 i.e. Annexure C in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. However, the details of the transactions with Related Party are provided in the Company's financial statements (note 36) in accordance with the Accounting Standards.

All Related Party Transactions are presented to the Audit Committee and the Board. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of all related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of the transactions.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website at https://www.nglfinechem.com/images/pdf/related- party-transaction-policy-dec-2021.pdf

16. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which redresses complaints received on sexual harassment. During the financial year under review, the Company has not received any complaints of sexual harassment from any of the women employees of the Company.

17. ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of Companies Act, 2013 following is the link for Annual Return 2023-2024.

https://www.nglfinechem.com/images/pdf/ngl-mgt-7.pdf

18. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

During the financial year, the Board met five times on 15^th May, 2023, 4^th August, 2023, 10^th November, 2023, 12^th February, 2024 and 18^th March, 2024.

19. DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 134(5) of the Companies Act, 2013 The Board of Directors of the Company hereby confirm:

• That in the preparation of the annual accounts, the applicable accounting standards have been followed and there has been no material departure.

• That the selected accounting policies were applied consistently and the directors 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 as on 31^st March, 2024, and that of the profit of the Company for the year ended on that date.

• That 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.

• That the annual accounts have been prepared on a going concern basis.

• The Board has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

• The directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

20. DEPOSITS

The Company has neither accepted nor renewed any deposits during the year under review.

21. PARTICULARS OF EMPLOYEES AND REMUNERATION

The information required under section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure D to this report.

In terms of provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules, if any, forms part of the Report.

The Nomination and Remuneration Committee of the Company has affirmed at its meeting held on 17^th May, 2024 that the remuneration is as per the remuneration policy of the Company. The policy is available on the Company's website: https://www.nglfinechem.com/ images/pdf/remuneration-nomination-policy.pdf

22. CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr Dhananjay Mungale (DIN: 00007563) is appointed as Additional Non-Executive Independent Director of the Company w.e.f 18^th March, 2024 and his appointment has been ratified by members by passing special resolution through postal ballot dated 20^th April, 2024. Mr Milind Shinde (DIN: 01593560) on completing his 2^nd term as Independent Director of the Company, ceased to be an Independent Director of the Company from 31^st March, 2024.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013, the members of the Company at the 42^nd Annual General Meeting re-appointed Mrs Ajita Nachane (DIN: 00279241) Non-Executive Non-Independent Director, who was subject to retire by rotation.

In accordance with the provisions of Section 152(6) of the Companies Act, 2013 Mr Rajesh Lawande (00327301) Whole-Time Director is liable to retire by rotation in this ensuing Annual General Meeting and being eligible he has offered himself for reappointment. Your Directors recommend his re-appointment.

23. ATTRIBUTES, QUALIFICATIONS & INDEPENDENCE OF DIRECTORS, THEIR APPOINTMENT AND REMUNERATION

The Nomination & Remuneration Committee of Directors have approved a Policy https://www.nglfinechem.com/ images/pdf/terms-and-condition-of-appointment-of- independent-director.pdf for Selection, Appointment and Remuneration of Directors which inter-alia requires that composition and remuneration is reasonable and sufficient to attract, retain and motivate Directors, KMP and senior management employees and the Directors appointed shall be of high integrity with relevant expertise and experience so as to have diverse Board and the Policy also lays down the positive attributes/ criteria while recommending the candidature for the appointment as Director.

24. DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors have submitted their disclosures to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant SEBI Listing Regulations.

25. FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The familiarisation program aims to provide Independent Directors with the pharmaceutical industry scenario, the socio-economic environment in which the Company operates, the business model, the operational and financial performance of the Company, significant developments so as to enable them to take well informed decisions in a timely manner. The familiarisation program also seeks to update the Directors on the roles, responsibilities, rights and duties under the Act and other statutes. The policy on Company's familiarisation program for Independent Directors is posted on Company's website at https://www.nglfinechem.com/images/pdf/details- familarisation-programmee-2024.pdf

26. CREDIT RATING

The Company has been rated by Crisil Ltd for SME and bank rating. The SME rating has been awarded "SME 1" indicating highest level of credit worthiness adjudged in relation to other SMEs. The long-term rating is Crisil BBB+ / Stable (Reaffirmed) and short-term rating is Crisil A2 (Reaffirmed). The Company has also been rated by ICRA Ltd for bank borrowing and long-term rating has been reaffirmed as BBB+/Stable and has reaffirmed the short-term rating as A2.

27. STATUTORY AUDITORS

The Members of the Company at their 41^st Annual General Meeting held on Thursday, 30^th June, 2022 on the recommendation of Audit Committee re-appointed M/s. Manek & Associates, Chartered Accountants (FRN: 0126679W) as Statutory Auditors of your Company for a period of 5 consecutive years from the conclusion of 41^st Annual General Meeting till the conclusion of 46^th Annual General Meeting to be held in the year 2027. The Company has not proposed an Ordinary Resolution for ratification of appointment of Statutory Auditor for the Financial Year 2024-2025 because pursuant to the Companies (Amendment) Act, 2017, the same is omitted with effect from 7^th May, 2018.

28. INTERNAL AUDITORS

On recommendation of Audit Committee, the Board of Directors of the Company at its meeting held on 21^st May, 2024 has appointed Mr Kamal Dharewa from M/s. KD Practice Consulting Pvt. Ltd., Chartered Accountants, Mumbai, as internal auditors for financial year 2024-25.

29. SECRETARIAL AUDITORS

On recommendation of the Audit Committee, the Board of Directors of the Company at its meeting held on 21^st May, 2024 have appointed M/s. HSPN & Associates LLP, Company Secretaries, as Secretarial Auditors of the Company to carry out the Secretarial Audit for the Financial Year 2024-25 and to issue Secretarial Audit Report as per the prescribed format under rules in terms of Section 204(1) of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Further, the Secretarial Audit issued by M/s. HSPN & Associates LLP Company Secretaries for the financial year 2023-2024 is annexed herewith and forms part of this report as Annexure E.

Secretarial Audit Report is not applicable to the Subsidiary, not being a material subsidiary.

30. COST AUDITORS

The Company has appointed M/s. Sanghavi Randeria & Associates, as Cost Auditors of the Company for the Financial Year 2024-2025.

31. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

The Auditors' Report does not contain any qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an Annexure E which forms part of this report.

32. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management's Discussion and Analysis Report for the year under review, as stipulated under regulation 34 (3) and Part B of schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to this Annual Report.

33. CORPORATE GOVERNANCE

The Company is committed towards maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India. The Report on Corporate Governance as stipulated under regulation 34 (3) and Part C of schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report. The Certificate from the practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under regulation 34 (3) and Part E of schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also published in this Annual Report as Annexure F.

34. SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

Macrotech Polychem Private Limited is a wholly owned subsidiary of the Company. The Consolidated Financial Statements of your Company form part of this Annual Report. Annual Report of your Company does not contain the Financial Statements of its Subsidiary.

The Audited Annual Accounts and related information of the Company's Subsidiary will be made available upon request. These documents will be available for inspection during all days expect Saturdays, Sundays and public holidays from 10.00 a.m. to 4 p.m. at the Company's Registered Office. The Subsidiary Companies Audited Accounts are available on the Company's Website: https://www.nglfinechem.com/ images/pdf/audit-financial-report-31^st-march-2024. pdf

35. VIGIL MECHANISM

The Company has established a vigil mechanism policy to oversee the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimisation of employees and Directors who express their concerns. The Company has also provided direct access to Mr Rahul Nachane, Chief Ethics Counsellor on reporting issues concerning the interests of co-employees and the Company. The Vigil Mechanism Policy is available at the website of the Company: https://www.nglfinechem. com/images/pdf/vigil-mechanism-policy.pdf

36. REPORTING OF FRAUD BY AUDITORS

During the year under review, the Internal Auditors, Statutory Auditors and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Act, details of which needs to be mentioned in this Report.

37. PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, your Company has devised a policy containing criteria for evaluating the performance of the Executive, Non-Executive and Independent Non-Executive Directors, Key Managerial Personnel, Board and its Committees based on the recommendation of the Nomination & Remuneration Committee. Feedback was sought by way of a structured questionnaire covering various aspects of the Board's functioning, such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, and governance. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report, forming part of this Annual Report.

The Board of Directors of your Company expressed satisfaction about the transparency in terms of disclosures, maintaining higher governance standards and updating the Independent Directors on key topics impacting the Company.

38. MATERIAL CHANGES AND COMMITMENTS, IF ANY, 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

There are no material changes and commitments affecting the financial position of the Company occurred during the financial year.

39. THE DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the year there has been no significant material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and company's operations in future.

Company and its promoters have received a Show Cause Notice dated 29^th December, 2023 from SEBI for incorrectly disclosures in shareholding pattern for the quarters from December 2002 to June, 2019 and making incorrect disclosures as required under regulation 30(1) of SAST regulation as required promoters of the Company. Company has filed a settlement application as per SEBI (Settlement Proceedings) Regulations, 2018 to Show Cause Notice and as on the date of this report there is no further action from SEBI towards the Company.

In FY 2022-23 the Company and its Officers received a notice from Hon'ble National Lok Adalat to answer to a charge for the offence punishable under Section 148 of the Companies Act, 2013 regarding non- submission of Cost Audit Report for the Financial Year 2014-15. The management is of the opinion that there is no noncompliance, as the said provisions are not applicable. The management is seeking suitable legal re-course. As on date of signing of this report, there is no further action from the concerned authority.

40. COMMITTEES OF THE BOARD

In accordance with the Companies Act, 2013, the Board has formed a Risk Management Committee. There are currently seven Committees of the Board, as follows:

• Audit Committee

• Corporate Social Responsibility Committee

• Nomination and Remuneration Committee

• Stakeholders' Relationship Committee

• Risk Management Committee

• Administrative Committee

• Internal Complaint Committee

Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the "Report on Corporate Governance", a part of this Annual Report.

41. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

Regulation 34(2) of the SEBI Listing Regulations, inter alia, provides that the Annual Report of the top 1,000 listed entities based on market capitalisation, should mandatorily include a Business Responsibility & Sustainability Report ("BRSR") from financial year 2022-23 onwards. The Company is not in Top 1,000 list for FY 2022-23 & FY 2023-24.

Further, in line with the SEBI listing requirements, your Company has included BRSR as part of this Report for the financial year 2023-24, as Annexure H, describing the initiatives taken by the Company from an environmental, social and governance perspective.

The BRSR for the financial year 2023-24 has also been hosted on the Company's website, which can be accessed at https://www.nglfinechem.com/images/ pdf/audited-financials-report-31-march-2024.pdf

42. OTHER DISCLOSURES

The Company does not have any Employees Stock Option Scheme in force and hence particulars are not furnished, as the same are not applicable.

No proceedings against the Company is initiated or pending under the Insolvency and Bankruptcy Code, 2016.

The details of difference between amount of the valuation done at the time of onetime settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not Applicable.

43. COST RECORDS AND COST AUDIT

Maintenance of cost records as prescribed under the provisions of Section 148(1) of the Companies Act, 2013 was not applicable for the business activities carried out by the Company for the financial year 2023-24. Accordingly, such accounts and records are not made and maintained by the Company for the said period. The requirement for cost audit was not applicable for the said period as the export turnover was greater than 75% for the prior year.

44. POLICIES

The Company seeks to promote highest levels of ethical standards in the normal business transactions guided by the value system. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandates formulation of certain policies for listed companies. The Policies are reviewed periodically by the Board and are updated based on the need and compliance as per the applicable laws and rules and as amended from time to time. The policies are available on the website of the Company at https://www.nglfinechem.com/ disclosures-under-regulation.html#7

45. COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

Your Directors hereby confirm that the Company has complied with the necessary provisions of the revised Secretarial Standard 1 and Secretarial Standard 2 to the extent applicable to the Company.

46. ENHANCING SHAREHOLDER VALUE

Your company firmly believes that its success, the marketplace and a good reputation are among the primary determinants of value to the shareholder. The organisational vision is founded on the principles of good governance and delivering leading-edge products backed with dependable after sales services. Following the vision your Company is committed to creating and maximising long-term value for shareholders.

47. CAUTIONARY STATEMENT

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Company's operation include global and domestic demand and supply conditions affecting selling prices of raw materials, finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within and outside the country and various other factors.

48. ACKNOWLEDGEMENTS

Your Directors take this opportunity to express their sincere appreciation and gratitude for the continued co-operation extended by shareholders, employees, customers, banks, suppliers and other business associates.