The Members,
Your Directors have pleasure in presenting their 34th (Thirty Fourth) Annual
Report on the business and operations of the Company and the Audited Financial Statements
for the Year ended March 31,2023.
1. Financial Summary or Highlights/Performance of the Company (Standalone &
Consolidated)
(Rs. in Crores)
| Particulars |
Standalone |
Consolidated |
|
FY 2022-23 |
FY 2021-22 |
FY 2022-23 |
FY 2021-22 |
| Revenue from Operations |
686.18 |
487.25 |
686.18 |
487.25 |
| Other Income |
4.63 |
1.34 |
4.45 |
1.07 |
| Total Income |
690.81 |
488.59 |
690.63 |
488.32 |
| Cost of materials consumed |
485.26 |
343.77 |
485.26 |
343.77 |
| Changes in inventories of finished goods, work-in progress and stock-in-trade |
(96.75) |
(68.80) |
(96.75) |
(68.80) |
| Employee benefits expense |
46.82 |
31.50 |
46.82 |
31.50 |
| Finance costs |
28.94 |
19.08 |
28.94 |
19.08 |
| Depreciation and Amortization Expense |
16.20 |
11.69 |
16.20 |
11.69 |
| Other Expenses |
139.23 |
94.19 |
139.23 |
94.19 |
| Total Expenses |
619.70 |
431.43 |
619.70 |
431.43 |
| Share of profit from Joint Venture |
- |
- |
0.10 |
0.18 |
| Profit Before Tax |
71.11 |
57.16 |
71.03 |
57.07 |
| Current Tax |
12.76 |
9.87 |
12.76 |
9.87 |
| Deferred Tax Liability |
8.30 |
2.57 |
8.30 |
2.57 |
| Profit After Tax |
50.05 |
44.72 |
49.97 |
44.63 |
| Other Comprehensive Income |
0.28 |
(0.28) |
0.28 |
(0.28) |
| Total Comprehensive Income for the year |
50.33 |
44.44 |
50.25 |
44.35 |
2. Brief Description of the Company's Working during The Year/State of
Company's Affair
The Company reported a standalone revenue of Rs. 690.81 crore and consolidated revenue
of Rs. 690.63 crore (including other income) in FY 2021-22 as compared to Standalone
revenue of Rs. 488.59 crore and consolidated revenue of Rs. 488.32 crore (including other
income) in the previous year thereby registered a growth of 41% on standalone and
consolidated basis over the previous year. The standalone and consolidated Profit before
Tax (PBT) was Rs. 71.11 crore and Rs. 71.03 crore as compared to Rs. 57.16 crore and Rs.
57.07 crore respectively over the previous year. The standalone and consolidated Profit
after Tax (PAT) stood at Rs. 50.05 crore and Rs. 49.97 crore as compared to Rs. 44.72
crore and Rs. 44.63 crore over the previous year. EBITDA grew by 29% to Rs. 111.6 crores
from Rs. 86.6 crores.
The Company began FY23 on a positive note with strong all-round performance. Revenues
grew by 75%, while EBITDA and PAT improved by 58% and 51% respectively. The performance
momentum was steered by strong gains from the expanded capacity, and this came in spite of
challenging operating environment marred by high input and utility costs, logistical
disruption as well as extreme volatility in exchange rates during the Q1FY23. In the CSM/
advanced intermediate business, the Company started witnessing traction from other newer
sectors which are non-agro and non-pharma and we endeavour to progressively increase the
contribution at the Company level.
In the 1st half of the year the Company delivered a superior performance reflected by
50% growth in revenues, 35% improvement in EBITDA and 13% increase in PAT. The performance
was fueled by continued positive demand outlook from key end user segments, further aided
by gains from incremental capacity available over same period last year. All this was
achieved in an environment that was premised on prolonged inflationary headwinds in key
raw materials and other utilities.
Q3 FY23 performance was bolstered by 40% Y-o-Y gains in revenue with healthy
profitability, where both EBITDA and PAT increased by 27% and 40% Y-o-Y respectively. The
performance was consistent and witnessed accelerated built up in the business based on
strong visibility and continued positive demand environment. All the strategic initiatives
undertaken in Q3FY23 including new CAPEX announcements and forming a separate entity for
battery chemicals business were steps in the right direction to gain early mover
advantage, be future ready with capacities meeting demand and strengthening our
technological expertise. All this will result in sustained value creation for our
stakeholders.
The Company entailed several CAPEX initiatives this year to elevate it's performance
trajectory in the existing business and to participate in the sunrise sector of
lithium-ion battery chemicals. The construction progressed well as expected both in
lithium-ion battery chemicals and existing business operations. Sizeable CAPEX plans were
lined up in the second half of FY 2023, based on the progress in discussion for lithium-
ion battery materials space.
The Company concluded the FY 2022-23 on a strong note despite challenging operating
scenario aggravated by continued volatility in input costs, disruption of global supply
chains due to Russia Ukraine conflict and variations in foreign exchange rates among
others. Amid all these headwinds, the Company demonstrated solid financial performance in
FY2023 steered by 41% growth in revenues and 29% expansion in EBITDA. More importantly,
the Company reported Highest-Ever revenues and PAT in the Company's history propelled by
positive demand environment, onset of several expansion initiatives and augmentation of
the product portfolio. This is a testament of our commitment and perseverance towards
building a solid foundation for the future.
FY2023 was a momentous year for Neogen Chemicals as we charted ambitious growth plans
for both existing as well as Battery Chemicals business and saw a lot of these initiatives
take concrete shape. On one hand, the Company entered into a share purchase agreement for
acquiring 100% stake in BuLi Chemicals India Private Limited from Livent USA to
strengthen our product offerings while on the other hand, we signed a landmark agreement
with MUIS, Japan to acquire manufacturing technology license for electrolytes in
India. Both these events will significantly bolster our competitive position in the market
and lay the roadmap for the future. We have markedly expanded our R&D prowess across
several high-potential chemistries to offer deep value to our customers. Initiatives under
Battery Chemicals business progressed well, and we are on track to achieve several
milestones as per our internal forecasts.
Further during the year under review, the company has promoted and incorporated a
Wholly Owned Subsidiary of the Company on March 29, 2023, named "Neogen Ionics
Limited" ("NIL"), to carry out the Battery Chemicals Business
addressing the growth opportunities in Energy Storage such as Lithium- Ion Battery
material space and other future energy storage chemistries. The main objects of NIL is to
manufacture Lithium-Ion battery materials with an initial plan of manufacturing
electrolytes and Lithium salts needed for electrolytes.
Our expansion plans are ambitious, but modular in nature. Our intent is to cement our
leadership position in the existing business, while garnering substantial market share in
the high potential Lithium-ion battery chemicals space. With this, we believe we have
built a solid foundation for Neogen Chemicals to independently grow and self-sustain both
its existing as well as battery chemicals businesses. We are optimistic that these
advancements will enable Neogen to achieve quantum leap in its earnings and demonstrate
its manufacturing excellence to the stakeholders across the globe.
The roadmap appears equally encouraging and we are ready to march to the next leg of
growth that will demonstrate our manufacturing capabilities at scale as well as expertise
in several complex chemistries. The demand landscape remains promising and the Company
will channelise its experience to deliver sustained performance in the years to come. The
industry is supportive, and the demand scenario continues to be favourable. Our objective
is to continue on this profitable growth journey and deliver sustained value for our
stakeholders.
3. Change in the Nature of Business:
There was no change in the nature of business or the business line of the Company.
4. Dividend:
For the financial year 2022-23, based on the performance of the company, the board of
the Company is pleased to recommend a final dividend of Rs. 3 per equity share. If the
dividend as recommended by the Board is approved at the 34th Annual General Meeting the
total outflow towards Dividend on equity share would be Rs.7.48 crores.
The Board had recommended a final Dividend of Rs. 2.75 per equity share for the
financial year 2021-22, which was approved by the shareholders at its 33rd Annual General
Meeting held on September 28, 2022 amounting to Rs.6.86 crores.
The Dividend Distribution Policy ("Policy") of the Company formulated in
accordance with the terms of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations"), which endeavors for fairness,
consistency and sustainability while distributing profits to the shareholders is made
available at the website of the Company at https://
neogenchem.com/wp-content/uploads/P-Dividend- Distribution-Policy.pdf
5. Reserves
Your Company has not transferred any amount to General Reserves during the financial
year under review.
6. Share Capital
The paid up share capital of the Company is as given hereunder:
| Particulars |
Opening Balance as on April 1, 2022 |
Closing Balance as on March 31, 2023 |
| Equity shares: |
|
|
| - Number of shares |
2,49,39,316* |
2,49,39,316 |
| - Amount |
24,93,93,160 |
24,93,93,160 |
The Board of Directors at its meeting held on 8th December, 2021, inter alia approved
the issue and offer of 16,04,710 equity shares on preferential basis for cash
consideration subject to the approval of shareholders of the Company. Subsequently the
shareholders of the Company at its Extra Ordinary General meeting held on 31st December,
2021 had approved issue, offer and allotment of 16,04,710 shares of face value of Rs. 10
each on preferential basis at an issue price of Rs. 1,402.12 per Equity Share (including a
premium of Rs. 1,392.12 per Equity Share) aggregating up to Rs. 225 crores to the
identified investors. The allotment of the said equity shares of the Company on a
preferential basis was done on 6th January, 2022. The Equity shares were listed at BSE
Limited and National Stock Exchange of India Limited.
Utilization of Proceeds raised through Issue of Equity Shares on Preferential
basis
The proceeds raised through the issue and allotment of shares on 6th January, 2022 were
utilized towards the objects it was raised for and there was no deviation or variation in
the utilisation of funds raised through issue of Equity Shares on preferential basis. The
proceeds of Rs. 225 crores raised through issue and allotment of equity shares on
preferential basis, was utilised as on March 31, 2023 and the statement in this respect
was placed before the Audit Committee of the Company for review and after such review the
same was submitted to the Stock Exchange and the same is also available at the website of
the Company at https://neogenchem. com/wp-content/uploads/Reg-32-SE.pdf .
Buy Back of Securities/ Sweat Equity/ Bonus Shares/ Issue of Shares with
Differential Rights
During the year under review the Company has not bought back any of its securities, nor
has it issued any Sweat Equity or Bonus Shares or Equity Shares with Differential Rights.
7. Board of Directors and Key Managerial Personnel:
The directors of the Company as on March 31, 2023 are:
| Sr. No |
Particular |
Designation |
| 1. |
Haridas Kanani |
Chairman and Managing Director |
| 2. |
Dr. Harin Kanani |
Managing Director |
| 3. |
Sanjay Mehta |
Independent Director |
| 4. |
Hitesh Reshamwala |
Independent Director |
| 5. |
Shyamsunder Upadhyay |
Whole Time Director |
| 6. |
Anurag Surana |
Non-Executive and Non-Independent Director |
| 7. |
Prof. Ranjan Kumar Malik |
Independent Director |
| 8. |
Avi Sabavala |
Independent Woman Director |
Retirement by rotation:
As per the provisions of Section 152 of the Companies Act, 2013, not less than
two-third of the total number of Directors, other than Independent Directors shall be
liable to retire by rotation. One-third of these Directors are required to retire every
year and if eligible, these Directors qualify for reappointment. Accordingly, at the 34th
AGM, Mr. Anurag Surana (DIN: 00006665), Non[ Executive and Non-Independent Director, shall
retire by rotation and being eligible, offers himself for re[ appointment.
A detailed profile of Mr. Anurag Surana (DIN: 00006665), Non-Executive and
Non-Independent Director along with additional information required under Regulation 36(3)
of Listing Regulations and Secretarial Standard on General Meetings is provided separately
by way of Annexure to the Notice of the 34th AGM.
Change in Designation:
During the year under review, Dr. Harin Kanani (DIN: 05136947), Managing Director of
the Company was re-appointed as a Managing Director of the Company, liable to retire by
rotation, for a further term of 5 years starting from July 22, 2022 till July 21, 2027 as
per the provisions of Section 203 of the Companies Act, 2013 ("the Act"), read
with other relevant provisions and rules made thereunder and Regulation 30 of the Listing
Regulations.
Re- appointment:
Based on recommendation being received from the nomination and remuneration committee
of the Company and after taking into account the performance evaluation of Mr. Haridas
Kanani, Chairman and Managing Director of the Company during his term of five years and
considering the knowledge, acumen, expertise, experience and the substantial contribution
he brings to the Board, the Board has at its meeting held on August 5, 2023, approved the
re- appointment of Mr. Haridas Kanani as a Chairman and Managing Director of the Company
for a further term of 5 years starting from August 11,2023 to August 10, 2028, not liable
to retire by rotation, subject to the approval of the shareholders at the 34th AGM of the
Company and on such terms and conditions including remuneration as set out in the
agreement, the abstract of which is given in explanatory statement annexed to the Notice
of the 34th AGM. This proposal forms part of the agenda of the Notice of 34th AGM of the
Company.
Pursuant to provisions of Section 149(10) of the Companies Act, 2013 and based on
recommendation being received from the nomination and remuneration committee of the
Company and after taking into account the performance evaluation carried by the Board
before recommending his reappointment to the shareholders and independence of Prof. Ranjan
Kumar Malik, Independent Director of the Company during his first term of five years
ending on October 5, 2023 and considering the knowledge, acumen, expertise, experience,
independence and substantial contribution he brings to the Board, the Board has at its
meeting held on August 5, 2023, approved the re- appointment of Prof. Ranjan Kumar Malik
as an Independent Director of the Company for a second term of 5 consecutive years
starting from October 6, 2023 to to October 5, 2028, not liable to retire by rotation,
subject to the approval of the shareholders at the 34th AGM of the Company and on such
terms and conditions as set out in the agreement. This proposal forms part of the agenda
of the Notice of 34th AGM of the Company.
Pursuant to provisions of Section 149(10) of the Companies Act, 2013 and based on
recommendation being received from the nomination and remuneration committee of the
Company and after taking into account the performance evaluation carried by the Board
before recommending her reappointment to the shareholders and independence of Mrs. Avi
Sabavala, Independent Director of the Company during her first term of five years ending
on October 5, 2023 and considering the knowledge, acumen, expertise, experience,
independence and substantial contribution she brings to the Board, the Board has at its
meeting held on August 5, 2023, approved the re- appointment of Mrs. Avi Sabavala as an
Independent Director of the Company for a second term of 5 consecutive years starting from
October 6, 2023 to to October 5, 2028, not liable to retire by rotation, subject to the
approval of the shareholders at the 34th AGM of the Company and on such terms and
conditions as set out in the agreement. This proposal forms part of the agenda of the
Notice of 34th AGM of the Company.
Declaration by Directors:
The Independent Directors of the Company have separately submitted a declaration of
independence, as required, pursuant to the provisions of Section 149(7) of the Act,
stating that they meet the criteria of independence, as provided in Section 149(6) of the
Act and Regulation 16(1)(b) of the Listing Regulation and are not disqualified from
continuing as Independent Directors of your Company. Further, all the Independent
Directors of your Company have confirmed their registration / renewal of registration, on
Independent Directors' Databank. Further there has been no change in the circumstances
which may affect their status as Independent Director during the year.
Your Company has in place a Code of Conduct for the Board of Directors, Key Managerial
Personnel and Senior management personnel, which reflects the legal and ethical values to
which your Company is strongly committed. Also pursuant to the requirements of Regulation
26(3) of the Listing Regulations, all members of the Board of Directors, Key Managerial
Personnel and Senior Management Personnel have affirmed compliance with the code of
conduct for Board of Directors, Key Managerial Personnel and senior management Personnel
for the financial year ended March 31, 2023. The said code is available on the website of
the Company at https://neogenchem.com/ wp-content/uploads/E-code-of-Ethics-Directors-KMP.
pdf.
Annual Evaluation by the Board:
The Nomination and Remuneration Committee has defined the evaluation criteria for the
Board, its Committees and Directors. The functioning of the Board was evaluated by the
Nomination and Remuneration Committee on various aspects, including, degree of fulfilment
of key responsibilities, Board Structure, composition, establishment and delegation of
responsibilities to various committees, effectiveness of Board processes, Board and
Management Relations, Board Strategy and Risk Management, Stakeholder value and
responsibility, information and functioning.
The Board of Directors formally assess their own performance based on parameters which,
inter-alia, include performance of the Board on deciding long term strategies, rating the
composition and mix of Board members, discharging of governance and fiduciary duties,
handling critical and dissenting suggestions, etc. The parameters for performance
evaluation of the Directors include contributions made at the Board meeting, attendance,
instances of sharing best and next practices, domain knowledge, vision, strategy,
engagement with senior management etc.
The performance evaluation of the Independent Directors was carried out by the entire
Board, excluding Directors being evaluated. Independent Directors were evaluated based on
parameters, such as qualifications, experience, knowledge and competence.
The performance evaluation of Chairman, Executive and Non-Executive Directors were
carried out by the Independent Directors who also reviewed the performance of the Board as
a whole in their meeting held on March 11, 2023.
Familiarization Programmes for Independent Directors:
Pursuant to provisions of Regulation 25 of the Listing Regulations, the Company has
formulated a programmes for familiarizing the Independent Directors, with regard to their
roles, rights, responsibilities under the act and regulations, nature of the industry in
which company operates, current business model of the Company, etc., through various
initiatives. The details of aforementioned programmes are available on the Company's
website at https://neogenchem.com/ corporate-qovernance/#familarization-proqramme/ .
8. Particulars of Employees:
The information required under Section 197 (12) of the Act, read with Rule 5(1) of the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached
as "Annex 1" to this report. The Statement containing particulars of
employees as required under Section 197 of the Act, read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided upon
request. In terms of Section 136 of the Act, the Annual Report and accounts are being sent
to the members and others entitled thereto, excluding the information on employee's
particulars which will be available for inspection on request being sent by the member
during business hours on all working days excluding Sunday and national holidays up to the
date of 34th AGM. Any member interested in obtaining a copy thereof, may write to the
Company Secretary at investor@neogenchem.com .
9. Committees & Meetings:
The Company has duly constituted the following mandatory Committees in terms of the
provisions of the Act, read with relevant rules framed thereunder & Listing
Regulations:
a) Audit Committee
b) Stakeholders Relationship Committee
c) Nomination and Remuneration Committee
d) Corporate Social Responsibility Committee
e) Risk Management Committee
The composition of all such Committees, brief terms of reference, number of meetings
held during the year under review, and other details have been provided in the Corporate
Governance Report which forms part of this Annual Report. All the recommendations made by
the Committees were accepted by the Board.
Board Meetings:
The Board of Directors met 7 (Seven) times, that is, on May 14, 2022, July 18, 2022,
August 6, 2022, November 5, 2022, February 11, 2023, March 4, 2023 and March 11, 2023
during the financial year under review. The maximum interval between any two meetings did
not exceed 120 days, as prescribed by the Act.
Audit Committee Meetings:
The Audit Committee met 6 (Six) times during the year, that is, on May 14, 2022, July
18, 2022, August 6, 2022, November 5, 2022, February 11, 2023 and March 4, 2023.
Stakeholders Relationship Committee Meetings:
The Stakeholders' Relationship Committee met once during the year on November 5, 2022.
Nomination and Remuneration Committee Meetings:
The Nomination and Remuneration Committee met twice during the year, that is, on May
14, 2022 and July 18, 2022.
CSR Committee Meeting:
The CSR committee met twice during the year on July 18, 2022 and February 11, 2023.
Risk Management Committee:
The Board of Directors ("Directors") of your Company have constituted Risk
Management Committee in accordance with the recent amendments in Regulation 21 of the
Listing Regulations, at its meetings held on May 29, 2021. The details pursuant to the
requirement of Regulation 21 and Schedule V (C) Para 5A of the Listing Regulations
pertaining to role, terms of reference and constitution of the Risk Management Committee
of the Company have been provided in the Corporate Governance Report which forms part of
this Annual Report.
The Risk Management committee met twice during the year on May 14, 2022 and November 5,
2022.
The Committee details and the Risk Assessment and Management Plan are made available on
the website of your Company at https://neogenchem.com/ corporate-governance/ and
https://neogenchem.com/ wp-content/uploads/I-Risk-Assessment-and-Mgt-Plan. pdf
respectively.
Independent Directors meeting:
Independent Directors met once during the year under review on March 11, 2023.
10. Details of Subsidiary/Joint Ventures/ Associate Companies:
The Company does not have any associate company or a holding company.
Further during the year under review, the company has promoted and incorporated a
Wholly Owned Subsidiary of the Company on March 29, 2023, named "Neogen Ionics
Limited" ("NIL"), to to carry out the Battery Chemicals Business
addressing the growth opportunities in Energy Storage such as Lithium- Ion Battery
material space and other future energy storage chemistries. The main objects of NIL is to
manufacture
Lithium-Ion battery materials with an initial plan of manufacturing electrolytes and
Lithium salts needed for electrolytes.
The Company has entered into a Joint Venture with Dhara Fine Chem Industries. Neogen
holds 90% of the capital contribution in a partnership firm. Dhara Fine Chem Industries is
engaged in the business of manufacturing, sale and trading of Organic and Inorganic
chemicals and other related activities. Consolidated Financial Statements of the Company
have been prepared in accordance with relevant Accounting Standards issued by the
Institute of Chartered Accountants of India and section 129 (3) of the Act forming part of
this report. In accordance with Section 136 of the Act, the Audited Financial Statements,
including Consolidated Financial Statements and related information are available on the
Company's website at https://neogenchem.com/annual- reports-2/. Pursuant to the first
proviso to Section 129(3) of the Act and Rule 5 and Rule 8(1) of the Companies (Accounts)
Rules, 2014, the salient features of financial statements, performance and financial
position of the Joint Venture is given in Form AOC-1 as set out in Annex 3 to this
Report.
11. Auditors:
Statutory Auditors
Pursuant to the provisions of Section 139 of the Act and the Rules made thereunder, it
is mandatory to rotate the statutory auditors on completion of the maximum term permitted
under the provisions of the Act. In line with the requirements of the Act, JMT &
Associates, Chartered Accountants (Firm Registration No. 104167W), was appointed as the
statutory auditors of the Company to hold office for a further period of five consecutive
years from the conclusion of the 30th AGM of the Company held on September 20, 2019 till
the conclusion of the 35th AGM.
The requirement for the annual ratification of auditors' appointment at the AGM has
been omitted pursuant to Companies (Amendment) Act, 2017 notified on May 7, 2018.
JMT & Associates, have confirmed that the appointment was within the limit
specified under Section 141(3) (g) of the Act and they are not disqualified to be
reappointed as a Statutory Auditors in terms of provisions of Section 139 and 141 of the
Act and the Companies (Audit and Auditors) Rules, 2015. As required under Regulation 33(1)
(d) of Listing Regulations, JMT & Associates, have confirmed that they hold a valid
certificate issued by Peer Review Board of the Institute of Chartered Accountants of
India.
Statutory Auditors report
The Statutory Auditors Report does not contain any modified opinion, qualifications,
reservations or adverse remarks for the year under review and the observations and
comments given in the report of the Statutory Auditors read together with Notes to
Accounts are self-explanatory and hence do not call for any further explanation or
comments under Section 134 (f) (i) of the Act.
Secretarial Auditors:
DVD and Associates, Practising Company Secretaries (FCS No. 6099 CP No. 6515), were
appointed as the Secretarial Auditor of the Company for FY 2022-23 and the Secretarial
Audit Report for the financial year ended March 31, 2023 from DVD and Associates is
annexed herewith as Annex - 2 to this Report. The Secretarial Auditors' Report for
the financial year ended March 31, 2023 does not contain any qualification, reservation or
adverse remark.
Pursuant to the provisions of Section 204 of the Act and Companies (Appointment and
Remuneration of Managerial Personnel) Rule, 2014, as amended from time to time and
Regulation 24A of Listing Regulations, the Company has appointed DVD and Associates,
Practicing Company Secretaries, as Secretarial Auditors of the Company to undertake the
Secretarial Audit for the FY 2023-24. The Company has received their written consent and
confirmation that the appointment will be in accordance with the applicable provisions of
the Act and rules framed thereunder.
Cost Auditors:
The Company is required to maintain cost records as per Section 148(1) of the Act and
the rules framed thereunder, and accordingly, the Company has made and maintained such
cost accounts and records.
Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294), were
appointed as Cost Auditor of the Company for Financial Year 2022-2023 as per the
provisions of the Act. The Cost Auditors' Report for the financial year ended March 31,
2023 does not contain any qualification, reservation or adverse remark.
In terms of Section 148 of the Act read with the rules framed thereunder, the Board of
the Company on recommendation being received from the Audit committee, has appointed
Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294) as Cost
Auditor of the Company, to conduct audit of the Cost records of the Company for the
financial year ending on March 31, 2024 at a remuneration of
Rs. 3,30,000 subject to ratification of remuneration by the shareholders at the 34th
AGM by passing a resolution as set out in Item No. 7 of the Notice of 34th AGM.
Kishore Bhatia & Associates have confirmed that they are free from disqualification
specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of
the Act and that the appointment meets the requirements of Section 141(3) (g) of the Act.
They have further confirmed their independent status and an arm's length relationship with
the Company.
Reporting of Frauds:
During the year under review, the Statutory Auditors, Cost Auditors and Secretarial
Auditors 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.
12. Management Discussion and Analysis Report:
The Management Discussion and Analysis Report is presented in a separate section
forming part of this Annual Report.
13. Business Responsibility and Sustainability Report:
The Business Responsibility and Sustainability Report as stipulated under Regulation
34(2)(f) of Listing Regulations is presented in a separate section forming part of the
Annual Report.
14. Risk Management Policy:
Risks are an integral part of a business operation. Neogen has developed and
implemented a robust Risk Management Policy that monitors, identifies and suggest risk
mitigation measures. The Company has developed and implemented the Risk Assessment and
Management Policy and the same is reviewed periodically by the Board of Directors. The
Board has constituted Risk Management Committee which would be reviewing this policy
henceforth on periodic intervals. The Committee details and the Risk Assessment and
Management Plan are made available on the website of your Company at
https://neoaenchem.com/corporate-aovernance/ and
https://neogenchem.com/wp-content/uploads/I-Risk- Assessment-and-Mgt-Plan.pdf
respectively. The Salient features of the Risk Assessment and Management Plan ("the
policy") are:
• Lay down a framework for identification, measurement, evaluation, mitigation
& reporting of various risks.
• Risk management allows Neogen to minimize losses and capitalize on
opportunities.
• Understanding risk and Neogen's appetite for risk will be key considerations in
Neogen's decision making.
• Evolve the culture, processes and structures that are directed towards the
effective management of potential opportunities and adverse effects, which the business
and operations of the Company are exposed to.
15. Vigil Mechanism/Whistle-Blower Policy:
The Company has adopted a ‘Whistle-Blower Policy' for its Directors and Employees
to report genuine concerns and to provide adequate safeguards against victimization of
persons who may use such mechanism. The Mechanism is designed for enabling all the
stakeholders to communicate their concerns about illegal or unethical practices, fraud or
violation of Company's Code of Conduct if any, freely. No personnel of the Company have
been denied access to the Chairperson of the Audit Committee. During the year under
review, no complaints were received under the Whistle Blower Policy.
The functioning process of this mechanism has been elaborated in the Corporate
Governance Report forming a part of this Annual Report. The said policy can be accessed on
the company's website at https:// neogenchem.com/wp-content/uploads/L-Whistle- blower.pdf.
16. Policy on Directors' Appointment and Remuneration:
The Company has adopted a Nomination and Remuneration policy, the policy for
appointment and remuneration of Directors, key managerial personnel and senior management
officials including the criteria for determining qualifications, positive attributes,
independence of a director and other matters as per the requirements of section 178 (3) of
the Act read with relevant rules made thereunder and Listing Regulations and to develop
and recommend the Board a set of Corporate Governance Guidelines. The Policy is available
on the Company's website at https:// neogenchem.com/wp-content/uploads/A-Nomination-
and-Remuneration-Policy.pdf. The Company affirms that the remuneration paid to the
directors is as per the terms laid out in the Nomination and Remuneration Policy of the
Company.
The current policy is to have an appropriate mix of executive, non-executive and
independent directors to maintain the independence of the Board and separate its functions
of governance and management.
As on March 31, 2023, the Board had eight members, three of whom are executive
directors, one is a non[ executive and non-independent member and four are independent
directors including one independent woman director.
17. Extract of Annual Return:
Pursuant to the requirement of section 92(3) of the Act and rule 12(1) of the Companies
(Management and Administration) Rules, 2014, a copy of annual return can be accessed on
our website at https://neogenchem. com/financial-performance/#all tab|1
18. 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:
No material changes and commitments have occurred between the end of the financial year
of the Company to which the financial statements relate and the date of the report which
may affect the financial position of the Company or its status as a "Going
Concern".
19. Significant Events that Occurred Between the end of the Financial Year of
the Company to which the Financial Statements Relate and the Date of the
Report.
After the end of financial year, Neogen Chemicals Limited (Neogen) and Livent
Corporation (Livent) had jointly entered into a definitive agreement on March 4, 2023, for
Neogen to acquire 100% stake in BuLi Chemicals India Pvt. Ltd (BuLi Chem) from Livent. The
transaction was completed on May 3, 2023, pursuant to which BuLi Chem became a Wholly
Owned Subsidiary (WOS) of NCL.
BuLi Chem owns the technology to manufacture N Butyl Lithium and other organolithium
products using lithium metal, which are key reagents for lithiation reaction used in
manufacturing of several complex pharmaceutical and agrochemical intermediates. BuLi Chem
manufactures and supplies N Butyl Lithium to several leading pharma and agrochemical
companies in India and across the world and is built one of the very few commercial
facilities outside of China for this chemistry.
Neogen is one of India's leading manufacturers of bromine, lithium-based specialty
chemicals and advanced intermediates produced using multiple chemistries. This acquisition
shall boost Neogen's portfolio by offering organolithium derivatives to existing pharma
and agrochemical industries and further enhance its advanced intermediates & CSM
manufacturing business. More importantly, Neogen is expected to significantly gain from
BuLi Chem's established & proven technology expertise for handling lithium metal &
organolithium derivatives. Overall, it will unlock deep synergies by complementing the
current portfolio.
BuLi Chem, houses the Indian operations of Livent USA Corp - one of the global leaders
in speciality lithium technology. Neogen is happy to welcome the employees of BuLi Chem
who have deep experience of more than a decade in handling Organo Lithium Chemistry to the
Neogen family. They have managed to develop one of the few facilities outside of China for
this chemistry with strong track record in safety and sustainability.
Furthermore, Neogen Chemicals Limited (Neogen), had entered into an agreement on April
10, 2023 with MU Ionic Solutions Corporation, Japan. MU Ionic Solutions (MUIS) is a JV
between Mitsubishi Chemical Corporation (MCC) and UBE Corporation and is a group company
of The Mitsubishi Chemical Group (the group) a Japanese conglomerate. The group is one of
the global leaders in electrolytes used in lithium-ion batteries with a strong track
record of 30 years and has 5 electrolyte manufacturing plants located in Japan, USA, UK
and China.
As per the terms of the agreement, Neogen has obtained the license from MUIS for
proprietary and confidential manufacturing technology for making electrolyte solutions at
its manufacturing facility in India with a planned max installed capacity of upto 30,000
MT per annum. These electrolytes will be targeted by Neogen to meet the growing demand of
lithium-ion cell manufacturers in India.
The agreement will allow Neogen to ensure that the manufacturing plant meets stringent
global standards for quality, reliability, safety and efficiency for electrolytes
production. It will also help Neogen to greatly reduce approval times with Lithium-Ion
Battery makers. Neogen is honoured to be a recipient of this first-ever license issued by
MUIS the part of MCC of electrolyte manufacturing technology anywhere in the globe.
20. Details of Significant and Material orders Passed by the Regulators or
Courts or Tribunals Impacting the Going Concern Status and the Company's
Operations In Future:
During the year under review there has been no significant and material order passed by
the regulators or courts or tribunals impacting the going concern status and the Company's
operations in future.
There is no Corporate Insolvency Resolution Process initiated under the Insolvency and
Bankruptcy Code, 2016.
During the year under review, the Company signed and executed a Settlement Agreement
("Agreement") with Neogen Corporation to amicably settle the ongoing dispute
relating to the trademark ‘Neogen'.
As a part of settlement, the parties have agreed to co[ exist without confusion with
respect to the use of their respective "Neogen" marks, and subject to the terms
of the Agreement. The disclosure in this regard is available at
https://neogenchem.com/wp-content/uploads/
Intimation-of-execution-of-Settlement-Agreement.pdf
21. Details in Respect of Adequacy of internal Financial Controls with Reference
to the Financial Statements
The internal financial controls with reference to the Financial Statements are
commensurate with the size and nature of business of the Company. This internal financial
control system at company's head office and all its plants are being checked by the
Internal Auditors on a quarterly basis and is certified by the Statutory Auditors in its
report. The Internal Auditor reports directly to the Audit Committee. The adequacy,
effectiveness and implementation of the internal financial control system is also
monitored by the Audit Committee on a quarterly basis and the recommendations, if any by
the committee is placed before the Board of Directors of the Company for their review and
comments and the recommendation from the Board are duly implemented in a timely manner.
The system helps in improving operational and financial efficiency of the Company,
safeguarding of assets and prevention and detection of frauds, if any, accuracy and
completeness of the accounting records and timely preparation of reliable financial
disclosures and ensuring compliance with the policies of the Company.
22. Deposits
The Company has not accepted any deposit as per the provisions of Section 73/76 of the
Act read with the Companies (Acceptance of Deposit Rules), 2014.
23. Particulars of Loans, Guarantees or investments under section 186
The Company has not provided any guarantee or security for any loan nor has made any
investments during the Financial Year under review. The Company has granted
inter-corporate deposits (ICDs) of Rs. 60 crore during the year under review pursuant to
section 186 of the Companies Act, 2013. In terms of Section 134 of the Companies Act,
2013, the particulars of loans, guarantees and investments made by the Company under
Section 186 of the Companies Act, 2013 are detailed in Notes to the standalone financial
statements.
The Company holds investment in its Joint Venture Firm Dhara Fine Chem Industries
(Partnership firm in which the Company holds 90% share). The said investments made in
Joint Venture being exempted in terms of first provisions to section 186 (3) of the Act,
the provisions of section 186 to that extent are not applicable to the Company.
Particulars of loans/ ICDs given and investment made by the Company is provided in the
Financial Statements which may be read in conjunction with this report.
24. The details of difference between amount of the valuation done at the time
of one time settlement and the valuation done while taking loan from the
banks or financial institutions along with the reasons thereof
During the year, there has been no one-time settlement of Loan and therefore this point
is not applicable.
25. Particulars of Contracts or Arrangements with Related Parties:
The Board of Directors has adopted a policy on related party transactions. As per the
Policy on related party transactions, all transactions with related parties were reviewed
and approved by the Audit Committee. Omnibus approval was obtained for related party
transactions which are of repetitive nature and entered in the ordinary course of business
and on an arm's length basis. A statement giving details of all related party transactions
entered pursuant to omnibus approval so granted is placed before the Audit Committee on a
quarterly basis for its review. The said policy is available on the Company's website
https://neogenchem.com/ wp-content/uploads/F-Policy-on-materiality-of-related-
party-transaction.pdf.
The objective of the policy is to ensure proper approval, disclosure and reporting of
transactions that are or may be executed by and between the Company and any of its related
parties. The related party transactions are as mentioned in notes to accounts which set
out the related party transactions disclosures pursuant to IND AS-24. All the
transactions/contracts/arrangements, falling within the purview of provisions of section
188 of the Act, entered by the Company with related parties during the year under review
are in ordinary course of business and an arm's length has been maintained in the
transaction. The Company has not entered into any new material contract or arrangement
with related parties during the year under review. Therefore, there is no requirement to
report any transaction in form AOC-2 in terms of Section 188 and 134 of the Act, read with
Rule 8 of the Companies (Accounts) Rule, 2014.
26. Obligation of the Company under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
The Company has adopted a policy for prevention of sexual harassment of women at
workplace pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013 and it has also constituted an Internal Complaints Committee to
redress the complaints relating to sexual harassment of its women employees at work place
and implementation of the said Policy. All employees (permanent, contractual, temporary
and trainees) are covered under this policy.
During the year under review the Company has not received any such complaint of
harassment.
27. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings
and Outgo
The disclosure of particulars with respect to Conservation of Energy, Technology
Absorption, and Foreign Exchange Earnings and Outgo as required under Sub-section (3)(m)
of Section 134 of the Act, read with Rule 8 (3) Companies (Accounts) Rules, 2014 is
enclosed herewith as "Annex 4" to this Board's Report.
28. Corporate Social Responsibility (CSR)
In accordance with the requirements of the provisions of Section 135 of the Act, the
Company has constituted CSR Committee. The Company has revised the CSR Policy pursuant to
the Companies (Corporate Social Responsibility) Amendment Rules, 2021. The revised CSR
policy is available on Company's website at https://
neogenchem.com/wp-content/uploads/B-CSR.pdf
In compliance with the provisions of Section 135 of the Act, 2013, the Companies
(Corporate Social Responsibility) Rules, 2014 and various notifications/ circulars issued
by the Ministry of Corporate Affairs, the Company has contributed an amount of Rs. 0.96
crores as against the statutory requirement of Rs.0.95 crores towards CSR activities
directly and also through various organizations/trusts engaged in activities specified in
Schedule VII of the Act. Your Company has contributed towards CSR activities in the areas
of environmental sustainability, promoting education, providing water in village area,
providing prosthetic arm, preventive healthcare to combat COVID- 19, rural development and
women empowerment projects. The salient features of the CSR policy along with the Report
on CSR activities are given in Annex - 5 to this Directors' Report.
29. Directors' Responsibility Statement
The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of
Section 134 of the Act, shall state that—
a) Applicable accounting standards have been followed along with proper explanation
relating to material departures, if any, in preparation of the annual accounts;
b) The Directors have selected such accounting policies and applied them consistently
and made judgments and estimates that are reasonable and prudent so as to give a true and
fair view of the state of affairs of the Company at the end of the financial year March
31, 2023 and of the profit of the Company for that period;
c) The Directors have taken proper and sufficient care for the 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;
d) The Directors have prepared the annual accounts on a going concern basis;
e) The Directors have laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating
effectively; and
f) 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.
30. Transfer of Amounts to Investor Education and Protection Fund
The Company did not have any funds lying unpaid or unclaimed for a period of seven
years. Therefore, there were no funds or shares which were required to be transferred to
Investor Education and Protection Fund (IEPF) during the year under review.
The Ministry of Corporate Affairs (MCA), Government of India, through its Circular No.
17/2012 dated 23rd July, 2012 has directed companies to upload on the company's website
information regarding unpaid and unclaimed dividend. Pursuant to the said IEPF Rules, the
Company has uploaded the details of unpaid and unclaimed dividend on its website at
https:// neogenchem.com/unclaimed-unpaid-dividend/.
31. Credit Rating
CRISIL Ratings Limited and ICRA Limited carried out an annual review of credit
facilities availed by the Company. CRISIL has vide its letter dated September 15, 2022,
given the rating for the Long-Term Banking Facilities as CRISIL A-/ Positive (reaffirmed)
and of a Short-Term Banking Facilities as CRISIL A2+ (reaffirmed). ICRA has vide its
letter dated December 19, 2022, given the rating for the Long-Term Banking Facilities as
ICRA A/ Stable and of a Short Term Banking Facilities as ICRA A2+.
32. Corporate Governance Certificate, Secretarial Audit Report and Secretarial
Compliance Certificate:
In compliance with Regulation 34 read with Schedule V(C) of Listing Regulations, a
report on Corporate Governance and the certificate required under Schedule V (E) of
Listing Regulations from our Statutory Auditors, forms part of the Corporate Governance
Report.
An Annual Compliance Certificate and a Secretarial Audit Report for the FY 2022-23 from
DVD and Associates, Practicing Company Secretary of the Company forms part of the
Directors Report of the Company as Annex 2 and Annex 6 respectively.
33. Compliance of Secretarial Standard of ICSI
In terms of Section 118(10) of the Act, the Company is complying with the Secretarial
Standards issued by the Institute of Company Secretaries of India (ICSI) and approved by
the Central Government with respect to Meetings of Board of Directors and General
Meetings.
34. Listing Agreement
In compliance with SEBI Circular No. CIR/CFD/ CMD/6/2015 dated October 13, 2015, the
Company has executed a Uniform Listing Agreement with BSE Limited and National Stock
Exchange of India Limited, where the shares of the Company got listed on May 8, 2019. The
Company has paid Annual Listing Fees to both the Stock Exchanges for Financial Year ending
on March 31, 2024.
35. Prohibition of Insider Trading
In compliance with SEBI (Prohibition of Insider Trading) Regulation 2015, the Company
has adopted a ‘Code of Conduct for Prevention of Insider Trading"
("Code") in the organization. As per the Code, the Company has also adopted
Policy on inquiry in case of leak or suspected leak of UPSI and Policy for Determination
of Legitimate Purposes ("Policies").
The said Code and policies is available on the Company's website at
https://neogenchem.com/wp- content/uploads/J-Code-of-Conduct-for-Prevention-of-
Insider-Trading.pdf . The Code lays down guidelines for procedures to be followed and
disclosures to be made by insiders while trading in the securities of the Company.
The ‘Trading Window' remains closed from the end of every quarter till 48 hours
after the declaration of financial results and the same is closed when Compliance Officer
determines that Designated Persons can reasonably be expected to have possession of
Unpublished Price Sensitive Information. Ms. Unnati Kanani, Company Secretary of the
Company has been designated as the Compliance Officer to administer the Code of Conduct
and other requirements under SEBI (Prohibition of Insider Trading) Regulations, 2015.
36. Acknowledgements
The Directors express their appreciation for the sincere co-operation and assistance of
Central and State Government authorities, bankers, customers, suppliers, investors and
business associates. The Directors also wish to place on record their deep sense of
appreciation for the committed services rendered by each and every employee of Neogen
Family. The Directors acknowledge with gratitude, the encouragement and support extended
by the Company's valued stakeholders.
For and on behalf of the Board of Directors Neogen Chemicals Limited
|
Mr. Haridas Kanani |
| Place: Thane |
Chairman and Managing Director |
| Date: August 5, 2023 |
DIN: 00185487 |
|