Chembond Chemicals Ltd Directors Report.

To,

The Members,

Your Directors take pleasure in presenting the 46th Annual Report on the business and operations of your Company together with the audited financial statements for the year ended 31st March, 2021.

State of Companys Affairs Financial Results

The financial performance of your Company is as summarized below for the year under review:

( in lakhs)

Particulars

Standalone

Conso idated

2020-21 2019-20 2020-21 2019-20
Revenue from Operations 4,203.69 5,854.29 27,444.58 26,804.28
Profit for the year 967.32 554.16 2,034.43 187.29
Add: Balance as per last year 21,038.43 21,042.95 24,336.67 23,724.77
Add: Effect of previous year transaction - - - -
Add : Addition during the year - - 400.72 1,152.99
Less: Deduction during the year - - - -
Total 22,005.74 21,597.10 26,771.82 25,065.04
Appropriation
General Reserves - - 70.00 70.00
Set off of Dividend Tax in respect of dividend from Subsidiary Company (79.14) (84.28)
Interim Dividend - - - 245.00
Taxon Interim Dividend - - - 55.50
Dividend Paid - 537.93 - 292.93
Tax on Dividend Paid - 99.89 - 149.22
Balance carried to Balance Sheet 22,005.74 21,038.43 26,701.82 24,336.67
Total 22,005.74 21,597.10 26,771.82 25,065.04

Results of Operations Income

During the year under review, consolidated revenue from operations was 27,444.58 lakhs as compared to 26,804.28 lakhs in the previous year. On a standalone basis, your Companys revenue from operations was 4,203.69 lakhs as compared to 5,854.29 lakhs in the previous year.

Profit Before Tax

Consolidated profit before tax for the year was 2,852.92 lakhs as against 789.21 lakhs in the previous year. On a standalone basis, your Companys profit before tax for the current year was 1,264.90 lakhs as against 530.81 lakhs in the previous year.

Profit After Tax

Consolidated profit after tax for the year was 2,040.89 lakhs as against 308.50 lakhs in the previous year. On a standalone basis, your Companys profit after tax for the current year was 967.32 lakhs as against 554.16 lakhs in the previous year.

Recent Developments at Micro and Macro Economic Levels

Financial Year 2020-21 was an unprecedented year of Covid-19 pandemic which led to recession globally. The pandemic created significant impact on lives, livelihoods, and businesses at macro levels. Restrictions in movement led to various operational challenges during the first few months of the pandemic. The Government initiated a vaccination drive for eligible adults and when the economy seemed to recover, the second wave hit the country severely. Your Company has taken necessary measures to try to mitigate the challenges being faced by it in the business due to the Covid-19 pandemic and to safeguard the health and safety of its employees and various other stakeholders.

Dividend

The Board of Directors have recommended a final dividend of 2.25/- per share for the financial year ended 31st March 2021. In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. Your Company shall, accordingly, make the payment of the final Dividend after deduction of tax at source.

Share Capital

The movement of Equity Capital is as under:

Particulars No. of Equity Shares
Equity Capital as on 1st April 2020 13,448,288
Increase/ Decrease during the year Nil
Equity Capital as on 31st March 2021 13,448,288

Your Company has only one class of equity shares and has neither issued shares with diferential rights for dividend, voting or otherwise, nor issued shares (including sweat equity shares) to the employees or Directors of the Company, under any Scheme.

No disclosure is required under Section 67(3) (c) of the Companies Act, 2013 ("the Act") in respect of voting rights not exercised directly by the employees or Key Managerial Personnel of the Company as the provisions of the section are not applicable.

Fixed Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Act and Rules framed thereunder.

Transfer to Reserves

Your Company does not propose to transfer any amount from the current years profits to the General Reserve. (Previous year Nil)

Directors and Key Managerial Personnel

At present your Company has seven Directors consisting of four Independent Directors including a

Woman Director, two Executive Directors and one Non-executive Director. Due to the Covid-19 Pandemic the Directors of your Company took voluntary deduction of 25% in their remuneration / sitting fees for the period from Apr-Aug 2020.

In accordance with the provisions of Section 152(6) of the Act, Mr. Ashwin Nagarwadia (DIN: 00466681) NonExecutive Director, retires by rotation and being eligible, offers himself for re-appointment. His background is given in the Corporate Governance Report, which forms part of this report.

The Board has approved the continuation of Directorship of Mr. Ashwin Nagarwadia (DIN: 00466681) beyond the age of seventy-five years which is also placed for approval by Members by way of special resolution at the ensuing aGm.

Pursuant to the provisions of Section 203 of the Act, Mr. Sameer V. Shah, Chairman and Managing Director, Mr. Nirmal V. Shah, Vice Chairman and Managing Director, Mrs. Rashmi Gavli, Chief Financial Officer and Mrs. Suchita Singh, Company Secretary are the Key Managerial Personnel of the Company as on the date of this Report.

Inter-se relationship between Directors

Mr. Sameer V. Shah, Chairman and Managing Director and Mr. Nirmal V. Shah, Vice Chairman and Managing Director are relatives (siblings). Apart from this none of the Directors of the Company are in any way related to each other.

Declaration by Independent Directors

All the Independent Directors of the Company have furnished a declaration to the effect that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(1)(b) and Regulation 25 of Securities & Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘the Listing Regulations). In the opinion of the Board, all the Independent Directors possess the integrity, expertise and experience including the proficiency required to be Independent Directors of the Company, fulfil the conditions of independence as specified in the Act and the Listing Regulations and are independent of the management and have also complied with the Code for Independent Directors as prescribed in Schedule IV of the Act.

Policy on Directors appointment and Remuneration

The Company has put in place an appropriate policy on appointment and remuneration of Directors and other matters provided under Section 178(3) of the Act. This policy is uploaded on the Companys website www.chembondindia.com. Salient features of the policy on remuneration of Directors have been disclosed in the Corporate Governance section of this Report.

Number of Board Meetings

Five (5) meetings of the Board were held during the year, details of which are furnished in the Corporate Governance Report.

Performance Evaluation and its Criteria

The Board of Directors carried out an evaluation of its own performance, of the Board, Committees and of the individual Directors pursuant to the provisions of the Act and Corporate Governance requirements as prescribed by the Listing Regulations.

The performance of the Board and its Committees was evaluated by the Board after seeking inputs from the Board / Committee Members based on criteria such as composition of the Board / Committees and structure, effectiveness of the Board / Committee processes, providing of information and functioning etc. The Board and the Nomination and Remuneration Committee reviewed the performance of individual Directors based on criteria such as attendance in Board / Committee meetings, contribution in the meetings like preparedness on issues to be discussed etc.

The Independent Directors at its separate meeting held on 9th February, 2021, reviewed the performance of Non-Independent Directors and performance of the Board as a whole, performance of the Chairman of the Company taking into account the views of Executive and Non-executive Directors and assessed the quality, quantity and timeliness of flow of information to the Board to perform their duties effectively and reasonably.

Directors’ Responsibility Statement

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, in respect of the year ended 31st March, 2021, confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

(b) they had 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 and of the profit of the Company for that period;

(c) they took 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) they prepared the annual accounts on a going concern basis;

(e) they 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) they devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Audit Committee

The details in respect of role/powers/composition of the Audit Committee and other information are included in the Corporate Governance Report.

Auditor’s and Auditor’s Report

Statutory Auditors

M/s. Bathiya & Associates LLP, Chartered Accountants (FRN:101046W/W100063) were appointed as the Statutory Auditor of the Company for a period of 5 consecutive years at the 43rd Annual General Meeting (AGM) held on 11th August, 2018 until the conclusion of 48th AGM to be held in the FY 2023 on a remuneration mutually agreed upon by the Board of Directors and the Statutory Auditor.

The Report given by the Auditors on the financial statement of the Company is part of this Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Cost Auditors

As per the requirement of Central Government and pursuant to Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time, your Company has been carrying out audit of cost records every year.

The Board of Directors, on the recommendation of Audit Committee have appointed M/s. Jitendrakumar & Associates, Cost & Management Accountants, Mumbai, (FRN. 101561/Membership No. 30106) as the Cost Auditor to audit the cost records of the Company for FY 2021-22. The Company is seeking the ratification/approval of the Members for the remuneration to be paid to M/s. Jitendrakumar & Associates, Cost & Management Accountant for the FY ended 31st March, 2022.

The relevant Cost Audit Report for the FY 2019-20 was filed with Ministry of Corporate Affairs on 4th August, 2020 in Form CRA-4.

Secretarial Auditor & Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder, the Board of Directors of the Company has appointed Mr. Virendra G. Bhatt, Practicing Company Secretary (C.P. No.: 124) to undertake the Secretarial Audit of the Company for the year ended 31st March, 2021. The Secretarial Audit Report in Form MR- 3 for the Financial Year ended

31st March, 2021 has been annexed as Annexure 1.

There are no Secretarial Audit qualification for the year under review.

Subsidiaries and Step-down subsidiaries

The Company has been carrying on its domestic and international operations through its wholly owned subsidiaries (WOS) and step-down subsidiaries (SDS) as detailed below:

Your Company has seven subsidiaries and three step- down subsidiaries namely;

i. Chembond Biosciences Limited

ii. Chembond Calvatis Industrial Hygiene Systems Ltd

iii. Chembond Distribution Limited

iv. Chembond Material Technologies Private Limited

v. Chembond Polymers and Materials Limited

vi. Chembond Water Technologies Limited

vii. Phiroze Sethna Private Limited Step-down subsidiaries

viii. Chembond Clean Water Technologies Limited

ix. Chembond Water Technologies (Malaysia) Sdn Bhd

x. Gramos Chemicals India Private Limited

During the year under review Chembond Water Technologies (Thailand) Company Limited became a WOS of Chembond Water Technologies Limited and SDS of your Company. It is yet to commence business.

The details of financial performance of the subsidiaries and step-down subsidiaries are given in AOC-1 as Annexure 2.

Further, pursuant to the provisions of Section 136 of the Act, the standalone financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the Companys website www.chembondindia.com.

Remuneration to Directors and Key Managerial Personnel

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, as amended, is given in Annexure 3.

Particulars of employees

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, as amended, will be provided upon request to the Company. None of the employees of the Company are being paid remuneration exceeding the prescribed limit under the said provisions and rules.

Remuneration to Managing Director from wholly owned subsidiary

During the financial year 2020-21, Mr. Sameer V. Shah -Chairman and Managing Director received remuneration of 25.88 lakhs from Chembond Biosciences Limited, WOS Company, and Mr. Nirmal V. Shah, Vice-Chairman & Managing Director received remuneration of 48.95 Lakhs from Chembond Water Technologies Limited, WOS Company.

Policies and Disclosure Requirements

In terms of provisions of the Act and the Listing Regulations, the Company has adopted all the applicable policies. The policies are available on the website of the Company at http://www.chembondindia.com/policy.html.

All Directors and Senior Management Personnel have affirmed their adherence to the provisions of the Code of Conduct during the financial year 2020-21.

The Companys policy on Directors appointment, remuneration and other matters provided in Section 178(3) of the Act forms part of Nomination and Remuneration Policy and has been disclosed in the Corporate Governance Report.

Risk Management

The Company has its Risk Management Plan & Policy in place which is also displayed on the website of the Company. In the opinion of the Board, during the financial year 2020-21, no elements of risk which may threaten the existence of the Company were noticed by the Board. The Committee monitors the risk management plan and ensures its effectiveness. The details of Committee are set out in the Corporate Governance Report.

Internal Financial Control System

The Board is responsible for establishing and maintaining adequate internal financial control as per Section 134 of the Act.

Your Company has in place an adequate system of internal controls to ensure compliance with various policies, practices and statutes. It has procedures covering all financial and operating functions and processes. These have been designed to provide a reasonable assurance with regards to maintaining of proper accounting controls for ensuring reliability of financial reporting, monitoring of operations, protecting assets from unauthorized use or losses and compliance with regulations. Key controls have been tested during the year and corrective and preventive actions are taken for any weakness.

During the year no frauds have been detected or reported to the Audit Committee.

Corporate Governance & Vigil Mechanism

A separate Corporate Governance Report on compliance with Corporate Governance requirements as required under Regulation 34(3) read with Schedule V to the Listing Regulations forms part of this Annual Report. The same has been reviewed and certified by Mr. Virendra G. Bhatt, Practising Company Secretary, the Secretarial Auditors of the Company and Compliance Certificate in respect thereof is attached as Annexure 4.

The Company has formulated a Whistle Blower Policy, details of which are furnished in the Corporate Governance Report, thereby establishing a vigil mechanism for Directors and permanent employees for reporting genuine concerns, if any. The vigil mechanism / whistle blower policy is available on Companys website

http://www.chembondindia.com/policy.html.

Corporate Social Responsibility (CSR)

The criteria prescribed under Section 135 of the Act with respect to constituting CSR Committee, adopting CSR policy and spending amount on CSR activities in accordance with the Act is applicable to your Company from FY 2020-21.

The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale, Impact and Sustainability.

During the year, the Company has spent 11.45 lakhs on CSR activities. The Company has identified focus areas of engagement which have been enumerated in the Annual Report on CSR Activities attached as Annexure 5.

Chembond Water Technologies Limited a WOS of the Company spent an amount of 25.15 lakhs on CSR activities. The Companys CSR Policy is available on the website of the Company at http://www.chembondindia.com/policy.html.

Particulars of Related Party Transactions

All transactions entered into with related parties during the financial year were in the ordinary course of business and on arms length basis and do not attract the provisions of Section 188(1) of the Act. Suitable disclosures as required by the Indian Accounting Standards (IndAS-24) have been made in the notes to the Financial Statements. The Board has a policy for related party transactions which has been uploaded on the Companys website http://www.chembondindia.com/policy.html. There were no material Related Party Transactions during the year. Accordingly, Form No. AOC-2, prescribed under the provisions of Section 134 (3)(h) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014, for disclosure of details of Related Party Transactions, which are not "not at arms length basis" and also which are "material and arms length basis", is not provided as an annexure to this Report as it is not applicable.

The Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required to be disclosed under the Act, are provided in Annexure 6.

Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments have been disclosed in the Financial Statements.

Promoters

The Promoter Groups holding in the Company as on 31st March, 2021 was 65.88 % of the Companys paid- up Equity Capital. The members may note that the shareholding and other details of Promoters has been provided in Annual Return as mentioned below.

Annual Return as on 31st March, 2021

The Annual Return as provided under Section 92(3) of the Act and as prescribed in Form No. MGT-7 of the Companies (Management and Administration) Rules, 2014, is available on the website of the company at http//www.chembondindia.com/annual-report.html.

Management Discussion and Analysis Report

Managements Discussion and Analysis Report for the year under review, as stipulated under the Listing Regulations, is presented in a separate section, forming part of this Report.

Prevention, Prohibition and Redressal of Sexual Harassment of Women

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy for Prevention of Sexual Harassment at Workplace is available on the website of the Company http://www.chembondindia.com/policy.html. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy who are also provided training about the Act.

During the year under review, no complaint was received.

Business Responsibility Report

The Business Responsibility Report for the year ended 31st March, 2021 as stipulated under Regulation 34 of the Listing Regulations is annexed as Annexure 7.

Material changes and commitment

Except as disclosed elsewhere in the Report, there have been no material changes and commitment affecting, the financial position of your Company, which have occurred between the end of the financial year of the Company and the date of this Report.

Significant and Material Orders

No significant and material order has been passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

Compliance with Secretarial Standards

The Company has complied with the applicable Secretarial Standards.

Acknowledgements

Your Board wish to place on record their appreciation and acknowledge with gratitude the support and cooperation extended by the government authorities, bankers, customers, vendors, employees and members during the year under review and look forward to their continued support.

On behalf of the Board

Nirmal V. Shah

VC and Managing Director

Sameer V. Shah

Chairman and Managing Director

Mumbai

15th May, 2021