finolex industries ltd share price share price Directors report

To the Members,

Your directors have pleasure in presenting the forty-second annual report together with the audited financial statements (standalone and consolidated) for the financial year ended March 31, 2023.

State of the Companys affairs:

Financial Results

( in Crore)

Particulars	Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Profit before depreciation, exceptional items & finance charges	413.92	1,106.90	437.72	1,104.50
Less: Finance charges	27.23	14.09	27.23	14.09
Profit before depreciation, exceptional items and taxation	386.69	1,092.81	410.49	1,090.41
Less: i. Depreciation	89.20	83.40	89.20	83.40
ii. Exceptional items (gain)/loss	-	(376.06)	-	(376.06)
iii. Provision for taxation	60.90	332.00	70.59	331.72
Profit after depreciation, exceptional items and taxation Add/(Less) :	236.59	1,053.47	250.70	1,051.35
i. Retained earnings at the beginning of the year	2,972.33	2,160.17	30.36.38	2,226.25
ii. Re-measurement of defined benefit plans and income tax effect	(0.26)	(0.24)	(0.24)	(0.15)
iii. Dividend	(248.19)	(248.19)	(248.19)	(248.19)
Retained earnings at the end of the year	2,960.47	2,965.21	3,038.65	3,029.26
Earning per equity share:	3.82	16.98	4.04	16.94

Operations

The operational performance is summarized below:

( in Crore)

Particulars	Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Revenue from Operations	4,397.05	4,647.32	4,397.05	4,647.32
Other Income	121.38	83.16	120.92	82.23
Total Income	4,518.43	4,730.48	4,517.97	4,729.55
Profit before tax (before exceptional item)	297.49	1,009.41	297.03	1,008.48
Exceptional item gain/(loss)	-	376.06	-	376.06
Profit before tax (after exceptional item)	297.49	1,385.47	297.03	1,384.54
Share of profit of associate before tax	-	-	24.26	(1.47)
Profit after tax	236.59	1,053.47	250.70	1,051.35
PVC Pipes and Fittings
Production – in MTs	301,830	230,847	301,830	230,847
Sale – in MTs	303,026	236,895	303,026	236,895
Sale – in Crores	4,113.28	3,852.67	4,113.28	3,852.67
PVC Resin
Production – in MTs	232,463	214,186	232,463	214,186
Sale – in MTs (including inter divisional):	239,638	224,924	239,638	224,924
Sale – in Crores (including inter divisional):	2,271.02	2,962.10	2,271.02	2,962.10

The total capacity of PVC pipes & fittings stands at 4,00,000 MT p.a. The sales volume for PVC pipes & fittings was 303,026 MT for the financial ended March 31, 2023 as against 2,36,895 MT for the financial year ended March 31, 2022. Total standalone income was at 4,518.43 Crore for the financial year ended March 31, 2023 against 4,730.48 Crore for the financial year ended March 31, 2022. Profit tax was at 236.59 Crore for the financial year ended March 31, 2023 as against 1,053.47 Crore for the financial year ended March 31, 2022.

During the period under review, your Company has commenced commercial operations of PVC fittings at a new state-of-the-art manufacturing facility at Talegaon, Pune (Maharashtra) with effect from March 12, 2023. The annual capacity of the said facility is 12,000 MT and the CAPEX is approximately 100 Crore, which has been funded entirely through internal accruals.

Dividend

The Board of Directors has recommended dividend of 1.50/- (i.e. 75%) per equity share (subject to deduction of tax at source). The dividend on equity shares, if approved by the Members, will absorb 93.07 Crore.

According, to the Finance Act, 2020, dividend income is taxable in the hands of the Members w.e.f. April 1, 2020 and the Company is required to deduct tax at source (TDS) from dividend paid to the Members at prescribed rates as per the Income-tax Act, 1961.

According to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Listing Regulations) the top 1000 listed entities based on market capitalization, calculated as on March 31, of every financial year are required to formulate a Dividend Distribution Policy which shall be disclosed on the website of the listed entity and a web-link shall also be provided in the Annual Report. Accordingly, the Dividend Distribution Policy of the

Company can be accessed using the following link https://www.finolexpipes.com/site/assets/files/12927/ dividend_distribution_policy.pdf .

Transfer to Reserves

The Board does not propose to transfer any amount to the General Reserve, during the financial year ended March 31, 2023. During the previous financial year, no amount was transferred to General Reserve. The total comprehensive Income for the year is 1,202.64 Crore (Previous year 1,039.07 Crores) was transferred to Reserves and Surplus of Balance Sheet.

Deposits

During the financial year, the Company has not accepted any deposits from public described under Chapter V of the Companies Act, 2013 (the Act) and as such no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

The Company had no unpaid /unclaimed deposit(s) as on March 31, 2023.

Management discussion and analysis

The Management Discussion and Analysis, as required in terms of the SEBI Listing Regulations, is annexed and forms an integral part of this report.

Consolidation of financial statements

As at the end of the financial year 2022-2023, your Company does not have any subsidiary Company.

However, it does have two associate companies namely ‘Finolex Plasson Industries Private Limited and ‘Pawas Port Limited.

Your Company has consolidated the financials of Finolex Plasson Industries Private Limited. The Company has not consolidated financials of an immaterial associate viz. ‘Pawas Port Limited, in which your Company holds 49.99% equity shares (0.05 Crore) and it has also not started operations.

The consolidated financial statements prepared as per the provisions of Section 129 of the Act and Schedule III of the Act, are annexed and forms an integral part of this report.

Revision in financial statements

There has been no revision in the financial statements of the Company during the financial year 2022-23.

Subsidiary and Associate Companies

In terms of Section 129(3) of the Act, a statement containing salient features of the financial statements of the associate or joint venture company(ies) in Form AOC-1 and forms an integral part of this report.

Pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014, the performance and financial position of the associate or joint venture companies is included in the consolidated financial statements which forms an integral part of this report.

During the financial year 2022-23, there is no change in associate company(ies) of the Company.

The Company has formulated the policy on material subsidiaries in consonance with the provisions of Regulation 16(i)(c) of the SEBI Listing Regulations, As required under Regulation 46(2)(h) of the SEBI Listing Regulations, the Material Subsidiary Policy has been uploaded on the Companys website and can be accessed through https://www.finolexpipes.com/site/ assets/files/12930/policy_on_material_subsidiary-1.pdf.

Pursuant to Regulation 34(3) of the SEBI Listing Regulations, the related party disclosures as specified in Para A of Schedule V are given below:

Sr. No.	In the accounts of	Disclosure of amounts at the year end and the maximum amount of loans/ advances/investments outstanding during the year	Remarks
1.	Holding Company	• Loans and advances in the nature of loans to subsidiary by name and amount.	No Holding Company.
		• Loans and advances in the nature of loans to associates by name and amount.
		• Loan and advances in the nature of loans to firms/companies in which directors are interested by name and amount.
2.	Subsidiary	Same disclosures as applicable to the parent company in the accounts of subsidiary company.	No Subsidiary Company
3.	Holding Company	Investments by the loanee in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan.	No Holding Company

There are no transactions made by the Company with any person or entity belonging to the promoter/ promoter group which hold(s) 10% or more shareholding in the Company.

Contracts or arrangements with related parties

The particulars of related party transactions are stated in the note no. 37 in the financial statements and Annexure-1 which forms an integral part of this report.

The related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business of the Company and prior omnibus approval is obtained for related party transactions which are of repetitive nature.

No material related party transactions, i.e. transaction with a related party exceeding Rupees One Thousand Crore or 10% of the annual consolidated turnover, as per the last audited Financial Statements of your Company whichever is lower, had been entered with any related party. There are no materially significant related party transactions entered by the Company with its Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict of interest with the Company at large.

Accordingly, the disclosure of related party transactions as required under Section 134(3) (h) of the Companies Act, 2013, in Form AOC-2 is not applicable and hence does not form part of this report. All related party transactions are placed before the Audit Committee for its approval. The Company has developed a related party transactions Manual, Standard Operating Procedures for the purpose of identifying and monitoring such transactions.

Your Company has formulated a policy on related party transactions and on dealing with related party transactions (‘RPT Policy). The Policy is available on Companys website and can be accessed through https://www.finolexpipes.com/site/assets/files/12932/ related_party_transactions_policy.pdf

Corporate Governance

A separate report on corporate governance in compliance with corporate governance requirements specified in Regulations 17 to 27 and clauses (b) to (i) and (t) of sub-regulation (2) of Regulation 46 and para C, D and E of Schedule V and Regulation 34 of the SEBI Listing Regulations along with compliance certificate dated May 22, 2023 obtained from M/s. SVD & Associates, Practicing Company Secretaries, is annexed and forms an integral part of this report

Material changes and commitments

Your directors confirm that there are no material change(s) and commitment(s) affecting the financial position of the Company which have occurred between the end of the financial year of the Company and the date of this report.

Risk management

The Risk Management Committee was duly constituted by the Board and the details of the Committee along with term of reference are provided in the Corporate Governance forming an integral part of this report.

The Company has a robust risk management policy and framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments. Risk management forms an integral part of the business planning and forecasting. The key business risks identified by the Company and its mitigation plans are included in the management discussion and analysis report.

Internal financial controls

Your Directors had laid down internal financial controls to be followed by the Company and such policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Audit Committee evaluates the internal financial controls systems periodically.

The scope and authority of the internal auditors are defined by the Audit Committee from time to time. To maintain its objectivity and independence, the internal auditors M/s. Ernst & Young, LLP report their observations to the Audit Committee of the Board. The internal auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of the internal auditors, process owners undertake corrective action in their respective areas which then strengthens the controls.

Audit observations and corrective actions thereon are presented to the Audit Committee of the Board. Based on the work performed by the internal, statutory and secretarial auditors and external consultants, including the audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by management, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2022-23.

Directors and Key Managerial Personnel:

The Board of your Company is duly constituted with a proper balance of executive, non-executive and independent directors.

Pursuant to Section 149 (1) and 161 of the Companies Act, 2013 read with Rule 8 (5) (iii) of the Companies (Accounts) Rules, 2014, the details relating to directors and key managerial personnel who were appointed / re-appointed or resigned / retired are reported as under:

1. Appointment and re-appointment of Directors:

During the financial year 2022-23, the members at the forty-first (41 ^st) Annual General Meeting held on August 30, 2022, approved the following resolutions with regard to appointment / re-appointment of Directors:

i. Mr. Prakash P. Chhabria (DIN: 00016017) Chairman of the Company was re-appointed as the Whole-time Director designated as Executive Director of the Company for a period of five years from December 1, 2021 to November 30, 2026.

ii. Mr. Sanjay S. Math (DIN: 01874086) was re-appointed as a Managing Director of the Company, for a period of six months from December 1, 2021 to May 31, 2022.

iii. Mr. Anil V. Whabi (DIN: 00142052), was appointed as a Director and as a Whole-time Director of the Company designated as Director Finance for a period of six months from December 1, 2021 to May 31, 2022. He was re-designated and appointed as Managing Director for a period of one year from June 1, 2022 to May 31, 2023.

iv. Mr. Saumya Chakrabarti (DIN: 09594036) was appointed as a Director and Whole-time Director of the Company designated as Director - Technical for a period of five years from June 1, 2022 to May 31, 2027

v. Mrs. Ritu P. Chhabria (DIN 00062144), was re-appointed as Non-Executive & Non-Independent Director liable to retire by rotation.

2. Retirement of Mr. Sanjay S. Math, Managing Director

During the financial year 2022-23, Mr. Sanjay S. Math was superannuated as Managing Director on close of business hours of May 31, 2022. Your Board places on record its sincere appreciation for valuable contribution and timely guidance of Mr. Math to the Company during his tenure.

3. Re-appointment of Mr. Saurabh S. Dhanorkar, Director

Mr. Saurabh S. Dhanorkar (DIN: 00011322), Non-Executive & Non-Independent Director will retire by rotation as Director at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

4. Re-appointment of Mrs. Kanchan U. Chitale Independent Director

Mrs. Kanchan U. Chitale (DIN: 00007267), Non-Executive & Independent Director, is proposed to be re-appointed for the second consecutive term of five years w.e.f. April 1, 2024 and she will not be liable to retire by rotation. The Board recommends her re-appointment.

5. Retirement of Mr. Anil V. Whabi, Managing Director

Mr. Anil V. Whabi will retire as Managing Director of the Company with effect from close of business hours of May 31, 2023, after rendering close to nine years of dedicated service to the Company.

The Board of Directors at its meeting held on May 22, 2023 has considered and approved the retirement of Mr. Anil V. Whabi, Managing Director and also Key Managerial Personnel with effect from close of business hours of May 31, 2023. Mr. Anil V. Whabi will cease to be Director of the Company with effect from end of business hours of May 31, 2023.

Your Board places on record its sincere appreciation for the valuable contribution of Mr. Whabi and timely guidance made by him during his tenure.

6. Appointment of Mr. Ajit Venkataraman, Additional Director & Managing Director

Consequent to the retirement of Mr. Anil V. Whabi, Managing Director on close of business hours of May 31, 2023, the Board recommends the appointment of Mr. Ajit Venkataraman (DIN: 07289950), currently Chief Executive Officer of the Company, as Additional Director & designated him as Managing Director (Key Managerial Personnel) for period of five years w.e.f June 1, 2023.

The resolutions for the aforesaid respective appointment(s) / re-appointment(s) including payment of their remuneration and details of their brief resume, nature of expertise in specific functional areas, disclosure of relationship between directors inter-se, names of the listed entities in which the person holds the directorship and the membership of the Committee of the Board of directors and shareholding in the Company and other details as required pursuant to SEBI Listing Regulations and the Secretarial Standards on General Meetings (SS-2) are contained in the notice of the 42^nd Annual General Meeting.

The Board recommends the appointment and re-appointment of Director, Managing Director and Independent Director as stated above and payment of their remuneration.

7. Independent Directors

Ms. Bhumika L. Batra (DIN: 03502004), Mrs. Kanchan U. Chitale (DIN: 00007267), Dr. Deepak R. Parikh (DIN: 06504537), Mr. Pradeep R. Rathi (DIN: 00018577) and Mr. Anami N. Roy (DIN: 01361110) are Non-Executive Independent Directors of the Company. Pursuant to Section the 149(7) of the Companies Act, 2013, all Independent Directors have submitted declaration that:

a) Each of them meet the criteria of independence as provided in Section 149 (6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI Listing Regulations

b) They are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence pursuant to Regulation 25 of the SEBI Listing Regulations and there has been no change in the circumstances affecting their status as independent directors of the Company;

c) They have complied with the requirement of inclusion of their name in the data bank maintained by Indian Institute of Corporate

Affairs as envisaged under Companies (Appointment and Qualification of Directors) Fifth Amendment Rules, 2019, as applicable and they hold valid registration certificate with Data Bank of Independent Directors;

Based on the confirmations/ disclosures received from the Independent Non-Executive Directors in terms of Regulation 25 of the SEBI Listing Regulations along-with a certificate issued by M/s. SVD & Associates., Practising Company Secretaries, (Peer Review No: P2013MH075200) Secretarial Auditors of the Company, the Board of Directors is of the opinion that the Independent Non-Executive Directors are of integrity and possess the requisite expertise and experience (including the proficiency).

8. Key Managerial Personnel (KMP)

Pursuant to the provisions of Section 203 of the Companies Act, 2013 Mr. Anil V. Whabi, Managing Director, Mr. Ajit Venkataraman, Chief Executive Officer (w.e.f. August 1, 2022) Mr. Niraj Kedia, Chief Financial Officer (w.e.f. May 20, 2022) and Mr. Ashutosh B. Kulkarni, Company Secretary are the Key Managerial Personnel of the Company as on March 31, 2023.

The Board of Directors on recommendation of Nomination and Remuneration Committee and Audit Committee, at its meeting held on July 22, 2022 appointed Mr. Ajit Venkataraman, as Chief Executive Officer and Key Managerial Personnel with effect from August 1, 2022.

Mr. Anil V. Whabi, Managing Director of the Company will superannuate on close of business hours of May 31, 2023 and accordingly he will cease to be Key Managerial Personnel of the Company.

The Board of Directors on recommendation of Nomination and Remuneration Committee, at its meeting held on May 22, 2023 appointed Mr. Ajit Venkataraman, as Managing Director and Key Managerial Personnel with effect from June 1, 2023.

Training and familiarization programme for directors

The Company has adopted the familiarization programme for independent directors in compliance of the Regulation 25(7) of the SEBI Listing Regulations, and with an aim to provide them with an insight into their roles, rights, responsibilities within the Company, the nature of the business of the Company and the business model of the Company. The Board members are provided with necessary documents, reports and internal policies to enable them to familiarize themselves with the Companys procedures and practices.

Periodic presentations were made at the Board and its Committee Meetings, on business and performance updates of the Company, the global business environment, business strategy and various risks involved.

The updates on relevant statutory changes and landmark judicial pronouncements encompassing important laws are regularly presented to the Directors.

The details of the familiarization programme for independent directors are available on the website of the Company and can be accessed through https://www.finolexpipes.com/site/assets/files/21854/ familiarization_programmes_for_independent_ directors_fy_2022-23.pdf

Policy on directors appointment and remuneration

The Company has adopted a Nomination and

Remuneration Policy (NRC Policy) for nomination and remuneration of Directors, Key Managerial Personnel (KMP), Senior Management (SM), Functional Heads (FH) and other employees, pursuant to the Act and SEBI Listing Regulations, as amended from time to time.

The salient features of the NRC Policy

i. Appointment and remuneration of Directors, KMP, SM and FH;

ii. Determination of qualifications, positive attributes and independence for appointment of a Director (Executive/Non-Executive/Independent) and recommendation to the Board matters relating to the remuneration for the Directors, KMP, SM and FH;

iii. Formulating the criteria for performance evaluation of all Directors; iv. Board Diversity;

The Board at its meeting held on February 4, 2023, revised the policy by revising the definition of ‘Senior Management, by including ‘Functional Heads as the Senior Management, pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2023.

The policy of Nomination and Remuneration is available on the website of the Company and can be accessed through https://www.finolexpipes.com/site/ assets/files/18437/nomination_and_remunaration_ policy.pdf

Annual performance evaluation of the Board, its committees and individual directors

The Company has devised a nomination and remuneration policy for performance evaluation of independent, non-executive and executive directors. The basis for this evaluation include fulfillment of the independence criteria, independence from the management, qualification, positive attributes, area of expertise and the number of directorships & memberships held in various committees of other companies.

The Board of Directors has carried out an annual evaluation of its own performance, its committees and the directors individually as per the requirements of the Act, and the SEBI Listing Regulations.

In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors. The above criteria are broadly based on the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017.

The Board and the Nomination and Remuneration

Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the board and committee meetings. At the board meeting, the performance of the Board, its Committees, and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.

Remuneration of directors and key managerial personnel

The information required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure – 1 and forms an integral part of this report.

Particulars of employees

In accordance with the provisions of Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of the limits set out in the aforesaid Rules, forms part of this Report. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136(1) of the Act, any Member, who is interested in obtaining the details, may write to the Company Secretary at investors@finolexind.com. The same is also open for inspection during working hours at the Registered Office of the Company.

Auditors and Auditors Report

Statutory Auditors

At the forty-first (41 ^st) Annual General Meeting held on August 30, 2022 the members of the Company approved the appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants, (Firm Registration No. 001076N/N500013), as Statutory Auditors of the Company to hold office for period of five (5) consecutive years commencing from the conclusion of the forty-first (41 ^st) Annual General Meeting until the conclusion of the forty-sixth (46th) AGM of the Company.

Your Companys standalone and the consolidated financial statements have been prepared in accordance with Ind AS notified under Section 133 of the Act.

The report of the Statutory Auditors on the Standalone and the Consolidated Financial Statements for the financial year ended March 31, 2023 is annexed and forms an integral part of this report and does not contain any qualifications, reservations, adverse remarks, disclaimers requiring any comments by the Board of Directors.

Cost Auditors

Your Company has maintained cost accounting records as specified by the Central Government under Section 148(1) of the Companies Act, 2013. The Board at its meeting held on May 22, 2023 has and on recommendation of the Audit Committee, appointed M/s. S. R. Bhargave & Co. as Cost Auditors to conduct an audit of cost accounting records of the Company for the financial year ending March 31, 2024. Your Company has received their written consent that the appointment is in accordance with the applicable provisions of the Act and Rules framed thereunder. The Cost Auditors have confirmed they are not disqualified to be appointed as the Cost Auditors of your Company for the financial year ending on March 31, 2024.

Pursuant to the provisions of Section 148 of the Act, and Rules made thereunder, the ratification by the Members is necessary for the payment of remuneration to cost auditors. Your directors recommend the same.

The Cost Audit Report for the financial year 2021-22, issued by M/s. S. R. Bhargave & Co., Cost Auditors, in respect of the various products prescribed under Cost Audit Rules, does not contain any qualifications, reservations, adverse remarks or disclaimers and the same was filed with the Ministry of Corporate Affairs on September 30, 2022.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Board has appointed M/s. SVD & Associates, Practicing Company Secretaries, Pune (Peer Review No: P2013MH075200) to undertake the secretarial audit of the Company for the ffinancial year 2022-23. The secretarial audit report for the financial year 2022-23, is annexed as Annexure-2 and forms an integral part of this report.

The secretarial auditors report does not contain any qualifications, reservations, or adverse remarks or disclaimer.

Secretarial Standards

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

Disclosures:

Your directors are pleased to furnish the following details which are required to be reported by the Company in the Directors Report pursuant to Section 134(3) (a) to (q) of the Act.

Annual return

In terms of Section 92(3) and Section 134(3)(a) of the Act, read with the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company for the financial year ended March 31, 2023 is available on the website of the Company and can be accessed through https://www.finolexpipes.com/ investors/compliance-report/.

Number of meetings of the Board

During the year under review, five (5) meetings of the Board of Directors were held. The details of the meetings are provided in the Corporate Governance Report.

Committees of directors

The details of the committees of the directors pursuant to the SEBI Listing Regulations and the Act, are described in the Corporate Governance Report.

Audit committee

The Audit Committee has been duly constituted as required under the provisions of the Act, and the SEBI Listing Regulations.

The required details pertaining to the composition of the Audit Committee, pursuant to Section 177 (8) of the Act, are provided in the corporate governance report.

There were no instances of not having accepted the recommendation of the Audit Committee during the financial year 2022-23, by the Board.

Directors Responsibility Statement

Pursuant to Section 134(5) of the Act, your directors, on the basis of information and documents made available to them, confirm that:

a) in the preparation of the annual financial statements for the year ended on March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

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 as at March 31, 2023 and of the profit of the Company for the year ended on that period;

c) the directors have taken proper and sufficient care for 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;

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.

Details in respect of fraud reported by Auditors

During the year under review, the statutory auditors or the cost auditors or the secretarial auditors have not reported any instances of fraud committed against the Company by its officers or employees to the audit committee/ Board and/or Central Government, under Section 143 (12) of the Act, and Rules framed thereunder, the details of which would need to be mentioned in the Boards report.

Vigil mechanism / Whistle blower policy

The Company has established a vigil mechanism Whistle Blower Policy (the "WBP"), pursuant to Section 177(9) and (10) of the Act and Regulation 22 to SEBI Listing Regulations. A vigil mechanism was established for directors, employees and by any other person(s) to report to the management instances of unethical behaviour, actual or suspected, fraud or violation of the

Companys code of conduct or ethics policy. The Vigil Mechanism provides a mechanism for employees of the Company to approach the Chairman of the Audit Committee of Directors of the Company for redressal.

No person has been denied access to the Chairman of the Audit Committee of Directors.

The Company affirms that no director or employee or other person(s) has been denied access to the Chairman of the Audit Committee and that no complaint was received during the year.

Prevention of Sexual harassment policy

The Company has zero tolerance for sexual harassment at the workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, to provide protection to employees at the workplace and for the prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. An Internal Complaints Committee has been constituted by the Company to redress any complaints received regarding sexual harassment.

Your directors state that during the year under review, there was no complaint received / case filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Disclosures in relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 have been provided in the Report on Corporate Governance.

Prohibition of Insider trading

In compliance with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015 and to preserve the confidentiality and prevent misuse of unpublished price sensitive information (UPSI), the Company has adopted a Code of Conduct to Regulate, Monitor and Report Trading by Insiders (‘Insider Trading Code) and a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (‘Code of Fair Disclosure). The Company has in place the digital structured database to monitor the insider trading activities.

The said Code of Conduct is intended to prevent the misuse of UPSI by insiders and connected persons and ensure that the Directors and designated persons of the Company and their immediate relatives shall not derive any benefit or assist others to derive any benefit from having access to and possession of such UPSI about the Company which is not in the public domain, that is to say, insider information.

The Code of Fair Disclosure ensures that the affairs of the Company are managed in a fair, transparent and ethical manner keeping in view the needs and interest of all the stakeholders.

Particulars of loans, guarantees or investments

The details, as applicable, of loans given, investments made or guarantees given pursuant to Section 186 of the Act, are disclosed in note no. 04 to the financial statements for the financial year 2022-23.

It is clarified that the Company has no loans/ advances and investments in its own shares.

Significant and material orders passed by the regulators or courts or tribunals

In terms of Rule 8 (5) (vii) of the Companies (Accounts) Rules, 2014, it is reported that no significant and material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the Company and the Companys operations in future.

Further no application neither against the Company has been filed or is pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016), nor the Company has done any one-time settlement with any Bank or Financial institutions.

Employee stock option scheme

During the year under review, your directors confirm that no shares were issued by the Company under the Finolex Industries Limited Employee Stock Option Scheme/ Plan (ESOP) of the Company.

A statement giving complete details, as at March 31, 2023, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2021 is available on the Companys website and can be accessed through https://www.finolexpipes.com/ investors/compliance-report/

The Company has obtained certificate from SVD & Associates, secretarial auditors of the Company pursuant to Regulation 13 of the Securities Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

Sweat equity shares and equity shares with differential voting rights

Your directors confirm that neither sweat equity shares nor equity shares with differential voting rights have been issued by the Company during the year under review.

The conservation of energy, technology absorption, foreign exchange earnings and outgo

Your Company is committed to achieve the highest standards of environmental excellence by adopting environmentally sustainable and effective operating systems and processes. Your Company has put in place the internationally acclaimed Environment Management System under ISO 14001 certification at Ratnagiri. Your Company, is in compliance with all applicable environmental regulations in respect of air, water, noise, hazardous waste, e-waste etc. to mitigate the potential environmental impact on society.

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo required to be given under Section 134(3) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure-3, and forms an integral part of this report.

Business Responsibility and Sustainability Report (BRSR)

Your Company does business that delivers long-term stakeholders value and benefits the society and continue to focus on its commitments which are aligned with national priorities.

As per the SEBI Circulars, effective from the financial year 2022-23, the BRSR reporting is mandatory for top 1000 listed companies by market capitalisation as on March 31, 2023. Your Company falls under the aforesaid category, hence in compliance of the same the BRSR report is annexed as Annexure-4 and forms an integral part of the report.

Corporate Social Responsibility

The Board has constituted Corporate Social

Responsibility (CSR) Committee and framed the corporate social responsibility policy pursuant to Section 135 of the Act. The required details pertaining to the composition of the CSR Committee are given in the corporate governance report.

The corporate social responsibility policy is available on the Companys website and can be accessed through https://www.finolexpipes.com/investors/policies-code-of-conduct/.

As a responsible corporate citizen, your Company conducts CSR activities in education, healthcare, sanitation, skill developments, social welfare, water conservation and women empowerment with its CSR partner, Mukul Madhav Foundation ("MMF"). Your Company has been actively contributing to the social and economic development of the underprivileged mainly in and around the Companys plants situated at Ratnagiri and Urse in the state of Maharashtra and at Masar in the state of Gujarat.

The CSR activities carried out by your Company through MMF is headed by Mrs. Ritu P. Chhabria, Managing Trustee of Mukul Madhav Foundation, and a driving force in accomplishing the activities on day-to-day basis.

During the financial year 2022-23, your Company in association with MMF has incurred expenditure on various CSR activities amounting to 22.12 Crore as against the mandatory CSR expenditure of 15.55 Crore.

The Annual report on the CSR activities is annexed Annexure-5 and forms an integral part of this report.

Cautionary statement

Statements in the Board of Directors Report and the Management Discussion & Analysis describing the Companys objectives, expectations or forecasts may be 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 Companys operations include global and domestic demand and supply conditions affecting the selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

Acknowledgements

Your directors take this opportunity to place on record their sense of gratitude to the banks, financial institutions, central and state government departments and local authorities for their guidance and support. Your directors are also grateful to the customers, suppliers and business associates of the Company for their continued co-operation and support. Your directors express their deep appreciation for the commitment, dedication and hard work put in by the employees at all levels. Lastly, your directors are grateful for the confidence and faith shown in them by the shareholders of the Company.

For and on behalf of the Board of Directors

	Prakash P. Chhabria
Date: May 22, 2023	Executive Chairman
Place: London	DIN: 00016017