india glycols ltd Management discussions

Economy and Industry Overview

With more than two years into the Covid-19 induced pandemic, the global economy continues to be plagued by uncertainty, with resurgent waves of mutant variants, supply-chain disruptions, and a return of inflation in both advanced and emerging economies. The economic damage from the ongoing conflict between Russia and Ukraine is expected to contribute to further slowdown in global growth in FY 2022-23 and add to inflation. The interest rates are expected to rise as central banks tighten policy. This overall risks derailing the post-pandemic recovery.

The global economy that was projected to show signs of recovery in 2022 after a short-lived impact of the Omicron variant has been going through a rough recovery process. As per International Monetary Funds (IMF), World Economic Outlook Update, the growth of global economy is projected to slow from an estimated 6.1% in 2021 to 3.6 percent in 2022 and 2023. The global trade volumes are forecasted to grow at about 5% in 2022, before moderating down to 4% in 2023. Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term.

As per the Economic Survey 21-22, Indias real GDP was projected to record a growth of over 8% in 2022-23. As per the IMFs latest World Economic Outlook growth projections, Indias real GDP is projected to grow at 8.2% in 2022-23 and at 6.9 % in 2023-24. This projects India as the fastest growing major economy in the world in the next two years.

In the backdrop of an evolving pandemic situation, the Government of India has adopted a calibrated fiscal policy approach to the pandemic, which had the flexibility of adapting to an evolving situation in order to support the vulnerable sections of society/firms and enable a resilient recovery. Indias unique agile policy response differed from the waterfall strategy of introducing front-loaded stimulus packages, adopted by most other countries in 2020. The stimulus measures announced so far during the year 202122 include liquidity enhancing and investment boosting measures such as the Production Linked Incentives scheme, credit guarantee schemes and export boosting initiatives. The global supply chain vacuum caused by geo-political changes work in Indias favour and expected to add momentum to economic growth trajectory as India becomes a key natural choice for sourcing and making it a promising investment destination.

Sustainability has increasingly become a focus area for the chemical industries. Industry is working on adoption of chemical recycling, decarbonization etc. These developments will likely help grow renewables, improve energy efficiency, reduce emissions, and create new markets for carbon and other byproducts as part of an increasingly circular economy. The benefits of decarbonizing chemical companies could spread beyond the industry itself, since chemistry provides the building blocks for many value chains.

The Indian chemicals industry stood at US$ 178 billion in 2019 and is expected to reach US$ 304 billion by 2025 registering a CAGR of 9.3%. The demand for chemicals is expected to expand by 9% per annum by 2025. Indian chemical industry accounts for approx. 3% of the global chemical industry is expected to contribute US$ 300 billion to Indias GDP by 2025. An investment of Rs 8 lakh crore (US$ 107.38 billion) is estimated in the Indian chemicals and petrochemicals sector by 2025. As per India Brand Equity Foundation, the chemical industry in India is extremely diversified, covering more than 80,000 commercial products. Between FY 2015 and FY 2021, the compounded annual growth rate (CAGR) in revenue for Indias chemical companies was 11% and Indian chemical industry is expected to continue the trend for next couple of years.

India Glycols Limited being the only Bio-based ingredients and Performance Chemicals Company of its kind, figures in the list of leading chemical manufacturers in the country.

Products

INDIA GLYCOLS LIMITED is one of the leading manufacturers with its presence in Bio-Based Specialities and Performance Chemicals, Potable Spirits, Ennature Biopharma, Bio Polymers and Industrial Gases. Our state- of-the-art manufacturing facilities are working to provide sustainable value added products using the superior technologies. To represent all its segment in the current context, the Company has changed the names of all the segments from Industrial Chemicals, Ethyl Alcohol (Potable) & Nutraceuticals to Bio-Based Specialities and Performance Chemicals, Potable Spirits & Ennature Biopharma, respectively. For details, refer note no. 59 of the Standalone Financial Statements.

The manufacturing building blocks are as presented below:

Manufacturing Building Blocks

The Company has organised its business into:

A. Bio-Based Specialities and Performance Chemicals("BSPC") having following :- • Bio-based Glycols (MEG, DEG, TEG and Heavy Glycols), Glycol Ethers, Glycol Ether Esters.

• Bio-based Ethylene Oxide and *Ethylene Oxide Derivatives (EODs).

• Power Alcohol (Bio Fuel), Industrial Gases, Bio Polymers etc.

B. Potable Spirits-Indian Made Foreign Liquor ("IMFL"), Branded Country Liquor and ENA (Extra Neutral Alcohol).

C. Ennature Biopharma

*till 30^th June, 2022. Post that EOD business was transferred in terms of Business Transfer Agreement. Details whereof are given under the heading Ethylene Oxide Derivatives (EODs) in this report.

The segment wise business share is indicated as below:-

Segment	Gross Revenue 2021-22 (Rs in Crores) (Domestic + Exports)	% Share
A. BIO-BASED SPECIALTIES AND PERFORMANCE CHEMICALS	2,235	32.82
B. POTABLE SPIRITS	4,419	64.89
C. ENNATURE BIOPHARMA	156	2.29
TOTAL	6,810	100.00

Bio-Based Specialities and Performance Chemicals Segment(BSPC)

Gross revenue in Bio-Based Specialities and Performance Chemicals segment has increased to Rs 2,235 Crores from Rs 2,162 Crores in FY 2021-22. This segment has contributed about 32.82% of the gross revenue of the Company.

FY	2019-20	2020-21	2021-22
Bio-Based Specialities and Performance Chemicals Gross Revenue (Rs in Crores)	2,727	2,162	2,235

Bio-based Glycols

Sales of Glycols [Monoethylene Glycol (MEG), Diethylene Glycol (DEG), Triethylene Glycol (TeG), Heavy Glycols and Glycols Ether] has increased from 75,767 MT in FY 20-21 to 81,077 MT in FY 21-22 and resultantly, the sales value also increased from Rs 1,024 Crores to Rs 1,555 Crores, respectively. The global chemical trade was adversely affected by prolonged lockdowns due to spread of Covid pandemic. The Bio-MEG sales grew in Far East markets

but experienced a slowdown in US/European markets as they were also impacted by the Covid-19 scenario and shift towards Recycled Polyethylene Tetraphyte (RPET).

International prices of crude based MEG remained in the range of US$ 650-675 during large part of the year. Tight container availability and limited sailing slots on vessels continued to impact order cycle time and disturbed delivery schedules.

IGL registered growth in the Glycol Ether segment as a result of aggressive market strategy and taking advantage of competition products being priced comparatively higher. Butyl and Propyl Glycol Ether prices were high thus pushing up the international prices of Ethyl Glycol Ethers which resulted in higher sales and better margins. There was some erosion of margins due to high sea freights and production cost going up due to high energy cost and ethanol remaining firm. The overall business performance of Glycol Ethers (exports and domestic) has been pretty impressive in terms of volume, value and contribution. All products were sold at good margins.

Ethylene Oxide Derivatives (EODs)

The Company, during the year under review, successfully formed a 49:51 JV with Clariant International Limited ("Clariant") wherein, the Company along with its affiliates holds 49% shares and Clariant holds 51% in Clariant IGL Specialty Chemicals Private Limited ("CISCPL") (erstwhile iGl Green Chemicals Private Limited). The Company through JV intends to further increase its EOD business by developing new products and applications combining its synergies with Clariant in technology. For further details of the transaction, Board Report be referred.

Surfactants and Speciality Chemicals

In order to meet the requirements of various industry sectors, India Glycols has been developing specialty surfactants as well as specialty chemicals for niche applications. These products are sold based mainly on their performance.

Opportunities & Challenges

The global MEG market is about 32 Million MT and expanding at a CAGR of about 6%. At this rate the MEG market would be in excess of US$ 65 Billion by the end of year 2031-32. In year 2020-21, the global market was estimated to be valued at US$ 35 Billion. Manufacturers of MEG are finding opportunities in the plastics and polyester industries. MEG manufacturing is being increased in order to produce polyster fiber, packaging materials and polyester films. The product further finds application in several industrial uses such as antifreeze, hydrate inhibitor in gas pipelines, coolants and as a heat transfer agent, which is projected to produce ample prospects from various end-use industries.

The biggest driver of demand is likely to be the increasing market for polyester fiber from the textile sector in Asia Pacific region. In India, the strong domestic PET demand and increase in exports of textiles and apparel by about 40% shall keep the MEG on firm footing. In India the demand for MEG has been witnessing a CAGR of around 7-8% which is higher than global average.

Reliance Industries Limited, Indian Oil Corporation Limited and India Glycols Limited are the only MEG manufacturers in the domestic market. Though production has seen a modest growth, it is not enough to meet domestic demand and the large gap is met through heavy imports.

The business environment in year 2021-22 has been very challenging for the Chemical industry due to Covid Pandemic and various global markets being subjected to lockdowns at different times of the year impacting sales as well as prices. The volatility in price greatly impacted the business. Feedstock Ethanol prices witnessed unprecedented increase throughout the year. The energy cost went up due to scarcity of coal and resulting high procurement price. The logistics cost and the sea freight went up steeply. All this had a cumulative impact on margins.

IGL performed rather well despite all the adverse factors due to persistent efforts to go into new markets and offer its product for diverse end use applications.

IGL has leveraged its position as the only Bio/ Green MEG supplier commercially and positioned its products for niche segments with high realizations. Potential customers interested in meeting their objective of using environment friendly chemicals made from natural renewable resources having low carbon footprint have shown lot of interest in IGL products. This concept offers a good business opportunity which will enable higher capacity utilization with better realization.

Power Alcohol (Bio- Fuels)

In our continued thrust towards offering sustainable and renewable ingredients, the Company has set-up Power Alcohol plants at Kashipur and Gorakhpur each with a capacity of 100 KL per day. During the year under review, production and supplies of Power Alcohol to Oil Manufacturing companies ("OMCs") for blending in Petrol as per Govt. Policy were continued by the Company from its both plants through tender participation. The Company registered a revenue of Rs 9 Crores during financial year 2021-22 as compared to Rs 74 Crores last year from sale of Power Alcohol.

Industrial Gases

IGLs Kashipur Plant has a capacity of Liquid Oxygen of 60 MT/day, out of which 20 MT/day is Medical grade and 40 MT/day is Industrial grade. During the second wave of Covid in Q1/FY 22 , the Company voluntarily converted the Industrial grade Liquid Oxygen to Medical grade and supplied 60 MT/day of Liquid Oxygen of Medical grade to the hospitals/refillers as per Government allotments. During the year under review, the Company, from its Air separation unit, produced 21,954 MT of Liquid Oxygen and 844 MT of Liquid Nitrogen. Both Liquid Oxygen and Liquid Nitrogen were sold in the market and also used for in-house requirements. In addition, Argon of 2,671 MT was also produced and its sales were 2,650 MT.

Industrial Gas Division also produced Beverage and Industrial Grade Liquid Carbon Di-oxide (LCO2) at Kashipur. During the year, your Company has produced 28,753 MT of LCO2 and its sale was 28,032 MT.

Your Company also produced ETO (Ethylene Oxide & Carbon Dioxide Gas Mixtures) under the trade name IGL-STERI GAS at its Kashipur Plant. It is suitable for sterilization of Disposable Surgical & Medical Devices, spices and packing substances like rubber, plastic etc. The Company has in-house facilities for production of EO and LCO2 which are used in production of ETO and as such it is the only plant in India to have such manufacturing facility, which gives us a distinct edge over other suppliers in the market. During the year under review, the Company has sold 1,343 MT of STERI Gas as compared to 1,181 MT in the last year.

Further, the Industrial Gases segment registered total sales of all gases of Rs 46 Crores as compared to Rs 41 Crores during the last year.

FY	2019-20	2020-21	2021-22
Sales Value (Rs in Crores)	40	41	46

Potable Spirits and Extra Neutral Alcohol (ENA)

During the year, your Company registered total sales value of Rs 4,393 Crores as compared to Rs 3,718 Crores last year in the Potable Spirits division. The Company has three state-of-the-art distilleries (Kashipur- Uttarakhand, Gorakhpur-Uttar Pradesh, and Saharanpur- Uttar Pradesh (through its subsidiary)) with a total distillery capacity of 280,000 KLPA for the production of ethyl alcohol, out of which, 80,000 KLPA is for potable alcohol. The Kashipur facility is considered one of the most efficient distilleries in the country. Apart from producing industrial alcohol for its captive consumption, IGL is also one of the biggest exporters of international quality ENA (Extra Neutral Alcohol). The Company has been certified by CONTROLUNION, an International certifying agency, for "Bonsucro MB Chain of Custody Standard" for EnA- Special Sprit.

The major deviation seen from Sanitizer market which was substantially reduced because Covid was in control in India. We also saw a decline in volume to export market due to high sea freight, blank sailings and erratic shipment schedules resulted in delayed deliveries. The Company continues to be a major player in North India for domestic pharma markets. It is a trusted and reliable supplier to many well established companies manufacturing homeopathic medicines. The Company enjoys a position of premium quality ENA supplier in the international markets and is gradually trying to increase its market share.

Kashipur is the only bottling plant in India to adopt ISO 22000 (food safety management systems) quality standards in addition to ISO 9000, 14000 and 18000. In Uttar Pradesh IGLs "Bunty Babli?" brand is the highest selling brand in the country liquor segment. The Country Liquor is now made from ENA. IGL has continue to hold the commanding position as the largest supplier of country liquor with highest market share in the states of Uttar Pradesh and Uttarakhand. During the year under review, the Company successfully launched Semi Premium Vodka called Amazing from the Gorakhpur Unit. Its Green Apple & Orange flavours are also very appreciated by the Consumers. This is because of its excellent German flavours and brilliant printed bottles. It is a favourite of the youngsters in particular. Demography of our Country is such that young population is huge, thereby there is good potential for the brand. IGL also Launched a Semi Premium Whisky named as Single Reserve. It has a unique innovative concept of "blended with Indian Single Malt". The brand is futuristic with a note of peat & has delighted the consumers. IGL intends to take the brand national and also intends to launch couple of more premium brands of IMFL in the time to come.

Another feather in the Cap of IGL is to introduce its Bunty Green Apple Vodka in Tetra pack., The Company enjoys the largest market share (over 40%) in the flavored Vodka category in the Tetra segment. The Company is a registered supplier to the Indian Defense Forces through CSD & Para Military Forces, and under premiumisation aims to introduce a new range of Whisky & Vodka brands. In high spirits, with improved quality and packaging, IMFL brands scores over the competitive market. India Glycols is also embarking on IMFL growth.

FY	2019-20	2020-21	2021-22
Potable Spirits Sales Value (Rs in Crores)	3,014	3,718	4,393

Ennature Biopharma

During the year, your Company registered sale value of Rs 153 Crores as compared to Rs 148 Crores last year in the Ennature Bio-pharma division.

With focus on the strategy to develop a diversified product portfolio, the Company has developed few APIs which did well. The division has successfully received 1^st CEP(Certification of EU pharmacopeia) from EDQM for our flagship API-Thiocolchicoside. The division is targeting to receive CEP for another API in the current fiscal. During the year under review, the Nicotine API performed very well and registered significant growth in sales volumes prompting the Company to enhance the capacity. All this will help the Company in further tapping the European and Russian markets. The Company has also launched the ENNSOL range of Cold Water Soluble ingredients for which marketing and promotional activities has started in various markets. Maxicuma (a curcumin formulation) in nanotized form, which is part of the ENNSOL range is more bioavailable than Curcumin itself, proven in the preclinical trials on animal models. Additionally, the Company has taken several energy saving and solvent recycling initiatives to make the plant more efficient and competitive. On account of pandemic, people are becoming more health cautious and , the market focus would remain more on health & health supplements, making this segment look promising in the times to come.

Exports

With an objective to create a niche market for its green chemicals, the Company has been focusing on exports as one of its key segments for future growth. For the past few years the effort has been to create a product differentiation and market segmentation on the basis of the green low carbon attributes of Bio-MEG. This has positioned the Company as a Green Chemicals Company in the international market and is today a well-known supplier of bio-glycols. The Company is working with a well thought over strategy to cater to the global high value added green market constituting Multinationals & Large Corporates, who have a special concern for the environment and have their internal sustainability objectives of moving towards green products. As result of sustained efforts, today, IGL enjoys the trust and confidence of world renowned companies in beverage/packaging/textile fiber segment and is a regular supplier of Bio-MEG made from renewable green feedstock.

IGL has been at the forefront of taking initiatives to partner with global brands to create a new paradigm in reducing the carbon footprint and meet its sustainability objectives. In this direction, IGL has partnered with a leading international technology innovator to use ethanol made from recycled industrial carbon emissions and convert into MEG. This low carbon path of Ethanol to MEG has great acceptability with consumer brands looking to bring sustainable sourced recycled carbon into their supply chain.

Despite the challenging global scenario in chemical trade, the export sales value increased by 11%. The increase was mainly driven by increase in Glycol sales value. The total export volume remained roughly same as last year. During the year under review, your Company has recorded export sales value of Rs 717 Crores as compared to Rs 645 Crores during last year. The Company continues to hold the Three Star Export House status as granted by Government of India.

FY	2019-20	2020-21	2021-22
Exports Sales Value (Rs in Crores)	747	645	717

Financial Review

Amidst the challenging business and economic conditions, the Companys overall performance resilient, consistent and good. During the FY 2021-22 on a standalone basis, your Company recorded total revenue of Rs 6,837 Crores as compared to Rs 6,070 Crores in FY 2020-21. Whereas, the profits after depreciation and tax for the FY 2021-22 were Rs 285 Crores as compared to Rs 84 Crores during the FY 2020-21 which includes an exceptional gain from slump sale of Companys BioEO (Speciality Chemicals) Business. For more financial details, Board Report be referred.

During the year under review, the Gross Fixed Assets has decreased to Rs 2,589 Crores in FY 2021-22 from Rs 2,659 Crores in FY 2020-21 on account of slump sale of Companys BioEo (Speciality Chemicals) Business to Clariant IGL Specialty Chemicals Private Limited ("CISCPL") (erstwhile IGL Green Chemicals Private Limited).

The Company has been regular in meeting its obligations towards timely payment of principal/interest to the financial Institutions and Banks.

Key Financial Ratios:

Details of Key Financial Ratios and explanation for significant changes therein are provided in note no. 64 to the Standalone Financial Statements for FY 2021-22.

Outlook

One of the critical areas of focus for most chemical companies in 2022-23 and thereafter will likely be sustainability and decarbonization. But its not only about taking out the carbon. There are also increasing calls for the industry to make less-toxic products that are safer for humans and the environment. Thus, the already widened scope will further expand significantly for chemical companies in response to shareholder and customer demand. The benefits of decarbonizing chemical companies could spread beyond the industry itself, since chemistry provides the building blocks for many value chains.

Also, with the rise of new materials and technologies, alternative energy sources and fuels, and circular- economy business models, new business ecosystems should and will emerge.

With global changing lifestyle habits of humans amid more environmental concerns, demand of speciality chemicals has surged. As per CRISIL Ratings, the resurgence in demand of specialty chemicals spurred to ramp up the capacity expansion (capex) plans in the segment.

As a dynamic and professionally driven organization, remaining always ahead of its time, IGL has emerged as a leading manufacturer of various Bio products with the distinction of being the first and the only company of its kind in the world, manufacturing bio-based performance chemicals adopting green technology.

In July, 2021, the Company has successfully formed a 49:51 JV with Clariant International Limited. The JV has emerged as a unique set-up having strengths and capabilities of the two leading companies dedicating themselves for the noble cause of environment-friendly green chemistry including Bio-based surfactants, in the world.

The Company is also a producer and supplier, in B2B category, of Nutraceuticals and phytochemical products, being derived from herbs, vitamins, minerals and with time have gathered greater acceptance as a preventive health care measure. The segment is expected to grow at a fast rate due to rising demand for dietary supplements. The growth trend in the Potable Spirits segment of the Company has also showcased better growth possibilities in the coming years.

The Company has a vast product range that covers a wide variety of specialty chemicals and herbal products such as nutraceuticals, phytochemicals, bio-polymers, industrial gases etc. User industries prefer products of IGL because they have significantly low carbon footprint. In recent times, IGL has partnered with reputed companies for supplying bio-based chemicals and aims to move towards supply of more value added chemicals. With this, IGL is well placed to become the leading manufacturer of a large number of products that will have potential to replace conventional products derived from fossil resources.

Sustainability-Health, Safety, Environment and Management Systems

India Glycols Limited prioritize employees Safety, Health and Environment to enhance its reputation as a responsible corporate. The Companys Policies covers- Quality, Safety, Health, Environment Stewardship & Energy conservation; it extends support to stakeholders and influencing the entire value chain. This also helps in sustaining environmental impacts beyond the prescribed limits and address social responsibility.

The Company has signed on to Responsible Care? Guiding Principles to become signatory to Indian Chemical Councils Responsible Care? initiative. These Principles apply to the Company globally. Being a Responsible Care? signatory, Company is committed for continual improvement of the performances in the fields of environmental protection, occupational safety and health protection, process safety, product stewardship and logistics, as well as to continuously improve dialog with the neighbours and the public.

Health

Your Company accords very high priority to provide healthy and safe working environment. Company has a medical centre at factory site with basic amenities; two qualified and experienced doctors with trained and experienced para-medical personnel are available round the clock to meet any contingency. The Company also has a qualified Occupational Health Physician. Company also has ambulances to provide necessary assistance in case of any emergency. All employees are required to undergo annual medical check-up for early diagnosis of any health problem. Company has made arrangements for treatment of employees and their dependents under the mediclaim insurance policy, which allows employee to avail treatment from any of the listed hospitals without having to make any immediate cash payments. The Company arranged free vaccination for employees and immediate family members under Pandemic. The Company also took care for the medical expenses of employees and their family members who suffered due to the Covid-19 infection. This provides the employees much needed emotional and financial security. The Company organizes blood donation camp as part of community welfare activities.

The Company also organizes medical camps at nearby villages and organize/assist in National health related programs in the nearby villages as part of community welfare activities.

Safety

Your Company has set up elaborate safety systems to ensure proper safe work environment. Emphasis is given to prevention of any accident. As a result of strict safety norms being followed Company has been able to maintain good safety record and has received various prestigious national and international safety awards recognizing the safe working environment available at the factory.

A Central Safety Committee has been constituted to continuously review and upgrade the safe working practices. Emergency management plan is in place for mitigating any kind of emergency. Proper systems have been set up to record and report any accident, which is thoroughly investigated and corrective action taken for future prevention.

At work place appropriate protective equipment and gears are provided to the employees and usage of the same is strictly monitored to ensure high level of safety. Safety training programs are regularly conducted for training the employees in proper use of safety equipment and following the safe work practices.

The Company always encourage internal and external stakeholder by conducting motivational program on safety by celebration of National Safety Day, Fire Service Day and Transport safety awareness program to promote safe work practices and environment inside and outside premises.

Various incentive schemes are in operation for motivating the employees to ensure working in the safe environment.

The Company has its own Fire Station fully equipped with Fire Tenders, modern communication facilities and elaborate auto fire hydrant system and other equipment which are manned and supervised by trained experts. There is also auto fire alarm system covering all the areas. Live fire training drills are organized to provide hands-on training to the employees.

Environmental Stewardship

Environmental stewardship refers to responsible use and protection of the natural environment through conservation and sustainable practices.

Your Company uses molasses, residue product of sugar mills generated in the process of manufacturing of sugar. The molasses converted into alcohol in the captive distillery and thereafter used in the process to make ethylene oxide and its products. Company has set up elaborate systems by making substantial capital investments for proper treatment of the effluent generated and meets all the requirements in this regard. The Company has also installed Rain Water Harvesting systems and keeps on working for reduction of water footprint (WFP).

To make the system more environmental friendly, Company has developed a green belt all around its factory by growing approx. 1,20,000 trees of different species some of which are fruit bearing in addition to providing green cover. All possible efforts are being made to preserve the environment and improve the same as far as possible.

The Company has already achieved zero effluent discharge from their Ethanol Plants by having concentrated effluent burning in specially designed Boilers.

The Company focuses on effective integration with the basic philosophy of resource optimisation, use of alternative sources and maximisation of recycle and reuse by innovation. The liquid effluent from Distillery is concentrated in the evaporator system to generate concentrated spent wash (slop). The Slop (concentrated spent wash) from the evaporator is used as fuel for the generation of steam and electricity. This is a novel boiler that has been developed for utilization of concentrated spent wash and generation of steam there from.

Sustainable Environment and Climate Change Initiatives

India Glycols Sustainable Solutions makes it easy for customers to identify, evaluate and select the right materials.

There are number of sustainable solutions and product grades. The raw material, properties, performance and/or content of these materials make a significant contribution to reduced environmental impact, from lowering carbon emissions and minimize use of the earths limited resources.

Sustainable solutions are based on number of defined action plans and standard based on Life Cycle Assessment (LCA) methodologies. India Glycols Sustainable Solutions enable customers to confidently choose high-performance materials that advance their environmental and business goals.

Your Company is continuously working for integrating the life cycle perspective in management system, as per revised Environmental Management System for bringing product and process in a more sustainable direction.

The Company believes in life cycle approach which directs business to consider responsibility on environmental protection from raw material procurement to product use. Company has conducted comparative Life Cycle Assessment (LCA) study of Bio-Mono Ethylene Glycol (Bio-MEG) based on ISO 14044-2006 standards and determining several Environmental Impacts (including Carbon Foot-Print) from its Renewable Manufacturing Approaches and conclude that "Manufacturing MEG through Renewable based raw materials is a better option than adopting Conventional Petro route approaches in India, US and Europe". The LCA study was conducted on a purchased software-SIMAPRO and report of "LCA on Bio-MEG" got Peer Reviewed.

In continuation Company has also conducted Life Cycle Assessment (LCA) study for its other products such as Bio-Ethanol, Bio-Ethylene Oxide, Bio-Glycols and Bio-Poly Ethylene Glycols etc. Company is working continuous on Life Cycle Assessment (LCA) study for its other products such as Ethylene Oxide derivatives and specialty chemicals.

Your company has become key partner in supply chain for innovative process of MEG, Ethylene Oxide and derivatives production by utilizing biotechnological converted Ethanol from industrial carbon emissions.

The Company always encourages stakeholders by conducting motivational program on environment by celebration of World Environmental Day. The focus of the World Environment Day Program was to promote environmental stewardship practices. Special campaign was taken up with communities, employees and individuals to come together and explore sustainable alternatives to reduce Air Pollution and encourage to participate in water conservation practices. The Company has taken up several initiatives in promoting climate change and environment-sustainable projects. Your Companys Gorakhpur plant has got its Large scale CDM project

(Title: Biomass based Cogeneration Project activity taken up by IGL at Gorakhpur, U.P.; Annual CERs 110,157 MT CO2 equivalent) registered at UNFCCC.

Management Systems

• Integrated Management System

Your Company is having Integrated Management System (IMS) comprising of Quality Management System, Environmental Management System, Occupational Health & Safety Management System, Food Safety Management System, Food Safety System Certificate, Energy Management System and Social Accountability. Your Company is successfully certified against the new revised High Level Structure (HLS) of Quality Management System (ISO 9001:2015), Environmental Management System (ISO 14001:2015), Occupational Health & Safety Management System (ISO 45001:2018), Energy Management System (ISO 50001:2018), Social Accountability (SA 8000:2014), Food Safety Management System (ISO 22000:2018), Food Safety System Certificate (FSSC 22000 ver-5), as applicable. All these are comprised under Integrated Management System and accreditation done by M/s DNV, a renowned certification agency.

Special emphasis on risk-based thinking has been the new focus of Quality Management System & Environmental Management System. This risk based thinking enables to determine the factors that could cause deviation in processes and thereby in management systems, which may pose business risk in turn. This risk-based thinking offers opportunity to put necessary controls, to mitigate and minimize the premature risks, in place. Furthermore, preventive actions can be implemented to avoid any potential business risk. Value addition to Environmental Management System is its new focus and emphasis on Life Cycle Perspective to achieve sustainable development by balancing three pillars Environment, Society and Economy which are essential to meet the present day need of sustainable business without compromising ability of future generation and rendering them impaired. Integrated Management System has been upgraded to cover RC 14001:2015 standard. Responsible Care helps companies to not only improve their environmental, health, safety and security performance, but also to improve their business operations. As per requirement of the standard, emphasis on risk-based thinking is given. Focus for security is also considered in addition to Quality, Health, Safety & Environment system.

The Company also has HALAL and KOSHER certificates for the defined products. The Company has worked for "Bonsucro MB Chain of Custody Standard" for the Extra Neutral Alcohol (ENA)- Special Sprit and successfully certified by CONTROLUNION. The Company uses an established ERP system of SAP S/4 HANA which is built on a robust IBM hardware platform and has helped the Company to achieve inter-alia, faster performance, improved user experience through simplified data structure, smaller data footprint & embedded analytics. The Company is practicing Behaviour Based Safety (BBS) under name "BHAVISHYA BANAYE SURAKSHIT ".

• Process Safety Management System

India Glycols is working towards implementation of Process Safety Management (PSM) along with RC in the organization to ensure systematic and high level Process Safety by elaborating its specific elements and ensuring the safety of employees, environment and physical plant assets in the event of any unexpected process excursion. All the new project and major changes has been processed through Hazard and Operability Study (HAZOP), Quantitative Risk Assessment (QRA) and Pre Startup Safety Review (PSSR). Company has digitized one of the key pillars of PSM as Management of Change in SAP system which helps to compile process safety information and changes as another key pillar of PSM.

The Company also carried out Hazard Identification and Risk Assessment as Group Risk Assessment (GRA) and have a well-defined safety work permit system to ensure safe jobs

Lean Management

Your Company has adopted a systematic approach to identifying and eliminating non-value-added activities through continuous improvement by following the product through flow processes based on a signal from the customers (internal & external). India Glycols Ltd. uses the building blocks of - standardized work, optimization of manpower, workplace organization 5S & visual controls, material handling systems, effective plant layout, improved operational and maintenance practices, quality at the source, batch cycle time reduction, customer demand-based manufacturing, point of use storage, quick changeover, cellular manufacturing, process improvements, Kaizen, world class manufacturing, synchronous manufacturing and inventory management. We are committed to work towards continual improvement of Quality, Environment, Health & Safety, Food Safety, Energy Performance and Social accountability and we discourage discrimination of any kind in any form.

R&D and Customer Oriented Innovation

R&D and innovations, for new product development (NPD), have always been driving growth of IGL, since beginning. Designing new products, establishing them with the customers, adopting novel ways to keep improving them and in the end ensuring that the products render value to the customers has been the life cycle of NPD. In order to remain competitive or to maintain an edge over competition, R&D has been focusing on finding alternative ways both in terms of inputs as well as process technology. The aim has always been to design products, while keeping the interests of customers in mind and ensuring high level of value creation and value addition. Major products of IGL are of low level of carbon footprint, keeping in view the global trends which are creating demand for products that can help achieve the targets of net zero; products being mostly derived from renewable resources.

The year gone by has been quite transformational for IGL. The Bio-EO (Speciality Chemicals) business has been transferred to a Joint Venture of IGL and Clariant International Limited. As per the business transfer arrangement, R&D facilities of Bio-EO (Speciality Chemicals) business forms part of JV. Accordingly, IGL have created a new R & D Centre focusing on NPDs of completely different chemistries as well as specialty applications. During the last one year, following notable tasks have been completed by IGL, R&D:

a) DSIR approval for new R&D set-up:

IGL R&D Centre has always been approved by DSIR (Department of Scientific and Industrial Research), Government of India, since the year 1993. Ever since then, the approval has been renewed based on it out-come oriented Research every three years. This distinction is also received based on the State-of-the- Art facilities as well as the out-come of the Research carried out in the past. By virtue of this approval, R&D activities of India Glycols are recognized by Government as of high standard. This also provide us with an opportunity to collaborate and corporate with Govt. Institution even for strategic areas. The efforts of the R&D has always been to value create and value add through New Product Development for Sustainability of the Company.

At the time of formation of JV, it was imminent to acquire DSIR approval for JV R&D. At the same time, it was also essential to secure DSIR approval also for new R&D set up of IGL. The NPD domain of BioPolymers, derivatives of bio-polymers, alternative feed stock like C-smart alcohol or Purple alcohol, Nutraceuticals, Functional foods, API etc. were covered under the new R&D plan. It is a matter of pride that all the targeted approvals from DSIR were obtained. Now, all the R&D facilities of IGL as well JV are DSIR approved. It is a notable achievement because this brings all R&D facilities at Kashipur as well as Dehradun approved by DSIR.

(b) Plan for setting up facilities to carry out NPDs work:

IGL R&D would focus on completely new range of chemistries and application, in future. For this purpose, certain process development and product development facilities have been planned. This will help design process for novel NPDs so that new range of NPDs can be launched. The focus will always be to design NPDs with low carbon foot-print.

c) Finalization of R&D Centre building for future:

In order to be able to pursue development work, lab scale facilities of the R&D housed in new building has been finalized. For taking the NPD work from Lab scale to Pilot and semi commercial scale, pilot plant facilities have also been finalized. All these facilities including the R&D building would be ready within a year. The NPD work for new specialties has started and some products have also been developed in the lab.

d) Novel specialties, of low carbon foot-print to achieve Net Zero targets:

Based on the business case, NPD plan for novel specialties has been drawn. A system for taking up of NPDs based on business case has also been put in place. In future, all the NPDs would be taken up, following this system by a NPDI group created for this purpose.

e) Future trends and growth path:

The products are being developed keeping in mind the aim of providing indigenous products for different industry sectors, by using local resources, while matching with global standards of quality. As an R&D driven organization, remaining always ahead of its time, IGL has emerged as a leading manufacturer of Bio-Glycols, BioEthylene Oxide, Bio-Glycol Ethers, Bio-Surfactants, Bio-Polymers, and performance chemicals with the distinction of being the first and the only company of its kind in the world, manufacturing bio-based performance chemicals adopting green technology. The Company has a vast product range that covers a wide variety of specialties and herbal products such as nutraceuticals, phytochemicals, bio-polymers mainly Polygalactomannans, industrial gases and liquor. User industries prefer products of IGL because they have significantly low carbon footprint. IGL has several firsts to its credit including the state-of- the-art manufacturing of bio-polymers. "Ennature Biopharma" Division, a unit which is GMP compliant, HACCP and CEP approved, established in 2008 at Dehradun, Uttarakhand, makes IGL as the leading manufacturer of nutraceuticals, APIs, etc., adopting green technology of Highly Selective Supercritical Fluid Extraction (SCFE-CO2).

The rapidly changing scenario has put a lot of demand on R&D to ensure that areas such as Environment Protection, Control of Water Pollution and Energy Efficiency. Thus, R&D will focus on innovative solutions through "GREEN CHEMISTRY" which has also been is a key focus area of India Glycols. India Glycols Ltd. is further diversifying to Bio-based Specialities; a new ranges of products are being developed based on novel chemistries and Green Technology. Customized value-added products and processes, with emphasis on "Sustainable" approaches via use of renewable RMs and savings of energy as well as water, were designed. In order to ensure that India Glycols remain ahead of its competitors, these products were developed as per global standards using renewable resources. All these products and processes met most of the international standards and accreditation of REACH/ HALAL etc.

Future growth path: Having several key starting materials at its hand, IGL is well placed to become the leading manufacturer of a large number of products that will have potential to replace conventional products derived from fossil resources. A significantly high capacity of key starting materials: Bio-ethylene; Bio- EO; Ethanol; CO2; N2; and O2, IGL is poised to exploit these starting materials for several new chemistries. There will be possibilities of a variety of products produced by IGL to replace conventional ingredients derived from fossil-resource. Thus, IGL will not only be the provider of import substitutes of Bio-specialties (specialty chemicals of minimum carbon footprint and extraordinary performance) but it will also become a resource point of quality products for de-carbonization goals. It would be appropriate to say that IGL today is the perfect example of "Make-in- India", while helping the cause of benefiting farmers, through the indigenous product design capability of IGL, R&D. In future, IGL will be a trustworthy partner for those dedicated to net zero.

f) New range of products in pipeline:

following would be the new range of products from IGL, based on unique and innovative concepts:

i) Products derived from C-smart or Purple alcohol,

ii) Bio Based specialties,

iii) Green solvents including a range of bio-esters, glymes, Specialty amines etc.,

iv) Specialty derivatives of Polygalactomannans,

v) APIs and Nutraceuticals.

IGL R&D would be focusing on following major industry sectors:

i) Oil & Gas Industry including refineries,

ii) Automobiles,

iii) Metal working Industry,

iv) Industrial and institutional cleaning,

v) Rheology modifiers for Petroleum Industry,

vi) Food Industry,

vii) Health care etc.

Internal Financial Controls and their Adequacy, Risk Management

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company periodically discusses and reviews at its Audit Committee and with its auditors the effectiveness of the internal financial control measures implemented by the Company including with reference to the Financial Statements of the Company.

The Company has a proper and adequate system of internal financial controls which includes the policies and procedures 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 systems, procedures, checks and controls are routinely tested and certified by our Statutory as well as Internal Auditors. Moreover, Company continuously upgrades and validates these systems in line with best practices and standards on internal control systems and procedures. The Company has a Risk Management Committee consisting of Directors and the senior management personnel of the Company to monitor the Risk Management Plan, to identify and mitigate the risks attached to the business of the Company.

Your Companys objective of risk management is to have a meaningful identification, measurement, prioritization of risks or exposures to potential losses on a continual basis through active participation of all members of the Company and accordingly establish controls and procedures to build a visible & structured enterprise-wide risk management framework; reduce the risk levels and mitigate their effects in the likelihood of a risk event with an aim to protect our Company from harm; and have a contingency plan to manage risks having high probability and high impact.

Risk management framework is created to ensure that risk management principles are implemented and integrated all over the organization and that information retrieved from the risk management process are correctly reported. This framework provides a stable foundation for the risk management work, orient the organizational arrangements properly in order to have a clear risk strategy across the organization & share information, experiences amongst different sites of the Company.

Considering the importance of keeping the risk management process dynamic, a quarterly review of the risks is carried out across sites and departments for necessary key risks and risk management strategies are communicated to the Board of Directors for their assessment for minimization of effects of risk.

Human Resource/Industrial Relations

Company continues to focus on training its employees on a continuous basis both on the job and through training program to face challenges in the business/industry. During the year, industrial relations have been cordial. Total Number of Employees on Companys role has been around 1,231(including 80 apprentice).

Cautionary Statement

The statement made in this report describing the Companys expectations and estimations may be a forward looking statement within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied in this report due to the influence of external and internal factors which are beyond the control of the Company.