linde india share price Management discussions

#Pertains to dividend for the financial year 2021 @ 135% including special dividend (Previous year @ 30% for the financial year 2020) on 85,284,223 equity shares of Rs.10/- each.

Financial Performance for the 15 months period ended 31 March 2023

Your Company has recorded total revenue from operations of Rs. 31,355 million during the 15 months period ended 31 March 2023 as compared to Rs. 21,120 million achieved in the previous financial year ended 31 December 2021 (FY 2021), clocking an impressive growth of 48.5% as compared to FY 2021. While the Gases revenues grew by 33.3% from Rs. 16,611 million to Rs. 22,144 million, the revenues of Project Engineering Division doubled from Rs. 4,509 million to Rs.9,211 million in the 15 months period ended 31 March 2023.

Comparing the performance to similar period 12 months ended 31 December 2022 vis-?-vis 31 December 2021, the total revenue from operations of stood at Rs. 25,053 million as compared to Rs. 21,120 million in FY 2021, reflecting a handsome double-digit growth of 18.6%. While the Gases revenues grew by 3.9% from Rs.16,611 million to Rs. 17,257 million, the revenues of Project Engineering Division increased by 72.9% from Rs. 4,509 million to Rs. 7,796 million during the same period.

The growth in Gases revenue was driven by higher merchant liquid demand in line with economic recovery, increase in gas consumption by steel sector and higher helium & special products business. Our Project Engineering business continues to perform strongly with healthy order book position supporting mainly steel, refineries, and electronics sectors.

During the period under review, your Company achieved earnings before interest, depreciation and amortisation (EBITDA) of Rs. 8,729 million as compared to Rs. 6,013 million in FY 2021, representing a growth of 45.2%. This increase in operating profit vis-a-vis FY 2021 was due to strong growth in merchant volume mainly liquid nitrogen and liquid argon and pricing discipline. The onsite segment also recorded higher gas demand and successful pass through of cost inflations. The Packaged Gases business shows traction across all industrial products and special gas products together with high helium pricing across the globe. Resilient prices in the Companys Healthcare segment helped to mitigate lower volumes in comparison to last years Covid driven high Oxygen demand. Other key factors driving improved profitability are the cost productivity & optimisation measures. On twelve months comparison for FY 2021 and period ended 31 December 2022, the EBITDA grew by Rs. 642 million from Rs. 6,013 million in 2021 to Rs. 6,655 million in 2022, representing an increase of 10.7%.

The total depreciation for the period under review stood at Rs. 2,529 million, which was higher by Rs. 715 million as compared to FY 2021, due to longer period impact, progressive capitalization of spend and impairment of idle assets.

The Company has elected to exercise the lower tax rate of 22% (effective rate of 25.168%) permitted under the new tax rate regime under Section 115BAA of the Income Tax Act, 1961 for the year beginning 1 April 2022 resulting in lower tax expense and re-measurement of deferred tax liabilities.

Profit after tax (PAT) for the period under review amounted to Rs. 5,358 million vis-a-vis Rs.5,139 million for FY 2021 which included a pre-tax exceptional profit of Rs. 2,944 million from the sale of land in Kolkata.

On twelve months comparison, PAT stood at Rs.4,370 million against Rs. 5,139 million in FY 2021which included a pre-tax exceptional item of Rs. 2,944 million. However, PAT (pre-exceptional) performance reflects a robust growth of Rs.1,489 million from Rs. 2,881 million in FY 2021 to Rs. 4,370 million during the twelve months period ended 31 December 2022.

Change in Financial Year

The Board of Directors had at its meeting held on 14 November 2022, approved the change in Financial Year of the Company from existing "1 January to 31 December" to "1 April to 31 March" in order to avoid preparation of two sets of Audited Financial Statements - one as per the Calendar Year (Accounting Year) and the other as per the Financial Year (April - March) for Income Tax purposes, which was requiring a lot of management time and substantial efforts, at various levels every year. The Regional Director – Eastern Region, Ministry of Corporate Affairs had vide its Order dated 29 March 2023, approved the Companys application for change in its Financial Year from Calendar Year (January – December) to uniform Financial Year (April – March). Consequently, the current Financial Year of the Company comprised of 15 months period from 1 January 2022 to 31 March 2023 and thereafter from 1 April every year to 31 March of the subsequent year.

Accordingly, the Directors Report together with all its Annexures, Audited Financial Statements both Standalone and Consolidated and Auditors Report have been prepared for the 15 months period from 1 January 2022 to 31 March 2023.

Dividend

Your Board has recommended a dividend of 120% (Rs. 12/- per equity share) which comprises of a normal dividend of 45% (Rs. 4.50/- per equity share) and a special dividend of 75% (i.e., Rs. 7.50/- per equity share) on 85,284,223 equity shares of Rs.10/ each in the Company for the 15 months period ended 31 March 2023, as against a dividend of 135% (Rs.13.50 per equity share) for the year ended 31 December 2021, which comprised of a normal dividend of 35% (Rs.3.50 per equity share) and a special dividend of 100% (Rs. 10/- per equity share).

The Boards recommendation for dividend has been made after considering the sustainability of the operating performance and cash flow position of the Company and is in line with its Dividend Distribution Policy. The dividend is subject to the approval of the shareholders at the ensuing 87th Annual General Meeting scheduled to be held on Thursday, 17 August 2023 and will be paid to the Members whose names appear in the Register of Members on the date of the Book Closure fixed for this purpose. This dividend will result in cash outgo of Rs. 1,023.41 million as compared to Rs. 1,151.34 million in FY 2021. The 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 Dividend after deduction of tax at source as per the provisions of the Income Tax Act, 1961.

The Board has not recommended any transfer to general reserves from the profits during the period under review.

The Dividend Distribution Policy is annexed to this report and is also available on the Companys website at https://www.linde-gas.in/ en/images/Dividend%20Distribution%20Policy_%28FINAL%29%20 LIL_tcm526-660614.pdf

Consolidated Financial Statements

Although the Company does not have any subsidiary, as per the requirement of Section 129(3) of the Companies Act, 2013 and the applicable Indian Accounting Standard 110 issued by the Institute of Chartered Accountants of India, your Company has prepared consolidated financial statements for the 15 months period ended 31 March 2023 together with its joint venture company, viz. Linde South Asia Services Private Ltd. (earlier known as LSAS Services Private Ltd.). The said consolidated financial statements of the Company form part of the Annual Report. The Company also has two Associates as on 31 March 2023, viz. Avaada MHYavat Pvt. Ltd. and FPEL Surya Pvt. Ltd. The financials of said Associates have not been consolidated with the financials of the Company for the reasons more specifically explained in Note 1 of the Notes to the Consolidated Financials Statements forming part of this Annual Report. Since the Company does not have a subsidiary, the compliance under Section 136 about separate financial statements do not apply to it.

Details of Joint Venture and Associate Companies

As on 31 March 2023, the Company had two joint ventures and two associates respectively, whose details are provided below:

Bellary Oxygen Company Private Ltd.

Bellary Oxygen Company Private Ltd. is a joint venture of the Company in the gases business with Inox Air Products Private Ltd. as the other JV partner and both JV partners own 50% of the issued and paid up share capital of the joint venture company. The said joint venture company operated an 855 tpd Air Separation Unit at Bellary, Karnataka for supply of gases under a long-term gas supply agreement to JSW Steel Ltd.s works at Bellary. As mentioned in the earlier Annual Reports of the previous years in the update on Belloxy Divestment Business, upon the expiry of the gas supply contract with JSW Steel Ltd. on

14 November 2021, Bellary Oxygen Company Private Ltd. signed and executed the Asset Sale Agreement with JSW Steel Ltd. Your Company has subsequently filed the closure report with the CCI and it is proposed to liquidate the joint venture company. Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the joint venture company in the prescribed Form AOC-1 is annexed to this report.

Linde South Asia Services Private Ltd. (formerly known as LSAS Services Private Ltd.)

Linde South Asia Services Private Ltd. is a Joint Venture company between Linde India Ltd. and Praxair India Private Ltd., with both the JV partners owning 50% each of its total issued and paid-up equity share capital. Linde South Asia and Management Services Agreement with both the JV partners, under which, the Joint Venture Company renders O&M Services to both Linde India Ltd. and Praxair India Private Ltd., which consists of carrying out all support services relating to functions such as Procurement, SHEQ, Human Resources, Finance, IT, Legal, Administration, Business Development, Onsite account management, Sales & Marketing, Product Management, etc. on an arms length basis.

Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the joint venture companies in the prescribed Form AOC-1 is annexed to this report.

[Annexure 2]

Avaada MHYavat Private Ltd.

Avaada MHYavat Private Ltd. was incorporated on 3 December 2019 in the name and style of ‘Avaada HNSirsa Private Limited. The name of the Company was changed from ‘Avaada HNSirsa Private Limited to ‘Avaada MHYavat Private Limited in the year 2021. The Company is engaged in the business of establishing, commissioning, setting up, operating and generation of electricity through renewable energy sources such as wind, solar, bio-mass, hydro, geothermal, co-generation and/or any other means in India or elsewhere, including transmission, distribution, supply and sale of such power either directly or through transmission lines and facilities of Central/ State Governments or Private Companies or Electricity Boards to industries and to Central/ State Government and other consumers of electricity including captive consumption. Your Company has invested a sum of Rs. 114 million towards subscription of 11,375,000 equity shares of Avaada MHYavat Private Ltd. representing 26% of the total paid-up capital of the said Associate. These investments were made with an objective to purchase renewable power under captive mechanism, resulting in a lower tariff, consequent cost savings and reduction in carbon footprints of the Company.

FPEL Surya Private Ltd.

FPEL Surya Private Ltd. was incorporated on 11 September 2021 and is engaged in the business of establishing, commissioning, setting operation and generation of electricity through renewable energy source such as wind, solar, and/or any other means in India or elsewhere, including transmission, distribution, supply and sale of such power either directly or through transmission lines and facilities of Central/State Governments or Private Companies or Electricity Board to industries and to Central/State Government and other consumers of electricity including captive consumption.Your Company has invested a sum of Rs. 76.95 million towards subscription of 15,39,000 equity shares of FPEL Surya Private Ltd. representing 26% of the total paid-up capital of the said Associate. These investments were also made with an objective to purchase renewable power under captive mechanism, resulting in a lower tariff and consequent cost savings.

Business Segments

Your Companys business has two broad segments, viz. Gases & Related Products and Project Engineering in line with the operating model of the Linde Plc Group. The details about these business segments together with the industry developments are given below:

Gases & Related Products

The Gases & Related Products segment comprises of pipeline gas supplies (Onsite) to large industrial customers, mainly the primary steel, glass and chemical industries, supply of liquefied gases through Cryogenic tankers (Bulk) to cater to mid-size demands across a wide range of industrial sectors and compressed gas supply in cylinders (Packaged Gas) for meeting smaller demand for gases mainly across fabrication, manufacturing and construction industry. The primary production of gases (oxygen, nitrogen and argon) is mostly achieved through cryogenic distillation of air in Air Separation Units (ASU). Oxygen, Nitrogen and Argon can also be produced in the gaseous state and supplied through pipeline to the Onsite customers or produced in liquid form and stored in insulated cryogenic tanks for supply to Bulk customers or further processed in the Packaged Gas plants to bottle compressed gas in cylinders. The strategy of the bulk and packaged gas business continues to focus on building density and sustaining market leadership through application led gas sales and enhanced service levels. The Healthcare business, an important part of the Gases business, provides high quality gases for pharmaceutical use such as medical oxygen, synthetic air and nitrous oxide in addition to providing state of the art medical gas distribution systems to major hospitals.

Industry Update

In 2022, as the world was recovering from pandemic-induced contraction, the Russia-Ukraine conflict, and inflation, the Indian economy was staging a broad-based recovery across sectors, positioning itself to resume pre-pandemic growth. While the global giants experienced high inflation in 2022 for the first time in three to four decades, India saw relatively lower inflation rates. Indian Rupee performed well compared to other Emerging Market Economies in April-December 2022. RBIs shift towards a monetary tightening cycle since April 2022 helped guide the trajectory of inflation in the country.

The Indian government took several steps to encourage domestic pharmaceutical drug manufacturing, including financial outlay in bulk drugs and medical devices to reduce reliance on imports. In addition, the government approved a PLI scheme for 16 plants producing key starting materials (KSMs), drug intermediates, and active pharmaceutical ingredients (APIs).

India is targeting to be the 3^rd largest economy by 2030 overtaking Japan and Germany. According to Department for Promotion of Industry and Internal Trade (DPIIT), India received a total foreign direct investment (FDI) inflow of US$ 58.77 billion in FY 2021-22. It is estimated that 1.4 million medical tourists have visited India in 2022 as the country positions itself as a global health destination.

India made the Net Zero Pledge, promising to achieve net zero emissions by 2070. As of 2022, installed solar power capacity (under the National Solar Mission) stood at 61.6 GW. The government had sanctioned the entire target capacity of 40 GW for the development of 59 Solar Parks in 16 states as of September 2022.

Steel sector: India ranks as the worlds second-largest producer of steel with this industry alone accounting for a significant portion of the nations GDP. Steel industry has emerged as a focus area due to expected rise in domestic consumption due to increased infrastructure construction and thriving automobile and railway sectors. In FY 2022, the production of crude steel and finished steel stood at 133.6 MT and 120 MT, respectively. Indias steel export rose by 25.1% year-on-year and stood at 13.49 MT. Export duty on Iron ore concentrates and pellets was raised to 50% and 45% respectively along with 15% export duty on pig iron to reduce the prices of steel in India by 15- 25%.

As a part of Glasgow commitments to achieve net zero emission by 2070, Ministry of Steel has taken multiple initiatives to decarbonize and improve resource efficiency of the Steel sector such as exploring Low Carbon Steel manufacture, Green Hydrogen usage in Steel making, Carbon capture, Storage and Utilization (CCUs), etc.

Domestic Steel is growing at a fast pace which augurs well for the Onsite business and Merchant business in addition to the cascading effects in other sectors. We expect the robust growth to continue at the same levels with the current support and focus from the central government.

Automotive sector: India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second largest bus manufacturer and third largest heavy truck manufacturer in the world. Indias annual production of automobiles in FY 2022 was 22.93 million vehicles. In FY 2022, total automobile exports from India stood at 5.60 million vehicles. India has a significant cost advantage, as automobile firms save 10-25% on operations vis-?-vis Europe and Latin America. In FY 2022, the Indian passenger car market was valued at US$ 32.70 billion (5.62 million units) with passenger vehicle sales reaching 3.07 million.

In Union Budget 2023-24 presented on 1 February 2023, adequate funds have been allocated for scrapping of old vehicles of Central and State Government. Replacing old polluting vehicles is indicated as an important part of greener economy.

The Indian automobile industry contributes significant portion of Indias GDP. The auto components industry provides direct employment to 1.50 million people. This sector registered a CAGR of 6.35% and was valued at US$ 56.50 billion in FY 2022. As per Automobile Component Manufacturers Association (ACMA) forecast, auto component exports from India is expected to reach US$ 30 million by 2026.

The government aims to develop India as a global manufacturing and research and development (R&D) hub for automotive sector. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) to act as a facilitator between government and the automotive sector. Government is also working to create an integrated electric vehicle (EV) mobility ecosystem with a low carbon footprint and high passenger density with an emphasis on urban transportation reform.

The Indian vehicle export is targeted to increase by five times over 2016-26. The electric vehicle industry in India is picking pace with 100% FDI possible, new manufacturing hubs, and increased push to improving charging infrastructure. EV sales have surged more than 2,218 percent over the past three years, with over 4,42,901 electric cars sold in FY 2023 (till 9 December), as compared to 19,100 sold in FY 2020.

The Indian government has planned US$ 3.50 billion in incentives over a five-year period until 2026 under a revamped scheme to encourage production and export of clean technology vehicles. Initiatives like Make in India, the Automotive Mission Plan 2026, and NEMMP 2020 will be a net positive for the sector.

Owing to the low penetration of passenger vehicles in the market, there is expected to be further growth in this segment boosting robust sales growth of Argon.

Electronics Sector: The PLI for semiconductor manufacturing was set at approx. US$ 10 billion, with the goal of making India one of the worlds major producers of the components. This has attracted investments from large conglomerates including global majors in the electronics/ semiconductors segment keen to setup finished products and chip manufacturing plants in India aided by the favourable investment climate and through a longer-term China Plus One policy.

After a sharp rise in the export of mobile phones, the export of electronic goods is now on the rise. Over US$ 11 billion worth of mobile phones were exported last fiscal year. According to data made public by the commerce department, the exports of electronic goods may have risen by more than 50% to US$ 23.60 billion in the fiscal year 2022-23. As per the report, electronic goods were the sixth-biggest item in the basket. Due to the governments efforts to increase mobile phone production in India, electronic exports have increased significantly in recent years. This manufacturing includes marquee devices like Apples iPhones.

With the impetus and thrust from the government on the semiconductor segment, we see a positive impact on all lines of business going forward.

Application Technologies: A key factor in the growth of MPG business has been new wins based on diverse Application Technologies. New wins in the Iron and Steel, Secondary Copper, and Secondary Lead and Manufacturing Industry segments continued to increase in 2022, just like previous years. Fuel savings, decarbonization and cost saving are the main drivers. The consumption pattern since Covid has changed, with more people consuming packaged and processed foods. As a result, the Ready to Cook and Ready to Eat segments PSO for bottom chilling and cryo freezing received first-time awards. The market for nitrogen dosing has also expanded from packaged water to edible oils and energy drinks. New gas applications for cutting gas and tyre curing are now undergoing testing.

Crude oil prices: Crude oil prices have been stable across towards the end of 2022 and early 2023. According to the data released by Department for Promotion of Industry and Internal Trade (DPIIT), FDI inflows in Indias petroleum and natural gas sector stood at US$ 7.98 billion between April 2000-March 2022.

Gases Performance

The Company continued to optimize plant operations with a view to improve specific power in various plants on an ongoing basis. Productivity initiatives were taken up at various sites to improve profitability. The Company has started sourcing of renewable energy through long term contract for 15 years for Taloja plant for nearly 50MU/year. The Company has signed long term agreements for renewable sourcing for its new upcoming units at Dahej, Sricity and Ludhiana for majority of its consumption. The same has also been done for its unit in Selaqui starting from Q4 2023-24. The Company is also installing rooftop solar panels in some of its sites where feasible. It has plans to tie up renewable sources of energy on long term basis at its Rourkela plant sites, while exploring other sites as well.

The drive for the improvement in efficiency continued in 2022 also and several specific power reduction projects were carried out across the sites resulting in savings of more than 850kW. Loss reduction projects were also successfully undertaken at some sites.

Merchant Bulk business witnessed an 8% increase in revenues against FY 2021. Growth in pharma has helped drive up Nitrogen volumes. Increased Oxygen and Nitrogen sales were catered to due to a spike in requirement from Steel and Refinery segment. Regularization of Argon volumes across the country post two consecutive years of slowdown in the automobile and metal fabrication segments was also established. There was a strong growth in ceramics, ampules and specialty chemicals aiding business growth.

Uninterrupted medical oxygen supply to hospitals associated with Linde India Ltd. has been the key driver of the Healthcare business. Keeping this core objective at the heart of everything we do, Linde India Ltd. has installed/enhanced multiple Liquid Medical Oxygen installations and healthcare PSA installations across the country. The healthcare team consistently works towards anticipating customer needs and has extended the promotion of ENTONOX? - Lindes patented mixture of Nitrous Oxide and Oxygen as analgesic and anxiolytic agent to colonoscopy in addition to pain managed normal childbirth. Your Company has introduced a new product - NOxBOXi?, NO therapy system mainly used for organ transplant and treatment of respiratory distress in newborns.

Healthcare business revenue was 22% lower than FY 2021 on account of regular volumes returning post the pandemic-driven spike seen in FY 2021. The Company has extended its medical gas pipeline system into private hospitals as well together with fresh orders, expanded geographic footprint for LIV cylinder facility in West and East India and widened customer reach with participation in several healthcare symposiums and exhibitions.

Industrial Products reported an increase of 32% on account of increased industrial activity for production backlog clearance and inorganic growth effect. Some of the key initiatives undertaken in the year included:

successful commercialization of the HPS Gases plant at Vadodara which was acquired in FY 2021, reaching out to a newer customer base. setting up of first-ever women operated packaged gases facility in Trichy, Tamil Nadu. continuation of the growth agenda with focus on high margin products and Minibulk installations for longer customer relationships.

The Specialty Gas business reported an annual growth of 18% against FY 2021. Post some initial supply shocks due to the Russia-Ukraine conflict, the supply chain has stabilized towards end of FY 2022 with a robust growth outlook. The Company has increased its focus on the growing segment of ophthalmic mixes. The Company commissioned a 300 Bar Helium filling at its Taloja helium trans-fill facility.

Post the investment approval for a new ASU in Dahej last year, the Company also received an investment approval for a new ASU in Ludhiana, Punjab for growth into the under-served secondary steel, metfab & pharma market. Both investments (approx. 500 tpd) are expected to get commercialized within FY 2023. Leveraging its strong footprint in the steel sector, your Company won orders for setting up ASUs at ESL Steel Limited, Bokaro and Jindal Stainless Limited, Kalinganagar. This is further expected to cement our position in East India, taken together (approx. 2,200 tpd). For strengthening our presence in the semiconductor segment, the Company is setting up a high purity Nitrous Oxide facility at its existing Hyderabad plant.

Customer Experience

Linde India Gases business is committed to providing best-in-class Customer Experience (CX) in the industry. In todays highly competitive, complex and customer-centric world, the Company focuses on every opportunity to understand & action the expectations of our customers. We are able to harness this knowledge to achieve a sustainable competitive advantage through our first in industry, Customer Experience Program. The Company endeavours to Acknowledge, Respond & Resolve every customer concern. We made sure to keep pace with Industry best practices & evaluate ourselves around global metrics like Net Promoter Score (NPS), Customer Effort Score (CES) &

Customer Satisfaction Index (CSI). What the customers think, feel & perceive about us is our only reality & the Company decided not only to hear them out but also to take action on all the insights that we identify.

In FY 2022, the Company conducted a pan-India Customer Experience Survey across its various businesses to measure CX. It is an encouraging fact for us that we improved our performance on all the metrics. Our Customer Effort Score (CES) improved by 2%, our Net Promoter Score (NPS) by 14% over FY 2021 survey scores for its MPG business. Our overall Customer Satisfaction Index (CSI) improved by 2% over FY 2021.

The Companys Gases business was audited for ISO 10002:2018 & ISO 10004:2018 compliance for its Customer Experience program in January 2023. This was the fourth year in a row for the Company to have successfully completed this audit for renewal of the certificate.

Distribution

The Distribution function, which takes care of the supply chain in the Gases business is key to its strategy. As mentioned in earlier years, the supply chain requires significant investments in the form of distribution assets and storage networks to service bulk volumes as well as in the form of cylinders to service relatively smaller volumes in the packaged gases business.

Transport Safety remains a challenge area and the Company has given high priority to this with a view to overcome and mitigate the safety risks involved in distribution of products. Taking the safety journey forward, your Company has upgraded the Transport Operation Center (TOC) for more focused monitoring and enhanced the training protocol for the Distribution crew. Since last few years, all our vehicles are equipped with five sets of cameras covering the entire periphery of the vehicle and one set of Fatigue & Distraction AI enabled camera to ensure that any fatigue and distraction event(s) of drivers are identified and immediate actions are triggered to prevent the vehicle from any untoward incident. To ensure the fitness of our drivers at all sites, the Company has introduced fit for duty test so that before drivers start a delivery trip, it is ensured that they are fit and agile to drive. Another signature program that your Company runs is "Near Miss Reporting" where the distribution crew at all levels are encouraged to report Near misses, which highlights the challenges in our operation and necessary corrective actions are taken proactively. The Company has digitized its Driver Risk Profiling system where all the risky violations including over speeding, hard acceleration, harsh breaking, etc., are captured through the system, which impacts the driver score and accordingly, the reward mechanism for the drivers.

With several innovative efficiency improvement programs, the Company has improved its delivery efficiency, i.e., tons /trip by 13% whereas overall delivered tonnes improved by 4%. In order to improve the cost efficiency, the Company has brought down the return and loss quantity to 1% average and improved the capacity utilization of the tanker by 4%.

On the training front, during the period under review, the Company has covered more than 80 managers under Transport Manager Reboot program which provided proper training and certification to the managers on the safe operating discipline. Driver coaches have been deployed against every set of 50 drivers, to mentor them, monitor their driving and other behavior on duty online, provide continuous coaching to them on safe behavior, and also provide inputs to the drivers on best practices.

Through experts, continuous periodic trainings have been imparted to the drivers & distribution crew to enhance their Operating and Behavioral skill. The Companys overall Safety performance has improved since previous years & were successful to avoid any ‘InControl incidents during the 15 months period ended 31 March 2023.

Various initiatives, viz., complete health check-up for crews, dynamic risk assessment & on-board announcement system and awareness programmes on two-wheeler safety (as a CSR Initiative) have been taken by the Company to improve the safety performance of the distribution function in general.

As reported in the previous Annual Reports, the Company has implemented Simulator at Jamshedpur for driver training, the first of its kind in India, where the equipment functionality has been enhanced to provide a more realistic scenario to the drivers for training. During the period under review, more than 75 drivers were trained, which resulted in reduced transport related incidents in the Company.

Project Engineering

The Project Engineering Division comprises the business of design, engineering, supply, installation, testing and commissioning of Air Separation plants and related projects on turnkey basis. The Project Engineering Division (PED) is having a U stamp-certified manufacturing works to fabricate core proprietary equipment such as distillation columns for air separation plants, cryogenic liquid storage tanks, ambient and steam bath vaporizers, process vessels, small-sized cold boxes, containerized micro plants for filling cylinders, submerged combustion vaporizer, liquefiers for in-house use as well as for sale to third party customers. The PED is IMS certified since 2020.

Considering the future business outlook, another fabrication shop is being constructed in Jamshedpur, which is expected to be operational during the current FY 2023-24.

The order intake during the period under review was to the tune of Rs. 12,140 million. This includes an export order for the supply of a cold box for an N2 liquefier of 300 TPD capacity at MIMS Florida USA for LG. This project is crucial for the Company as it was won against stiff competition from Linde China. This is expected to open doors for similar projects for the USA / Europe market. Apart from this, PED also received many in-house orders from the Gases division. Some of the major orders received by the Division during the period under review were from refineries, steel and mining sectors such as 1850 from Tata Steel Jamshedpur, 150 TPD N2 plant from Numaligarh Refinery Ltd., 60 TPD O2 plant with IA/PA system from IOCL Gujarat Refinery, 1450 TPD ASU for Jindal Stainless Steel – Duburi, Odisha, 800 TPD ASU for ESL Steel Ltd., Bokaro, 250 TPD Merchant ASUs at Ludhiana as well as at Patencheru (Telangana) and GAN augmentation from existing 2000 TPD ASU with 7km pipeline from LG Indonesia for Lotte Chemicals.

During the period under review, the Division successfully commissioned several projects, which included compressed Air and Nitrogen plant package for HPCL Mumbai Refinery, HPCL Vizag Refinery, HMEL Bhatinda Nitrogen plant, Assam Petrochemical Ltd., Meghna, Bangladesh (100 TPD ASU) and IOCL Paradip (629 TPD ASU).

The Division is presently executing several projects, which include compressed Air and Nitrogen plants at HRRL at Rajasthan, Air Separation Units at JSW at Bellary, NMDC at Naganar Chhattisgarh, Sesa Goa at Vedanta Amona Plant and Schott Glass at Gujarat.

As on 31 March 2023, the order book position of PED for third party projects was about Rs. 14,200 million.

Opportunities

India is known as the "pharmacy of the world" due to the popularity of its economical and high-quality medicines worldwide. India is the third-largest producer of pharmaceutical goods globally (in terms of volume) and the twelfth-largest producer (in terms of value). With a 20% volume share in the global supply of generic drugs, the industry leads the world in both production and sales of vaccines, accounting for 60% of the global market. Indian pharmaceutical industry is known for its generic medicines and low-cost vaccines globally. India also has the highest number of US-FDA-compliant Pharma plants after USA. By 2030, the total market size of the Indian Pharmaceutical Industry is estimated to reach US$ 130 billion. Indias budget 2023-24 for healthcare covers an increase of 13% allocation from Rs. 791,450 million in FY 2022-23 to Rs. 891,550 million in FY 2023-24. Over the last five years, the sector has seen a 27% rise in allocations from Rs. 626,590 million in FY 2020 to Rs. 891,550 million in FY 2023-24. Expenditure in Healthcare sector is growing & the Pharma sector is also expanding by way of Active Pharmaceutical Ingredients (API) and Bulk drug manufacturing parks. In the Economic Survey of 2022, Indias public expenditure on healthcare stood at 2.10% of GDP in FY 2021-22 against 1.80% in FY 2020-21 and 1.3% in FY 2019-20.

Production Linked Incentive (PLI) Scheme for Pharmaceuticals offers incentives for incremental sales to selected members. Active Pharmaceutical Ingredients (API) as well as other types of pharmaceutical products are eligible under the scheme. The tenure of the scheme is from 2020-21 to 2028-29 with a total financial outlay of US$ 1.82 billion (Rs. 150,000 million).

Indias steel production and consumption grew by 5.70% and 11.50%, respectively during April – December 2022 (as per CareEdge Research). The rating agency estimates Indias steel production to be in a range of 117-119 million tonnes, up by 3-5% year-on-year in FY 2023. The consumption growth rate is expected to be healthy at

10-12% in FY 2023. The annual production of steel is anticipated to exceed 300 million tonnes (MT) by 2030–31. As of 2022, India was the worlds second-largest producer of crude steel, with an output of 10.14 MT. In FY 2022, the production of crude steel and finished steel stood at 133.59 MT and 120.01 MT, respectively. In FY 2023, steel demand is expected to grow by 8%. Per capita finished steel consumption is expected to rise to 160 kg by 2030-31 (from 72.3 kg in 2021). Indias finished steel consumption is anticipated to increase from 133.6 MT in FY 2022 to 230 MT by FY 2030-31. Steel industry is witnessing consolidation and capacity expansion by global majors. Indias steel ministry inked 57 agreements with steel firms to create 25 MT of special steel capacity under US$ 770 million PLI scheme. Steel exports declined sharply by 54% year-on-year during April to December 2022 due to weak global demand and 15% export duty levy on steel products from May – November 2022. In November 2022, the government had withdrawn the export duty on steel products, iron ore lumps and fines (< 58% iron content) and iron pellets while the export duty of iron ore lumps and fines (> 58% iron content) has been reduced from 50% to 30%. The reversal of the export duty hike is expected to boost the Indian exports of steel products in the near to medium term.

Supply disruption in major economies has caused the global end-user industries to diversify their vendor base mainly towards Indian players. The Indian chemicals industry stood at US$ 178 billion in FY 2019 and is expected to reach US$ 304 billion by FY 2025 registering a CAGR of 9.30% on the back of rising demands in the end-user segments for specialty chemicals and petrochemicals. The specialty chemicals sector is expected to reach US$ 40 billion by FY 2025. According to CRISIL, the Indian specialty chemicals industry would outperform its Chinese counterpart and double its worldwide market share to 6% by FY 2026, up from 3-4% in FY 2021. Growth will be fuelled by two factors, viz. significant export tailwinds due to a shift in the global supply chain caused by vendors Chinas policy and demand recovery in local end-user segments.

Acceleration of infrastructure projects, infusion of liquidity into stressed sectors, including MSME to have chain reaction in the economy. Self-reliant Stimulus (approx. US$ 280 billion) is expected to pep up industrial activity, increased privatization and faster economic revival.

The Government of Indias aspiration of becoming US$ 5 trillion economy by FY 2025, ‘Make in India focused government policies, favorable investment climate and low political risks provide great opportunities for growth in the medium to long term.

Threats

At macro-economic level, the ongoing climate change and the World Meteorological Organizations prediction that an El Ni?o warming event is likely to occur in the next couple of months, could hamper farm output. This would directly impact rural consumption including industries like automobiles, steel, cement, etc. where the Company has an exposure. The fragile geo-political situation is further impacting the supply chain management and GDP growth. Recessionary environment prevailing in the European Union and United States could have a negative impact on segments with exposure to exports. Reduced output from refineries in Russia impacting the global availability for rare gases, primarily Neon, which is a key ingredient for LASER mixes in SPC business.

Intense competition is observed in the small onsite & sale of equipment space with a lot of overseas players willing to compromise on margins for newer markets. India is witnessing a huge capacity expansion in ASUs both in the captive & merchant space. Increase in competition by way of entry of new players into merchant market including non-gas players. With abundance in liquid availability, most of the smaller players have de-captivated their classical gas plants owing to cheaper liquid, thus impacting the Companys PGP (IP) sales. Predatory pricing with compromising margins is dominating the commercial discipline to load new capacity. Heavy reliance on steel segment, sluggish metal fabrication & two-wheeler market along with Argon from captive plants influencing market availability and pricing are some of the business risks that the Company faces. With impetus from government financing & NGOs approx. 3,756 PSA plants are currently operational in the country, impacting liquid medical oxygen sales. Some of the risks covered under the Risk Management section in this Report may also be considered as threats in short to medium term.

Risk Management

Your Companys business faces various risks - strategic as well as operational in both its segments viz. Gases and Project Engineering, which arise from both internal and external sources. As explained in the report on Corporate Governance, the Company has an adequate risk management system, which takes care of identification, assessment and review of risks. Your Company has been holding risk workshops periodically to refresh its risks in line with the dynamic and ever- changing business environment and the last refresher risk workshop was conducted on 25 October 2021, which was attended by the senior management team with a view to refresh the various risks facing the business of the Company. The risks being addressed by the Company during the period under review included risk relating to the organisation structure, risk of reliability issues of large ASUs, risk of cyber-attacks on Linde plants and business systems, competition risk, risk related to increase in fuel prices, commodity price inflation and its impact on operating margins and the risk arising from potential future waves of Covid-19, etc. The Company is in the process to adopt a structured approach to identify the landscape of ESG risks relevant to its operations and will take mitigating actions as necessary to address the same.

Your Board of Directors oversees the risk management process in the Company and reviews the progress of the action plans for the identified key risks with a distinct focus on top 5 key risks on a quarterly basis. Upon superannuation, Mr Pawan Marda ceased to be the Chief Risk Officer of the Company effective 1 March 2023. The Risk Management Committee at its meeting held on 20 March 2023 appointed Mr Amit Dhanuka, Company Secretary of the Company as the new Chief Risk Officer with effect from that date.

The Company has a Risk Policy with a view to provide a more structured framework for proactive management of all risks related to the business of the Company and to make it more certain that the growth and earnings targets as well as strategic objectives are met.

Finance

As on 31 March 2023, your Company had ‘zero outstanding borrowing. There were no material changes and commitments affecting the financial position of the Company, which occurred between the end of the period to which these financial statements relate and the date of this report.

Credit Rating

As your Company has ‘zero borrowings from the Banks, the last available rating of your Companys total bank facilities - both fund-based and non-fund based by CRISIL was withdrawn with effect from 1 August 2021.

Large Corporates Disclosure for Fund raising through Debt securities

As on 31 March 2023, your Company did not have any long-term borrowing. As a result of the same, your Company does not meet the criteria specified by SEBI for large corporates for fund raising through debt securities.

Deposits

During the period under review, the Company has not accepted any deposits from public under Chapter V of the Companies Act, 2013.

Significant and Material Orders passed by the Regulators or Courts

There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations.

Insolvency and Bankruptcy Code, 2016

During the period under review, neither any application nor any proceeding has been initiated against the Company under the Insolvency and Bankruptcy Code, 2016.

Particulars of loans, guarantees or investments

The particulars of loans, guarantees given and investments made during the period under review under Section 186 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are annexed to this Report.

Key Financial Ratios

Please refer Note. no. 48 of the Standalone Financial Statements for the details on Key Financial Ratios.

Investor Education and Protection Fund

During the period under review, your Company transferred the 60th unpaid/unclaimed dividend amount of Rs.0.68 million pertaining to the financial year ended 31 December 2014 to the Investor Education and Protection Fund in compliance with the provisions of Sections 124 and 125 of the Companies Act, 2013. In compliance with these provisions read with the Investor Education and Protection Fund

Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, your Company also transferred 20,246 shares held by 157 shareholders to the Demat Account of the IEPF Authority on 23 July 2022 and 2 August 2022, in respect of which dividend had remained unpaid/unclaimed for a consecutive period of 7 years. More information in this regard is provided in the Corporate Governance Report.

Safety, Health, Environment and Quality (SHEQ)

At Linde, our aim truly is to avoid causing harm to people or the environment and as such Safety remains one of our topmost priorities. Compliance with SHEQ rules, standards and procedures is a prerequisite for all employees & contractors and the Management is committed to ensure that all personnel are trained and made competent before undertaking any safety critical job for the Company.

Covid-19 related government & company restrictions have been reduced, however, the Company continues to focus on seamless supplies to hospitals. Your Company continues to maintain the Covid – 19 Health principles such as hygiene, social distancing, regular health check-up of our employees, screening of visitors at Linde Indias offices and sites, as appropriate. A robust business continuity plan is in place in case any such crisis arises in future so that we are able to cater to any such situation.

Global Safety Commitment Day 2022 was celebrated at all Linde operating sites as well as project sites in the month of September 2022 with theme of ‘Focus on Safety - Moment-to-Moment. The objective is to spend time with our colleagues & reiterate the fact that safety is a decision each one of us must make every day from moment-to-moment.

Positive outcomes have been received with the introduction of new SHEQ application for incident reporting & encouraging all to report any unsafe behaviour, near-miss, process safety Tier–3 incidents, in terms of new learnings. These learnings are now being used for training & process improvement purposes as well. The new system has already started showing its results by way of reduction of repetitive incidents. A process has been established for weekly review of all high-risk potential near misses by Leadership team for more focus & attention of the management actions.

In order to strengthen the SHEQ performance, a comprehensive SHEQ Annual Operating Plan (AOP) was introduced, covering the area of improvements in Process safety, Distribution safety, Operational safety, Behavioral & Personnel safety and Quality & Environmental safety, which helped in prioritizing our efforts. Focus was also given on training of plant personnel through various campaigns such as "Slips Trips & Fall", Lifting equipment, Working at Height, Hand protection at Project Sites, Management of Change, Permit to Work, etc. together with various Management control actions.

At Linde, we have never stopped embracing technological advancement. Your Company has upgraded its fleet monitoring system with DVRs with enhanced capabilities, Clinical Test Equipment for Drivers fit for duty tests, exploring advance warning system on vehicles, etc. Transport safety performance have improved compared to previous years.

Human Resources

With Covid-19 having gradually receded in 2022, your Company has embraced the hybrid work model to give employees the flexibility and help maintain a work life balance. Workplace fun initiatives were also organized at regular time intervals to maintain the engagement levels.

The growth in economy has also led to scarcity of good talent. Your Company continued to focus on retaining its talent by giving enhanced responsibilities and growth opportunities. The Company also provided career enhancement opportunities to inhouse talent rather than hiring from outside, whenever vacancies arose. On the Diversity and Inclusion front, your Company onboarded an all women batch of youngsters hired from colleges across the country as part of its campus hiring programme. They are currently undergoing training in various functions.

Employee Relations scenario continues to be harmonious and supportive for enhanced business activities post Covid period. Regular connect with operating unions and factory visits by HR representatives kept us abreast of the issues faced by employees and their quick resolution. During the period under review, with relaxation of Covid norms, various engagement activities for blue collar employees including celebration of festivals, picnics and get together were organized which helped to re-establish the employer-employee bond.

Your Company also introduced ‘Project Prayas, aimed at engaging people at the grass root level in the journey of sustained culture of productivity. The Project was initially implemented at two manufacturing units, where interactive sessions were arranged for the operators/technicians including outsourced resources and they were introduced to the concept of Kaizen, lean methodology and problem-solving techniques. A total of 31 such projects have been rolled out and individuals showing exceptional contribution, from diverse categories, have been rewarded.

The Company had harmonious employee relations across all its plants and offices in India. As on 31 March 2023, the total manpower strength was 207.

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company remains committed to provide and promote a safe, healthy and congenial atmosphere irrespective of gender, caste, creed or social class of the employees. The Companys Policy on Prevention of ‘Sexual Harassment is in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. Internal Complaints Committee (ICC) has been set up to redress complaints, if any, received regarding sexual harassment. All employees whether permanent, contractual, temporary, etc. have been covered under this Policy. The Policy is gender neutral.

During the period under review, no complaint alleging sexual harassment was received by the Company. As a preventive measure and to create awareness in this area, the Company has been conducting refresher programs for all permanent and contractual employees on a periodic basis.

Prescribed Particulars of remuneration

The disclosures pertaining to ratio of remuneration of each Director to the median remuneration of all the employees of the Company, percentage increase in remuneration of each Director and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are annexed to this Report.

[Annexure 4]

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement containing the names and other prescribed particulars of top 10 employees in terms of remuneration drawn and that of every employee, who if employed throughout the period from 1 January 2022 to 31 March 2023 was in receipt of remuneration aggregating to not less than Rs. 10.20 million; and if employed for part of the said period, was in receipt of remuneration not less than Rs.0.85 million per month is annexed to and forms part of this Report. However, having regard to the provisions to the first proviso of Section 136(1) of the Companies Act, 2013, the Annual Report is being sent to all the Members of the Company excluding this information. The aforesaid statement is available for inspection by shareholders at the Registered Office of the Company during business hours on working days up to the date of the ensuing Annual General Meeting. Any shareholder interested in obtaining a copy of the said information may write to the Company Secretary at the Registered Office of the Company and the same will be furnished on request and the said information is also available on the website of the Company. None of the employees are covered under Rule 5(3)(viii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended.

Corporate Social Responsibility (CSR)

As a member of The Linde plc Group, your Company has been a socially responsible corporate and our core values define the way we operate and create value within the larger society. Lindes core principles and values form the basis of its CSR policy. Your Company is therefore, committed to behave responsibly towards people, society and the environment for inclusive growth of the society where we operate to conserve natural resources and to develop sustainable products. In line with its CSR Policy, Linde Indias CSR commitment centres around four thematic areas - Education, Health, Environment and Livelihood (Skill Development) and other areas including Disaster Management as specified in Schedule VII to the Companies Act, 2013.

Some of the CSR projects/initiatives taken up/sustained during the period under review included expenditure for education programs for underprivileged children in Kolkata, Jamshedpur and Odisha, providing education and other support for blind children in Rourkela. Further, as a part of its endeavour to support disaster relief, the Company made a contribution through Give India by way of food and hygiene necessities for Assam flood victims. Other such initiatives towards disaster relief included projects across plant and office locations proposed and executed by the employees of the Company aimed at community building. The Company also had two ongoing projects, one of them being Defensive driver training in collaboration with Institute for Road Traffic Education for drivers of heavy vehicles at several locations including Delhi NCR, Uttar Pradesh, Rajasthan, West Bengal, Odisha, Maharashtra and Jharkhand for making the highways safer and two-wheeler training workshops for delivery agents and first-time drivers and university students in Delhi NCR. It also included a project on building infrastructure in Gujarat by Scaling Zero Fatality Corridors called the "Zero-Fatality Corridor" (ZFC) model, a solution which identifies high-fatality stretches of roads and implements distilled solutions. Another ongoing project of the Company comprised of training and awareness programs through Centre for Catalyzing change to promote the cause of natural childbirth and reduce the rate of C-Section deliveries in Odisha and Lucknow. The Companys CSR initiatives towards environment included plantation of trees at different parts of West Bengal.

The total spend on CSR during the period under review amounted to Rs.45.16 million on various CSR projects/activities as above. Your Directors wish to state that the CSR Committee and the Board of your Company had approved a total budget of Rs. 51.24 million towards its various CSR projects vis-a-vis the statutory CSR spend of Rs. 50.07 million under the Companies Act, 2013. The balance unspent amount of Rs. 6.08 million has been transferred to the unspent CSR bank account on 24 April 2023.

The details of the CSR projects/activities for the 15 months period from 1 January 2022 to 31 March 2023 are covered in the Annual Report on CSR activities, which is annexed to this Report.

[Annexure 5]

Your Company encourages volunteering of services by its employees into its CSR initiatives, which are measured as employee days spent on CSR projects.

Business Responsibility and Sustainability Report

The Linde plc Group has published a detailed Sustainable Development Report 2021, which is prepared in accordance with GRI standards. Linde plc Groups mission of "making our world more productive" reflects its strong belief that Linde is a part of the solution to the climate change challenges faced by the world. As a member of the Linde plc Group, your Company has adopted the various policies of its parent, that relate to the 9 principles laid down by Securities and Exchange Board of India for Business Responsibility and Sustainability Reporting (BRSR) by the top 1000 listed entities in India based on market capitalisation. As stipulated in Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has included a BRSR as an integral part of the Annual Report for the period ended 31 March 2023 briefly describing initiatives taken by it from an environment, social and governance perspective during the period under review. Besides, this report, the Company is in the process to adopt a structured approach for a better understanding of the ESG data relevant to its operations.

Corporate Governance

As a member of the Linde plc Group, your Company attaches great importance to sound responsible management and good corporate governance. Linde plc follows highest standards in corporate governance and has policies and international best practices to build a strong governance architecture. Your Company remains committed to business integrity, high ethical standards and professionalism in all its activities same as ever. As an essential part of this commitment, the Board of Directors of Linde India Ltd. supports high standards in corporate governance.

It is the endeavour of the Company to ensure that their actions are always based on principles of responsible corporate management. In the Linde plc Group, corporate governance is seen as an on-going process. Your Company closely follows the developments in the governance norms and has taken lead in ensuring compliance with the same. A separate report on Corporate Governance along with the certificate of the Secretarial Auditor, M/s P Sarawagi & Associates, Company Secretaries, confirming compliance of the conditions of corporate governance, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Annual Report.

Board Meetings

A calendar of Board and Committee meetings is agreed and circulated in advance to the Directors. The Board met six times during the period under review, details where of are given in the Corporate Governance Report, which forms part of this Report.

Board Membership Criteria

The Nomination and Remuneration Committee of the Company identifies and ascertains the integrity, qualification, expertise, positive attributes and experience of persons for appointment as Directors and thereafter recommends the candidature for election as a Director on the Board of the Company. The Committee follows defined criteria in the process of obtaining optimal Board diversity which, inter-alia, includes optimum combination of executive and non-executive directors, appointment based on specific needs and business of the Company, qualification, knowledge, experience and skill of the proposed appointee, etc. The Policy on appointment and removal of Directors, Board Diversity Criterion and Remuneration to Directors/Key Managerial Personnel/Senior Management forms part of the Nomination and Remuneration Policy of the Company, which is available on the Companys website at https://www.linde-gas.in/en/ images/Nomination%20and%20Remuneration%20Policy_tcm526-657189.pdf.

Familiarisation Programme for Directors

In terms of Regulation 25(7) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company is required to conduct the Familiarisation Programme for Independent Directors (IDs) to familiarise them about their roles, rights, responsibilities in your Company, nature of the industry in which your Company operates, business model of your Company, etc., through various initiatives. The details of training and familiarization programmes for Directors have been provided under the Corporate Governance Report. Apart from the initial familiarisation program as above, presentations are made to the Board Members at almost all board meetings to enable them to familiarise and update themselves with the changes in the applicable legal framework, competition, industry specific developments, etc. The details of the familarisation programs held during and up to the period ended 31 March 2023 are available on the Companys website at https://www.linde-gas.in/en/images/Linde_Familirisation%20 Programme_01.01.2022-31.03.2023_tcm526-676683.pdf.

Performance Evaluation

During the period under review, pursuant to provisions of Section 134, Section 149 read with Code of Independent Directors (Schedule IV), Section 178 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination and Remuneration Committee of the Board reviewed the process and criteria used in the previous year for evaluating the performance of the Board, its Committees, Chairman of the Board and the individual directors. Like the previous year, an online platform was provided to the Directors for participating in the performance evaluation process, which contained a structured questionnaire for seeking feedback from the Directors on certain pre-defined attributes applicable to them, including some specific ones for the Independent Directors. More details about the performance evaluation process followed by the Board are provided in the Corporate Governance Report.

Declaration of Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The declarations received from the Independent Directors are aligned to the amendment made in the Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, which became applicable effective 1 January 2022.

Certificate for non-disqualification of Directors

On an annual basis, the Company obtains from each Director, details of their Board and Committee positions he/she occupies in other Companies and changes, if any regarding their Directorships. The Company has obtained a certificate dated 23 May 2023 from M/s. P Sarawagi & Associates, Company Secretaries, confirming that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India or Ministry of Corporate Affairs or any such authority and the same forms part of this Annual Report.

Internal Control Systems and their adequacy

Your Company continues to have adequate system of internal control commensurate with the size and the nature of its business, which ensures that transactions are recorded, authorised and reported correctly apart from safeguarding its assets against loss from wastage, unauthorised use and removal.

The internal control system is supplemented by documented policies, guidelines and procedures. The Companys Internal Audit department continuously monitors the effectiveness of the internal controls with a view to provide to the Audit Committee and the Board of Directors an independent, objective and reasonable assurance of the adequacy of the organizations internal controls and risk management procedures. The Internal Audit function submits detailed reports periodically to the management and the Audit Committee. The Audit Committee reviews these reports with the executive management with a view to provide oversight of the internal control systems.

Your Board has in compliance with the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, approved several policies on important matters such as related party transactions, risk management, nomination and remuneration of directors and senior managers, whistle blower mechanism, CSR, insider trading, practices and procedures for fair disclosure of unpublished price sensitive information, materiality of events/ information, preservation of documents, etc., which provide robust guidance to the management in dealing with such matters to support internal control. The Company reviews its policies, guidelines and procedures as a matter of internal control on an on-going basis in view of the ever-changing business environment.

Additionally, M/s. Suresh Surana & Associates LLP, Charted Accountants engaged by the Company reviews the framework of its existing internal financial controls across the Company and testing of the operating effectiveness of various internal controls in the organisation. M/s. Suresh Surana & Associates LLP has submitted a report to the Audit Committee on their findings based on the testing of the key controls for the 15 months period ended 31 March 2023. The Statutory Auditors of the Company have also independently reviewed internal financial controls over financial reporting. Both Suresh Surana & Associates LLP as well as the Statutory Auditors have confirmed that these controls were operating effectively as at 31 March 2023. As stated in the Responsibility Statement, your Directors have confirmed that based on the reviews performed by the internal auditors, statutory auditors, cost auditors, secretarial auditors and the reviews undertaken by the management and the Audit Committee, the Board is of the opinion that the Companys internal financial controls have been adequate and effective during the 15 months period ended 31 March 2023.

Directors

During the period under review, Mr Robert John Hughes, Non-Executive Chairman of the Company stepped down from the Office of Chairman and Director with effect from close of business hours on 13 February 2023.

Your Directors record their appreciation of the valuable contribution made by Mr Hughes to the functioning of the Company and the Board during his tenure. The Board of your Company has benefitted immensely from his wise counsel.

The Board of Directors had on the recommendation of Nomination and Remuneration Committee of the Board appointed Mr Michael James Devine (DIN: 10042702) as an Additional Director (Non-Executive) of the Company with effect from 15 February 2023. Subsequently, at the Board Meeting held on 20 March 2023, Mr Devine was elected as the Chairman of the Board with effect from that date. Further, appointment of Mr Devine as a Non-Executive Director of the Company was approved by the Members of the Company through Postal Ballot on 25 April 2023.

Dr Shalini Sarin was appointed as an Independent Director of the Company for a period of five years with effect from 10 July 2018 up to 9 July 2023. The Board of Directors of the Company at its meeting held on 23 May 2023, based on the recommendations of the Nomination and Remuneration Committee of the Board and as per the performance evaluation of Dr Sarin as a Member of the Board, considered that the continued association of Dr Sarin would be beneficial to the Company. The Board accordingly proposed to re-appoint Dr Shalini Sarin as an Independent Director of the Company, not liable to retire by rotation, for a second term of five consecutive years effective from 10 July 2023 up to 9 July 2028.

Notice under Section 160(1) of the Companies Act, 2013, has been received from a Member proposing the candidature of Dr Sarin for the Office of Director of the Company.

Ms Mannu Sanganeria retires by rotation at the ensuring Annual General Meeting pursuant to the provisions of Section 152 of the Companies Act, 2013 and Article 104 of the Articles of Association of the Company and being eligible, offers herself for re-appointment.

Necessary resolutions for approval of re-appointment of Dr Shalini Sarin as Independent Director and re-appointment of Ms Mannu Sanganeria, being the director retiring by rotation are included in the Notice of the ensuing Annual General Meeting. The Board recommends the aforesaid resolutions for your approval.

Key Managerial Personnel

Pursuant to Section 203 of the Companies Act, 2013, the present Key Managerial Personnel of the Company are Mr Abhijit Banerjee, Managing Director, Mr Neeraj Kumar Jumrani, Chief Financial Officer and Mr Amit Dhanuka, Company Secretary. During the period under review, Mr Anupam Saraf, the erstwhile Chief Financial Officer of the Company had resigned from the Company with effect from close of business hours on 31 May 2022 and Mr Pawan Marda, the erstwhile Director – Corporate Affairs and Company Secretary of the Company superannuated from the services of the Company with effect from close of business hours on 28 February 2023. In view of the above cessations, Mr Neeraj Kumar Jumrani had been appointed by the Board as the Chief Financial Officer of the Company with effect from 9 August 2022 and Mr Amit Dhanuka had been appointed by the Board as the Company Secretary of the Company with effect from 1 March 2023.

Directors Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, audit and reviews performed by the internal auditors, statutory auditors, cost auditors, secretarial auditors and the reviews undertaken by the management and the Audit Committee, the Board is of the opinion that the Companys internal financial controls have been adequate and effective during the 15 months period ended 31 March 2023 (1 January 2022 to 31 March 2023).

As required by Sections 134(3)(c) and 134(5) of the Companies Act, 2013, the Directors to the best of their knowledge and belief state and confirm:

a. that in preparation of the annual financial statements for the 15 months period ended 31 March 2023, applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

b. that 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 aforesaid period and of the profit of the Company for that period;

c. that they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the aforesaid annual financial statements have been prepared on a going concern basis;

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

There have been no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Companies Act, 2013 and the Rules framed thereunder.

Secretarial Standards

The Company has proper systems in place to ensure compliance with the provisions of the applicable standards issued by The Institute of Company Secretaries of India and such systems are adequate and operating effectively.

Related Party Transactions

All related party transactions entered during the period under review were in ordinary course of business and on arms length basis and the same have been disclosed under Note 45 of the Notes to the Standalone Financial Statements. No material related party transactions, that is, transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statements were entered during the period under review by the Company. 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.

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

Details of conservation of energy, technology absorption and foreign exchange earnings and outgo in accordance with Section 134(3)(m) read with Companies (Accounts) Rules, 2014 are annexed to this Report.

Annual Return

A copy of Annual Return of the Company for the financial year ended 31 December 2021 in Form MGT-7 has been placed on the website of the Company at https://www.linde-gas.in/en/images/Linde%20 India%20Annual%20Return_FY%202021_tcm526-675878.pdf. The Annual Return of the Company for the 15 months period from 1 January 2022 to 31 March 2023 would be updated on the Companys website within the due timelines.

Outlook

The Indian economy is looking at better growth prospects over the next five years. Structural improvements in the financial system, ongoing pace of reforms and policies that support a revival of the private sector pave the way for an improved medium-term outlook. Technological advancements, and other structural shifts such as emerging trends in global supply-chain de-risking and green transition hold out greater promise.

Indias GDP growth is expected to remain robust in FY 2024. GDP forecast for the FY 2024 is expected to be in the range of 6-6.8%. Owing to a high-base effect, consumer inflation is expected to moderate to 5% in next fiscal from 6.8% in the current fiscal. Retail inflation is back within RBIs target range post November 2022.

Given the rising costs of production, policy uncertainty and tensions with the US, manufacturers are against focusing on a shift out of China. India is favourably positioned due to its large domestic market which is expected to grow faster than its peers.

Indian economy has also started benefiting from the efficiency gains resulting from greater formalisation, higher financial inclusion, and economic opportunities created by digital technology-based economic reforms. The capital expenditure of the Central Government and crowding in the private capex led by strengthening the balance sheets of the Corporates is one of the growth drivers of the Indian economy in the years to come. Indias growth outlook seems better than the pre-pandemic years and the Indian economy is prepared to grow at its potential in the medium term.

India had one of the highest Covid-19 vaccination rates with over 95% of the eligible population (12+ year old) receiving at least one shot and 88% receiving two shots. Over 2.20 billion doses have been administered under the nationwide vaccination drive exponentially reducing the impact of a pandemic re-run.

Indias working age group (15-64 years) is set to expand to 100 million over the next decade despite declining birth rates. In context, this would account for 22.50% of the incremental global workforce. Participation of women in the labour force is quite low. As per a World Bank report in 2018, Indias GDP could add an additional 1.50% to its GDP, if 50% of the women join the labour force.

With Covid-19 pandemic turning into an inflection point in Digitalization, Linde India is also matching pace with the changes around. Key focus areas are: Growth, Revenue & Collection Cost Efficiencies & Digital Supply Chain Asset Effectiveness & Reliability Business Excellence and Customer Experience

Statutory Audit

M/s. Price Waterhouse & Co. Chartered Accountants LLP (Firm Registration No. 304026E/E300009) was appointed as the Statutory Auditors of the Company at its 86th Annual General Meeting to hold office from the conclusion of the said meeting and until the conclusion of the 91st Annual General Meeting to be held in the year 2027.

The reports of the Statutory Auditors, Price Waterhouse & Co. Chartered Accountants LLP on the standalone and consolidated financial statements of the Company for the 15 months period ended 31 March 2023 (1 January 2022 to 31 March 2023) forms part of this Annual Report. The Statutory Auditors have submitted an unmodified opinion on the audit of financial statements for the 15 months period ended 31 March 2023 and there is no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

The Board of Directors of the Company had on the recommendation of the Audit Committee, approved the revision in audit fees of M/s. Price Waterhouse & Co. Chartered Accountants LLP (Firm Regn. No. 304026E/ E300009), Statutory Auditors of the Company from Rs. 58,00,000/- (Rupees Fifty-Eight Lakhs only) to Rs. 67,00,000/- (Rupees Sixty-Seven Lakhs only) plus applicable taxes and out of pocket expenses that may be incurred during the course of audit, for the 15 months period ended 31 March 2023 (from 1 January 2022 to 31 March 2023). The revised remuneration payable to the Statutory Auditors as recommended by the Audit Committee and approved by the Board for the aforesaid period has to be approved by the Members of the Company and appropriate resolution in this regard forms part of the Notice convening the ensuing Annual General Meeting.

Secretarial Audit

The Board of Directors of the Company had appointed M/s. P Sarawagi & Associates, a firm of Company Secretaries pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for undertaking the secretarial audit of the Company for the 15 months period ended 31 March 2023 (1 January 2022 to 31 March 2023). In terms of the provisions of Section 204(1) of the Companies Act, 2013, a Secretarial Audit Report dated 23 May 2023 in Form MR-3 given by the Secretarial Auditor is annexed with this Report. The Report confirms that the Company had complied with the statutory provisions listed under Form MR-3 and the Company also has proper board processes and compliance mechanism. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Cost Audit

In terms of Section 148 of the Companies Act, 2013, the Company is required to have the audit of the cost accounting records conducted by a Cost Accountant. M/s. Mani & Co., a firm of Cost Accountants conducted this audit for the Companys financial year ended 31 December 2021 and submitted their report to the Central Government in Form CRA 4 on 10 June 2022.

The Board of Directors of the Company had on the recommendation of the Audit Committee revised the term of appointment of M/s. Mani & Co., Cost Accountants having registration no. 000004 as the Cost Auditors of the Company from 1 January 2022 – 31 December 2022 to 1 January 2022 – 31 March 2023, i.e., for the 15 months period ended 31 March 2023 to conduct cost audit under the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time. The audit of the cost records of the Company for the said 15 months period is being conducted by M/s. Mani & Co., Cost Auditors. In accordance with the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the revised remuneration payable to the Cost Auditors as recommended by the Audit Committee and approved by the Board for the aforesaid period has to be ratified by the Members of the Company and appropriate resolution in this regard forms part of the Notice convening the ensuing Annual General Meeting.

The Board of Directors of the Company had also on the recommendation of the Audit Committee appointed M/s. Mani & Co., Cost Accountants having registration no. 000004 as the Cost Auditor for the year ended 31 March 2024 to conduct cost audit under the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time. In accordance with the provisions of Section 148(3) of the Companies Act,

2013 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors as recommended by the Audit Committee and approved by the Board has to be ratified by the Members of the Company and appropriate resolution in this regard also forms part of the Notice convening the ensuing Annual General Meeting.

Acknowledgements

Your Directors wish to place on record their gratitude to the bankers, customers, dealers, suppliers and all other business associates and the shareholders of the Company for their continued support during the period under review. Your Directors, also place on record their appreciation of the contribution made by the employees of the Company at all levels and thank them for their dedication and commitment.

Your Directors also acknowledge the valuable support and cooperation received from the various Government departments and agencies in these challenging times and look forward to their continued support in the future. The Board of Directors also takes this opportunity to thank the Linde plc Group for their strategic inputs, guidance and support in various operational and functional areas. This has helped the Company to attain higher standards in every sphere of performance.

Disclaimer

Certain statements in this report relating to Companys objectives, projections, outlook, expectations, estimates, etc. may be forward looking statements within the meaning of applicable laws and regulations. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly, actual results or performance could differ materially from such expectations, projections, etc. whether express or implied as a result of among other factors, changes in economic conditions affecting demand and supply, success of business and operating initiatives and restructuring objectives, change in regulatory environment, other government actions including taxation, natural phenomena such as floods and earthquakes, customer strategies, etc. over which the Company does not have any direct control.

On Behalf of the Board

Kolkata 23 May 2023