Linde India Ltd Management Discussions.

The Directors have pleasure in submitting their Report together with the Audited Financial Statements of your Company for the year ended 31 December 2019:

The Companys standalone financial performance for the year ended 31 December 2019 is summarized below:

In Rupees million Year ended 31 Dec. 2019 Year ended 31 Dec. 2018
Revenue from operations 17,617.86 21,916.54
Earnings before interest, tax, depreciation, amortisation and impairment (EBITDA) 4,356.54 3,490.09
Less: Depreciation and amortisation expense (including impairment) 1,772.54 1,991.38
Earnings before interest and tax (EBIT) 2,584.00 1,498.71
Less: Finance costs 862.50 1,027.01
Profit before tax (PBT) before exceptional item 1,721.50 471.70
Add: Exceptional items 8,407.55 -
Profit before tax (PBT) after exceptional item 10,129.05 471.70
Tax expenses 2,857.26 136.84
Net Profit for the year (after tax) (A) 7,271.79 334.86
Total Other Comprehensive Income for the year(B) (17.23) (41.16)
Total Comprehensive Income for the year(C)=(A)+(B) 7,254.56 293.70
Movement in Equity
Retained earnings opening balance brought forward 5,445.90 5,271.99
Add: Net Profit for the year 7,271.79 334.86
Less: Other comprehensive income recognised in retained earnings (net of taxes) (16.29) (58.14)
Profit available for appropriation (D) 12,701.40 5,548.71
Appropriations:
Dividend on Equity share including dividend distribution tax paid during the year* (E) (154.23) (102.81)
Retained earnings closing balance carried forward (F)= (D)-(E) 12,547.17 5,445.90

¦Pertains to dividend for the financialyear 2018 @ 15% (Previous year @ 10% for the financialyear2017) on 85,284,223 equity shares of Rs.10 each.

Financial Performance 2019

Your Company delivered total revenues from operations of Rs. 17,617.86 million during the financial year 2019 as compared to Rs. 21,916.54 million achieved in the previous year. This decline of about 19.6 % in the total revenue from operations is mainly on account of adoption of lndAS115on "Revenue from Contracts with Customers" during the year under review. The first time application of new accounting standard Ind AS115on Revenue from Contracts with Customers had a negative impact on revenue as your Company used "Modified Retrospective Approach" for transition to Ind AS 115. Accordingly, power and fuel cost in respect of onsite plants, which in the previous year was disclosed gross has now been shown net of sales related costs reimbursed by the customer. This has resulted in reduction in revenue and a reduction of an egual amount in power and fuel cost to the tune of Rs.4,976.61 million for the year ended 31 December 2019. The underlying gases revenue for the year 2019 without the adjustment as per Ind AS 115, however, recorded a growth of about 3.1%.

Besides, the divestment of the "South Region Divestment Business" of the Company inter alia, comprising of the 1800 tonnes per day onsite Air Separation Unit atJSW Steels steelworks at Bellary and the Companys packaged gases plants located at Hyderabad and Chennai with effect from 16 December 2019 in compliance with the order issued by the Competition Commission of India also contributed to some decline in the revenues of the Gases business.

At the segment level, the revenue from operations in the Gases business segment at Rs. 13,221.04 million recorded a decline of 26.6% as compared to Rs. 18,020.78 million in the previous year on account of adjustment for Ind AS 115as mentioned above. The underlying growth in the gases business was achieved on the back of higher revenues in onsite and healthcare business together with pricing actions in onsite, merchant and packaged gases. Similarly, the Project Engineering business segment (PED) revenues stood at Rs.4,396.82 million as compared to Rs. 3,895.76 million during the previous year, recording an increase of 12.9% year on year. The PED revenues grew primarily on the back of orders from steel and refinery sectors, besides supplies for projects overseas.

During the year under review, your Company achieved higher earnings before interest, depreciation and amortisation (EBITDA) of Rs.4,356.55 million for the year 2019 as compared to Rs. 3,490.09 million in the previous year. This increase in the operating profit over 2018 was driven by growth in merchant business, pricing actions across onsite, bulk and merchant gases business and higher provisions made during 2018 in respect of indirect taxes, post medical retirement benefits, gratuity, etc. The Company also benefited from a lower depreciation of Rs. 1,772.54 million during the year 2019 as compared to Rs. 1,991.38 million in the

previous year due to nil depreciation charged during the year on certain assets held for sale as per the order of the Competition Commission of India for divestiture of certain assets as a condition for approving the global merger of Linde AG and Praxair, Inc. During the year, there has also been a reduction in the interest cost of Rs.164.51 million arising mainly as a result of repayment of the ECB borrowings. Profit before tax (PBT) before exceptional item improved to Rs. 1,721.50 million as compared to Rs. 471.70 million in the previous year.

The "South Region Divestment Business" was divested during the year on a "slump-sale" and "as is where is basis". This has resulted in an exceptional profit of Rs. 8,407.55 million after adjusting for carrying value of the business of Rs. 2,739.23 million, consent fees for assignment of contract of Rs. 2,500 million and other related expenditure for sale of the business of Rs. 153.22 million.

Your Companys Profit before tax for the year 2019 stood at Rs.10,129.05 million. Profit after tax of Rs. 7,271.79 million for the year 2019 compares favourably as against Rs. 334.86 million achieved in the previous year.

Dividend

In recognition of the improved financial performance during the year 2019 and the exceptional profits earned from the divestment of South Region Divestment Business of the Company in compliance with the order of the CCI, the Board of Directors of your Company is pleased to recommend a dividend of 100% (Rs. 10/- per equity share) on 85,284,223 equity shares of Rs.10 each in the Company for the year 2019. This dividend includes a Special Dividend of 75% (Rs. 7.50 per equity share) in view of the exceptional income earned by the Company from divestment of South Region Divestment business.

The Boards recommendation for dividend has been made after due consideration of 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 84th Annual General Meeting scheduled to be held on Friday,

18 September 2020 and will be paid on or about 23 September 2020, to the Members whose names appear in the Register of Members, as per the Book Closure date, i.e. from Saturday, 12 September 2020 to Friday,

18 September 2020 (both days inclusive). This dividend will result in cash outgo of Rs. 852.84 million as compared to Rs. 154.23 million in the previous year, which was inclusive of dividend tax. In view of the changes made under the Income tax Act, 1961, by the finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the Shareholders. Your Company shall, accordingly, make the payment of the Dividend after deduction of tax at source.

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

The Dividend Distribution Policy is annexed to this report and is also available on the Companys website at www.linde.in. [Annexure 1]

Update on Global Merger, Voluntary delisting & Open Offer

The Members are aware that in response to the application made to the Competition Commission of India (CCI) by Linde AG and Praxair,

Inc. seeking approval for the business combination in India, CCI vide its Order dated 06 September 2018 (in Combination Registration No. C-2018/01/545), approved the aforesaid business combination subject to divestment of certain assets controlled by them in India. Accordingly, Linde India Ltd. was required to make divestiture of the Companys "South Region Divestment Business" and "Belloxy Divestment Business" as described in the CCI Order. During the year 2019, Linde India has completed the divestment of its "South Region Divestment Business" as per the Business Transfer Agreement signed with Air Water India Pvt.

Ltd. The "South Region Divestment Business" was divested during the year on a "slump-sale" and "as is where is basis" for an aggregate sale consideration of Rs.13,800 million. This has resulted in an exceptional profit of Rs. 8,407.55 million after adjusting carrying value of business of Rs. 2,739.23 million, consent fees for assignment of contract of Rs. 2,500 million and other related expenditure for sale of the business of Rs. 153.22 million. The approval of the shareholders for divestment of the "Belloxy Divestment Business" was obtained on 20 Tebruary 2020 and the same is presently in process.

Outcome of voluntary delisting of equity shares & subseguent Open Offer by The BOC Group Ltd.

The Members of the Company are aware that as informed earlier in the report of the Board of Directors for the year 2018, the offer price discovered in terms of the SEBI Delisting Regulations was Rs.2,025/-, which was rejected by The BOC Group Ltd. and the person acting in concert on 24January 2019. Following the same, The BOC Group Ltd. published necessary Post Offer Public Announcement for failure of the Delisting Offer in newspapers. In view of the failure of the Voluntary Delisting Offer, The BOC Group Limited as the Acquirer along with Praxair, Inc. and Linde Holdings Netherlands B.V. as persons acting in concert (PAC) made an open offer during the year 2019 to acguire up to 2,13,21,056 fully paid up equity shares of Rs.10/- each representing 25% of the voting capital of Linde India Limited, which closed on 17 September 2019. The BOC Group Ltd. acquired 25,276 shares tendered under the said Open Offer on 27 September 2019. The shareholding of The BOC Group Ltd. thus increased to 63,988,443 equity

shares representing 75.03% of the total voting share capital of Linde India Limited. The Acquirer has subseguently on 27 April 2020, for the purpose of achieving the minimum public shareholding reguirement in compliance with the provisions of Securities Contracts (Regulation) Rules, 1957 as amended, SEBI (Listing Obligations and Disclosure Reguirements) Regulations, 2015 read with para 2(a) and para 3 of the SEBI circular no. SEBI/HO/CFD/CMD/CIR/P/43/2018 dated 22 February 2018 sold the said 25,276 shares through the stock exchange mechanism. As a result of the same, the shareholding of the promoter group in the Company now stands at 75% of its total voting capital.

Consolidated Financial Statements

Although the Company does not have any subsidiary, as per the reguirement 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 year ended 31 December 2019 together with its joint venture company, viz. Bellary Oxygen Company Private Limited. The said consolidated financial statements of the Company form part of the annual report. However, 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 Company

Bellary Oxygen Company Private Ltd.

As on 31 December 2019, the Company had one joint venture in the gases business viz. Bellary Oxygen Company Pvt. Ltd., which operates 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. Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of the joint venture company in the prescribed Form AOC-1 is annexed to this report. [Annexure 2]

Pursuant to the order dated 6 September 2018 passed by the Competition Commission of India (Combination Registration no- C-2018/01/545), the Members of the Company had on 20 February 2020 approved by way of Special Resolution divestment of "Belloxy Divestment Business of the Company". The Belloxy Divestment Business comprises of the business of distributing and selling liguid oxygen, liquid nitrogen & liquid argon purchased from Bellary Oxygen Company Private limited and conducted from the Bellary Trading office along with Companys investment in 15,000,000 equity shares of Rs.10 each fully paid up, being 50% of the total issued and paid up share capital of Bellary Oxygen Company Private Ltd. As informed earlier, your Company had earlier classified its investment in their Joint venture Company, Bellary Oxygen Company Private Ltd. together with the asset of Bellary Trading office as "asset held for sale".

LSAS Services Private Ltd.

The Board of Directors of the Company at its meeting held on 24 March 2020, approved the execution of a Joint Venture and Shareholders

Agreement ("JV&SHA") with Praxair India Private Ltd. and LSAS Services Private Ltd. Pursuant to execution of the JV&SHA, your Company holds 20,00,000 equity shares in LSAS Services Private Ltd. at Rs.10 each share, being 50% of the total issued and paid up equity share capital of LSAS Services Private Limited with the remaining 50% being held by Praxair India Private Ltd. LSAS Services Private Ltd. has thus become a Joint Venture Company of your Company with effect from 24 March 2020. The Board of Directors of the Company had also approved of Linde India Limited entering into an O&M Services Agreement with Joint Venture Company, under which, the Joint Venture Company will render Operation and Management Services to both the joint venture partners for their respective functions including Procurement, SHEQ, Human Resources, Finance, IT, Legal, Administration, Business Development, Onsite account management, Sales & Marketing, Product Management on an arms length basis.

Business Segments

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

Gases and Related Products

The gases business is capital intensive by nature as it requires large investments in setting up of air separation units as well as new packaged gases sites. The supply chain in the gases business also requires significant investments in the form of distribution assets and storage networks to service bulkvolumes as well as in the form of cylinders to service relatively smaller volumes in packaged gases business. The industry comprises major users in steel, chemicals and refinery sectors and a large number of merchant liquid customers primarily in metal, glass, automobile, petrochemicals and pharmaceutical sectors, besides customers for medical gases. New applications continue to provide growth opportunities. This growth also gets supported by the outsourcing of gases requirement under a Build Own Operate (BOO) type of supply scheme opportunities mainly in steel and refinery sectors.

The Gases and Related Products segment comprises of pipeline gas supplies (Onsite) to very 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 may 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.

As informed last year, the 1290 tonnes per day air separation plant at Jamshedpur has been operating on a Lease and O&M model with effect from 1 July 2018. As such there is no invoicing for the variable gas cost to the customer and accordingly the power cost in respect of such gases consumed by the customer is not an element of cost.

Another important highlight in the accounting of the gases revenues during the year has been adoption of Ind AS 115on "Revenue from Contracts with Customers". The first- time application of new accounting standard Ind AS 115on Revenue from Contracts with Customers has resulted in a negative impact on revenue as your Company used "Modified Retrospective Approach" for transition to Ind AS 115. The Company had therefore appropriately evaluated its revenue recognition policy in the gases business with effect from 1 January 2019. Accordingly, power and fuel cost in respect of onsite plants, which in the previous year was disclosed gross has now been shown net of sales related costs reimbursed by the customer. This has resulted in reduction in revenue of the gases business during the year and a reduction of an equal amount in power and fuel cost to the tune of Rs.4,976.61 million for the year ended 31 December 2019. This however, had a positive impact on the operating margin, though operating profit from the gases business remained unaffected.

The growth of the Gases business is largely driven by overall growth of the economy, more particularly, the rise in index of industrial production. During the fiscal year 2019-20, the growth in Indias GDP moderated from 6.1% to about 4.2% in the previous year. This was mainly due to weak domestic consumption and contraction of demand leading to sluggish growth in manufacturing and subdued investments. This has contributed to overall weakening of revenues in the Gases business during the year under review. Besides, more specifically foryourCompany, the divestmentofits"SouthRegionDivestment Business" inter alia, comprising of the 1800 tonnes per day onsite Air Separation Unit atJSW Steels steelworks at Bellary and the Companys packaged gases plants located at Hyderabad and Chennai with effect from 16 December 2019 in compliance with the order issued by the Competition Commission of India also contributed to some decline in the revenues of the Gases business for the year 2019.

The total revenue from operations in the Gases business at Rs. 13,221.04 million recorded a decline of 26.6% as compared to Rs. 18,020.78 million in the previous year on account of adjustment for Ind AS115as mentioned above. However, the underlying growth in the gases business was achieved on the back of higher revenues in onsite and healthcare business together with pricing actions in onsite, merchant and packaged gases.

As per the report of World Steel Association, the total steel production in India recorded a lower growth of 1.8% during the year 2019 as compared to 2018. India however, maintained its position of the second largest producer of crude steel in the year 2019 at 111.2 million tonnes.

While the marginally higher domestic demand during the year 2019 was backed by Governments thrust on infrastructure development, it was largely offset by continued weakness in the automotive, real estate and construction sector.

In view of the above, the revenues in the underlying gases business during the year 2019 witnessed higher oxygen demand from the steel sector. Besides, opportunity business in steel sector and pricing actions in the bulk and packaged gases business contributed to higher revenues. However, in view of a decline in the overall manufacturing sector, the demand for liquid nitrogen recorded a degrowth. The demand for liquid argon also decreased due to ongoing slowdown in automobile sector. The automotive sector has been facing severe contraction of demand due to combined effect of introduction of BS VI norms in India, new truck axle norms and increase in third party motor insurance cost and the liquidity problems in financing of new vehicles, which impacted the demand in passenger and commercial vehicles as well as two wheelers.

The bulk business which is a major part of the merchant and packaged gases business grew nearly 3% as compared to the previous year mainly on the back of pricing actions. The growth in the Bulk business was supported by sales to refineries and steel mills, as well as sales through distributors. The Industrial Packaged Gas Business registered volume degrowth mainly due to sustained downturn in the automobile industry. There has however been remarkable growth in revenues of Special Products & Chemicals portfolio. Helium prices continued to remain very remunerative though the supplies were under pressure.

Linde India is consistent in its pursuit of introducing new products and applications into the market with a view to enhance gas sales with improved margins. During the year under review, your Company was able to secure a number of orders by leveraging Linde applications technology, some of which are highlighted below.

Your Company achieved LIN dosing conversion on existing water lines in association with Varun Beverages (PepsiCo). As informed in last year, your Company had secured its first Instant Quick freezer for shrimp freezing and in line with the same, had conducted extensive trials at its Pood Lab and Technology Centre and at the customer end to achieve 1 Shrimp freezing customer (IQT line) and 1 Cake customer (cryogenic batch freezer). Besides, we have also started implementation of locally made cryo-cooling screw to convert conventional grinding into cryogenic grinding line. The success of cryogenic grinding would open-up untapped conventional grinding market. The packaged ready to eat/ready to cook product market is growing fast in metro cities with growing middle class. With increasing volumes for processors, right packaging solution is a must. Your Company has been strengthening Lindes collaboration with Sealed Air for packaging material & OEMs and has also added 2 more supply sites for large production of pornthos with Lindes pre-mix gas.

Global crude prices hit an average price of $64 a barrel, during 2019, a fall of 8% than average price of 2018. While our transportation cost didnt change much in 2019 as compared to 2018, our application oriented businesses didnt see much of growth in the Metals segment

as the refined products basket of Propane, Naphtha and Furnace Oil didnt see the appreciation that would trigger our application solutions to brace with the cost benefit offerings. The cost economic dynamics for steel sector continued to be in favor of furnace operations on Air Fuel technology vis a vis our REBOX Oxy-fuel technology - the former being a more viable option under the low fuel prices and demand.

Your Companys application technology sales force has been making efforts to enter some of the newer industry segments namely automotive industries, railways, powertransmission, tyres, heavy engineering, chemical, etc. leveraging Lindes suite of applications. We have been continuing to use applications technology such as CIRRUS, CUMULUS, N2 Lock, etc. in the pharmaceutical industry.

The Healthcare business continues to remain a focus area for growth of the gases business and your Companys brand remains a leader in the healthcare gases market. The Company has maintained its focus on both the LIV cylinders for medical oxygen as well as ENTONOX, an anaesthetic gas used for natural childbirth as well as for short term pain relief in a variety of medical procedures. Your Company organized several training programs for pain management in labour during 2019, which helped in making inroads in many new hospitals and also increased revenues from Entonox as compared to the previous year. Similarly, awareness for the use of lightweight LIV medical cylinders to increase patient safety in emergencies and ease of transport also helped gain new business in LIV. The revenues from medical gases grew on the back of liguid medical oxygen demand from new customers as well as incremental demand from the existing ones, such as PGI Chandigarh, Motilal Nehru Hospital, Prayagraj, Ganesh Shankar Vidyarthi Memorial Hospital, Kanpur and others.

Innovative Marketing Strategy:

In its focus on digitisation in marketing strategy, your Company has been a pioneer in adoption of best Industry practices and launched e-sale, a first of its kind e-commerce portal for sale of cryogenic products. This provides your Company with a first of its kind strategy in gases business in India, where cryogenic products are being sold through an e-commerce portal. The e-sale facilitates a quick turnaround by selling to our channel partners in an efficient, smooth and faster way as compared to the traditional manual process. This initiative will help avoid potential high stock situations thereby improving plant efficiency by ensuring uninterrupted operations.

As a part of its digitalization agenda, Linde India identified a need for experimental marketing for its niche product LIV™. Your Company, therefore, created an Augmented Reality mobile application with an aim to transform traditional see-to-feel experience. The App demonstrates the ease of use and distinctive features of the product, which is difficult to share by videos, brochures or other traditional marketing collaterals.

Another unigue feature of your Companys gases business is tracking customer experience on a defined metric system with different customer satisfaction indices (CSI). The combined analysis of the various indices gives a score for the Customer Experience. Your Companys

CX performance is measured on 3 Key Performance Indicators (KPI) for guery/complaint resolution. During the year 2019, KPI 1 (acknowledgement) was 100%, KPI 2 (response) & KPI 3 (resolution) scores were at 98%. The Customer Experience program was audited for ISO 10002:2018 & ISO 10004:2018 in December 2019. The certification will help Linde India in identifying the opportunity areas of perceived, expected and actual service levels through benchmarking against a global standard which would be audited every year henceforth.

Linde India also measured Customer Experience with 3 different metrics in 2019 by conducting a Customer Experience Survey. The Customer Satisfaction Score was 4.0, Customer Effort Score was 3.9 & Net Promoter Score was 39% from a sample size of 436 respondents.

The Distribution function which takes care of the supply chain in the Gases business is key to its strategy. As mentioned earlier, the supply chain requires significant investments in the form of distribution assets and storage networks to service bulkvolumes as well as in the form of cylinders to service relatively smaller volumes in the packaged gases business. During the year, the Company continued its focus on improving efficiency of the distribution function by phasing out of old 3 and 5 KL VITTs and reduction of fleet size, flow meter based supply to healthcare customers, improving delivered quantity per trip by about 9%, reducing product loss in distribution by 10% and reducing return of undelivered products by about 4%. The function has also made use of digitation such as SMS for delivery information to bulk customers, digitized pre & post departure check on vehicles & drivers, driver engagement/briefing & debriefing processes, centralized invoicing with digitized signature, all aimed at reducing distribution related timelines and enhancing the quality of the distribution processes.

Transport safety across India remains challenging and the Company has given high priority to this area with a view to overcome and mitigate the safety risks involved in distribution of products. Your Company has installed eguipment to monitor Fatigue and Distraction of the driver on road on 100% of its vehicles. Your Companys Transport Operation Center now covers 100% of its fleet for both bulk and packaged gases businesses. Your Company has also given a sharp focus on driver risk profiling and categorizing as High, Medium and Low, driver training need analysis, digital identity cards for drivers for monitoring of service hours, etc. with a view to overcome the various challenges in transportation, which has also resulted in reduced transport related incidents in the Company.

Project Engineering

The Project Engineering Division (PED) comprises the business of design, engineering, supply, installation, testing and commissioning of Air Separation plants and related projects on turnkey basis. The project engineering business, therefore, reflects the appetite for new projects in diverse core sectors of the economy.

The Project Engineering Division is having a U stamp certified manufacturing works to fabricate core proprietary eguipment such as distillation columns for air separation plants, cryogenic liguid storage

tanks, ambient and steam bath vaporizers, process vessels, UNIT plants, small sized cold boxes, containerized micro plants for cylinder filling for in-house use as well as for sale to third party customers.

The order intake of the Division during the year 2019 was to the tune of more than Rs 4,500 million, which mainly consisted of a large value order for setting up Air Separation Units at a customers steel works on turnkey basis at Bellary in the state of Karnataka and another order for supply of a Cryogenic N2 plant for a customer in refinery sector. Apart from this, the Division also received orders aggregating Rs.439 million for supplying small capacity Cryogenic N2 plants from customer in public sector for their fertilizer plants.

The Division has delivered a strong performance in the year 2019 by achieving its highest ever revenue of Rs. 4,396.82 million as compared to Rs. 3,895.76 million recorded in 2018.

During the year, the Division successfully completed supply and erection of a 200 tonnes per day IMPACT 4 Air Separation Unit at Semij in Gujarat for INOX Air Products Private Ltd. The Division is engaged in the supply and erection of five cryogenic N2 plants for its customers, which would be completed during the year 2020. Besides, two more IMPACT 4 Air Separation Units, each of 200 tonnes per day capacity are also expected to be completed during the year 2020 for INOX Air Products Pvt. Ltd.

The Division is also engaged in turnkey contract for supply and erection of the 2nd Air Separation Unit at JSWs Dolvi steel works with a capacity of 2200 tonnes per day, which would be completed in the year 2020.

During the year 2019, the Division has earned a turnkey contract from within the Linde Group for supply and erection of a 629 tonnes per day Air Separation Unit at Paradip Refinery of Indian Oil Corporation.

PED is working to receive IMS Certificate (ISO 9001, 14001,18001) for their EPC business, which will enhance its ability to get more international business. This certification is expected to be received during the year 2020.

As on 31 December 2019, the Project Engineering Divisions third-party order book stood at over Rs.6,300 million.

Opportunities and Threats

The Government of India has an aspirational goal to become a USD 5 trillion economy by the year 2025. Although this seems a challenging task, however, the resolve of the Government to focus on make in India and the new focus on Self Reliant India presents an excellent opportunity to participate in the growth of the manufacturing industry in the years ahead. Besides, imposition of anti-dumping duties on Chinese steel products to boost domestic steel production, national infrastructure pipeline with projects spread across many states over the next five years, production of new vehicles meeting BS VI norms, significant expansion of infrastructure and railways are expected to augment demand for gases in the future.

The recent geopolitical developments may result in several global manufacturers in pharma, chemicals and other industries shifting their operations from China to India.

Demand from the steel sector remains the main driver for the growth of the gases business in India and the expansion as well as consolidation in primary steel sector and refineries is expected to create opportunities for the Project Engineering business. The focus on application technology-based selling of gases in manufacturing, food and beverage, cement, paper, oil and gas, etc. is likely to create more demand for the gases business.

Healthcare has become one of Indias largest sectors both in terms of revenue & employment. The industry is growing at a tremendous pace owing to increasing expenditure by public as well private players. The healthcare market is expected to grow at a CAGR of 16-17 percent in the coming years. The spread of Covid-19 in India has presented a great opportunity in the healthcare sector with need for addition of 3 million beds for India to achieve the target of 3 beds per 1,000 people. This Industry offers a tremendous scope of infrastructure growth across the country especially in tier 2 & tier 3 cities. Besides, your Company also sees opportunity in the fast growing food and beverages market.

The present economic conditions in India and globally and the slowing economies across the globe is one of the major threats to global prosperity and economic growth, which obviously impacts all sectors including the gases industry in India. India has seen contraction in almost all the core sectors with negative growth in IIP during the last few quarters. The significant downturn in automotive sector, which is one of the important user of industrial gases poses some challenges.

Aggressive addition of new merchant capacities by competitors in an already competitive marketplace and some of the steel majors implementing plans to set up Air Separation Units may have adverse impact on the fortunes of the gases industry and price in certain geographies. A more detailed information on risk is covered in this report under the risk management section.

Last but not the least, the outbreak of Covid-19 pandemic in India and indeed across the globe since early 2020 has had an unprecedented impact on the country, its people and the world economy as a whole. As a preventive measure, the Government of India like some of the other countries announced a nationwide lockdown from 25 March 2020 to contain the spread of Covid-19. While the future impact on the business operations as a result of Covid 19 is difficult to assess at this point, as the situation is unravelling at a fast pace. The concerns on macro impact of mini lockdowns across certain states and containment zones remain as we continue to make progress on Unlock phase 1. Your Company is however fully committed to working with the Government and all its partners to ensure that we overcome this crisis together. Our portfolio of Gases, customer contracts and Project Engineering capabilities, our financial strength and Lindes brand and strength of the management team give us a competitive advantage to deal with the crisis and the new normal.

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 adeguate risk management system, which takes care of identification, assessment and review of risks. Your Company held a refresher risk workshop on 27June 2019, which was attended by the senior management team with a view to refresh the various risks facing the Company. The risks being addressed by the Company during the year under review included risk relating to aggressive capacity addition by competitors, risk from new global gas players who may have access to lower capital cost or cheaper product offerings, risk of integrated Steel plants owing ASUs in future, risk arising from delay in setting up new organisation structure, etc.

The most significant emerging risk is the ongoing outbreak of the novel coronavirus (Covid-19). This has presented the world with one of most challenging times ever. The outbreak of Covid-19 and its rapid acceleration across the globe are indeed concerning and your Companys strategy is to overcome the crisis partnering with the Government and all its stakeholders.

Your Board of Directors provides oversight of 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.

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

Towards the end of the year 2019, your Company received a sum of Rs.13,800 million from the divestment of South Region Divestment Business, which was done in compliance with the order of the Competition Commission of India. The receipt of this amount significantly changed the cash flow position of the Company prompting it to repay its high cost borrowings from banks as well as the ECB from the promoter group.

During the year 2019, your Company made full repayment of loan facilities by way of external commercial borrowings (ECB) aggregating to Rs. 6,277.76 million from Linde AG through its divestment proceeds and internal accruals. The facilities were executed mainly for funding of large air separation units (ASU) at Tata Steel Jamshedpur (2,550 tpd ASU), SAIL Rourkela (2X853 tpd ASU) and Tata Steel Kalinganagar (2X1200 tpd scale plants).

Your Company also repaid two USD denominated term loan facility availed from Citibank aggregating to USD 23.28 million (fully hedged at Rs. 1,500 million) and Rupee term loan of Rs. 600 million out of divestment proceeds from the South Region Divestment Business. Your

Company also had a Rupee term loan of Rs. 1,000 million which was repaid in May 2020. The term loan facilities were executed to fund ongoing small capital expenditure and working capital reguirements.

The Company had earlier negotiated at arms length an inter corporate loan of Rs. 1,000 million from Linde Engineering India Pvt. Ltd. The facility was executed as an alternative financing mode for short-term funds. This facility was in addition to the existing inter corporate loan of Rs. 2,400 million from the same party. During the year, the Company fully repaid intercorporate borrowings of Rs. 3,400 million out of its divestment proceeds.

Your Company also availed short term working capital demand loans from its banks for meeting cash flow mismatches, which were fully repaid during 2019.

There were no material changes and commitments affecting the financial position of the Company, which occurred between the end of the financial year to which these financial statements relate and the date of this report. As on 31 December 2019, the Company had a total outstanding borrowing of Rs 1,084.72 million, with maturity of less than six months from the year end.

Credit Rating

The Companys total bank facilities- both fund-based and non-fund based are rated by CRISIL, which has reaffirmed its long-term credit rating of CRISIL AA with Stable outlook on its bank facilities. The rating denotes high degree of safety regarding timely servicing of financial obligations.

Large Corporates Disclosure for Lund raising through Debt securities

Your Company met the criteria specified by SEBI for large corporate for fund raising through debt securities. Accordingly, necessary disclosure has been submitted to both BSE Ltd. and National Stock Exchange of India Ltd., where the shares of the Company are listed.

Deposits

During the year, 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.

Particulars of loans, guarantees or investments The particulars of loans, guarantees given and investments made during the year under Section 186 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Reguirements) Regulations, 2015 are annexed to this Report. [Annexure 3]

Investor Education and Protection Fund

During the year under review, your Company transferred the 57th unpaid/ unclaimed dividend amount of Rs.0.62 million for the financial

year ended 31 December 2011 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 27,743 shares to the Demat Account of the IEPF Authority, in respect of which dividend had remained unpaid/unclaimed for a consecutive period of 7 years. Further information in this regard is provided in the Corporate Governance Report.

Safety, Health, Environment and Quality (SHEQ)

Your Company continues to remain fully committed to Safety, which is one of the foundation principles upon which Finde spirit has evolved and as such Safety remains one of our topmost priority. Compliance with SHEQ rules, standards, procedures are pre-requisite for all employees & contractors and the management is committed to ensuring that all personnel are trained and made competent before undertaking any safety critical job for the Company.

Global Safety Commitment Day 2019 was celebrated at all Finde Operating units and project sites on 19 June 2019 with a sharp focus on our Safety Principles. The event has given an opportunity to collectively reinforce our goal of "Zero" injuries and incidents and think about our behaviours and how we can contribute to improving our safety culture and performance. Also, as an Asia Pacific initiative, a week of safety commitment was celebrated starting from 12 June 2019 at all our sites/ offices to engage our teams with various SHEQ activities, focusing on topics like office safety, home safety, transport safety, life-saving rules etc.

As a part of the Supply & SHEQ Improvement plan, key programs were rolled out to bring more focus on risk identification & control measures, reinforcing training & competencies for all high-risk jobs, etc. Statutory compliance management system was introduced to develop suitable tool for tracking the compliance of applicable statutory permits, returns and licenses for each of the Finde sites, with necessary escalation matrix. Validation of Electrical Single Fine Diagram & P&IDs for PGP plants helped consolidation of up-to-date Electrical Single Fine Diagram & P&ID in the standard format, which are stored in our global database. Contractor Management program for Distribution and Operations were reinforced by regularly monitoring their SHEQ performance, identifying gaps, training needs and ensuring compliance to Contractor Management standards.

Moreover, in order to strengthen the SHEQ performance, an Integrated Safety Plan has been introduced covering areas of improvement in Process Safety, Distribution Safety, Operational Safety, Behavioral & Personnel Safety, Quality & Environmental Safety and to also reinforce the SHEQ Policy & Rules.

With the increased use of Electronic & Speciality Gases, the Safety in electronics gases at Mundra Solar was reviewed by Linde Asia Pacific team. The first Audit, within one year of set-up and stability with minimum findings is testament to our management commitment and our teams knowledge and skillsets.

Transport Safety remains the biggest challenge and focus area for continuous improvement for our organization. According to the statistical analysis from the past couple of years, transport related incidents are mainly due to driver fatigue & distraction. To monitor the fatigue & distraction, we have installed F&D (Fatigue and Distraction) devices in 100% vehicles (Bulk & PGP). In our continuous endeavor to improve Transport Safety, a Transport Operation Centre (TOC) has been established at the Head Office in Kolkata. The Transport Operating Centre uses the most up to date technologies such as Artificial Intelligence (Al), Machine learning etc. and digitalized driver risk profiling covering inputs from various technologies installed in our vehicles. It also identifies positive driving behavior of the drivers using live monitoring, data and video analytic skills and periodic trend analysis.

Further, in continuation to our transport safety initiative, we have introduced monitoring of driver duty & driving hours through digitized mode. In our effort towards improving the quality of the drivers, we have taken them through various behavioral safety programs such as Act Safe, which was reviewed by the Global BSHEQ Champion and well appreciated for compliance. A special campaign on Overtaking & Fatigue Management was organized, which covered 100% drivers & transport contractors to focus on the area of improvements identified in investigation of Major Transport Events.

Your Company continues to mandate complete transparency in reporting of all accidents and incidents; even the minor ones are reported. Thereafter, depending on the incident, the same is duly investigated; corrective actions are identified and actioned upon. The Lessons from Incidents (LFIs) of all major Incidents are circulated to prevent repeat of similar incidents.

With the help of the Major Hazards Review Programme (MHRP) all major sites have been certified with relevant MHRP CAT1, CAT2 and CAT3 certificates. This MHRP program helps the organization to assess the offsite risk due to our operations; thereby based on risk categorization, risk control measures are established to reduce the offsite risk.

Your Company has successfully completed annual environmental data reporting using Credit360 for 21 sites in India including ASUs and the Cylinder filling sites. This data collection is reflected in both the Linde Non-Financial Report and Sustainable Development Report. The Environmental data collection program helps to meet our goals for environmental reporting by identifying environmental improvement opportunities, prioritising environmental actions and measures in order to achieve continuous performance improvement and monitoring environmental targets to ensure progression towards long term goals of no harm to people and the environment.

As a part of our commitment to environment protection, initiatives like rainwater harvesting, water recycling, recycling of waste generated, continue to be reinforced. All ASU sites are certified and sustained with IS014001 certification. The actions for certification to the latest ISO 9001:2015 & ISO 14001:2015 standards have also been initiated.

Security vulnerability risk assessments are carried out at high risk sites and effective CCTV monitoring arrangements have been made at some of the high-risk locations.

Human Resources

Employee engagement and talent retention were the focus areas of Human Resources function in 2019. We digitalized our employee engagement process by introducing a unigue Artificial Intelligence (Al) based tool called Amber. The tool, which is in the form of a chatbot, reaches out to employees periodically to gauge their engagement levels. Employees are encouraged to share their views openly on any aspect of their work life. Areas of concern highlighted by employees were addressed through face to face meetings with the employee and functional heads. So far, this initiative has been extended to about 400 employees and we intend to extend it to a larger group in the year 2020. The openness with which employees have been sharing their experiences is commendable.

Our continuous efforts to build a talent pipeline for succession planning continued in 2019 through our Young Talent Development programme. The young talent who were onboarded in the previous year and put through year-long orientation and induction, were confirmed on the rolls of the Company after an objective performance assessment. Retention of critical and key talents had been on focus throughout the year.

The Human Resources team also contributed to the productivity initiative of the organization by introducing certain policy changes.

We are committed towards creating a work environment which is safe and free of harassment for all our employees and associates. Our commitment to safety continued through imparting regular training programmes on SHEQ for newly onboarded and existing employees and associates.

During the year, the Human Resource function also supported the divestment of the South Region Divestment Business of the Company, which was divested along with employees in compliance with the order of the Competition Commission of India. HR was instrumental in ensuring the smooth transition of both the direct and indirect manpower of South Region Divestment Business to the buyers organization. In the area of industrial relations, your Company was able to arrive at an amicable settlement with workmen union on matters that have been under protracted litigation at various courts for more than 20 years.

The Company continued to have harmonious employee relations across all its plants and offices in India. As on 31 December 2019, the Company had a manpower strength of 654 on its payroll.

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 year 2019, 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.

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 year ended 31 December 2019 was in receipt of remuneration aggregating to not less than Rs. 10.20 million; and if employed for part of the said year, 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 reguest and the said information is also available on the website of the Company. None of the employees is 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 pic 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 specified in Schedule VII to the Companies Act, 2013.

Some of the CSR projects/initiatives taken up/sustained during the year include providing special education to differently abled children at Indian Institute of Cerebral Palsy (IICP), supporting homes of underprivileged children and schools run by NGOs at Kolkata and Chennai and contribution to Odisha Chief Ministers Relief Fund towards relief for victims of cyclone Fani, organising blood donation camp in Kolkata, etc. Your Company spent an amount of Rs.2.46 million during the year on various CSR projects/activities as above, against the mandated CSR spend of Rs.2.53 million as per the Companies Act, 2013. Your Directors wish to state that the CSR Committee and the Board of your Company had amongst others approved a CSR budget for Rs.10 lakhs during the year 2019 to support Gases Industry Drivers Community Project - involving defensive driver training for the drivers in the Gases industry for making the highways and the roads safer and scholarship program for their children. However, the modalities of the project could not be finalised during the year 2019, as a result of which, no spend against the budgeted amount could be made during the year. This has resulted in a negligible unspent amount of Rs.0.07 million, which is proposed to be spent in the year 2020.

The details of the CSR projects/ activities for the year 2019 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 Report

The Linde pic Group supports the United Nations Global Compact and every year publishes a detailed Corporate Responsibility Report incorporating the Global Compacts ten principles and their impact into our business activities in the manner required for GRI reporting.

As a member of the Linde pic 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 reporting by the top 500 listed entities in India based on market capitalisation. As stipulated in Regulation 34(2) of the SEBI Listing Regulations, 2015, your Company has included a Business Responsibility Report as an integral part of the Annual Report for the year 2019 briefly describing initiatives taken by it from an environment, social and governance perspective during the year under review.

Corporate Governance

As a member of the Linde pic Group, your Company attaches great importance to sound responsible management and good corporate governance. Arising from the completion of the global merger between Linde AG and Praxair, Inc., Linde pic, a company incorporated in Ireland has become the new holding company of both Linde AG and Praxair, Inc. Linde pic now has redefined its vision, mission and strategic direction and has replaced some of its legacy codes and policies to align with the new Linde values. Your Company, however, 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 Limited supports high standards in corporate governance.

It is the endeavour of the Board and the executive management of your Company to ensure that their actions are always based on principles of responsible corporate management. In the Linde pic Group, corporate governance is seen as an on-going process. Your company has already complied with some of the new recommendations of the KotakCommittee on Corporate Governance, which were implemented in May 2018 last year and is continuing to comply with all new reguirements on an ongoing basis. 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 Auditors, Deloitte Haskins & Sells, LLP, confirming compliance of the conditions of corporate governance, as stipulated under SEBI (Listing Obligations and Disclosure Reguirements) 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 eight times during the year 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 www.linde.in.

Familiarisation Programme for Directors

In terms of Regulation 25(7) of SEBI (Listing Obligations and Disclosure Reguirements) 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 has 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 familiarisation programs held during and up to the year 2019 are available on the Companys website www.linde.in.

Performance Evaluation

During the year, pursuant to provisions of Section 134, Section 149 read with Code of Independent Directors (Schedule IV) and Section 178 of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Reguirements) 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. Arising from the review, minor improvements were made in the performance evaluation form for the year 2019. 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 predefined attributes applicable to them, including some specific ones for the Independent Directors. More details about the performance evaluation process followed by the Board is 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 Reguirements) Regulations, 2015.

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 28 Tebruary 2020 from M/s. P Sarawagi & Associates, Practicing 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 report.

Internal Control Systems and their adequacy

Your Company has an 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 of internal control on an on-going basis in view of the ever-changing business environment.

Fraud in Project Engineering Division Despite all the endeavours and focus on internal controls, during the year under review, the management detected a fraud involving misappropriation of the Companys funds in the Project Engineering Division (PED) of the Company, which was committed by an employee in connivance with two contractual employees and certain vendors of the Division. The misappropriation of funds was carried out by making payments to the vendor through false and unauthorized invoices and fraudulent accounting entries passed by the employee. The amount involved in the fraud over last four years commencing from 2016 amounted to about Rs. 36 million, which has already been charged to revenue in the accounts in respective years. This was immediately informed to the Audit Committee, the Board of Directors, Statutory Auditors and Internal Auditors of the Company. The Internal Audit department has carried out a thorough investigation of these transactions and provided their recommendation to the Board. The management had, in discussion with the Audit Committee and the Board, appointed an independent firm for forensic investigation of the misappropriation, who have also submitted their findings and recommendation to the Board.

The Management has since taken consequent management actions against the persons involved in the misappropriation of funds, suspended transactions with the reported vendors and blacklisted them, revised IT policy, and reviewed all relevant internal controls, both automated and manual and implemented adequate changes in the control environment and the organization structure to mitigate the risk.

During the year, Ernst & Young LLP, were engaged by the Company for reviewing and strengthening the framework of its existing internal financial controls across the Company and testing of the operating effectiveness of various internal controls in the organisation. Ernst & Young has submitted a report to the Audit Committee and the Board on their findings based on the testing of the key controls for the year 2019. The Statutory Auditors of the Company have also independently reviewed internal financial controls over financial reporting and Ernst & Young as well the Statutory Auditors have confirmed that these controls were operating effectively as at 31 December 2019. 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 financial year 2019.

Directors

During the year under review, there has been several changes in the Board of Directors of the Company. Mr Sanjiv Lamba, Chairman of the Board retired by rotation as a director on the Board, as he did not seek re-election at the last Annual General Meeting of the Company held on 16 May 2019. Mr Moloy Banerjee also stepped down from the office of Managing Director with effect from close of business hours on 6June2019inviewof organizational changes within the Group resulting in broadening of his role and responsibilities. Ms Des Bacher resigned from the Board with effect from 11 November 2019 in view of changes in her role within the Group.

During the year, at the Board meeting held on 6June 2019, Mr Abhijit Banerjee was appointed as an additional director and Managing Director of the Company for a term of three years, subject to the approval of the Members of the Company with effect from 7June 2019. Mr Robert John Hughes was appointed by the Board as an additional director (Non-Executive) of the Company with effect from 28June 2019 as a nominee of the promoter group. Subseguently, the Board had unanimously elected Mr Hughes as the Non-Executive Chairman of the Board with effect from 23 July 2019. Lastly, Ms Cheryl Chan representing the promoter group was appointed as an additional director (NonExecutive) of the Company with effect from 11 November 2019. The appointment of Mr Abhijit Banerjee as a Director and Managing Director of the Company for a term of three years with effect from 7 June 2019 was approved by the Members of the Company by way of postal ballot on 2 October 2019. The Members of the Company had in the same postal ballot also approved re-appointment of Mr J Mehta and Mr A Balakrishnan as Independent Directors of the Company for a second term of 5 years with effect from 1 October 2019 to 30 September 2024.

Notice under Section 160 of the Companies Act, 2013 has been received from a Member proposing the candidatures of the additional directors for the office of Director of the Company.

Your Directors record their appreciation of the valuable contribution made by the abovementioned outgoing directors to the functioning of the Company and the Board during their respective tenures. The Board of your Company has benefited immensely from their wise counsel.

Mr Abhijit Banerjee, retires by rotation 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 himself for re-appointment.

Necessary resolutions for approval of appointment of Mr Robert Hughes and Ms Cheryl Chan as Directors and for re-appointment of Mr Abhijit Banerjee on retirement by rotation as Director of the Company 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 Subhabrata Ghosh, Chief Financial Officer (CFO) and Mr Pawan Marda, Asst. Vice President and Company Secretary. During the year, there has been changes in the Key Managerial Personnel, viz. Managing Director and the Chief Financial Officer of the Company, with the earlier executives moving to new roles within the Linde pic Group.

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 adeguate and effective during the financial year 2019.

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 year ended 31 December 2019, 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 financial year and of the profit of the Company for that period;

c. that they had taken proper and sufficient care for the maintenance of adeguate 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 adeguate 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 adeguate 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 year 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 year 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. [Annexure 6]

Extract of Annual Return

An extract of Annual Return as on the financial year ended on 31 December 2019 in Torm No. MGT-9 as required under Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, as amended, is set out as an annexure to the Directors Report and forms part of this Annual Report. [Annexure 7]

Outlook

The year 2019 has been somewhat difficult for the global economy, with ongoing tariff war between the US and China. The global economic scenario further deteriorated with the Chinese economy facing a severe slowdown. The slowdown in China and the other geo-political developments has impacted most of the developed and emerging economies across the globe. In these times, while the Indian economy also faced signs of slowdown in most industry segments, it continued to remain the fastest growing economy in the world. However, during

large part of the year, some of your Companys end user segments such as automobiles, construction, etc. have been facing severe slowdown for several reasons. Added to this was the significant slide in the crude oil prices, which also did not augur well for the growth of the global economy as well as India, even though, India remains a large importer of crude.

The Government of Indias aspiration to attain a USD 5 trillion economy in the next five years has led to some hope, which however, may appear a difficult proposition at present despite the focus to grow the rural economy in the budget proposals for the year 2020-21.

Of late, the world has been witnessing the impact of Covid-19, which originally had its epicentre in Wuhan in China. The Covid-19 has been declared as a pandemic by the WHO as it has already impacted nations and continents across the globe. This has already caused a grave disruption to the world economy and humanity with large number of loss of lives reported across the globe. The Government of India along with the State Governments had to impose a countrywide lockdown since 25 March 2020, which was extended from time to time with varying intensity till 30 June 2020 as a strong measure to prevent the spread of Covid-19. Several other countries across the globe had to resort to similar lockdown for extended periods. This has caused a severe blow to the Indian economy as also the global economies, which were already facing challenges due to contraction of demand.

The World Steel Association expects Indian steel demand to contract by about 18% during 2020 on the back of Covid-19 induced abrupt halt of economic activities. The demand however, is expected to sharply recover during 2021 led by the Governments thrust on infrastructure and construction projects with improving consumer sentiment in other sectors.

The country is fighting the Covid-19 with all its might and your Company is doing what it can to overcome the severe challenge presented by this. While the long term macro- economic fundamental of the Indian economy is still in place, there is great deal of uncertainty about the short to medium term future outlook of diverse sectors across the globe and India is not an exception to the same. Your Directors and the management team however, have immense confidence in the future of your Company.

Auditors

Statutory Audit

Messrs Deloitte Haskins & Sells, LLP, Chartered Accountants (firms Registration No. 117366W/W-100018) was appointed as the Statutory Auditors of the Company at its 81st Annual General Meeting from the conclusion of the said meeting and hold office until the conclusion of the 86th Annual General Meeting.

The reports of the Statutory Auditors, Deloitte Haskins & Sells LLP, Chartered Accountants on the standalone and consolidated financial statements of the Company for the year 2019 form part of this Annual Report. The Statutory Auditors have submitted an unmodified opinion on the audit of financial statements for the year 2019 and there is no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Secretarial Audit

The Board of Directors of the Company had appointed M/s. S M Gupta & Co., 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 year 2019. In terms of the provisions of Section 204(1) of the Companies Act, 2013, a Secretarial Audit Report dated 21 Tebruary 2020 in Torm MR-3 given by the Secretarial Auditor is annexed with this Report. The observations made by the Secretarial Auditors in their Report are self- explanatory. The Report confirms that the Company had complied with the statutory provisions listed under Torm 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. [Annexure 8]

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. Messrs Bandyopadhyaya Bhaumik & Co., a firm of Cost Accountants conducted this audit for the Companys financial year ended 31 December 2018 and submitted their report to the Central Government in Torm CRA 4on13 May 2019. The audit of the cost records for the year 2019 has been conducted by the cost auditors.

The existing Cost Auditors have been office for about five years and with a view to get the benefits of rotation, the Board of Directors of the Company have 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 ending on 31 December 2020 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 forms part of the Notice convening the AGM.

Acknowledgements

Your Directors place on record their deep appreciation of the cooperation received from the bankers, customers, dealers, suppliers and all other business associates and the shareholders of the Company during the year 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 support and cooperation received from the various Government departments and agencies and look forward to their continued support in the future. The Board also takes this opportunity to thank the Linde pic Group for their strategic inputs, guidance and support in various operational and functional areas, which has enabled the Company to make continuous improvement in its 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

RJ Hughes A Banerjee
Chairman Managing Director
DIN: 08493540 DIN: 08456907
Thailand Kolkata
30 July 2020 30 July 2020