National Peroxide Ltd Directors Report.

TO THE MEMBERS OF NATIONAL PEROXIDE LIMITED

The Directors take pleasure in presenting their Sixty-Seventh Annual Report on the business and operations of the Company and the Audited Financial Statements for the year ended March 31, 2021.

1. FINANCIAL RESULTS

(H in lakhs)

Financial Year Ended

Particulars

Standalone

Consolidated

31-03-2021 31/03/2020 31-03-2021 31/03/2020
Total Income 22,725.31 20,859.97 22,778.77 20,918.11
Profit before tax and exceptional items 2,728.85 2,899.58 2,778.46 2,955.90
Exceptional Items 1,549.30 - 1,549.30 -
Profit before tax after exceptional items 1,179.55 2,899.58 1,229.16 2,955.90
Tax (901.53) 1,162.96 (888.49) 1,164.34
Net Profit after Tax 2,081.08 1,736.62 2,117.65 1,791.56
Dividend paid on Equity Shares (H 12.50 Per Share for FY 2019-20 and H 65 Per Share for FY 2018-19) 718.38 3,735.55 718.38 3,735.55
Dividend Distribution Tax - 768.03 - 768.03

2. DIVIDEND

Your Directors have recommended a dividend of H 12.50/- per equity share having face value of H 10/- each (i.e. 125%) for the Financial Year 2020-21, to be paid, if declared by the Members at the Annual General Meeting to be held on August 25, 2021.

3. TRANSFER TO RESERVES

During the year under review, no transfers were made to reserves.

4. STATE OF COMPANY’S AFFAIRS

The gross sales and other income for the year under review were H 22,725.31 lakhs as against H 20,859.97 lakhs for the previous year. The profit before tax was H 1,179.55 lakhs and the profit after tax was H 2,081.08 lakhs for the year under review as against H 2,899.58 lakhs and H 1,736.62 lakhs respectively, for the previous year.

The Company achieved a capacity utilization of 65% of the installed capacity of Hydrogen Peroxide, as compared to 74% during the previous year, mainly on account of plant shutdown for two months and lower demand due to ongoing COVID-19 pandemic.

5. IMPACT OF COVID-19

The spread of COVID-19 disease has severely impacted economies, businesses and social set ups across the globe and in India. The number of new cases which had reached its lowest level in the first week of February 2021 has gone up dramatically in March 2021. Several restrictions had been imposed by various state governments and local bodies to control this strong second wave of the pandemic, but these were not as severe as the lockdown during the first wave. Your Directors have carried out a detailed assessment of its liquidity position as at the Balance sheet date, and has concluded that there are no material adjustments required in the standalone financial statements. Based on the Companys liquidity position as at March 31, 2021 and review of cash flow projections (after applying sensitivity analysis) over the next twelve months, your Directors’ believes that the Company will have sufficient liquidity to operate its businesses in the ordinary course. However, the impact assessment of COVID-19 pandemic is a continuing process given the uncertainties associated with its nature and duration. The Company will continue to monitor material changes to future economic conditions.

6. COMPOSITE SCHEME OF ARRANGEMENT

The Board of Directors at its meeting held on March 9, 2021, has approved the draft Composite Scheme of Arrangement amongst the Company (‘NPL’) (‘the Transferee Company / Demerged Company’), Naperol Investments Limited (‘NIL’) (‘the Transferor Company’), NPL Chemicals Limited (‘NPCL’) (‘the Resulting Company’) and their respective Shareholders and Creditors under Sections 230-232 of the Companies Act, 2013 (‘the Scheme’). The Scheme, inter alia, provides for:

i. Demerger of chemical business of the Company (NPL) into the Resulting Company (NPCL) (as defined in the Scheme), on a going concern basis, and in consideration thereof, the Resulting Company shall issue its equity shares to equity shareholders of the Demerged Company in the same proportion as their holding and;

ii. Amalgamation of the Transferor Company (NIL) with the Transferee Company (NPL).

Rationale for the Scheme:

i. The Transferee / Demerged Company is engaged in business of manufacturing of and dealing in peroxygen chemicals and also owns certain strategic investments as well as engaged in the business of making long term investments and corporate lending directly and also through its wholly owned subsidiary viz., the Transferor Company.

ii. The nature and competition involved in each of the aforementioned businesses is distinct and it is capable of attracting a different set of investors, strategic partners, lenders and other stakeholders.

iii. Further for growth and expansion of the said chemical business and the investment and corporate lending business, differentiated strategy is required to be aligned to the industry specific risks, market dynamics and growth trajectory.

iv. With a view to reorganise the businesses of the Transferee / Demerged Company, it is proposed to bring the said chemical business of the Demerged / Transferee Company under the aegis of the Resulting Company and amalgamate the Transferor Company, engaged in the business of long term investment and corporate lending, with the Transferee Company.

This, inter-alia, would result in the following benefits:

a. unlocking the value of each of the businesses for the shareholders of the Transferee / Demerged Company, attracting investors and providing better flexibility in accessing capital;

b. segregating different businesses having different risk and return profiles, and providing investors with better flexibility to select investments which best suit their investment strategies and risk profile; and c. enabling focused growth strategy for each of the businesses for exploiting opportunities specific to each business.

Your Directors consider the Scheme to be in the best interests of the Shareholders, Employees and the Creditors of each of the parties thereon.

Consideration for the Scheme:

Amalgamation / Merger

The Transferor Company (NIL) is a wholly owned subsidiary of the Transferee Company (NPL) and therefore for the amalgamation of the Transferor Company with the Transferee Company there shall be no issue of shares by the Transferor Company.

Demerger

Upon the Scheme becoming effective, the Resulting Company (NPCL) shall issue and allot, to each Member of the Demerged Company (NPL) whose names appear in the Register of Members of the Demerged Company as on the Record Date, as under: “One fully paid-up equity share of H 10/- each (Rupees ten each) of the Resulting Company, for every One equity share of H 10/- each (Rupees ten each) held in the

Demerged Company.”

Subject to necessary approvals, the equity shares allotted by the Resulting Company, pursuant to the Scheme, to Shareholders of the Demerged Company shall be listed on BSE Limited.

The Scheme, if approved, shall be effective from the Appointed Date and operative from the Effective Date (as defined in the Scheme) and the Scheme is subject to necessary statutory and regulatory approvals including approval of BSE Limited and Hon’ble National Company Law Tribunal (NCLT), Mumbai Bench.

The Company has filed the Scheme with BSE Limited, on March 27, 2021, for obtaining its observation / no-objection letter required towards filing of the Scheme with the NCLT and the same is awaited.

7. CHANGE(S) IN THE NATURE OF BUSINESS, IF ANY

There is no change in the nature of business carried on by the Company and its subsidiaries. The Company has not changed the class of business in which the Company has an interest.

8. MATERIAL CHANGES AND COMMITMENTS

There have been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

9. SAFETY & ENVIRONMENT

The Company continues to maintain a good safety and environmental record. There was no lost time injury during the Financial Year 2020-21 and as on March 31, 2021, it has worked for 1,887 days without Lost Time Injury.

10. INSURANCE

All the properties of the Company, including Buildings, Plant and Machinery, Stocks and Materials have been adequately insured. The Company also has a public liability insurance policy as per the Public Liability Insurance Act, 1991.

11. FIXED DEPOSITS

The Company does not accept fresh deposits at present, and as such, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

12. DETAILS OF SUBSIDIARIES, JOINT VENTURES, ASSOCIATE AND HOLDING COMPANY

During the year under review, NPL Chemicals Limited was incorporated as wholly owned subsidiary on July 29, 2020, as part of the draft Composite Scheme of Arrangement and accordingly, as on March 31, 2021, the Company has two subsidiaries namely, Naperol Investments Limited and NPL Chemicals Limited. There were no joint ventures and associate Company.

Nowrosjee Wadia and Sons Limited (NWS) holds 30.79% shares in the Company and is the holding company of Macrofil Investments Limited (Macrofil) which also holds 33.31% shares in the Company. Hence, NWS holding through Macrofil and its other subsidiaries and associates stands at 55.30% shared which makes NWS the holding company of the Company.

13. PERFORMANCE AND FINANCIAL POSITION OF SUBSIDIARY COMPANIES

Naperol Investments Limited is registered as a Non-Banking Financial Company as provided by Section 45-IA of the Reserve Bank of India Act, 1934 and is engaged in the business of long-term investment. During the year under review, the company earned a profit after tax of H 37.29 lakhs as against H 54.94 lakhs in the previous year.

NPL Chemicals limited, was incorporated on July 29, 2020 as part of the draft Composite Scheme of Arrangement to carry on the business of manufacturing, distributing and selling of peroxygen chemicals and has not commenced operations.

Pursuant to Section 129(3) of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 forms part of the Consolidated Financial Statements. Pursuant to Section 136 of the Companies Act, 2013, the Company is exempted from attaching to its Annual Report, the Annual Reports of the subsidiary companies.

The Audited Financial Statements of the subsidiary companies are kept open for inspection by the Members at the Head Office of the Company. The Company shall provide a copy of the financial statements of its subsidiary companies to the Members upon their request. The statements are also available on the website of the Company at www.naperol.com.

14. CONSOLIDATED FINANCIAL STATEMENTS

The Company has prepared Consolidated Financial Statements (CFS) in accordance with the applicable Accounting Standards as prescribed under the Companies (Accounts) Rules, 2014 of the Companies Act, 2013.

The Consolidated Financial Results reflect the results of the Company and its subsidiaries. As required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audited CFS together with the Independent Auditors’ Report thereon are annexed and form part of this Annual Report. The summarized Consolidated Financial Results are provided above at point no. 1 of this Report.

15. DIVIDEND DISTRIBUTION POLICY

The Securities and Exchange Board of India (‘SEBI’) vide its amendments in SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, has extended the requirement of formulation of Dividend Distribution Policy to top 1000 listed entities based on Market Captalization. Accordingly, in compliance with the said requirement, the Company has formulated a Dividend Distribution Policy, and the same is available on the its website at http://naperol.com/BoardPolicies.

16. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report for the year under review, is presented in a separate section and forms part of this Annual Report.

17. CORPORATE GOVERNANCE

Your Company has taken adequate steps to ensure that all mandatory provisions of Corporate Governance in terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been complied with.

A separate Report on Corporate Governance along with a Certificate from a Practicing Company Secretary, regarding compliance of the conditions of Corporate Governance, forms part of this Annual Report.

18. BUSINESS RESPONSIBILITY REPORT

A Business Responsibility Report pursuant to Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, detailing the various initiatives taken by the Company on the environmental, social and governance perspective, in prescribed format forms part of this Annual Report.

19. CORPORATE SOCIAL RESPONSIBILITY

During the Financial Year ended March 31, 2021, the Company has spent H 280 lakhs (Rupees Two Hundred Eighty lakhs) towards its Corporate Social Responsibility (CSR) activities as per the provisions of the Companies Act, 2013. The CSR initiatives of the Company were under the thrust area of health & hygiene, rural development and education. The CSR Policy of the Company is available on the website of the Company at https://www. naperol.com/BoardPolicies

The Ministry of Corporate Affairs (MCA) vide its notification dated January 22, 2021, notified the Companies (Corporate Social Responsibility) Amendment Rules, 2021, which, inter-alia, provides for the revised format of annual report for publishing the CSR Activities undertaken during the Financial Year ended March 31, 2021.

A brief outline of the Company’s CSR policy statement and annual report on the CSR activities undertaken by the Company during the Financial Year ended March 31, 2021, in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 is appended as ‘Annexure I’.

20. DETAILS OF BOARD MEETINGS

During the year, seven Board Meetings were held through video-conferencing mode due to the ongoing threat of COVID-19 pandemic as well as exemptions given by Ministry of Corporate Affairs and Securities & Exchange Board of India. The details of the meetings are provided in the Report on Corporate Governance, which forms part of this Annual Report.

21. BOARD COMMITTEES

As on March 31, 2021, the Board has six committees: Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders’ Relationship Committee, Risk Management Committee and Strategy Advisory Committee.

During the year under review, the Board of Directors had constituted Risk Management Committee and Strategy Advisory Committee. The composition and terms of reference of all the Committees of the Board of Directors of the Company is in line with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosire Requirements) Regulations, 2015.

During the year, all the recommendations made by the Committees were approved by the Board. A detailed note on the Committees, its composition, number of Committee meetings held and attendance of the Committee Members at each meeting is provided in the Report on Corporate Governance.

22. ANNUAL RETURN

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, a copy of the Annual Return of the Company is uploaded on the website of the Company at www.naperol.com.

23. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

1. in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

2. they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for that period;

3. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. they have prepared the Annual Accounts on a ‘going concern’ basis;

5. they have laid down internal financial controls to be followed by the Company and that such internal controls are adequate and were operating effectively; and

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

24. ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Internal Audit plays a key role in providing an assurance to the Board of Directors with respect to the Company having adequate Internal Control Systems.

The Internal Control Systems provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of Company’s assets. The details about the adequacy of Internal Financial Controls are provided in the Management Discussion and Analysis Report.

25. SHARE CAPITAL

The authorised share capital as on March 31, 2021 was H 2,500 lakhs. The paid-up share capital as on March 31, 2021 was H 574.70 lakhs. During the year under review, there has been no change in the authorised and paid-up share capital of the Company.

26. AUDITORS AND AUDIT REPORTS

Statutory Auditors

M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N / N500016), had been appointed as the Statutory Auditors of the Company, from the conclusion of the Annual General Meeting (AGM) held on August 9, 2017, upto the conclusion of the AGM to be held in the financial year 2022-23, subject to ratification of their appointment at every AGM. However, pursuant to the Companies (Amendment) Act, 2017, which was notified on May 7, 2018, the provision related to ratification of appointment of auditors by Members at every AGM has been done away with.

There are no qualifications, reservations or adverse remarks made in the Statutory Auditors’ Report.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014 and the Companies (Cost Records and Audit) Rules, 2014, the cost records of the Company are required to be audited. The Board of Directors, on the recommendation of the Audit Committee, appointed M/s. D. C. Dave & Co. Cost Accountants (Firm Registration No. 000611), to audit the cost records of the Company for the financial year ending March 31, 2022, on a remuneration of H 4,50,000/- plus applicable taxes and reimbursement of travelling and out-of-pocket expenses as incurred by them for the purpose of Audit. The remuneration payable to the Cost Auditor is required to be ratified by the Members at this AGM.

There are no qualifications, reservations or adverse remarks made in the Cost Auditors’ Report.

Secretarial Auditors

In terms of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,

M/s. Parikh & Associates, Practicing Company Secretaries, have been appointed as Secretarial Auditors of the Company to carry out Secretarial Audit.

The Report of the Secretarial Auditors is appended as

‘Annexure II’.

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board and General Meetings.

There are no qualifications, reservations or adverse remarks made in the Secretarial Auditors’ Report.

27. RELATED PARTY TRANSACTIONS

All transactions entered into with Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the financial year were in the ordinary course of business and on an arm’s length basis and do not attract the provisions of Section 188 of the Companies Act, 2013.

During the year, the Company had not entered into any contract / arrangement / transactions with related parties which could be considered as material.

The Company’s policy on dealing with Related Party Transactions as approved by the Board is available on the Company’s website at https://naperol.com/ BoardPolicies.

The related party transactions are disclosed under Note No. 42 of the Notes to Standalone Financial Statements for the Financial Year 2020-21.

28. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the provision of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time, the Company has established vigil mechanism through the Audit Committee for Directors and Employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Company’s Code of Conduct. The vigil mechanism provides for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee in appropriate or exceptional cases.

The details of establishment of such mechanism is also available on the Company’s website at https://naperol. com/BoardPolicies.

29. RISK MANAGEMENT

The Company has in place a mechanism to inform the Board about the risk assessment and minimization procedures and undertakes periodical review of the same to ensure that the risk are indentified and controlled by means of properly defined framework. In the opinion of the Board, there are no material risks, which may threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis Report which forms part of this Annual Report.

30. PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has an Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of women employees at workplace. No complaints were received during the year under review.

31. REPORTING OF FRAUDS

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, to either the Company or the Central Government.

32. DIRECTORSANDKEYMANAGERIALPERSONNEL

Retirement by Rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ness N. Wadia, Director, retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

Necessary resolution for the re-appointment of Mr. Ness N. Wadia, Director, has been included in the Notice convening the AGM and requisite details have been provided in the explanatory statement to the Notice.

Independent Directors

The Independent Directors of the Company have given the certificate of independence to the Company stating that they meet the criteria of independence as required under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. They have registered their names in the Independent Director’s data-base as maintained by Indian Institute of Corporate Affairs (IICA).

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Key Managerial Personnel

In terms of the provisions of Section 2(51) and Section 203 of the Companies Act, 2013, the following are the Key Managerial Personnel of the Company:

- Mr. Rajiv Arora, Chief Executive Officer & Director

- Mr. Conrad Fernandes, Chief Financial Officer

- Mr. Chandukumar Parmar, Company Secretary & Compliance Officer

33. BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out annual performance evaluation of its own performance, the Directors individually and all Committees of the Board. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

34. NOMINATION AND REMUNERATION POLICY

The Board has adopted, on the recommendation of the Nomination & Remuneration Committee, a policy for selection and appointment of Directors, Senior Management and their remuneration. A brief detail of the policy is given in the Report on Corporate Governance and is also available on the Company’s website at https://naperol.com/BoardPolicies.

35. PARTICULARS OF EMPLOYEES

The information in terms of provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which forms part of this Report, is appended as ‘Annexure III’.

However, as per the provisions of Section 136 of the Companies Act, 2013, the report and accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars as required under Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, which is available for inspection by the Members at the Head Office of the Company during business hours on working days of the Company upto the date of the ensuing Annual General Meeting.

If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard.

36. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013, are given in Note No. 14 of the Notes to the Standalone Financial Statements.

37. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There have been no significant and material orders passed by the regulators, courts and tribunals impacting the going concern status and the Company’s operations in future.

38. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is appended as ‘Annexure IV’.

39. ACKNOWLEDGEMENTS

Your Directors would like to express their sincere appreciation to the Customers, Vendors, Bankers, Members, Central and State Governments and Regulatory Authorities for their continued co-operation and support. Your Directors also take this opportunity to acknowledge the dedicated efforts made by Employees for their contribution to the achievements of the Company.

On behalf of the Board of Directors
Ness N. Wadia
Chairman
Mumbai, June 29, 2021 DIN: 00036049