Navin Fluorine International Ltd Management Discussions

Annexure 1

ECONOMIC REVIEW

Global Economic Overview

The global economy surpassed predictions in 2023, experiencing a steady yet slow recovery, with disparities evident across regions. According to the International Monetary Fund (IMF), global growth held steady at a modest rate of 3.2% compared to 3.5% in 2022. However, underlying risks and vulnerabilities persist due to escalating geopolitical conflicts, sluggish recovery in China, volatility in energy and food markets, and higher-for-longer interest rates, which continue to put pressure on discretionary spending and private capex. Despite these challenges, signs of stable growth, robust performance of the United States and several large emerging market and developing economies, coupled with inflation returning to target levels in advanced economies, indicate a diminished risk for the global economy. Global inflation continues to recede at a faster pace from 8.7% in 2022 to 6.8% in 2023. However, core inflation has remained persistent and is expected to decline gradually.

Despite the major economic shocks, global trade has been resilient in recent years. Merchandise trade experienced a decline of 1.2% in 2023 as import demand in real terms fell sharply in Europe, declined in North America and remained flat in Asia. However, imports surged in the Middle East and the Commonwealth of Independent States (CIS) region.

Several emerging markets and developing economies (EMDEs) have outperformed initial projections in 2023. The US economy has experienced the strongest recovery among major economies. Strong private consumption, swift containment of a looming banking crisis, tight labour market and rising wages have contributed to this recovery. The European Union (EU) has also shown fortitude in navigating through unprecedented shocks arising from the prolonged Russia-Ukraine war. Although its GDP growth contracted from 3.6% in 2022 to 0.6% in 2023, the EU managed to avoid the recession in 2023. Furthermore, Asia recorded a growth rate of 5.0% in 2023, with India and China playing a major role.

Performance of major economies

	GDP Growth 2023	GDP Growth 2022
United States	2.5%	1.9%
China	5.2%	3.0%
United Kingdom	0.1%	4.3%
Japan	1.9%	1.0%
Germany	0.3%	1.8%

Outlook

The global economic outlook for 2024 will be impacted by high interest rates, risk of a resurgence in inflation and consequent shifts in the anticipated monetary stance. Furthermore, the ongoing Russia-Ukraine war and an escalation in geopolitical tensions in West Asia threaten to dampen the economic prospects. Additionally, the disruptions in the Red Sea route pose a risk of intensifying concerns about a global supply chain crisis and increasing logistics costs, energy prices, and commodity prices.

Global headline inflation is expected to decrease to 5.9% in 2024 and to 4.5% in 2025. The global economy is expected to sustain its resilience in 2024. The IMF forecasts a global growth of 3.2% for both 2024 and 2025. Advanced Economies (AEs) are projected to expand from 1.6% in 2023 to 1.7% in 2024, while EMDEs are expected to experience a slight decline from 4.3% in 2023 to 4.2% in 2024. Asia is expected to again contribute significantly to global growth in 2024, echoing its impact in 2023.

(Source: IMF Economic Outlook-April 2024, World Trade Organisation)

INDIAN ECONOMIC OVERVIEW

Amid the volatile global economic environment, India has emerged as a beacon of optimism, retaining its position as the worlds fifth-largest economy. It is expected to continue leading as the fastest-growing major economy. As per the Second Advance Estimates of National Income, FY 2023-24, Indias GDP growth remained strong at 7.6% in FY 2024 as against 7% in FY 2023, supported by buoyant domestic demand, moderate inflation, a stable interest rate environment, and strong foreign exchange reserves. Furthermore, a doubledigit growth rate of 10.7% in the Construction sector and an 8.5% growth rate in the Manufacturing sector have contributed to the GDP growth in FY 2024.

The Index of Industrial Production (IIP) growth rate for FY 2023-24 indicates a 5.8% increase compared to the previous year. The Mining sector recorded the highest growth at 7.5%, followed by the Electricity sector with a growth of 7.1% and the Manufacturing sector at 5.5%. Furthermore, CPI inflation is on a downward trajectory and eased to 4.83% in April 2024. Headline inflation is expected to gradually decline to the target although it remains volatile due to repetitive food price shocks. The RBI keeps the policy repo rate unchanged at 6.50% and remains vigilant to take effective measures to achieve the target of 4% inflation.

Outlook

According to the IMF, the Indian economy is anticipated to progress steadily at 6.8% in 2024 and 6.5% in 2025. The RBIs forecast is more optimistic, projecting a higher GDP growth of 7.0% for FY 2024-25. Additionally, CPI inflation is forecasted to decline to 4.5% in FY 2024-25. Indias economic outlook remains positive, supported by stronger consumer demand, increased capital expenditure, and enhancements in both physical and digital infrastructure. Private and government investments are expected to be the primary drivers of economic growth in 2024, backed by improving prospects of rural consumption due to the easing of inflation, increased spending in an election year, and proactive government policy measures. The Interim Budget 2024-25 reflects the governments continued focus on infrastructure development, economic stability, sector-specific developments, environmental sustainability, and strategic global positioning. It establishes the framework for realising the vision of a ‘Viksit Bharat (Developed India) by 2047.

(Source: Ministry of Statistics & Programme Implementation, Ministry of Finance, RBI, Ministry of Commerce & Industry, IMF Economic Outlook- April 2024)

INDUSTRY OVERVIEW

Global fluorochemical industry

The global fluorochemical market size was estimated at US$ 28.7 billion in 2023 and is expected to reach US$ 41.35 billion by 2030, exhibiting a CAGR of 5.35% during 2023-30. Fluorochemicals find applications in various sectors such as cooling, refrigerants, dyeing, automotive, electronics, agriculture, pesticides, herbicides, insecticides, textiles, electronics, and pharmaceuticals. The Asia Pacific region dominates the global fluorochemicals market due to its expanding consumer base and diverse applications across sectors like automotive, oil and gas, electronics, pharmaceuticals, and transportation. China, Japan, and India are the major markets in the Asia-Pacific region. North America, particularly the United States and Canada, also play significant roles in the global fluorochemical market due to their advanced industries and high demand for fluorochemical products.

The global fluorospecialty market was valued at US$ 7 billion in 2022 and is expected to reach "US$ 9.1 billion by 2028, growing at a CAGR of "5.4%. The rising requirement for refrigeration across various industries is a significant driver boosting the growth of fluorospecialty market.

The growing installation of HVAC systems in the manufacturing and automotive sectors is expected to increase the use of refrigerants, thereby driving the demand for fluorochemicals. The increased production of automobiles has led to a higher demand for refrigerants. Furthermore, increased production of electric vehicles will also contribute to the heightened demand for refrigerants. Additionally, the rising demand for refrigeration and cooling systems in industrial, domestic, and food and beverage (F&B) sectors due to lifestyle changes and the need for convenience food products storage, positively influences the market. The projected growth of the global refrigerant market from US$ 25.04 billion in 2023 to US$ 27.4 billion in 2024, at a CAGR of 9.4%, is poised to significantly shape the expansion of the global fluorochemical industry, as fluorine gases have been an integral part across generations of refrigerants.

The increasing usage of fluorochemicals in the healthcare industry for medical implants due to their high biocompatibility is offering lucrative growth opportunities to industry players. Fluorine plays a vital role in the pharmaceutical industry. Fluorine-based intermediates are the key starting materials to many APIs. "20-30% of modern pharmaceutical molecules contain at least one Fluorine atom. In the pharmaceutical segment, the key driving factor is that one in every three new APIs will be based on fluorine chemistry.

The increasing consumption of fluorochemicals in plasma etching for semiconductors, batteries, and other electronic products and components is boosting their demand. Moreover, the rising application of aluminium in the automotive industry is spurring the demand for fluorochemicals. Hydrofluoride is expected to experience an uptick in demand, driven by the rising aluminium production, propelled by its expanding utilisation in the automotive and construction industries.

Automotive industry: The automotive industry serves as the primary market for fluorochemicals, driven by the increased production of light commercial vehicles and their application in the production of aluminium, semiconductors, and electric components. With global sales of new light vehicles projected to rise by 2.8% y-o-y in 2024, reaching 88.3 million units, the automotive industry is benefiting from demand recovery and production increase due to inventory restocking efforts across many regions. This uptick in automotive production is expected to further fuel the demand for fluorochemicals in the market.

Construction industry: Fluor technology products find applications in the construction sector, providing materials such as architectural membranes and coatings, caulks, wire, and cable with anti-corrosion properties, high durability, and UV resistance. Due to urbanisation, industrialisation, population growth, and a surge in infrastructure projects in developing countries, the global construction industry is estimated to reach US$ 19.85 trillion in 2028. As the construction sector flourishes, there will be an increased demand for fluoropolymers, which is anticipated to drive the expansion of the fluoropolymers segment, forecasted to reach US$ 10.31 billion in 2028.

(Source: Frost & Sullivan, Research and Markets, Expert Market Research, Prabhudas Lllladher-Fluorochemlcals Sector Report, S&P Global, GlobeNewswIre)

Indian specialty chemicals industry

India is emerging as a preferred manufacturing hub for specialty chemicals for domestic and export markets. "20% of the total chemicals market in India, the specialty chemicals sector has been instrumental in propelling the growth of the chemicals industry.

The Indian specialty chemicals industry has exhibited resilience and adaptability, demonstrating consistent growth amidst a rapidly evolving global economic landscape. It is projected to experience revenue growth of 6-7% in fiscal 2024, with increased domestic demand ("60% of total revenue) driving volume growth, despite macroeconomic challenges in the US and Europe dampening exports. Amid the global economic slowdown and volatile crude prices, the specialty chemical market witnessed weakness in demand in the US and the Eurozone. Growth trends vary across sub-segments, with the agrochemicals and fluorochemicals sectors, constituting over 35% of total revenues, expected to achieve double-digit growth in fiscal year 2024.

Favourable government initiatives

Initiatives such as the Public Procurement (Preference to Make in India) policy, along with schemes like the establishment of plastic parks and centres of excellence, the Chemicals Promotion and Development Scheme, and the Proposed New Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR) Policy 2020-35, have been crucial in shaping policy formulations and propelling the specialty chemicals sector forward. Under the new PCPIR Policy 2020-35, it has been targeted to attract a combined investment of? 10 trillion by 2025, Rs. 15 trillion by 2030 and Rs. 20 trillion by 2035. Furthermore, the Ministry of Chemicals and Fertilisers has labelled the specialty chemicals industry as a sunrise sectorand isworking towards implementing the Production Linked Incentive (PLI) scheme to boost domestic production and exports.

(Source: Assocham-EY report- Indian Specialty Chemicals Industry: ready for a quantum leap, June 2023, Crlsll Ratings)

Indian fluorochemical industry

The Indian fluorospecialty market is projected to grow at a CAGR of 8.7% between 2022 and 2028, reaching US$ 760 million by 2028. Indias expanding industries and increasing chemical manufacturing infrastructure have led to a consistent and growing requirement for fluorochemicals.

Fluorospecialty market in India is growing rapidly due to presence of pure play manufacturers who entered the industry a few years back, carving out a distinct presence on the global stage. Major consumer regions for fluorospecialties are showing interest in India to source their raw materials postpandemic. This favourable environment benefits fluorospecialty manufacturers, as the market remains relatively uncrowded with soaring demand from pharmaceutical and agrochemical sectors. Moreover, the Government of Indias PLI scheme for API manufacturing in the pharmaceutical and specialty chemical sectors is a significant driving force behind the growth of the fluorospecialty market. Moreover, transitioning to low- GWP refrigerants is augmenting market growth, aligning with the increasing emphasis on environmental sustainability and regulations concerning greenhouse gas emissions.

Pharmaceutical industry: With the domestic pharmaceutical industry placing greater emphasis on developing innovative and complex drug molecules, there is a growing demand for custom synthesis and advanced fluorination technologies, which, in turn, boosts the sales of fluorochemicals across India. The Indian API market has demonstrated consistent growth, achieving a CAGR of 10.4% from 2018 to 2022, with projections indicating further expansion at nearly 14% through 2028. To enhance their competitiveness in regulated markets, API manufacturers in India are focussing on improving production yields, refining production processes, and bolstering international sales efforts. As of 2022, over 30% of Indias API production is exported to countries including the US, UK, and Japan.

Electronics industry: The electronics industry is dominating the Indian fluorochemicals market due to rapid industrial growth and high dependency on these chemicals. The increased manufacturing and assembly of electronic devices, due to rising domestic consumption and the governments ‘Make in India initiative, has fuelled the demand for fluorochemicals, especially in applications like printed circuit boards (PCBs), microelectronics, and LED lighting. Furthermore, Indias electronics manufacturing sector is attracting foreign investment and technology, indicating ongoing growth and evolution, driving the demand for specialised fluorochemicals.

Agrochemicals industry: Fluorinated molecules are gaining traction in the agrochemical industry due to their unique properties. In 2022, 11 out of 15 new ISO-assigned agrochemicals had fluorination in their chemistry, compared to 6 out of 17 in 1998. India is one of the most prominent exporters of agrochemicals in the world, catering to key end-user nations such as the USA, Japan, China, and Brazil. Among the notable agrochemicals exported are mancozeb, 2,4D, acephate, chlorpyrifos, permethrin, and profenos.

Automobile industry: The Indian automobile sector witnessed a satisfactory year in 2023, with all segments demonstrating healthy growth. The industry is optimistic that the growth momentumwill continue in 2024. Exportsfrom India is expected to drive the growth especially for component and ancillary manufacturing segments. Additionally, the increased focus on electric vehicles (EVs) and smart vehicles is contributing to the rising demand for fluorospecialty chemicals.

(Source: Frost & Sullivan, Prabhudas Lllladher-Fluorochemlcals Sector Report)

OPPORTUNITIES AND THREATS

Opportunities

Growing domestic demand: The Indian specialty chemicals industry has significant potential due to the growing demand for specialty chemicals in various end-use industries, including pharmaceuticals, automobiles, agrichemicals, etc.

Fluorination in pharmaceutical innovation: The Indian fluorochemical industry is poised for growth, with a remarkable 64% of New Chemical Entities (NCEs) approved by the Food & Drug Administration (FDA) in 2022 using fluorination chemistry, almost double of 34% observed in 2015. It emphasises the growing importance of fluorination methods in pharmaceutical innovation.

China+1 and Europe+1 strategy: Global companies are seeking to derisk and diversify their supply chain away from China. Key fluorospecialty consuming regions like USA, EU and Japan are considering India as their supply partner for reliable and timely supply of raw materials. Moreover, the slowdown in Chinese manufacturing presents an opportunity for India to expand its footprint and secure a larger share of the global market. Furthermore, amidst the ongoing Russia- Ukraine conflict, numerous customers are now adopting not just the China+1 strategy but also the Europe+1 approach.

This shift has contributed to the growth ofthe Indian market for fluorine-based intermediates, creating export opportunities.

Innovation and collaboration: Collaboration and innovation are vital strategies for Indian companies to maintain competitiveness in the global market by enriching their product portfolios. Public-private partnerships and collaborations among industry stakeholders can stimulate innovation and research efforts.

Threats

Stringent regulations: The industry is subject to stringent regulations regarding the protection of the ozone layer amid growing environmental concerns. These regulations are applied to the production and consumption of fluorochemicals, which are expected to impede market growth. The adoption of Montreal and Kyoto Protocols and regulations regarding restriction on chemicals with high global warming potential (GWP) is expected to impact the demand for fluorocarbons, including Chlorofluorocarbons (CFCs) and hydrochlorofluorocarbons (HCFCs). The phaseout of HCFCs in developed countries is already complete, with most end users transitioning to HFCs (hydrofluorocarbons). However, even HFCs are now facing limitations due to their global warming potential, with new regulations likely to govern their future use in advanced economies. India has committed to achieving a complete phaseout of HCFCs by 2030.

Limited availability and volatility in raw material prices:

Access to reliable fluorine source (acid grade fluorspar) is crucial for fluorination companies in India, considering the absence of commercially proven fluorspar reserves in the country. Fluorspar reserves are mainly concentrated in Mexico, China, and South Africa, which accounted for "60% of global reserves in 2022. China dominates the fluorspar mining market, followed by Mexico. Due to concentrated availability, fluorspar prices are highly volatile, making secure access a vital factor for ensuring sustainable business operations.

Competition from Imports: Imports, primarily from China, have a significant impact on domestic players and exert pricing pressure. Additionally, destocking by certain global players, who are contending with overcapacity amidst subdued consumption, has led to increased shipments of products to India, further exacerbating the challenges for Indian players.

COMPANY OVERVIEW

Established in 1967, Navin Fluorine International Limited ("NFIL" or "the Company") is one of Indias leading manufacturers of specialty fluorochemicals. With over five decades of experience in handling fluorine and extensive expertise in specialty fluorochemicals business, the Company has established its reputation as a trusted partner to global companies in life science, crop science and performance materials. As the flagship ofthe Padmanabh Mafatlal Group, NFIL is a pioneer in the manufacturing of refrigerant gases in India. It operates one ofthe largest integrated fluorochemicals complexes in India, with manufacturing facilities strategically located at Surat and Dahej in Gujarat and Dewas in Madhya Pradesh. The Companys DSIR-approved research and development centre, known as Navin Research Innovation Centre (NRIC) is situated in Surat.

NFIL operates in three major business segments, viz., speciality chemicals, HPP and CDMO and manufactures over 60 fluorinated products. Its main business units include refrigeration gases, inorganic fluorides, specialty fluorides, and CDMO. Expanding its foothold in fluorochemicals, the Company is investing in a Multi-Purpose Plant (MPP), paving the way for a new portfolio of products for its future growth.

The Companys presence is spread across domestic and export markets, including North America, Europe, the Middle East and Asia Pacific regions. Its long-term contracts with supply intermediate in the pharmaceutical and agrochemical industries validate its capabilities.

• One ofthe largest integrated specialty fluorochemical companies in India

• Established Indias only plant equipped with high-pressure fluorination capabilities for CDMO business, adhering to cGMP standards

• "Responsible Care" certification

FINANCIAL PERFORMANCE

The Company recorded revenue from Specialty Chemicals at Rs. 848 crores (14% YoY growth), HPP at Rs. 955 crores (8% YoY growth), and CDMO at Rs. 262 crores (42% YoY decrease). The Company aims to bolster its position in the CDMO segment by enhancing its capacities and capabilities. In FY 2023-24, NFIL entered into a partnership with a European CDMO to supply intermediate for a patented commercial molecule. The Company introduced 6 new commercial products in its portfolio, leading to a substantial increase in the revenue mix from its commercial portfolio, rising from 45% to 61%.

During the year, the Companys exports were adversely impacted by weak demand driven by dumping of Chinese materials across global markets and destocking of high priced inventories, particularly in agrochemical space. Additionally, in Refrigerant space, we experienced a significant decline in selling prices in the export market. CDMO export sales were impacted by postponement of commercial stage approvals of certain late stage drugs ofthe Companys customers.

Consolidated Profit and Loss Statement

(Rs. in crores)

Particulars	FY 2023-24	FY 2022-23
Revenue from operations	2,065.01	2,077.40
Raw material	935.43	896.01
Employee expenses	285.84	249.41
Other expenses	445.46	381.67
Total expenses	1,666.73	1,527.09
Operating EBITDA	398.28	550.31
Operating EBITDA margin	19.29%	26.49%
Interest expenses	74.56	27.52
Depreciation	96.16	62.64
Operating PBT	227.56	460.15
Operating PBT margin	11.02%	22.15%
Profit before tax	335.54	495.88
Tax	65.03	120.69
Profit after tax	270.50	375.18
Other comprehensive income	0.02	2.04
Total comprehensive income	270.52	377.22

Standalone Profit and Loss Statement

(Rs. in crores)

Particulars	FY 2023-24	FY 2022-23
Revenue from operations	1,420.83	1,628.14
Raw material	667.26	715.26
Employee expenses	209.50	202.98
Other expenses	308.56	288.01
Total expenses	1,185.32	1,206.25
Operating EBITDA	235.51	421.89
Operating EBITDA margin	16.58%	25.91%
Interest expenses	4.96	2.05
Depreciation	57.58	42.60
Operating PBT	172.97	377.24
Operating PBT margin	12.17%	23.17%
Profit Before Tax	292.47	418.24
Tax	57.30	105.75
Profit After Tax	235.17	312.49
Other comprehensive income	(1.58)	0.78
Total comprehensive income	233.59	313.27

Analysis of the Consolidated P&L Statement

Revenue

The Companys consolidated revenue for FY 2023-24 stood at Rs. 2,065 crores as against Rs. 2,077 crores in the preceding year, indicating a degrowth of 1%. However, the Companys Other income increased by 56%, rising from Rs. 36 crores last year to Rs. 56 crores in FY 2023-24.

Expenses

Total consolidated expenses ofthe Company increased by 14%, from Rs. 1,617 crores in FY 2022-23 to Rs. 1,837 crores in FY 2023-24. Raw material costs, accounting for a 45% share of the Companys revenues, increased by 4% from Rs. 896 crores in FY 2022-23 to Rs. 935 crores in FY 2023-24 due to the change in business mix and decline in prices of refrigerant gases. Employee expenses, constituting 14% share ofthe Companys revenues, surged 15% from Rs. 249 crores in the previous year to Rs. 286 crores in FY 2023-24.

Analysis ofthe Balance Sheet

Sources of Funds

The consolidated capital employed by the Company increased by 8%, reaching Rs. 3,209 crores as of March 31,2024, compared to Rs. 2,967 crores as of March 31, 2023, driven by additional growth capex undertaken by the Company. Focussed efforts to reduce working capital helped us in reducing the capital employed. Consolidated return on capital employed, a measurement of returns derived from every rupee invested in the business was at 11%. The Companys consolidated net worth increased by 9%, climbing from Rs. 2,185 crores as of March 31, 2023, to Rs. 2,383 crores as of March 31, 2024.

Application of Funds

The Companys consolidated Property, Plant and Equipments (gross) increased by 17% from Rs. 1,695 crores as on March 31, 2023 to Rs. 1,988 crores as on March 31, 2024.

Investments

Consolidated total investments (non-current and current) other than investments in subsidiaries and joint venture ofthe Company increased from Rs. 43 crores as on March 31, 2023 to Rs. 494 crores as on March 31, 2024. Consolidated cash and cash equivalents decreased from Rs. 35 crores as on March 31, 2023 to Rs. 28 crores as on March 31, 2024 aided mainly by affirmative actions on optimising working capital levels.

Working Capital Management

Consolidated inventories, including raw materials, work-in- progress and finished goods, among others, decreased by 21% from Rs. 468 crores as on March 31, 2023 to Rs. 372 crores as on March 31, 2024. In FY 2023-24, the inventory turnover cycle was 66 days, as against 82 days in FY 2022-23. Trade receivables declined by 9%, reducing from Rs. 562 crores as of March 31, 2023, to Rs. 513 crores as of March 31, 2024. The debtor turnover cycle was 91 days in FY 2023-24, compared to 99 days in the preceding year. The receivables and inventories management continue to be actively managed and are in line with the scope and scale of operations.

Margins

Consolidated revenue decreased by 1% in FY 2023-24. The EBITDA margin (before exceptional items) of the Company decreased by 720 bps from 27% in FY 2022-23 to 19% in FY 2023-24, while PBT (before exceptional items) decreased by 1,113 bps due to change in business mix, lower operating leverage and pricing pressure in refrigerant gases in export market.

Key Ratios

Particulars	Consolidated		Standalone
	FY 2023-24	FY 2022-231	FY 2023-24	FY 2022-23
EBITDA/Turnover (%) (before exceptional items)	22	28	21	28
Return on net worth (%)*	11	17	11	16
Book value/share (Rs.)	481	441	464	432
Earnings per share (Rs.)*	54.57	75.70	47.44	63.05
Debtors turnover (days)	91	99	82	88
Inventory turnover (days)	66	82	55	73
Current ratio*	1.81	2.66	3.68	4.91
Operating profit margin (%)*	11	22	12	23
Net Debt-Equity	0.37	0.37	Negative	Negative
Interest Coverage Ratio	4.80	19.02	49.44	205.13
Net profit margin (%)*	13	18	16	19

Change as compared to previous year is clue to:

* change in business mix, lower operating leverage and pricing pressure in refrigerant gases in export market.

* better management of receivables and inventory and extended credit period negotiated with vendors and increase in borrowings.

change in business mix, lower operating leverage and pricing pressure in refrigerant gases in export market and increase in interest cost in current year.

RISK MANAGEMENT

The Company has an efficient Risk Management Framework for the timely and effective identification, assessment, and mitigation of key business risks. This framework is central to achieving NFILs corporate objectives and business sustainability. The effectiveness of risk management is evaluated based on its well-defined processes and frameworks, supported by robust governance, appropriate delegation of authority, and comprehensive management information systems. The precision of this process has enhanced corporate sustainability, making risk management an integral aspect of corporate philosophy and strategic execution.

Risk management organisation, roles and responsibilities

The Companys governance principles, including overall risk tolerance, are established by the Board of Directors. Specific functional committees, such as the Risk Management Committee, Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee, and Corporate Social Responsibility Committee, which include Board Members, reporttheirfindingstothe Board ofDirectors. As part of its governance initiative, the Company ensures that members within the risk management structure are well- informed about the risk strategy and processes, ensuring complete transparency and an enhanced ability to manage day-to-day risks.

Strategic implementation of the risk management cycle

The Company embedded risk management across the organisation to effectively manage risks. Processes including risk identification, measurement, analysis, and assessment, along with risk reporting, mitigation, and review, enable it to monitor the major risks.

Risk Identification: The Company utilises relevant systems and indicators (quantitative elements) to identify risks. Additionally, internal reporting protocols enable executives to report risks promptly as they are identified.

Risk Measurement: The Company consistently bolsters risk management tools aligned with business functions. Risk is measured at both the organisational and departmental levels based on the departments risk insights.

Analysis and Assessment: A key objective of the Companys risk management strategy is to optimise financial performance.

The Companys financial performance reflects the efficacy of its risk management approach.

Risk Reporting: The Company creates awareness by regularly evaluating and reporting the efficacy of its risk management strategy to the Risk Management Committee and Board. This process enables the Company to devise and implement counter-risk strategies.

HUMAN RESOURCES

Human resource management plays a pivotal role in driving the Companys growth. The Companys robust HR policy fosters equality and transparency across the organisation, creating a safe, synergetic, and conducive work environment for employees to deliver optimal results, ensuring that employees goals align with the organisations growth vision. Through a structured induction program, HR teams assist new hires in understanding and embracing the organisational culture. Additionally, they focus on employee engagement, recruitment, and retention, providing them with essential knowledge to enhance performance.

The HR team organises employee engagement and employee connect meetings, led by site heads and site HR heads. During these sessions, there is an open exchange of dialogues covering discussions on the Companys vision, future strategies, employee grievances, initiative planning, suggestions, and resolution of other concerns.

The Company conducted regular training programmes aimed at improving employee skills and awareness. These included mandatory safety and quality training sessions (in compliance with cGMP standards), functional and technical skill enhancement workshops, and statutory training covering POSH (Prevention of Sexual Harassment of Women at Workplace). Furthermore, leadership assessment trainings were conducted to groom leaders and fortify succession planning for key positions. The Company, including its subsidiaries, had 1,514 employees as of March 31, 2024.

Internal Control Systems and Their Adequacy

The Company adheres to comprehensive guidelines, procedures, and processes that are essential components of overall governance, laws, and regulations. All major business processes of the Company are seamlessly integrated and operated through SAP.

The Company has established robust internal control systems, tailored to the size and complexities of its operations. These controls were designed to provide a reasonable level of assurance regarding the accuracy of financial reporting, compliance with applicable laws and statutory requirements, safeguarding and efficient use of assets and resources, and compliance with policies, and procedures. These systems are regularly tested for effectiveness by the statutory and internal auditors.

An independent firm conducts internal audit across the organisation. A well-established internal audit framework is in place, encompassing all aspects of financial and operational controls across all businesses, locations, and functions. The internal auditors review the adequacy, integrity, and reliability of control systems and recommend improvements to their effectiveness. The effectiveness of the controls is evaluated and scored based on control indices. The internal audit team conducts extensive reviews and process improvements identified during the reviews are regularly communicated to the management. Significant findings by the internal auditors and subsequent actions are periodically reported to the Audit Committee of the Board of Directors. The Audit Committee monitors the implementation of audit recommendations.

	By order of the Board of Directors
	For NAVIN FLUORINE INTERNATIONAL LIMITED
	Vishad P. Mafatlal
Date: May 07, 2024	Chairman
Place: Mumbai	DIN: 00011350
Registered Office:
Office No. 602, 6th Floor, Natraj by Rustomjee,
Near Western Express Highway,
194, Sir Mathuradas Vasanji Road,
Andheri (East), Mumbai 400069, India
Tel: +91 22 6650 9999; Fax: +91 22 6650 9800
E-mail ID: infoicpnfil.in; Website: www.nfil.in
CIN: L24110MH1998PLC115499