neogen chemicals ltd share price Directors report


The Members,

Your Directors have pleasure in presenting their 34th (Thirty Fourth) Annual Report on the business and operations of the Company and the Audited Financial Statements for the Year ended March 31,2023.

1. Financial Summary or Highlights/Performance of the Company (Standalone & Consolidated)

(Rs. in Crores)

Particulars Standalone Consolidated
FY 2022-23 FY 2021-22 FY 2022-23 FY 2021-22
Revenue from Operations 686.18 487.25 686.18 487.25
Other Income 4.63 1.34 4.45 1.07
Total Income 690.81 488.59 690.63 488.32
Cost of materials consumed 485.26 343.77 485.26 343.77
Changes in inventories of finished goods, work-in progress and stock-in-trade (96.75) (68.80) (96.75) (68.80)
Employee benefits expense 46.82 31.50 46.82 31.50
Finance costs 28.94 19.08 28.94 19.08
Depreciation and Amortization Expense 16.20 11.69 16.20 11.69
Other Expenses 139.23 94.19 139.23 94.19
Total Expenses 619.70 431.43 619.70 431.43
Share of profit from Joint Venture - - 0.10 0.18
Profit Before Tax 71.11 57.16 71.03 57.07
Current Tax 12.76 9.87 12.76 9.87
Deferred Tax Liability 8.30 2.57 8.30 2.57
Profit After Tax 50.05 44.72 49.97 44.63
Other Comprehensive Income 0.28 (0.28) 0.28 (0.28)
Total Comprehensive Income for the year 50.33 44.44 50.25 44.35

2. Brief Description of the Companys Working during The Year/State of Companys Affair

The Company reported a standalone revenue of Rs. 690.81 crore and consolidated revenue of Rs. 690.63 crore (including other income) in FY 2021-22 as compared to Standalone revenue of Rs. 488.59 crore and consolidated revenue of Rs. 488.32 crore (including other income) in the previous year thereby registered a growth of 41% on standalone and consolidated basis over the previous year. The standalone and consolidated Profit before Tax (PBT) was Rs. 71.11 crore and Rs. 71.03 crore as compared to Rs. 57.16 crore and Rs. 57.07 crore respectively over the previous year. The standalone and consolidated Profit after Tax (PAT) stood at Rs. 50.05 crore and Rs. 49.97 crore as compared to Rs. 44.72 crore and Rs. 44.63 crore over the previous year. EBITDA grew by 29% to Rs. 111.6 crores from Rs. 86.6 crores.

The Company began FY23 on a positive note with strong all-round performance. Revenues grew by 75%, while EBITDA and PAT improved by 58% and 51% respectively. The performance momentum was steered by strong gains from the expanded capacity, and this came in spite of challenging operating environment marred by high input and utility costs, logistical disruption as well as extreme volatility in exchange rates during the Q1FY23. In the CSM/ advanced intermediate business, the Company started witnessing traction from other newer sectors which are non-agro and non-pharma and we endeavour to progressively increase the contribution at the Company level.

In the 1st half of the year the Company delivered a superior performance reflected by 50% growth in revenues, 35% improvement in EBITDA and 13% increase in PAT. The performance was fueled by continued positive demand outlook from key end user segments, further aided by gains from incremental capacity available over same period last year. All this was achieved in an environment that was premised on prolonged inflationary headwinds in key raw materials and other utilities.

Q3 FY23 performance was bolstered by 40% Y-o-Y gains in revenue with healthy profitability, where both EBITDA and PAT increased by 27% and 40% Y-o-Y respectively. The performance was consistent and witnessed accelerated built up in the business based on strong visibility and continued positive demand environment. All the strategic initiatives undertaken in Q3FY23 including new CAPEX announcements and forming a separate entity for battery chemicals business were steps in the right direction to gain early mover advantage, be future ready with capacities meeting demand and strengthening our technological expertise. All this will result in sustained value creation for our stakeholders.

The Company entailed several CAPEX initiatives this year to elevate its performance trajectory in the existing business and to participate in the sunrise sector of lithium-ion battery chemicals. The construction progressed well as expected both in lithium-ion battery chemicals and existing business operations. Sizeable CAPEX plans were lined up in the second half of FY 2023, based on the progress in discussion for lithium- ion battery materials space.

The Company concluded the FY 2022-23 on a strong note despite challenging operating scenario aggravated by continued volatility in input costs, disruption of global supply chains due to Russia Ukraine conflict and variations in foreign exchange rates among others. Amid all these headwinds, the Company demonstrated solid financial performance in FY2023 steered by 41% growth in revenues and 29% expansion in EBITDA. More importantly, the Company reported Highest-Ever revenues and PAT in the Companys history propelled by positive demand environment, onset of several expansion initiatives and augmentation of the product portfolio. This is a testament of our commitment and perseverance towards building a solid foundation for the future.

FY2023 was a momentous year for Neogen Chemicals as we charted ambitious growth plans for both existing as well as Battery Chemicals business and saw a lot of these initiatives take concrete shape. On one hand, the Company entered into a share purchase agreement for acquiring 100% stake in BuLi Chemicals India Private Limited from Livent USA to strengthen our product offerings while on the other hand, we signed a landmark agreement with MUIS, Japan to acquire manufacturing technology license for electrolytes in India. Both these events will significantly bolster our competitive position in the market and lay the roadmap for the future. We have markedly expanded our R&D prowess across several high-potential chemistries to offer deep value to our customers. Initiatives under Battery Chemicals business progressed well, and we are on track to achieve several milestones as per our internal forecasts.

Further during the year under review, the company has promoted and incorporated a Wholly Owned Subsidiary of the Company on March 29, 2023, named "Neogen Ionics Limited" ("NIL"), to carry out the Battery Chemicals Business addressing the growth opportunities in Energy Storage such as Lithium- Ion Battery material space and other future energy storage chemistries. The main objects of NIL is to manufacture Lithium-Ion battery materials with an initial plan of manufacturing electrolytes and Lithium salts needed for electrolytes.

Our expansion plans are ambitious, but modular in nature. Our intent is to cement our leadership position in the existing business, while garnering substantial market share in the high potential Lithium-ion battery chemicals space. With this, we believe we have built a solid foundation for Neogen Chemicals to independently grow and self-sustain both its existing as well as battery chemicals businesses. We are optimistic that these advancements will enable Neogen to achieve quantum leap in its earnings and demonstrate its manufacturing excellence to the stakeholders across the globe.

The roadmap appears equally encouraging and we are ready to march to the next leg of growth that will demonstrate our manufacturing capabilities at scale as well as expertise in several complex chemistries. The demand landscape remains promising and the Company will channelise its experience to deliver sustained performance in the years to come. The industry is supportive, and the demand scenario continues to be favourable. Our objective is to continue on this profitable growth journey and deliver sustained value for our stakeholders.

3. Change in the Nature of Business:

There was no change in the nature of business or the business line of the Company.

4. Dividend:

For the financial year 2022-23, based on the performance of the company, the board of the Company is pleased to recommend a final dividend of Rs. 3 per equity share. If the dividend as recommended by the Board is approved at the 34th Annual General Meeting the total outflow towards Dividend on equity share would be Rs.7.48 crores.

The Board had recommended a final Dividend of Rs. 2.75 per equity share for the financial year 2021-22, which was approved by the shareholders at its 33rd Annual General Meeting held on September 28, 2022 amounting to Rs.6.86 crores.

The Dividend Distribution Policy ("Policy") of the Company formulated in accordance with the terms of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), which endeavors for fairness, consistency and sustainability while distributing profits to the shareholders is made available at the website of the Company at https:// neogenchem.com/wp-content/uploads/P-Dividend- Distribution-Policy.pdf

5. Reserves

Your Company has not transferred any amount to General Reserves during the financial year under review.

6. Share Capital

The paid up share capital of the Company is as given hereunder:

Particulars Opening Balance as on April 1, 2022 Closing Balance as on March 31, 2023
Equity shares:
- Number of shares 2,49,39,316* 2,49,39,316
- Amount 24,93,93,160 24,93,93,160

The Board of Directors at its meeting held on 8th December, 2021, inter alia approved the issue and offer of 16,04,710 equity shares on preferential basis for cash consideration subject to the approval of shareholders of the Company. Subsequently the shareholders of the Company at its Extra Ordinary General meeting held on 31st December, 2021 had approved issue, offer and allotment of 16,04,710 shares of face value of Rs. 10 each on preferential basis at an issue price of Rs. 1,402.12 per Equity Share (including a premium of Rs. 1,392.12 per Equity Share) aggregating up to Rs. 225 crores to the identified investors. The allotment of the said equity shares of the Company on a preferential basis was done on 6th January, 2022. The Equity shares were listed at BSE Limited and National Stock Exchange of India Limited.

Utilization of Proceeds raised through Issue of Equity Shares on Preferential basis

The proceeds raised through the issue and allotment of shares on 6th January, 2022 were utilized towards the objects it was raised for and there was no deviation or variation in the utilisation of funds raised through issue of Equity Shares on preferential basis. The proceeds of Rs. 225 crores raised through issue and allotment of equity shares on preferential basis, was utilised as on March 31, 2023 and the statement in this respect was placed before the Audit Committee of the Company for review and after such review the same was submitted to the Stock Exchange and the same is also available at the website of the Company at https://neogenchem. com/wp-content/uploads/Reg-32-SE.pdf .

Buy Back of Securities/ Sweat Equity/ Bonus Shares/ Issue of Shares with Differential Rights

During the year under review the Company has not bought back any of its securities, nor has it issued any Sweat Equity or Bonus Shares or Equity Shares with Differential Rights.

7. Board of Directors and Key Managerial Personnel:

The directors of the Company as on March 31, 2023 are:

Sr. No Particular Designation
1. Haridas Kanani Chairman and Managing Director
2. Dr. Harin Kanani Managing Director
3. Sanjay Mehta Independent Director
4. Hitesh Reshamwala Independent Director
5. Shyamsunder Upadhyay Whole Time Director
6. Anurag Surana Non-Executive and Non-Independent Director
7. Prof. Ranjan Kumar Malik Independent Director
8. Avi Sabavala Independent Woman Director

Retirement by rotation:

As per the provisions of Section 152 of the Companies Act, 2013, not less than two-third of the total number of Directors, other than Independent Directors shall be liable to retire by rotation. One-third of these Directors are required to retire every year and if eligible, these Directors qualify for reappointment. Accordingly, at the 34th AGM, Mr. Anurag Surana (DIN: 00006665), Non[ Executive and Non-Independent Director, shall retire by rotation and being eligible, offers himself for re[ appointment.

A detailed profile of Mr. Anurag Surana (DIN: 00006665), Non-Executive and Non-Independent Director along with additional information required under Regulation 36(3) of Listing Regulations and Secretarial Standard on General Meetings is provided separately by way of Annexure to the Notice of the 34th AGM.

Change in Designation:

During the year under review, Dr. Harin Kanani (DIN: 05136947), Managing Director of the Company was re-appointed as a Managing Director of the Company, liable to retire by rotation, for a further term of 5 years starting from July 22, 2022 till July 21, 2027 as per the provisions of Section 203 of the Companies Act, 2013 ("the Act"), read with other relevant provisions and rules made thereunder and Regulation 30 of the Listing Regulations.

Re- appointment:

Based on recommendation being received from the nomination and remuneration committee of the Company and after taking into account the performance evaluation of Mr. Haridas Kanani, Chairman and Managing Director of the Company during his term of five years and considering the knowledge, acumen, expertise, experience and the substantial contribution he brings to the Board, the Board has at its meeting held on August 5, 2023, approved the re- appointment of Mr. Haridas Kanani as a Chairman and Managing Director of the Company for a further term of 5 years starting from August 11,2023 to August 10, 2028, not liable to retire by rotation, subject to the approval of the shareholders at the 34th AGM of the Company and on such terms and conditions including remuneration as set out in the agreement, the abstract of which is given in explanatory statement annexed to the Notice of the 34th AGM. This proposal forms part of the agenda of the Notice of 34th AGM of the Company.

Pursuant to provisions of Section 149(10) of the Companies Act, 2013 and based on recommendation being received from the nomination and remuneration committee of the Company and after taking into account the performance evaluation carried by the Board before recommending his reappointment to the shareholders and independence of Prof. Ranjan Kumar Malik, Independent Director of the Company during his first term of five years ending on October 5, 2023 and considering the knowledge, acumen, expertise, experience, independence and substantial contribution he brings to the Board, the Board has at its meeting held on August 5, 2023, approved the re- appointment of Prof. Ranjan Kumar Malik as an Independent Director of the Company for a second term of 5 consecutive years starting from October 6, 2023 to to October 5, 2028, not liable to retire by rotation, subject to the approval of the shareholders at the 34th AGM of the Company and on such terms and conditions as set out in the agreement. This proposal forms part of the agenda of the Notice of 34th AGM of the Company.

Pursuant to provisions of Section 149(10) of the Companies Act, 2013 and based on recommendation being received from the nomination and remuneration committee of the Company and after taking into account the performance evaluation carried by the Board before recommending her reappointment to the shareholders and independence of Mrs. Avi Sabavala, Independent Director of the Company during her first term of five years ending on October 5, 2023 and considering the knowledge, acumen, expertise, experience, independence and substantial contribution she brings to the Board, the Board has at its meeting held on August 5, 2023, approved the re- appointment of Mrs. Avi Sabavala as an Independent Director of the Company for a second term of 5 consecutive years starting from October 6, 2023 to to October 5, 2028, not liable to retire by rotation, subject to the approval of the shareholders at the 34th AGM of the Company and on such terms and conditions as set out in the agreement. This proposal forms part of the agenda of the Notice of 34th AGM of the Company.

Declaration by Directors:

The Independent Directors of the Company have separately submitted a declaration of independence, as required, pursuant to the provisions of Section 149(7) of the Act, stating that they meet the criteria of independence, as provided in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulation and are not disqualified from continuing as Independent Directors of your Company. Further, all the Independent Directors of your Company have confirmed their registration / renewal of registration, on Independent Directors Databank. Further there has been no change in the circumstances which may affect their status as Independent Director during the year.

Your Company has in place a Code of Conduct for the Board of Directors, Key Managerial Personnel and Senior management personnel, which reflects the legal and ethical values to which your Company is strongly committed. Also pursuant to the requirements of Regulation 26(3) of the Listing Regulations, all members of the Board of Directors, Key Managerial Personnel and Senior Management Personnel have affirmed compliance with the code of conduct for Board of Directors, Key Managerial Personnel and senior management Personnel for the financial year ended March 31, 2023. The said code is available on the website of the Company at https://neogenchem.com/ wp-content/uploads/E-code-of-Ethics-Directors-KMP. pdf.

Annual Evaluation by the Board:

The Nomination and Remuneration Committee has defined the evaluation criteria for the Board, its Committees and Directors. The functioning of the Board was evaluated by the Nomination and Remuneration Committee on various aspects, including, degree of fulfilment of key responsibilities, Board Structure, composition, establishment and delegation of responsibilities to various committees, effectiveness of Board processes, Board and Management Relations, Board Strategy and Risk Management, Stakeholder value and responsibility, information and functioning.

The Board of Directors formally assess their own performance based on parameters which, inter-alia, include performance of the Board on deciding long term strategies, rating the composition and mix of Board members, discharging of governance and fiduciary duties, handling critical and dissenting suggestions, etc. The parameters for performance evaluation of the Directors include contributions made at the Board meeting, attendance, instances of sharing best and next practices, domain knowledge, vision, strategy, engagement with senior management etc.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding Directors being evaluated. Independent Directors were evaluated based on parameters, such as qualifications, experience, knowledge and competence.

The performance evaluation of Chairman, Executive and Non-Executive Directors were carried out by the Independent Directors who also reviewed the performance of the Board as a whole in their meeting held on March 11, 2023.

Familiarization Programmes for Independent Directors:

Pursuant to provisions of Regulation 25 of the Listing Regulations, the Company has formulated a programmes for familiarizing the Independent Directors, with regard to their roles, rights, responsibilities under the act and regulations, nature of the industry in which company operates, current business model of the Company, etc., through various initiatives. The details of aforementioned programmes are available on the Companys website at https://neogenchem.com/ corporate-qovernance/#familarization-proqramme/ .

8. Particulars of Employees:

The information required under Section 197 (12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as "Annex 1" to this report. The Statement containing particulars of employees as required under Section 197 of the Act, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided upon request. In terms of Section 136 of the Act, the Annual Report and accounts are being sent to the members and others entitled thereto, excluding the information on employees particulars which will be available for inspection on request being sent by the member during business hours on all working days excluding Sunday and national holidays up to the date of 34th AGM. Any member interested in obtaining a copy thereof, may write to the Company Secretary at investor@neogenchem.com .

9. Committees & Meetings:

The Company has duly constituted the following mandatory Committees in terms of the provisions of the Act, read with relevant rules framed thereunder & Listing Regulations:

a) Audit Committee

b) Stakeholders Relationship Committee

c) Nomination and Remuneration Committee

d) Corporate Social Responsibility Committee

e) Risk Management Committee

The composition of all such Committees, brief terms of reference, number of meetings held during the year under review, and other details have been provided in the Corporate Governance Report which forms part of this Annual Report. All the recommendations made by the Committees were accepted by the Board.

Board Meetings:

The Board of Directors met 7 (Seven) times, that is, on May 14, 2022, July 18, 2022, August 6, 2022, November 5, 2022, February 11, 2023, March 4, 2023 and March 11, 2023 during the financial year under review. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act.

Audit Committee Meetings:

The Audit Committee met 6 (Six) times during the year, that is, on May 14, 2022, July 18, 2022, August 6, 2022, November 5, 2022, February 11, 2023 and March 4, 2023.

Stakeholders Relationship Committee Meetings:

The Stakeholders Relationship Committee met once during the year on November 5, 2022.

Nomination and Remuneration Committee Meetings:

The Nomination and Remuneration Committee met twice during the year, that is, on May 14, 2022 and July 18, 2022.

CSR Committee Meeting:

The CSR committee met twice during the year on July 18, 2022 and February 11, 2023.

Risk Management Committee:

The Board of Directors ("Directors") of your Company have constituted Risk Management Committee in accordance with the recent amendments in Regulation 21 of the Listing Regulations, at its meetings held on May 29, 2021. The details pursuant to the requirement of Regulation 21 and Schedule V (C) Para 5A of the Listing Regulations pertaining to role, terms of reference and constitution of the Risk Management Committee of the Company have been provided in the Corporate Governance Report which forms part of this Annual Report.

The Risk Management committee met twice during the year on May 14, 2022 and November 5, 2022.

The Committee details and the Risk Assessment and Management Plan are made available on the website of your Company at https://neogenchem.com/ corporate-governance/ and https://neogenchem.com/ wp-content/uploads/I-Risk-Assessment-and-Mgt-Plan. pdf respectively.

Independent Directors meeting:

Independent Directors met once during the year under review on March 11, 2023.

10. Details of Subsidiary/Joint Ventures/ Associate Companies:

The Company does not have any associate company or a holding company.

Further during the year under review, the company has promoted and incorporated a Wholly Owned Subsidiary of the Company on March 29, 2023, named "Neogen Ionics Limited" ("NIL"), to to carry out the Battery Chemicals Business addressing the growth opportunities in Energy Storage such as Lithium- Ion Battery material space and other future energy storage chemistries. The main objects of NIL is to manufacture

Lithium-Ion battery materials with an initial plan of manufacturing electrolytes and Lithium salts needed for electrolytes.

The Company has entered into a Joint Venture with Dhara Fine Chem Industries. Neogen holds 90% of the capital contribution in a partnership firm. Dhara Fine Chem Industries is engaged in the business of manufacturing, sale and trading of Organic and Inorganic chemicals and other related activities. Consolidated Financial Statements of the Company have been prepared in accordance with relevant Accounting Standards issued by the Institute of Chartered Accountants of India and section 129 (3) of the Act forming part of this report. In accordance with Section 136 of the Act, the Audited Financial Statements, including Consolidated Financial Statements and related information are available on the Companys website at https://neogenchem.com/annual- reports-2/. Pursuant to the first proviso to Section 129(3) of the Act and Rule 5 and Rule 8(1) of the Companies (Accounts) Rules, 2014, the salient features of financial statements, performance and financial position of the Joint Venture is given in Form AOC-1 as set out in Annex 3 to this Report.

11. Auditors:

Statutory Auditors

Pursuant to the provisions of Section 139 of the Act and the Rules made thereunder, it is mandatory to rotate the statutory auditors on completion of the maximum term permitted under the provisions of the Act. In line with the requirements of the Act, JMT & Associates, Chartered Accountants (Firm Registration No. 104167W), was appointed as the statutory auditors of the Company to hold office for a further period of five consecutive years from the conclusion of the 30th AGM of the Company held on September 20, 2019 till the conclusion of the 35th AGM.

The requirement for the annual ratification of auditors appointment at the AGM has been omitted pursuant to Companies (Amendment) Act, 2017 notified on May 7, 2018.

JMT & Associates, have confirmed that the appointment was within the limit specified under Section 141(3) (g) of the Act and they are not disqualified to be reappointed as a Statutory Auditors in terms of provisions of Section 139 and 141 of the Act and the Companies (Audit and Auditors) Rules, 2015. As required under Regulation 33(1) (d) of Listing Regulations, JMT & Associates, have confirmed that they hold a valid certificate issued by Peer Review Board of the Institute of Chartered Accountants of India.

Statutory Auditors report

The Statutory Auditors Report does not contain any modified opinion, qualifications, reservations or adverse remarks for the year under review and the observations and comments given in the report of the Statutory Auditors read together with Notes to Accounts are self-explanatory and hence do not call for any further explanation or comments under Section 134 (f) (i) of the Act.

Secretarial Auditors:

DVD and Associates, Practising Company Secretaries (FCS No. 6099 CP No. 6515), were appointed as the Secretarial Auditor of the Company for FY 2022-23 and the Secretarial Audit Report for the financial year ended March 31, 2023 from DVD and Associates is annexed herewith as Annex - 2 to this Report. The Secretarial Auditors Report for the financial year ended March 31, 2023 does not contain any qualification, reservation or adverse remark.

Pursuant to the provisions of Section 204 of the Act and Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, as amended from time to time and Regulation 24A of Listing Regulations, the Company has appointed DVD and Associates, Practicing Company Secretaries, as Secretarial Auditors of the Company to undertake the Secretarial Audit for the FY 2023-24. The Company has received their written consent and confirmation that the appointment will be in accordance with the applicable provisions of the Act and rules framed thereunder.

Cost Auditors:

The Company is required to maintain cost records as per Section 148(1) of the Act and the rules framed thereunder, and accordingly, the Company has made and maintained such cost accounts and records.

Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294), were appointed as Cost Auditor of the Company for Financial Year 2022-2023 as per the provisions of the Act. The Cost Auditors Report for the financial year ended March 31, 2023 does not contain any qualification, reservation or adverse remark.

In terms of Section 148 of the Act read with the rules framed thereunder, the Board of the Company on recommendation being received from the Audit committee, has appointed Kishore Bhatia & Associates, Cost Accountants, (Firm Registration No. 00294) as Cost Auditor of the Company, to conduct audit of the Cost records of the Company for the financial year ending on March 31, 2024 at a remuneration of

Rs. 3,30,000 subject to ratification of remuneration by the shareholders at the 34th AGM by passing a resolution as set out in Item No. 7 of the Notice of 34th AGM.

Kishore Bhatia & Associates have confirmed that they are free from disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act and that the appointment meets the requirements of Section 141(3) (g) of the Act. They have further confirmed their independent status and an arms length relationship with the Company.

Reporting of Frauds:

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its officers or employees, to the Audit Committee under Section 143(12) of the Act details of which needs to be mentioned in this Report.

12. Management Discussion and Analysis Report:

The Management Discussion and Analysis Report is presented in a separate section forming part of this Annual Report.

13. Business Responsibility and Sustainability Report:

The Business Responsibility and Sustainability Report as stipulated under Regulation 34(2)(f) of Listing Regulations is presented in a separate section forming part of the Annual Report.

14. Risk Management Policy:

Risks are an integral part of a business operation. Neogen has developed and implemented a robust Risk Management Policy that monitors, identifies and suggest risk mitigation measures. The Company has developed and implemented the Risk Assessment and Management Policy and the same is reviewed periodically by the Board of Directors. The Board has constituted Risk Management Committee which would be reviewing this policy henceforth on periodic intervals. The Committee details and the Risk Assessment and Management Plan are made available on the website of your Company at https://neoaenchem.com/corporate-aovernance/ and https://neogenchem.com/wp-content/uploads/I-Risk- Assessment-and-Mgt-Plan.pdf respectively. The Salient features of the Risk Assessment and Management Plan ("the policy") are:

• Lay down a framework for identification, measurement, evaluation, mitigation & reporting of various risks.

• Risk management allows Neogen to minimize losses and capitalize on opportunities.

• Understanding risk and Neogens appetite for risk will be key considerations in Neogens decision making.

• Evolve the culture, processes and structures that are directed towards the effective management of potential opportunities and adverse effects, which the business and operations of the Company are exposed to.

15. Vigil Mechanism/Whistle-Blower Policy:

The Company has adopted a ‘Whistle-Blower Policy for its Directors and Employees to report genuine concerns and to provide adequate safeguards against victimization of persons who may use such mechanism. The Mechanism is designed for enabling all the stakeholders to communicate their concerns about illegal or unethical practices, fraud or violation of Companys Code of Conduct if any, freely. No personnel of the Company have been denied access to the Chairperson of the Audit Committee. During the year under review, no complaints were received under the Whistle Blower Policy.

The functioning process of this mechanism has been elaborated in the Corporate Governance Report forming a part of this Annual Report. The said policy can be accessed on the companys website at https:// neogenchem.com/wp-content/uploads/L-Whistle- blower.pdf.

16. Policy on Directors Appointment and Remuneration:

The Company has adopted a Nomination and Remuneration policy, the policy for appointment and remuneration of Directors, key managerial personnel and senior management officials including the criteria for determining qualifications, positive attributes, independence of a director and other matters as per the requirements of section 178 (3) of the Act read with relevant rules made thereunder and Listing Regulations and to develop and recommend the Board a set of Corporate Governance Guidelines. The Policy is available on the Companys website at https:// neogenchem.com/wp-content/uploads/A-Nomination- and-Remuneration-Policy.pdf. The Company affirms that the remuneration paid to the directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

The current policy is to have an appropriate mix of executive, non-executive and independent directors to maintain the independence of the Board and separate its functions of governance and management.

As on March 31, 2023, the Board had eight members, three of whom are executive directors, one is a non[ executive and non-independent member and four are independent directors including one independent woman director.

17. Extract of Annual Return:

Pursuant to the requirement of section 92(3) of the Act and rule 12(1) of the Companies (Management and Administration) Rules, 2014, a copy of annual return can be accessed on our website at https://neogenchem. com/financial-performance/#all tab:1

18. Material Changes and Commitments, if any, 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:

No material changes and commitments have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report which may affect the financial position of the Company or its status as a "Going Concern".

19. Significant Events that Occurred Between the end of the Financial Year of the Company to which the Financial Statements Relate and the Date of the Report.

After the end of financial year, Neogen Chemicals Limited (Neogen) and Livent Corporation (Livent) had jointly entered into a definitive agreement on March 4, 2023, for Neogen to acquire 100% stake in BuLi Chemicals India Pvt. Ltd (BuLi Chem) from Livent. The transaction was completed on May 3, 2023, pursuant to which BuLi Chem became a Wholly Owned Subsidiary (WOS) of NCL.

BuLi Chem owns the technology to manufacture N Butyl Lithium and other organolithium products using lithium metal, which are key reagents for lithiation reaction used in manufacturing of several complex pharmaceutical and agrochemical intermediates. BuLi Chem manufactures and supplies N Butyl Lithium to several leading pharma and agrochemical companies in India and across the world and is built one of the very few commercial facilities outside of China for this chemistry.

Neogen is one of Indias leading manufacturers of bromine, lithium-based specialty chemicals and advanced intermediates produced using multiple chemistries. This acquisition shall boost Neogens portfolio by offering organolithium derivatives to existing pharma and agrochemical industries and further enhance its advanced intermediates & CSM manufacturing business. More importantly, Neogen is expected to significantly gain from BuLi Chems established & proven technology expertise for handling lithium metal & organolithium derivatives. Overall, it will unlock deep synergies by complementing the current portfolio.

BuLi Chem, houses the Indian operations of Livent USA Corp - one of the global leaders in speciality lithium technology. Neogen is happy to welcome the employees of BuLi Chem who have deep experience of more than a decade in handling Organo Lithium Chemistry to the Neogen family. They have managed to develop one of the few facilities outside of China for this chemistry with strong track record in safety and sustainability.

Furthermore, Neogen Chemicals Limited (Neogen), had entered into an agreement on April 10, 2023 with MU Ionic Solutions Corporation, Japan. MU Ionic Solutions (MUIS) is a JV between Mitsubishi Chemical Corporation (MCC) and UBE Corporation and is a group company of The Mitsubishi Chemical Group (the group) a Japanese conglomerate. The group is one of the global leaders in electrolytes used in lithium-ion batteries with a strong track record of 30 years and has 5 electrolyte manufacturing plants located in Japan, USA, UK and China.

As per the terms of the agreement, Neogen has obtained the license from MUIS for proprietary and confidential manufacturing technology for making electrolyte solutions at its manufacturing facility in India with a planned max installed capacity of upto 30,000 MT per annum. These electrolytes will be targeted by Neogen to meet the growing demand of lithium-ion cell manufacturers in India.

The agreement will allow Neogen to ensure that the manufacturing plant meets stringent global standards for quality, reliability, safety and efficiency for electrolytes production. It will also help Neogen to greatly reduce approval times with Lithium-Ion Battery makers. Neogen is honoured to be a recipient of this first-ever license issued by MUIS the part of MCC of electrolyte manufacturing technology anywhere in the globe.

20. Details of Significant and Material orders Passed by the Regulators or Courts or Tribunals Impacting the Going Concern Status and the Companys Operations In Future:

During the year under review there has been no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

There is no Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code, 2016.

During the year under review, the Company signed and executed a Settlement Agreement ("Agreement") with Neogen Corporation to amicably settle the ongoing dispute relating to the trademark ‘Neogen.

As a part of settlement, the parties have agreed to co[ exist without confusion with respect to the use of their respective "Neogen" marks, and subject to the terms of the Agreement. The disclosure in this regard is available at https://neogenchem.com/wp-content/uploads/ Intimation-of-execution-of-Settlement-Agreement.pdf

21. Details in Respect of Adequacy of internal Financial Controls with Reference to the Financial Statements

The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company. This internal financial control system at companys head office and all its plants are being checked by the Internal Auditors on a quarterly basis and is certified by the Statutory Auditors in its report. The Internal Auditor reports directly to the Audit Committee. The adequacy, effectiveness and implementation of the internal financial control system is also monitored by the Audit Committee on a quarterly basis and the recommendations, if any by the committee is placed before the Board of Directors of the Company for their review and comments and the recommendation from the Board are duly implemented in a timely manner. The system helps in improving operational and financial efficiency of the Company, safeguarding of assets and prevention and detection of frauds, if any, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures and ensuring compliance with the policies of the Company.

22. Deposits

The Company has not accepted any deposit as per the provisions of Section 73/76 of the Act read with the Companies (Acceptance of Deposit Rules), 2014.

23. Particulars of Loans, Guarantees or investments under section 186

The Company has not provided any guarantee or security for any loan nor has made any investments during the Financial Year under review. The Company has granted inter-corporate deposits (ICDs) of Rs. 60 crore during the year under review pursuant to section 186 of the Companies Act, 2013. In terms of Section 134 of the Companies Act, 2013, the particulars of loans, guarantees and investments made by the Company under Section 186 of the Companies Act, 2013 are detailed in Notes to the standalone financial statements.

The Company holds investment in its Joint Venture Firm Dhara Fine Chem Industries (Partnership firm in which the Company holds 90% share). The said investments made in Joint Venture being exempted in terms of first provisions to section 186 (3) of the Act, the provisions of section 186 to that extent are not applicable to the Company. Particulars of loans/ ICDs given and investment made by the Company is provided in the Financial Statements which may be read in conjunction with this report.

24. The details of difference between amount of the valuation done at the time of one time settlement and the valuation done while taking loan from the banks or financial institutions along with the reasons thereof

During the year, there has been no one-time settlement of Loan and therefore this point is not applicable.

25. Particulars of Contracts or Arrangements with Related Parties:

The Board of Directors has adopted a policy on related party transactions. As per the Policy on related party transactions, all transactions with related parties were reviewed and approved by the Audit Committee. Omnibus approval was obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and on an arms length basis. A statement giving details of all related party transactions entered pursuant to omnibus approval so granted is placed before the Audit Committee on a quarterly basis for its review. The said policy is available on the Companys website https://neogenchem.com/ wp-content/uploads/F-Policy-on-materiality-of-related- party-transaction.pdf.

The objective of the policy is to ensure proper approval, disclosure and reporting of transactions that are or may be executed by and between the Company and any of its related parties. The related party transactions are as mentioned in notes to accounts which set out the related party transactions disclosures pursuant to IND AS-24. All the transactions/contracts/arrangements, falling within the purview of provisions of section 188 of the Act, entered by the Company with related parties during the year under review are in ordinary course of business and an arms length has been maintained in the transaction. The Company has not entered into any new material contract or arrangement with related parties during the year under review. Therefore, there is no requirement to report any transaction in form AOC-2 in terms of Section 188 and 134 of the Act, read with Rule 8 of the Companies (Accounts) Rule, 2014.

26. Obligation of the Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has adopted a policy for prevention of sexual harassment of women at workplace pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and it has also constituted an Internal Complaints Committee to redress the complaints relating to sexual harassment of its women employees at work place and implementation of the said Policy. All employees (permanent, contractual, temporary and trainees) are covered under this policy.

During the year under review the Company has not received any such complaint of harassment.

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

The disclosure of particulars with respect to Conservation of Energy, Technology Absorption, and Foreign Exchange Earnings and Outgo as required under Sub-section (3)(m) of Section 134 of the Act, read with Rule 8 (3) Companies (Accounts) Rules, 2014 is enclosed herewith as "Annex 4" to this Boards Report.

28. Corporate Social Responsibility (CSR)

In accordance with the requirements of the provisions of Section 135 of the Act, the Company has constituted CSR Committee. The Company has revised the CSR Policy pursuant to the Companies (Corporate Social Responsibility) Amendment Rules, 2021. The revised CSR policy is available on Companys website at https:// neogenchem.com/wp-content/uploads/B-CSR.pdf

In compliance with the provisions of Section 135 of the Act, 2013, the Companies (Corporate Social Responsibility) Rules, 2014 and various notifications/ circulars issued by the Ministry of Corporate Affairs, the Company has contributed an amount of Rs. 0.96 crores as against the statutory requirement of Rs.0.95 crores towards CSR activities directly and also through various organizations/trusts engaged in activities specified in Schedule VII of the Act. Your Company has contributed towards CSR activities in the areas of environmental sustainability, promoting education, providing water in village area, providing prosthetic arm, preventive healthcare to combat COVID- 19, rural development and women empowerment projects. The salient features of the CSR policy along with the Report on CSR activities are given in Annex - 5 to this Directors Report.

29. Directors Responsibility Statement

The Directors Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Act, shall state that—

a) Applicable accounting standards have been followed along with proper explanation relating to material departures, if any, in preparation of the annual accounts;

b) The Directors have 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 financial year March 31, 2023 and of the profit of the Company for that period;

c) The Directors 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;

d) The Directors have prepared the annual accounts on a going concern basis;

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

30. Transfer of Amounts to Investor Education and Protection Fund

The Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore, there were no funds or shares which were required to be transferred to Investor Education and Protection Fund (IEPF) during the year under review.

The Ministry of Corporate Affairs (MCA), Government of India, through its Circular No. 17/2012 dated 23rd July, 2012 has directed companies to upload on the companys website information regarding unpaid and unclaimed dividend. Pursuant to the said IEPF Rules, the Company has uploaded the details of unpaid and unclaimed dividend on its website at https:// neogenchem.com/unclaimed-unpaid-dividend/.

31. Credit Rating

CRISIL Ratings Limited and ICRA Limited carried out an annual review of credit facilities availed by the Company. CRISIL has vide its letter dated September 15, 2022, given the rating for the Long-Term Banking Facilities as CRISIL A-/ Positive (reaffirmed) and of a Short-Term Banking Facilities as CRISIL A2+ (reaffirmed). ICRA has vide its letter dated December 19, 2022, given the rating for the Long-Term Banking Facilities as ICRA A/ Stable and of a Short Term Banking Facilities as ICRA A2+.

32. Corporate Governance Certificate, Secretarial Audit Report and Secretarial Compliance Certificate:

In compliance with Regulation 34 read with Schedule V(C) of Listing Regulations, a report on Corporate Governance and the certificate required under Schedule V (E) of Listing Regulations from our Statutory Auditors, forms part of the Corporate Governance Report.

An Annual Compliance Certificate and a Secretarial Audit Report for the FY 2022-23 from DVD and Associates, Practicing Company Secretary of the Company forms part of the Directors Report of the Company as Annex 2 and Annex 6 respectively.

33. Compliance of Secretarial Standard of ICSI

In terms of Section 118(10) of the Act, the Company is complying with the Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI) and approved by the Central Government with respect to Meetings of Board of Directors and General Meetings.

34. Listing Agreement

In compliance with SEBI Circular No. CIR/CFD/ CMD/6/2015 dated October 13, 2015, the Company has executed a Uniform Listing Agreement with BSE Limited and National Stock Exchange of India Limited, where the shares of the Company got listed on May 8, 2019. The Company has paid Annual Listing Fees to both the Stock Exchanges for Financial Year ending on March 31, 2024.

35. Prohibition of Insider Trading

In compliance with SEBI (Prohibition of Insider Trading) Regulation 2015, the Company has adopted a ‘Code of Conduct for Prevention of Insider Trading" ("Code") in the organization. As per the Code, the Company has also adopted Policy on inquiry in case of leak or suspected leak of UPSI and Policy for Determination of Legitimate Purposes ("Policies").

The said Code and policies is available on the Companys website at https://neogenchem.com/wp- content/uploads/J-Code-of-Conduct-for-Prevention-of- Insider-Trading.pdf . The Code lays down guidelines for procedures to be followed and disclosures to be made by insiders while trading in the securities of the Company.

The ‘Trading Window remains closed from the end of every quarter till 48 hours after the declaration of financial results and the same is closed when Compliance Officer determines that Designated Persons can reasonably be expected to have possession of Unpublished Price Sensitive Information. Ms. Unnati Kanani, Company Secretary of the Company has been designated as the Compliance Officer to administer the Code of Conduct and other requirements under SEBI (Prohibition of Insider Trading) Regulations, 2015.

36. Acknowledgements

The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government authorities, bankers, customers, suppliers, investors and business associates. The Directors also wish to place on record their deep sense of appreciation for the committed services rendered by each and every employee of Neogen Family. The Directors acknowledge with gratitude, the encouragement and support extended by the Companys valued stakeholders.

For and on behalf of the Board of Directors Neogen Chemicals Limited

Mr. Haridas Kanani
Place: Thane Chairman and Managing Director
Date: August 5, 2023 DIN: 00185487