tamil nadu petro products ltd share price Directors report

Dear Shareholders,

Your Directors have pleasure in presenting the Thirty Eighth Annual Report together with the Audited Financial Statements of the Company for the year ended 31^st March 2023. The Management Discussion & Analysis Report which is required to be furnished as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") is also presented as part of this Report.

FINANCIAL RESULTS

The summary of the financial results prepared per the Indian Accounting Standards (Ind AS) is given below:

( In crore)

Description	2022-23	2021-22
Earnings Before Interest, Depreciation and Tax	147.25	260.95
Interest	6.80	5.80
Depreciation	21.30	23.63
PBT (before exceptional item)	119.15	231.52
Exceptional item	-	-
PBT (after exceptional item)	119.15	231.52
Tax expenses	29.84	60.88
Profit After Tax	89.32	170.64

HIGHLIGHTS OF OPERATIONS

Your Company achieved revenue from operations of 2,150.25 crore up by 19% over previous year figure of 1,805.58 crore.

Linear Alkyl Benzene (LAB), the major product of the Company increased its topline due to optimal sales volume and improved prices. However, the contributions reduced substantially with equivelant increase in raw material cost due to high crude price that prevailed in FY 2022-23 and low-priced imports, consequent to expiry of Anti-dumping duty on imports from China, Iran & Qatar in April 2022. Average crude price prevailed during the year was at peak of USD 96/bbl. Further, the LAB Plant was under maintenance for a period of 19 days during the year, which also had its own impact on production and profitability.

Your Company is the first in the Country to receive BIS certification for LAB product.

Chlor-alkali business improved its contribution substantially compared to previous year due to improved prices.

Your Company continued its policy of prudent sourcing & inventory management, sustaining margins achieved during the pre-pandemic period, despite increase in crude prices.

Your Company in its efforts to augment the capacity of LAB Plant from its existing 120 KTA to 145 KTA, has obtained Environment Clearance from Ministry of Environment, Forest and Climate Change of India. As on 31^st March, 2023, the Company had spent a sum of 38.82 crore majorly towards the cost of the design Engineering. The estimated cost of revamp of LAB facility is 240 crore and expected to be put on stream in 24 months.

As an initiative towards decarbonization, two new Gas Engines (2 x 7.8 MW) have been procured to meet the power requirement of LAB Plant and the same were put into service.

Your Company in order to modernise the existing Caustic Soda plant from its 150 TPD to 250 TPD has estimated an outlay of 165 crore to be incurred over a period of 18 months from the date of receipt of all statutory clearances. Towards this, the Company has incurred a sum of 0.62 crore for initial feasibility study.

FINANCIAL REVIEW

Your Companys top line increased due to higher prices in LAB keeping in trend with crude price combined with improved Caustic Soda Lye price realisation. Net Profits achieved was 89.32 crore as compared to 170.64 crore in the previous year. FY 2021-22 was exceptional in nature due to pandemic resulting in average crude USD 46/bbl as against USD 96/bbl during FY 2022-23.

Chlor-alkali business contribution more than doubled compared to previous year owing to better prices. Propylene Oxide contribution sustained in line with the previous year.

In order to meet the project expansion cost of LAB & HCD, the board of directors had approved the proposal for availing of term loan upto 50% of the project cost and your company had received a sanction from HDFC Bank Ltd towards funding of the project helping in financial closure of these envisaged projects.

Your Companys debt is lower as it is currently restricted to working capital borrowings and lease liabilities.

CARE Ratings Limited has upgraded Company rating to CARE A+; Stable (Single A Plus; Outlook: Stable) for Long Term Bank facilities (term loans and fund-based working capital facilities) and CARE A+; Stable / CARE A1+ (Single A Plus; Outlook: Stable / A One Plus) ratings for Short Term Bank facilities (non-fund based working capital facilities).

DIVIDEND

Pursuant to Regulation 43A of the Listing Regulations, the Company has a Dividend Distribution Policy approved by the Board, a copy of which is available on the website of the Company: https://www.tnpetro.com/wp-content/uploads/2021/07/Dividend-Distribution-Policy-2021.pdf.

In line with the parameters in the policy, your directors are pleased to recommend a dividend of 15% i.e. 1.50 per equity share of face value of 10/- each fully paid up, for the year 2022-23, aggregating to 13.50 crore subject to witholding taxes.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Linear Alkyl Benzene (LAB) is an organic compound primarily used as an intermediate in the production of surfactant linear alkylbenzene sulphonate (LAS), also known as linear alkylbenzene sulphonic acid (LABSA) which is the key ingredient for producing biodegradable detergents. LAB is consumed chiefly to produce laundry detergents, light-duty dishwashing liquids, industrial cleaners, household cleaners, other applications like crop protection, Enhanced crude oil recovery etc.

Due to increase in population and lifestyle changes, the detergent industry is expected to grow at a better rate. Asia is the worlds largest producer and consumer of LAB. The leading manufacturers are presently India, China, and the Middle East. In the Middle East and India, new capacity has been developed during the year under review.

The Indian LAB sector began in 1978 with the opening of IPCLs first LAB facility in Vadodara Following which, Reliance Industries Limited (RIL) acquired IPCL. TPL, RIL, Nirma, and IOC later had set up plants around India as the import substitution sector grew. However, due to globalization and legislative developments such as the Free Trade Agreement (FTA), the sector has faced stiff competition from imports primarily from Middle East, Thailand and China until last year. The expiration of anti-dumping charges against Iran, Qatar, and China has forced the industry to contend with severe competition from low-cost imports, which has affected the contribution margins during FY 2022-23.

The Indian government made BIS certification mandatory for LAB in the Indian market effective 3^rd April 2023. This has given temporary relief as low-cost LAB imports from Iran, China and Korea have not come in post implementation of BIS. The global LAB market has reached approximately 4 million Tons and is expected to grow at a CAGR of 4.36% i.e., approximately 6.5 million Tonnes by 2032.

Based on demand across the globe, Asia Pacific happens to be the biggest consumer of LAB. This region accounted for a demand of approximately 50% of the global LAB consumption. With rising concerns over cleanliness and personal hygiene, government-led campaigns like Swachh Bharat Mission in India to promote wellness, well-being, and welfare of the citizens, are expected to stimulate the growth of the LAB market.

The UOP Technique, which is widely recognized as the best and most cost-effective technology has been applied by more than 95 percent of all LAB manufacturers, including TPL. Regardless, the cost of making LAB in India exceeds international standards due to the high cost of essential components and feedstock quality.

Domestic firms with standalone units constantly struggle to compete with offshore suppliers and factories integrated with refineries, which allow them to achieve lower production costs.

Caustic soda is an inorganic bulk chemical, strongly alkaline and odourless, having application in various industries like pulp and paper manufacturing, viscose yarn, staple fibre, aluminium, textiles, soaps & detergent, dyestuffs, drugs and pharmaceuticals, petroleum refining, etc.

It is available in two forms, liquid form which is called lye & solid form which is called Flakes or pellets. Caustic soda is used to extract alumina from the bauxite ore. The products annual demand was stable. Despite the power-intensive process, national capacity utilization of the aggregate capacity of roughly 5 million tons are high and expected to further grow at a CAGR of 6.50% by FY2035.

Global increase in power/coal costs, exports from India to Europe increased in H1 FY23 and hence the price of Caustic soda improved, and shipments began from the west, clearing the path for domestic market price sustenance at higher levels. From January 2023 situation turned normal, as the coal costs started reducing. This has curbed down the export orders from India thus resulting in the price drop of Caustic Lye from the fourth quarter of FY 2022-23.

Chlorine, a co-product of Caustic Soda, is widely utilized in industries such as Vinyl Chloride, Chlorinated Paraffin Wax (CPW), pulp and water treatment, chlorinated solvents, and so on. The lack of integrated plants and downstream Chlorine utilization initiatives are key barriers to Chlorine disposal.

Propylene oxide is a colorless liquid that is organic, volatile, and flammable. It is soluble in ether alcohol. It is primarily utilized in the production of propylene glycol, polyols, and other industrial intermediates. It is a chiral epoxide, even though it is widely used in combination. PO derivatives are most used in the automotive, household home appliances, and industrial insulation industries. The import lines into India are clear after the pandemic, but market prices are under pressure due to the massive influx of imported products available Indian purchasers.

OPPORTUNITIES AND THREATS

Global economic growth remains sluggish as financial concerns mount. However, India stands as a bright spot in the global economy. With 75 years of freedom under its belt, India is rapidly advancing to become one of the worlds major economies. The country is witnessing unprecedented social and economic development. It recently become the worlds fifth largest economy, with the goal surpassing the $5 trillion GDP threshold.

Your company is indirectly involved in the Fast-Moving Consumer Goods (FMCG) industry, which remains one of our countrys most significant long-term sustainable business potential. Despite being one of the fastest growing FMCG markets in the world, Indias per capita FMCG consumption remains among the lowest in the world, providing a vast runway for growth. We operate in two key FMCG categories (detergent and dishwashing) and continue to be the lead player in South Indian market.

A solid talent pool, a diverse client base that spans the price-benefit spectrum, unrivalled distribution that covers nearly all households, and an agile supply chain all contribute to our enormous competitive advantage in South. Consumer preferences and purchasing paths are fast changing because of changing demographics such as rising prosperity, a big youthful working population, developing nuclear-family structures, urbanisation, and increased usage of technology.

Consumers are growing more discerning, seeking superior products, making informed decisions, and demanding brands with a purpose and a point of view. We recognise shifting customer needs and believe that businesses that help people and the earth will thrive in the future. LAB demand is altering with a portion of detergent powder market moving to Liquid detergent. The Content of LAB is lower in liquids than Powder. As a company, we are continually looking ahead, adapting and changing to stay one step ahead. Consumers, government agencies, and investors looking for enterprises to invest in are increasingly accepting of the commercial case for sustainability.

India is on a path towards sustainable and inclusive growth, and all businesses are required to conduct themselves properly. Our objective is to produce consistent, competitive, profitable, and responsible growth. Urban markets drove FMCG growth, aided by a return to normalcy in economic activity following a couple of years of COVID-induced disturbances. We remained laser-focused on serving our customers increasing needs while also protecting our business model. As economic activity returned to normal after a couple of years of COVID, we saw consumers prioritise fundamentals above discretionary spending in a high inflationary environment. In the last three years, our Home Care businesss liquid detergent and dishwashing portfolio has been growing steadily.

Rapid industrialization and urbanisation because of population increase are also predicted to contribute to market expansion. The global market for Linear Alkyl Benzene is profitable, and it is predicted rise steadily because of key players expansion, collaboration, and partnership initiatives. The increased need for sanitizers induced by the pandemic crises has expanded the potential for LAB usage.

Detergent makers have found it simpler to reach out to rural locations with the use of video marketing. Furthermore, customers have the option of selecting from a large choice of items, thus businesses are continually upgrading their products and attempting to increase their market share through inventive advertising strategies. The LAB business has a lot of room to develop because these companies cater to the bottom of the pyramid consumer. However, India being a desirable market considering its population and consumption, it is being pursued by global LAB companies, resulting in higher imports to India. The addition of new factories in the Middle East poses a significant threat to Indias LAB industry, as large portion of output is projected to migrate into the country. Pricing and margins may continue to be influenced by this. All of this is on top of the fact that LABs anti-dumping tariff has expired. This is a challenging macroeconomic climate typified geopolitical uncertainty, high commodity prices, and lacklustre market growth. We live in a complicated and volatile world. Our plan of action is continually evolving to respond to the trends and forces driving our industry and affecting our stakeholders.

The operational environment remained tough this year. Food, energy, and commodity prices rose at an unprecedented rate due to geopolitical instability in Europe and worldwide supply chain disruptions. Global central banks aggressive monetary tightening efforts put further strain on emerging economies. With prices of various commodities ballooning to decadal highs, widespread inflation caused significant issues for the economy and the FMCG industry. This had a huge influence on FMCG consumption as consumers attempted to manage their household budgets by modifying volume and prioritising necessities over discretionary categories. The decline had a greater impact in rural areas.

Caustic soda is a key industrial intermediate with numerous applications. The market for Caustic Soda is expected to grow further as demand for textiles and apparel increases due to urbanization and increased expenditure on personal care products. The import volume of Caustic decreased during the fiscal year under review since prices in all international sectors are high for suppliers. The situation has been changing recently resulting in free flow of imports coupled with an overstock position in India affecting the prices of caustic lye.

The conversion of the former ECH facility into a Propylene Oxide (PO) manufacturing facility has proven beneficial in many ways, including the beneficial use of a defunct facility and the opening of a new avenue for the advantageous use of Chlorine, which has paved the way for higher capacity utilisation of the Chlor Alkaline Division.

OUTLOOK LAB

Soap and detergent demand have risen in recent years because of improved hygiene awareness and a greater emphasis on cleanliness. A shift in lifestyle is transferring a large portion of the population from semi-urban to metropolitan areas, and detergent usage is keeping up, causing demand to climb continuously.

Despite fierce competition from overseas vendors, TPL remains the market leader in south India. Over the previous three decades, TPL has established a reputation as a trusted LAB supplier to MNCs and others.

The increase in Saudi Arabian imports is concerning. In addition, IOCL debottlenecked its Baroda facility in September 2022, by repositioning loading bays, enabling for an additional 42 kt/year of production.

CAUSTIC SODA /CHLOR ALKALI

The Caustic Soda industrys survival and expansion are dependent on the avenues of Chlorine utilization potential. There is currently no anti-dumping tariff on caustic soda entering India. Due to COVID-19 in the last fiscal, manufacturing activities affected caustic exports from China and Russia-Ukraine war escalated power costs in Europe affecting their production, paving way for more exports from West India and our domestic prices of the alkali have witnessed highest ever prices.

There have been new additions in domestic caustic soda production, like the Grasim plant in Balabhadrapuram, AP in South, and GNalco in West increasing availability of this inorganic chemical. Your Company is also expanding the caustic plant capacity adopting the cost effective bi-polar technology within a couple of years. Despite a drop in demand in the textile industry, businesses such as alumina, paper, vinyl, and color intermediates are thriving, making caustic sales simpler than ever. However, greater supply than demand due to Chinas return to the export market, and Europes production normalization will have a significant impact on Caustic Lye prices, with margin erosion projected for Caustic margin-dependent enterprises like us.

PROPYLENE OXIDE

The long-awaited conversion of our former ECH facility to make Propylene Oxide was completed in 2018-19. The new PO Plant has given your company an additional possibility to dispose of chlorine more advantageously, allowing for higher caustic production. While there would be no difficulty in selling the product, as previously increasing output is contingent on the recovery of end consumers of PO derivatives, such as the automobile industry, from the recent depression, which has been exacerbated by the pandemic crisis.

RISK MANAGEMENT PROCESS

Your Company has a structured methodology to effectively monitor and manage the risks by setting up two-employee level Committee and one Board level Committee to identify the risks, suggest mitigation actions and monitor implementation. The employee-level sub-committee has senior personnel from each function and the Apex Committee is headed by the WTD(Operations) with functional heads as other Members.

As part of the risk mitigation process, the Board has constituted a Risk Management Committee of Directors, which comprises of Ms. Sashikala Srikanth as the Chairperson, Mr. C S Shankar, Ms. R Bhuvaneswari and Mr. D Senthi Kumar as its Members. During the year, the Committee met four times viz. 20^th May 2022, 4^th August 2022, 31^st October 2022 and 3^rd February 2023. As required under Section 177 of the Act, the Audit Committee also reviews the risk management process periodically.

RISKS AND CONCERNS

As previously stated, the biggest risk that TPL faces is the import of LAB, Caustic Soda, and Chlorine (in indirect form) into the country. Aside from the new Farabi capacity, IOCLs expansion has enhanced the markets accessible quantity. This is projected to exacerbate competitiveness in the domestic market. Your Company is considering minimising this risk by increasing contract volumes with large LAB buyers. Because large-scale imports would have an influence on product pricing, addressing the possibility of lower margins would be an important issue to handle, as spot price stress has a significant impact on the bottom line.

To address the concerns, your Company is focusing on boosting production and productivity to control per-unit costs while providing for product price flexibility. Furthermore, reliance on spot markets is being gradually reduced to expand and secure direct customer committed volumes. Also, anti-dumping duty case has been filed and in progress with trade remedies agencies of government to tackle the low-cost imports. Your company jointly filed an application on the Under valuation of low-cost imports and seeking help, guidance from Department of Chemicals and Petrochemicals, Government of India for the Production linked Incentive Schemes for the new LAB Expansion project which is underway. Your organization continues to conduct risk assessments and corresponding mitigations for the hazardous chemicals used in the Plants with the assistance of technical experts. Adequate measures are being taken to address this risk.

In the year 2020, NGT on Suo Motu basis registered a case against few industries situated at Manali (including your Company), based on the newspaper report published in November 2020 regarding emission from the industries affecting air quality in Manali, Chennai during the period April 2019 to December 2020. NGT vide its order dated 20.07.2023 had given certain directions/ recommendations to the industries at Manali, Tamilnadu Pollution Control Board and Central Pollution Control Board which includes collection of environmental compensation and creation of corpus fund for improvement of environmental standards in Manali Industrial area. Your Company is addressing these issues and taking appropriate action in this regard. Your Company is in adherence to the prescribed environmental conditions and will continue to adhere the same.

SAFETY, HEALTH & ENVIRONMENT

TPL plants are accredited with International Organization for Standardization (ISO) certificates for Occupational Health & Safety Management System (ISO 45001-2018) and Environmental Management System (ISO 14001-2015) and Quality Management System (ISO 9001-2015).

Your Company has replaced the old fire engines with two latest high capacity fire engines of BS VI model to TPLs fleet of emergency preparedness Also, two fire water pumps with Diesel engines as prime mover were replaced with new BS VI model engines.

Your Company continue to utilize treated city sewage water after Tertiary Treatment Reverse Osmosis (TTRO) for industrial purpose. Regassified Liquefied Natural Fuel (RLNG) is being used as fuel in the process heaters and boilers. These two major changes have come up as a natural resource conservation measure and efforts towards cleaner environment.

Your Company already achieved Zero Liquid Discharge in LAB and HCD plants. Significant level of green belts developed, around 31000 Tree saplings were planted in and around Manali and at Thiruvallur District during the period 2021, 2022 & 2023.

Leak Detection and Repair (LDAR) programme is being implemented to control HC/VOC emissions. 3-Dimensional Risk Assessment has been carried out for LAB plant, for inclusion of vertical Assessment.

New gas based CPP (2 X 7MW Engines) are being installed to reduce emission to new low level. As part of National Safety Day (4^th March), various competitions were conducted for employees and other contractors to reiterate the Companys commitment towards safety. Participation by employees and contractors were encouraging. World Environment day is also celebrated every year and tree plantation programs are organized for planting saplings towards green initiative to promote carbon offset.

Adequate safety standards have been prescribed and are being followed without any compromise. Utmost importance is given to the protection of employees, assets and environment at all times. All legal and statutory requirements are complied, by planning well in advance without any deviation. Regular training is arranged for workers as a refreshment on safety, environment & health.

SUBSIDIARIES

As at the year end, your Company had one Wholly-Owned Subsidiary (WOS) and one Step down Subsidiary (SDS) which were incorporated outside India. The financials of these subsidiaries have been consolidated and the salient features of financial and other information have been furnished in the Consolidated Financial Statement (CFS) attached to this Report.

Certus Investment and Trading Ltd

Certus Investment and Trading Ltd. (CITL), Mauritius was promoted as a Special Purpose Vehicle (SPV) to set up LAB and NP projects in Middle East and South East Asia. However, due to changed business environment, the projects could not be taken up. At present, the WOS is not carrying on any major activity. Since your Company has enhanced the NP capacity to meet the entire requirement in-house, there may not be scope for taking up NP project.

Certus Investment and Trading (S) Private Limited

In the past, TPL was exporting large quantity of LAB and importing various materials, such as NP, Benzene, etc. Therefore, CITL, Mauritius had set up CITL, Singapore as a WOS, in order, to function as a coordinator for TPLs overseas procurement and marketing activities. At present, there are no significant exports or imports and so the above SDS is not engaged in any activities.

As explained above, the subsidiaries were floated several years ago for specific purposes. Due to change in circumstances and also opportunities opening up in India, it is being examined if other opportunities would be available for the subsidiaries. A decision on the usefulness of these subsidiaries would be taken in due course, after judiciously reviewing the situation.

HUMAN RESOURCES

Your Company strongly believes that its strength is directly proportional to the strength of its employees in terms of knowledge, experience, and decision-making skills. Your Company has been practicing various HR initiatives such as recognition, empowerment, personality development, decentralisation, delegation of powers etc., to retain talent and to enhance capabilities. A balanced staffing system has been adopted in your wherein competent fresh talent has been infused into the stream of experienced hands.

The training needs of employees have been identified at regular intervals through performance appraisal systems and necessary training is being imparted through in-house and external programs. The manpower strength as on 31^st March 2023 was 394.

BOARD OF DIRECTORS AND RELATED DISCLOSURES

As on the date of this Report, the Board comprises of 12 Directors of whom six are Independent, including 3 Woman Directors.

The Board met five times during the year and the relevant details are furnished as part of Corporate Governance Report.

The following changes took place in the composition of the Board since the date of last Annual General Meeting: Mr. S Krishnan, IAS (DIN: 03439632) and Ms. Jayashree Muralidharan, IAS (DIN:03048710) nominees of TIDCO were appointed as Non-Executive Directors of the Company at the 37^th Annual General Meeting held on 29^th September 2022.

Ms. R Bhuvaneswari, Director (DIN: 06360681) retires by rotation at the ensuing AGM and being eligible, has offered herself for re-appointment and is recommended for approval of the Shareholders.

Declaration from Independent Directors:

All the Independent Directors (IDs) have submitted necessary declarations under Section 149(7) of the Act and Regulation 25(8) of the Listing Regulations. As per the said declarations, they meet the criteria of independence as per Section 149(6) of the Act and the Listing Regulations. In the opinion of the Board, the IDs fulfil the conditions specified in the Act and the rules made thereunder for appointment as IDs including the integrity, expertise and experience and confirm that they are independent of the management. All the IDs have confirmed their registration with the Indian Institute of Corporate

Affairs under Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended and all of them have been exempted from or passed the proficiency test.

As required under Section 178(3) of the Act, your Company has a Board approved policy on remuneration which is available on the website of the Company : https://www.tnpetro.com/investors/ policies/.

KEY MANAGERIAL PERSONNEL

As on 31^st March 2023, Mr. D Senthi Kumar and Mr. KT Vijayagopal, Whole-time Directors and Ms. Sangeetha Sekar, Company Secretary were the Key Managerial Personnel of the Company. During the year, Ms. Sangeetha Sekar was appointed as Company Secretary and Compliance Officer of the Company effective ^th February 20236 in the place of Mr. V Balamurugan who ceased to be the Company Secretary and Compliance Officer effective close of business hours of 31^st January 2023.

ANNUAL EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

The performance of the Board was evaluated taking the following aspects into account viz., Structure, Meetings, Functions, Risk Evaluation Process adopted, Grievance Redressal Mechanism, Stakeholder Value and Responsibility, Corporate Culture and Ethics and other matters. Board also took into account facilitation to the Independent Directors to function independently and perform their roles as another important parameter for evaluation.

The performance of each of the Committees was evaluated taking into account the composition, mandate, working procedures, effectiveness, independence and contribution to the Board in the decision making process.

The evaluation of the two Executive Directors was done based on their assigned roles and responsibilities. As regards the other Directors, including the Independent Directors, the evaluation was carried out taking into account the following parameters, viz., qualification, experience, competency, adequacy of knowledge about the Company and its sector of operation, understanding about the strategic direction, ethical behavior, participation in the risk evaluation process, resolving conflict of interests, attendance and preparation for the meetings, ability to work as a team player and voluntary sharing of information for the larger benefit of the Company and the like.

In compliance with the requirements of Schedule IV of the Act and the Listing Regulations, a separate meeting of the Independent Directors was held on 21^st March 2023 at which the Directors evaluated the performance of the Non-Independent Directors, the Chairperson and also the adequacy of flow information to the Board and Committees.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of sub-section 3(c) and 5 of Section 134 of the Companies Act, 2013, it is hereby confirmed that

a) in the preparation of the annual accounts for the financial year ended 31 ^st March 2023, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 and of the profits of the Company for the year;

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

d) the Directors had prepared the accounts for the financial year ended 31 ^st March, 2023 on a "going concern" basis;

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

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

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Corporate Governance stipulated under Regulation 27 of the Listing Regulations. A Report on Corporate Governance forms part of this Report and a Certificate from the Secretarial Auditors regarding compliance with the requirements of Corporate Governance is given in Annexure I of this report.

AUDITORS

M/s. RGN Price & Co., Chartered Accountants, Chennai having Firm Registration No. 002785S was appointed as the Statutory Auditors of the Company. As per the extant provisions of the Act, they will hold office for a period of five years till conclusion of 42^nd AGM. The report of Auditors on the financial statements is attached and forms part of this report and does not contain any qualification, reservation or adverse remarks.

SECRETARIAL AUDIT REPORT

As required under Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Secretarial Audit Report issued by Ms. B Chandra (CP No.7859), Company Secretary in Practice, Chennai is given in Annexure II to this report. The Secretarial Audit Report is attached and forms part of this report and does not contain any qualification, reservation or adverse remarks.

Your Company has complied with the requirements of all the applicable Secretarial Standards.

MAINTENANCE OF COST RECORDS & COST AUDIT

Your Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Act which is duly complied with, by your Company. Your Company is also covered under Cost Audit.

M/s. M Krishnaswamy and Associates, Cost Accountants, Chennai have been appointed as the Cost Auditors of the Company for conducting the audit of cost records for the financial year 2022-23 and 2023-24 on a remuneration of 2.75 lakh plus applicable taxes and duties (for each financial year) andthey will hold office submission of their Report or 30^th September of the respective year for which they are appointed, whichever is earlier.

As required under Section 148 of the Act, read with the relevant Rules, ratification of the remuneration to the Cost Auditor for the year 2022-23 and 2023-24 will be considered by the Members at the ensuing AGM of the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

Your Company has in place adequate internal financial control systems with periodical review the process. The control system is also supported by ERP, internal audits and management reviews with documented policies and procedures. The system was also earlier reviewed by an external agency, and no major weaknesses were reported. To ensure effective operation of the system, periodical reviews are made by the Internal Auditors and their findings are discussed by the Audit Committee with the Auditors. The Auditors of the Company have also furnished certificates in this regard, which attached to their Reports.

CONSERVATION OF ENERGY AND OTHER DISCLOSURES

As required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, information on conservation of energy, technology absorption, foreign exchange earnings and outgo, to the extent applicable are given in Annexure - III and form part of this Report.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the year under review, Debt service coverage (in times) (56)%, Return on equity (in %) (55)%, Net profit (in %) (56)%, Return on capital employed (in %) (51)% ratios significantly altered as earnings compared to the previous financial year substantially reduced on account of increased raw material costs which is a factor of abnormal crude price (average USD 96/bbl.) prevailed in FY 2022-23. The accounting ratios are given under Note: 40 of the Standalone Financial Statements.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Information on loans, guarantees and investments till covered under Section 186 of the Companies Act, 2013, forms part of the Notes to Financial Statements.

RELATED PARTY TRANSACTIONS

All transactions with related parties entered into by the Company during the year were on arms length basis and were approved by the Audit Committee at the beginning of the financial year. There were no contracts or arrangements entered into with the related parties covered under section 188(1) of the Act that is required to be disclosed in Form AOC-2. The policy on materiality of transactions with related party as approved by the Board is available in the website of the Company : https://www.tnpetro.com/ investors/policies/.

As required under Regulation 23(2) of the Listing Regulations, prior approval of the Members was obtained at the 37^th AGM held on September 29, 2022, for transactions with Manali Petrochemicals Limited upto 425 crore plus taxes for the period October 2022 to September 2023.

AUDIT COMMITTEE

The Composition of the Committee and particulars of its meetings are disclosed under the Corporate Governance Report annexed to this Report. During the year, the Board had accepted all the recommendations made by the Committee.

VIGIL MECHANISM

As required under Section 177 of the Act and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, your Company has established a vigil mechanism for its directors and employees to report genuine concerns through the Whistle Blower Policy of the Company as published in the website of the Company. As prescribed under the Act and the Listing Regulations, provision has been made for direct access to the Chairperson of the Audit Committee in appropriate / exceptional cases.

ANNUAL RETURN

Pursuant to Section 92(3) of the Act, the Annual Return in Form MGT-7 is available in the website of the Company: https://www.tnpetro.com/investors/annual-return/.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (POSH)

The Company has complied with the provisions relating to framing of policy and constitution of Internal Complaints Committee (ICC) under the POSH Act. There were no referrals received by ICC during the year.

PARTICULARS OF EMPLOYEES AND OTHER DISCLOSURES

The disclosures prescribed under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure - IV to this Report.

It is hereby affirmed that the remuneration to employees is as per the remuneration policy of the Company.

CSR POLICY AND RELATED DISCLOSURES

The brief outline of CSR policy of your Company and such other details and disclosures as per the prescribed format are furnished in Annexure V to this report.

BUSINESS RESPONSIBILTY AND SUSTAINABILITY REPORT

The report on Business Responsibility and Sustainability in compliance with Regulation 34 of the Listing Regulations is given as Annexure VI of this report.

Other Disclosures:

- There was no fraud reported by the Auditors of the Company as per Section 143(12) of the Act read with the Companies (Audit and Auditors) Rules, 2014;

- There were no significant and material orders passed by any of the regulators / courts / tribunals impacting the going concern status and companys operations; Your Company has not accepted any deposits from the public during the year.

Acknowledgement

Your Directors are grateful to the Government of India, the Government of Tamilnadu, financial institutions, banks, other lending institutions, the promoters, technical collaborators, suppliers, customers, joint venture partners and marketing agents for their assistance, co-operation and support. The Directors thank the shareholders for their continued support.

The Directors also place on record their high appreciation for the contributions by all cadres of employees of the Company.

Disclaimer

The Management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Companys performance is dependent. It may be materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.

For and on behalf of the Board of Directors

	D Senthi Kumar	KT Vijayagopal
8th August 2023	DIN: 00202578	DIN: 02341353
Chennai 600068	Whole-time Director (Operations)	Whole-time Director (Finance) & CFO