Tata Chemicals Ltd Directors Report.

TO THE MEMBERS OF TATA CHEMICALS LIMITED

The Directors hereby present their Eighty-Second (82nd) Annual Report on the performance of the Company together with the Audited Financial Statements for the Financial Year (FY) ended March 31,2021.

1. Financial Results

Rs.in crore
Standalone Consolidated
Particulars Year ended March 31, 2021 Year ended March 31, 2020 Year ended March 31, 2021 Year ended March 31, 2020
Revenue from continuing operations 2,999 2,920 10,200 10,357
Profit before depreciation and finance costs 830 1,027 1,735 2,260
Depreciation and amortisation expense 197 150 760 666
Profit before finance costs 633 877 975 1,594
Finance costs 19 43 367 342
Profit before share of profit of joint ventures and tax 614 834 608 1,252
Share of profit/(loss) of joint ventures - - 26 (4)
Profit before tax 614 834 634 1,248
Tax expense 135 162 198 220
Profit from continuing operations after tax 479 672 436 1,028
Profit from discontinued operations after tax - 6,168 - 6,200
Profit for the year 479 6,840 436 7,228
Attributable to:
- Equity shareholders of the Company 479 6,840 256 7,006
- Non-controlling interests - - 180 222
Other comprehensive income (OCI) 1,081 (542) 1,417 (406)
Total comprehensive income 1,560 6,298 1,853 6,822
Balance in retained earnings at the beginning of the year 5,860 5,742 6,186 5,193
Profit for the year (attributable to equity shareholders of the Company) 479 6,840 256 7,006
Remeasurement of defined employee benefit plans (net of tax) 21 (38) 93 (27)
Dividends including tax on dividend* (280) (379) (280) (384)
Deemed dividend on demerger - (6,308) - (6,308)
Acquisition of non-controlling interests - - - 718
Others (2) 3 (1) (12)
Balance in retained earnings at the end of the year 6,078 5,860 6,254 6,186

#Dividend declared in the previous year and paid during the respective reporting year

2. Dividend

For FY 2020-21, the Board of Directors has recommended a dividend of 10 per share i.e. 100% (previous year 11 per share i.e. 110%) on the Ordinary Shares of the Company. If declared by the Members at the ensuing Annual General Meeting (AGM), the total dividend outgo during FY 2021-22 would amount to 255 crore (previous year 280 crore).

3. Performance Review & State of Companys Affairs

3.1 Consolidated:

On a consolidated basis, the revenue from operations decreased from 10,357 crore in FY 2019-20 to 10,200 crore for FY 2020-21. This was mainly on account of the impact on soda ash business due to drop in the global demand during the first quarter of FY 2020-21 (sale volume down by approximately 11% in FY 2020-21). The profit before tax from continuing operations decreased from 1,248 crore in FY 2019-20 to 634 crore in FY 2020-21, down 49% due to a drop in volumes and prices, both of which affected the profitability. For more details, please refer to Management Discussion and Analysis.

3.2 Standalone:

On a standalone basis, the revenue from operations was 2,999 crore for FY 2020-21 as against 2,920 crore for FY 2019-20. Profit before tax from continuing operations decreased from 834 crore in FY 2019-20 to 614 crore in FY 2020-21, down 26%, mainly due to the drop in prices of soda ash during the year. For more details, please refer to Management Discussion and Analysis.

4. Management Discussion and Analysis

The Management Discussion and Analysis, as required in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations), forms part of this Integrated Annual Report.

5. Business Overview

The Company has two business segments viz. Basic Chemistry Products and Specialty Products catering to varied customer segments such as Industrial, Food and Farm customers. Basic Chemistry Products mainly consist of soda ash, salt, sodium bicarbonate, etc. The operations in this segment are spread across India, the United States of America (USA or US), the United Kingdom (UK) and Kenya. It caters to customers in Glass, Detergent, Feed, Food and Pharma industry. Specialty products consists of specialty food ingredients such as Prebiotics, Formulations for Feed, Food and Pharma customers, Specialty Silica for Rubber/Tyre industry and Crop Care and Seeds for the Farm sector through its subsidiary, Rallis India Limited.

The Company is on a transformation journey with a focus to grow along the vectors promoting sustainability and good health. In line with this, growth will increasingly be in food ingredients such as bicarbonate, iodised and fortified salt, prebiotics and other formulations in nutrition area and silica for rubber and tyre industry in line with sustainability- led changes in this area. Soda ash also is a key ingredient in container glass (which is a substitute for plastic packaging), solar PV glass panels, lithium extraction and detergents (for wash). Crop Care and Seeds play a key role in food and nutrition security and the Company is focussed on products which are sustainable.

5.1 Basic Chemistry Products Standalone (India)

For FY 2020-21, the revenues from the Basic Chemistry Products business stood at 2,845 crore, marginally up as against 2,837 crore in the previous year. Profit before tax for FY 2020-21 was 645 crore as against 819 crore in the previous year, lower by 21%.

Soda Ash

The supply of soda ash exceeded the demand throughout the year. Lower demand due to Covid-19, higher pipeline inventories and imports at low prices kept the realisations under pressure. Sales of soda ash for FY 2020-21 stood at 6,21,299 metric tonne (MT), marginally lower by 2% compared to the previous year. Operations were impacted due to flooding caused by cyclonic conditions over the Arabian Sea during part of the year which led to increase in cost of raw materials like salt.

Sodium Bicarbonate

Sales of sodium bicarbonate witnessed a marginal drop of 2%. Production volumes also witnessed a drop of 6% over the previous year. The Company markets three value added grades of Bicarb - Sodakarb (food grade), Alkakarb (feed grade) and Medikarb (pharma grade).

Salt

The demand for salt from our key customer, Tata Consumer Products Limited was higher during the year and the plant was successful in increasing the output to meet the requirement even amid the pandemic. The Company recorded highest ever production of salt at 12.22 lakh MT during FY 2020-21 compared to FY 2019-20 of 10.78 lakh MT. In addition, the project to expand salt capacity further to meet with projected demand increase is on schedule.

Other Products

Sale of other products like bromine, cement, etc. was close to the previous years figures. Bromine production was impacted due to the extended monsoon and resultant dilution of bittern. The Companys cement production volumes recovered by 8% during the year and stood at 3.91 lakh MT. Cement pricing and margin were under pressure.

Subsidiaries

Tata Chemicals North America Inc., USA (TCNA)

(as per USGAAP)

During FY 2020-21, the production volumes at TCNA were lower by 18% compared to the previous year, mainly on account of reduced demand owing to Covid-19 pandemic. During FY 2020-21, overall sales volumes were down by 15% compared to the previous year. This was driven primarily by volumes decreasing in the export markets.

TCNA posted a revenue of US$ 388 million ( 2,878 crore) for FY 2020-21 compared to US$ 480 million ( 3,403 crore) in the previous year. For FY 2020-21, EBITDA at TCNA was US$ 48.1 million ( 357 crore) against US$ 104.8 million ( 743 crore) in FY 2019-20.

This sharp reduction in volumes led to TCNA posting a loss after tax and non-controlling interest of US$ 12.8 million ( 95 crore) during FY 2020-21 compared to the profit after tax and non-controlling interest of US$ 36.0 million ( 251 crore) in FY 2019-20.

TCE Group Limited, UK (TCE group) (as per IFRS)

TCE Group Limiteds business consists of soda ash, sodium bicarbonate and salt (referred as UK Operations). The revenue from the UK Operations for FY 2020-21 was 145.2 million ( 1,409 crore) compared to 150.4 million ( 1,356 crore) in FY 2019-20.

Soda ash and salt sales volumes were down by 7% and 5% respectively compared to the previous year on account of reduced demand caused by lockdowns in relation to the Covid-19 pandemic, leading to reduction in EBITDA for FY 2020-21 for the UK Operations to 14.2 million (? 138 crore) from 17.4 million ( 157 crore) in FY 2019-20. UK Operations posted a loss after tax of 5.8 million (? 56 crore) compared to a profit after tax of 1.5 million (? 13 crore) in the previous year.

Tata Chemicals Magadi Limited, Kenya (TCML)

(as per IFRS)

During FY 2020-21, sales volumes were lower by 7% over FY 2019-20. TCML achieved revenue of US$ 55.4 million ( 411 crore) for FY 2020-21 as against revenue of US$ 67.9 million ( 481 crore) in the previous year, a decrease of 18%. For FY 2020-21, TCML registered an EBITDA of US$ 9.6 million ( 71 crore) as against the EBITDA of US$ 8.3 million ( 59 crore) in the previous year, higher by 16%. The increase in EBITDA was due to better cost control and lower sea freights to markets.

TCML recorded a net profit of US$ 2.8 million ( 21 crore) in FY 2020-21 against a net loss of US$ 0.1 million ( 1 crore) in FY 2019-20.

The county government had issued a demand during FY 2018-19 for an arbitrary increase in land rates, which was struck down subsequently by Honble High Court. TCML has filed an appeal for reconsideration of the other related issues raised in the petition before the Honble High Court and the appeal is pending. TCML is working with Kenya national authorities and government to arrive at a fair and transparent resolution of the issues.

5.2 Specialty Products Standalone

Performance Materials

The Company manufactures and sells Specialty Silica Products to food, rubber and tyre industry. Silica is a versatile material with varied applications and with changes in regulations, its use in the tyre industry is expected to accelerate. FY 2020-21 was also the first year of steady operations at the Silica plant at Cuddalore, Tamil Nadu which the Company had acquired few years ago. Several improvements in facilities were done to make it compliant with requisite standards. The Companys food grade silica has received customer approvals. Trials with customers for other applications in rubber and tyre industry are underway and are in different stages of acceptance.

Nutrition Sciences

The Company manufactures and sells Specialty Nutrition Products under the brand Tata NQ which primarily consists of Fructooligosaccharide (FOS) a prebiotic dietary fibre that promotes the growth of gut microbiome which in turn has been known to positively impact digestive and immune health. FY 2020-21 was the first full year of commercial operations of newly set-up greenfield unit in Nellore, Andhra Pradesh that produces prebiotic fibre, FOS. The Company received key certifications viz. Food Safety System Certification - FSSC 22000 and FDA registration which enabled it to service new markets and provide assurance to the customers of quality standards. The FOS volumes grew by 143% over the previous year mainly owing to the growth from International markets that the Company serviced for the first time. The Company is focussed on further improving the utilisation rates.

Subsidiary

Agri Sciences - Rallis India Limited (Rallis)

(as per TCL consolidated books)

Rallis is the Companys listed subsidiary focussed on specialty products for the farm and agriculture sector consisting mainly of Crop Care and Seeds. During FY 2020-21, Rallis achieved a consolidated revenue from operations of 2,424 crore in FY 2020-21 compared to 2,248 crore in FY 2019-20, an increase of 8%. The net profit after tax stood at 229 crore, higher by 24% as against a net profit after tax of 185 crore in FY 2019-20.

During FY 2020-21, the Domestic business of Rallis achieved a revenue of 1,287 crore as against 1,165 crore in FY 2019-20, an increase of 10% on account of robust farm demand. Key crops which have shown major growth are Paddy, Cotton, Sugarcane, Soybean, Pulses, Chilli, Tea, Tomato and Grapes. Due to Covid-19 and labour shortage, the demand for herbicide products also increased.

During the year under review, the International business of Rallis achieved a revenue growth of 3% over the previous year at 741 crore as against 722 crore in FY 2019-20. During the year under review, Rallis secured new registrations in strategic overseas markets.

During FY 2020-21, the Seeds division of Rallis delivered a revenue of 401 crore as against 364 crore during FY 2019-20, an increase of 10% driven by volume growth in Maize & Vegetables and price increase across the categories. Overall, the focus remains to deliver growth through new product introductions, deepening customer reach and increasing international registrations.

6. Finance and Credit Ratings

During the year under review, the liquidity and cash positions were monitored with reinforced focus and close controls over the working capital and discretionary capital expenditures. Earnings from the cash surplus investments, comprising mutual funds/bank fixed deposits/debentures (bonds) during the year saw a reduction due to the drop in the market interest rates. Nevertheless, utmost importance was given to ensure the safety and liquidity of surplus cash.

Amid a particularly volatile global financial market in FY 2020-21, the overseas subsidiaries of the Company concluded refinancing agreements of US$ 100 million in Valley Holdings Inc., US$ 275 million in Tata Chemicals North America, US$ 45.5 million in Homefield Pvt. UK Limited and 55 million in British Salt Limited.

During FY 2020-21, Rallis, a subsidiary and IMACID, a joint venture paid dividends of 24 crore (FY 2019-20: 24 crore) and 26 crore (FY 2019-20: 72 crore) respectively to the Company. Valley Holdings Inc., the Companys step-down overseas subsidiary, which holds investments in the US operations, paid a dividend of US$ 20.9 million ( 155 crore) [FY 2019-20: US$ 30.1 million ( 214 crore)], which was utilised for operational requirements, external finance costs and capital funding requirements at Tata Chemicals International Pte. Ltd., Singapore and other group companies.

There being no change in the credit ratings during the year, the Company as on March 31, 2021 had the following credit ratings:

- Long Term Corporate Family Rating - Foreign Currency of Ba1/Stable from Moodys Investors Service

- Long Term Issuer Default Rating (IDR) of BB+ with Stable outlook from Fitch Ratings

- Long Term bank facilities (fund-based limits) of 1,897 crore and short term bank facilities (non-fund based limits) of 2,448 crore are rated at CARE AA+ (Outlook: Stable) and CARE A1+ respectively, by CARE Ratings and

- Commercial Paper of 600 crore is rated at CRISIL A1 + by CRISIL Ratings

Upon refinancing of the loan facility at Tata Chemicals North America, Inc. during June 2020, the existing credit ratings being no longer needed were discontinued.

7. Dividend Distribution Policy

In accordance with Regulation 43A of the SEBI Listing Regulations, the Board of Directors of the Company has adopted a Dividend Distribution Policy (Policy) which endeavours for fairness, consistency and sustainability while distributing profits to the shareholders. The Policy is attached to this Report as Annexure 1 and the same is available on the Companys website at https://www.tatachemicals.com/ DividendDistPolicy.htm.

8. Transfer to Reserves

The Board of Directors has decided to retain the entire amount of profits for FY 2020-21 in the retained earnings.

9. Responding to an unprecedented challenge: The Covid-19 pandemic

FY 2020-21 was an unprecedented year with Covid-19 pandemic impacting the globe and global supply chains, amidst biggest global health crisis ever faced by the world. The uncertainty around the resurgence of second wave across India towards the end of March 2021 is being closely monitored and all necessary actions are underway.

In order to respond to the pandemic effectively, the Company navigated through these difficult times by developing and adopting a multi-pronged strategy. The Company practised extreme care and caution towards the health and well-being of its employees and partners while ensuring this care and caution was extended to the community at large. The Companys operations and assets were managed to ensure prioritisation of products that were part of essential needs of the masses and markets by optimising on available manpower, raw materials and supply chain support. The Company regularly adhered to various guidelines and advisories issued by the authorities from time to time including maintaining social distancing at all its plant operations. Reduced manpower in shift working, working from home, staggering of breaks and postponing non-critical projects were some of the actions taken in conjunction with provision of all facilities such as sanitation, temperature checks, masks, etc. The Company maintained strict vigilance over cash conservation and working capital optimisation besides initiating digital interventions to move to touchless and remote operations.

10. Deposits from Public

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on March 31,2021.

11. Business Responsibility Report

Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility Report initiatives taken from an environmental, social and governance perspective in the prescribed format forms part of this Integrated Annual Report.

12. Related Party Transactions

The Company has formulated a Policy on Related Party Transactions which is available on the Companys website at https://www.tatachemicals.com/RPTPolicy.htm. All related party transactions entered into during FY 2020-21 were on arms length basis and in the ordinary course of business. No material related party transactions were entered into during the year under review by the Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 (the Act) in Form No. AOC-2 is not applicable to the Company for FY 2020-21 and hence the same is not provided.

All transactions with related parties were reviewed and approved by the Audit Committee. Omnibus approval is 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 related party transactions entered into pursuant to the omnibus approval so granted are also reviewed by the internal audit team on a half-yearly basis.

The details of the transactions with related parties are provided in the accompanying Financial Statements.

13. Risk Management

Risk Management at Tata Chemicals forms an integral part of Management focus.

The Risk Management Policy of the Company provides the framework of Enterprise Risk Management (ERM) by describing mechanisms for the proactive identification and prioritisation of risks based on the scanning of the external environment and continuous monitoring of internal risk factors. The ERM framework identifies, evaluates, manages and reports risks arising from the Companys operations and exogenous factors.

The Company has deployed bottom-up and top-down approaches to drive enterprise wide risk management. The bottom-up process includes identification and regular assessment of risks by the respective business units and implementation of mitigation strategies. This is complemented by a top-down approach where the senior management as well as the Board level Risk Management Committee (RMC) identifies and assesses long-term, strategic and macro risks for the Company.

The RMC oversees the risk management process in the Company. The RMC is chaired by an Independent Director and the Chairperson of the Audit Committee is also a member of the RMC. This robust governance structure has also helped in the integration of the ERM with the Companys strategy and planning processes where emerging risks are used as inputs in the strategy and planning process. Identified risks are used as one of the key inputs in the strategy and business plan.

A systematic review of risks identified is subject to a series of focussed meetings of the empowered Risk Management Group (Senior Leadership Team), respective Business level/ Subsidiary level Committee and the RMC of the Board. The RMC meets periodically to review key strategic and operational risks and assess the status of mitigation measures.

Based on benchmarking and inputs from global standards on ERM, the Risk Management process has been deployed across geographies and businesses.

Some of the risks identified are set out in the Management Discussion and Analysis which forms part of this Integrated Annual Report.

14. Corporate Social Responsibility

The Corporate Social Responsibility (CSR) activities of the Company are governed through the Corporate Social Responsibility Policy (CSR Policy) approved by the Board. The CSR Policy guides in designing CSR activities for improving quality of life of society and conserving the environment and biodiversity in a sustainable manner. The CSR Committee of the Board oversees the implementation of CSR Projects in line with the Companys CSR Policy.

The Company has adopted a participatory approach in designing need-based CSR programmes which are implemented through Tata Chemicals Society for Rural Development (TCSRD), the Tata Trusts and with various government and non-government institutions.

Building economic capital: The Company focusses on poverty alleviation and creating livelihoods, both linked to farm and non-farm based activities.

Ensuring environmental integrity: The Companys main focus is on management of natural resources and conservation of environment. The key programmes include land and water management activities, waste management, preservation of biodiversity and mitigation of climate change impacts. Under the Swachh Bharat Abhiyan, the Company through TCSRD set up a dry waste processing plant at Mithapur.

Enablers for social, economic and environmental development: The Companys key programme is the Holistic Nutrition Programme which targets the first 1,000 days of a child. Additionally in the neighbourhood, the Company conducts regular health and nutrition camp.

The education programme focusses on students starting from primary to the post-graduation level. Educational support is provided for 100% enrolment of children and improving quality of education.

The Company helps to provide clean water through roof rainwater harvesting structures, repair of hand pumps, supporting households with water purifier systems through Samriddhi and Swach Tarang Project.

Building social capital: Building the social capital for long-term sustainability is a key cross-cutting theme in all these programmes.

Women empowerment, reducing inequality of marginalised communities (through Affirmative Action), partnerships for achieving goals and setting up sustainable social enterprise models (Okhai and Ncourage Social Enterprise Foundation) are key initiatives for achieving the same.

The Company also responds to disasters that hit any part of India and in the neighbourhood of all its manufacturing plants.

The Annual Report on CSR activities for FY 2020-21 is enclosed as Annexure 2 to this Report.

15. Whistleblower Policy and Vigil Mechanism

The Company has devised an effective whistleblower mechanism enabling stakeholders, including individual employees and their representative bodies, to communicate their concerns about illegal or unethical practices freely. The Company has also established a vigil mechanism for stakeholders to report concerns about any unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct. Protected disclosures can be made by a whistleblower through several channels. The Whistleblower Policy of the Company (the Policy) provides for adequate safeguards against victimisation of employees who avail of the mechanism. No personnel of the Company has been denied access to the Chairperson of the Audit Committee. The Policy also facilitates all employees of the Company to report any instance of leak of unpublished price sensitive information.

A dedicated Ethics Helpline has been setup which is managed by an independent professional organisation for confidentially raising any ethical concerns or practices that violate the Tata Code of Conduct.

The Policy is also posted on the website of the Company at: https://www.tatachemicals.com/WhistleblowerPolicy.htm.

16. Prevention of Sexual Harassment (POSH)

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (POSH Act) and Rules made thereunder, the Company has formed an Internal Committee (IC) for its workplaces to address complaints pertaining to sexual harassment in accordance with the POSH Act. The Company has a detailed policy for prevention of sexual harassment at workplace which ensures a free and fair enquiry process with clear timelines for resolution.

No complaints were pending at the beginning of the year. During the year under review, two concerns were reported which were investigated and appropriate action was taken. No complaint was pending as at the end of the financial year.

To build awareness in this area, the Company has been conducting awareness sessions during induction, periodically through online modules and webinars (no classroom trainings were conducted due to Covid-19). Awareness sessions were conducted with permanent employees, third-party employees and contract workmen. A special virtual awareness programme was organised for all the employees of the Company through webinar on POSH in July 2020.

17. Particulars of Loans, Guarantees and Investments

The Company has not given any loans during the year under review. The Company has made an investment of 150 crore in Non-Convertible Debentures (NCDs) and 40 crore in equity shares through rights issue of Tata International Limited.

The Company also invested 9 crore in Tata Steel Limited (Tata Steel) wherein the partly paid shares of Tata Steel were converted to fully paid shares. The Company sold 12,85,110 shares in Tata Teleservices Limited (book value: Nil). During the year under review, the Company has provided additional corporate guarantee of US$ 34.2 million to Homefield Private UK Limited, 96 million to Natrium Holdings Limited and 9.6 million to Tata Chemicals Europe Limited, subsidiaries of the Company.

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.

18. Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its subsidiaries for FY 2020-21 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the SEBI Listing Regulations as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The Audited Consolidated Financial Statements together with the Auditors Report thereon forms part of this Integrated Annual Report.

Pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate annual accounts in respect of subsidiaries are available on the website of the Company.

The annual accounts of the subsidiaries and related detailed information will be made available to investors seeking information till the date of the AGM. They are also available on the website of the Company at https://www.tatachemicals.com/Investors/ AGM-documents.

19. Subsidiary Companies and Joint Ventures

As on March 31, 2021, the Company had 33 (direct and indirect) subsidiaries (2 in India and 31 overseas) and 4 joint ventures. There has been no material change in the nature of the business of the subsidiaries.

There were following changes pertaining to subsidiaries during the year under review:

• The Honble National Company Law Tribunal (NCLT), Mumbai Bench on April 23, 2020 approved the Scheme of Merger by Absorption of Bio Energy Venture-1 (Mauritius) Pvt. Ltd. (Bio-1), a wholly owned subsidiary, with the Company with an Appointed Date of April 1, 2019. The Registrar of Companies at Mauritius removed the name of Bio-1 from the register of companies w.e.f. June 1, 2020 and accordingly, Bio-1 has ceased to be a subsidiary of the Company with effect from the said date

• The NCLT, Mumbai Bench also approved the Scheme of Arrangement between Zero Waste Agro-Organics Limited, a wholly-owned subsidiary of Rallis (Zero Waste) and Rallis (Scheme) on February 22, 2020 from the Appointed Date of April 1, 2017. The Effective Date of the Scheme is July 9, 2020. Accordingly, Zero Waste has ceased to be a subsidiary of the Company with effect from the said date

• Rallis Chemistry Exports Limited, a wholly owned subsidiary of Rallis (RCEL) has been struck-off from the register of companies with effect from March 29, 2021 consequent to the voluntary striking-off application filed by it with the Registrar of Companies, Maharashtra, Mumbai. Accordingly, RCEL has ceased to be a subsidiary of the Company with effect from the said date

• PT Metahelix LifeSciences Indonesia, a subsidiary of Rallis received approval for the cancellation of its Company Registration Number and revocation of its business licence with effect from March 19, 2021.

Further, an application for cancellation of its Tax Identification Number has been made and the approval for the same is awaited

The Companys Policy on determining material subsidiaries, as approved by the Board, is uploaded on the Companys website at https://www.tatachemicals.com/ MaterialSubsPolicy.htm.

A report on the financial position of each of the subsidiaries and joint ventures as per the Act is provided in Form No. AOC-1 attached to the Financial Statements.

20. Details of Significant and Material Orders

No significant and material orders were passed by the regulators or the courts or tribunals impacting the going concern status and the Companys operations in future.

21. Internal Financial Controls

Internal financial control systems of the Company are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards and relevant statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company has a well-defined delegation of authority with specified limits for approval of expenditure, both capital and revenue. The Company uses an established Enterprise Resource Planning (ERP) system to record day-to-day transactions for accounting and financial reporting.

The Audit Committee deliberated with the members of the management, considered the systems as laid down and met the internal audit team and statutory auditors to ascertain, their views on the internal financial control systems. The Audit Committee satisfied itself as to the adequacy and effectiveness of the internal financial control system as laid down and kept the Board of Directors informed. However, the Company recognises that no matter how the internal control framework is, it has inherent limitations and accordingly, periodic audits and reviews ensure that such systems are updated on regular intervals.

Details of internal control system are given in the Management Discussion and Analysis which forms part of this Integrated Annual Report.

22. Directors Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s), including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Companys internal financial controls were adequate and effective during FY 2020-21.

Accordingly, pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that for the year ended March 31,2021:

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

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

c) they have 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) they have prepared the annual accounts on a going concern basis;

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

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

23. Corporate Governance and Compliance

The Company strives to evolve and follow the best governance practices, not just to boost long-term shareholder value, but also to respect minority rights. The Company considers the same as its inherent responsibility to disclose timely and accurate information to its stakeholders regarding its operations and performance, as well as the leadership and governance of the Company. The Company is committed to the Tata Code of Conduct which articulates values and ideals that guide and govern the conduct of the Tata companies as well as its employees in all matters relating to business. The Companys overall governance framework, systems and processes reflect and support its Mission, Vision and Values.

The Companys governance guidelines cover aspects mainly relating to composition and role of the Board, Chairman and Directors, Board diversity and Committees of the Board.

With a view to uphold human rights as an integral aspect of doing business, being committed to respect and protect human rights and remediate adverse human rights impacts resulting from or caused by the Companys businesses, the Board adopted The Tata Business and Human Rights Policy during the year under review.

The Company has in place an online compliance management system for monitoring the compliances across its various plants and offices. A compliance certificate is also placed before the Board of Directors every quarter.

In compliance with the SEBI Listing Regulations, the Corporate Governance Report and the Auditors Certificates form part of this Integrated Annual Report.

24. Directors and Key Managerial Personnel Directors Appointment

Pursuant to the recommendations of the Nomination and Remuneration Committee (NRC), the Board of Directors made the following appointments during the year under review in accordance with the Companys Articles of Association and Section 161(1) of the Act, subject to approval of the Members at the forthcoming AGM:

i. Appointed Mr. Rajiv Dube as an Additional Director in an independent capacity not liable to retire by rotation, for a period of 5 years commencing from September 18, 2020 to September 17, 2025

ii. Appointed Mr. N. Chandrasekaran as an Additional Director (Non-Executive Non-Independent) and Chairman of the Board of Directors of the Company with effect from November 24, 2020

They hold office up to the date of the forthcoming AGM and the Company has received requisite Notices from Members in writing proposing their appointment as Directors of the Company.

The Board recommends for the approval of the Members by way of an Ordinary Resolution, the appointment of Mr. Dube as an Independent Director effective September 18, 2020 and Mr. Chandrasekaran as a Director on the Board of the Company with effect from November 24, 2020, at Item Nos. 5 and 6 respectively, of the Notice convening the AGM.

During the year under review, at the 81st AGM of the Company held on July 7, 2020, the Members of the Company appointed Dr. C. V. Natraj and Mr. K. B. S. Anand as Indpendent Directors of the Company with effect from August 8, 2019 and October 15, 2019 respectively.

Re-appointment

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Company, Mr. Zarir Langrana, Executive Director of the Company, retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment.

Cessation

During the year under review, Mr. Bhaskar Bhat resigned as a Director of the Company with effect from November 24, 2020. The Board places on record its deep appreciation for the invaluable contribution and guidance rendered by Mr. Bhat.

Independent Directors

In terms of Section 149 of the Act, Ms. Vibha Paul Rishi, Ms. Padmini Khare Kaicker, Dr. C. V. Natraj, Mr. K. B. S. Anand and Mr. Rajiv Dube are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and are independent of the management. In terms of Regulation 25(8) of the SEBI Listing Regulations, they have confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same. They are not liable to retire by rotation in terms of Section 149(13) of the Act.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise in the fields of science and technology, digitalisation, strategy, finance, governance, human resources, safety, sustainability, etc. and that they hold highest standards of integrity.

The Independent Directors of the Company have confirmed that they have enrolled themselves in the Independent Directors Databank maintained with the Indian Institute of Corporate Affairs (IICA) in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014. They are exempt from the requirement to undertake the online proficiency self-assessment test conducted by IICA.

Details of Familiarisation Programme for the Independent Directors are provided separately in the Corporate Governance Report which forms a part of this Integrated Annual Report.

Key Managerial Personnel (KMP)

Mr. John Mulhall ceased as the Chief Financial Officer (CFO) of the Company with effect from March 31, 2021 upon his transfer as Managing Director & CEO of Tata Chemicals North America Inc., a wholly owned subsidiary of the Company.

Pursuant to the recommendations of the Nomination & Remuneration Committee and Audit Committee, the Board appointed Mr. Nandakumar S. Tirumalai as the Chief Financial Officer and Key Managerial Personnel of the Company with effect from April 1,2021.

In terms of the provisions of Section 2(51) and Section 203 of the Act, the following are the KMP of the Company:

• Mr. R. Mukundan, Managing Director & CEO

• Mr. Zarir Langrana, Executive Director

• Mr. Nandakumar S. Tirumalai, Chief Financial Officer (w.e.f. April 1,2021)

• Mr. Rajiv Chandan, General Counsel & Company Secretary

Procedure for Nomination and Appointment of Directors

The NRC is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.

The NRC conducts a gap analysis to refresh the Board on a periodic basis, including each time a Directors appointment or re-appointment is required. The Committee is also responsible for reviewing the profiles of potential candidates vis-a-vis the required competencies and meeting the potential candidates, prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position including expert knowledge expected is communicated to the appointee.

The list of core skills, expertise and competencies of the Board of Directors as are required in the context of the businesses and sectors applicable to the Company are identified by the Board and are available with the Board. The Company has also mapped each of the skills, expertise and competencies against the names of the Board Members possessing the same. The same is disclosed in the Corporate Governance Report forming part of this Integrated Annual Report.

Scientific Advisory Board

The Board has constituted a Scientific Advisory Board consisting of scientists with relevant domain expertise under the Chairmanship of Dr. C. V. Natraj, Independent Director of the Company with a view to synergise the Research & Development initiatives at the Companys Innovation Centre and Research & Development Centres (Crop Care and Seeds respectively) of Rallis India Limited. Further details in this regard are provided in the Corporate Governance Report.

Criteria for determining Qualifications, Positive Attributes and Independence of a Director

The NRC has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and the SEBI Listing Regulations. The relevant information has been given in Annexure 3 which forms part of this Report.

Board Evaluation

The Board has carried out the annual evaluation of its own performance and that of its Committees and individual Directors for the year pursuant to the provisions of the Act and the SEBI Listing Regulations. The exercise of performance evaluation was carried out electronically through a secure application. This resulted in saving paper, reducing the cycle time to make documents available to the Board/Committee Members and in increasing confidentiality and accuracy.

The performance of the Board and individual Directors was evaluated by the Board after seeking inputs from all the Directors. The criteria for performance evaluation of the Board included aspects such as Board composition and structure, effectiveness of Board processes, contribution in the long-term strategic planning, etc. The performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members. The criteria for performance evaluation are broadly based on the Guidance Note issued by SEBI on Board Evaluation which included aspects such as structure and composition of Committees, effectiveness of Committee Meetings, etc.

The Chairman of the Board had one-on-one meetings with each Independent Director and the Chairman of the NRC had one-on-one meetings with each Executive and Non-Executive, Non-Independent Directors.

In a separate meeting, the Independent Directors evaluated the performance of Non-Independent Directors and performance of the Board as a whole including the Chairman of the Board taking into account the views of Executive Directors and Non-Executive Directors. The NRC reviewed the performance of the Board, its Committees and of the Individual Directors. The same was discussed in the Board Meeting that followed the meeting of the Independent Directors and the NRC, at which the feedback received from the Directors on the performance of the Board and its Committees was also discussed.

The Company follows a practice of addressing each of the observations and suggestions by drawing up an action plan and monitoring its implementation through the Action Taken Report which is reviewed by the Board of Directors from time to time.

25. Remuneration Policy

The Company has in place a Remuneration Policy for the Directors, KMP and other employees pursuant to the provisions of the Act and the SEBI Listing Regulations which is set out in Annexure 4 forming part of this Report.

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

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed pursuant to the provisions of Section 134 of the Act read with the Companies (Accounts) Rules, 2014, are provided in Annexure 5 forming part of this Report.

27. Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) are enclosed as Annexure 6 forming part of this Report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Rules forms part of this Report. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon request by the Members. Any Member interested in obtaining such particulars may write to the Company Secretary at investors@tatachemicals.com.

28. Auditors

I. Statutory Auditors

At the AGM held on August 9, 2017, B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed as Statutory Auditors of the Company for a period of five (5) consecutive years.

Further, the report of the Statutory Auditors along with notes to Schedules is a part of this Integrated Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

II. Cost Auditors

As per Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to prepare, maintain as well as have the audit of its cost records conducted by a Cost Accountant and accordingly, it has made and maintained such cost accounts and records. The Board on the recommendation of the Audit Committee has appointed D. C. Dave & Co., Cost Accountants (Firm Registration No. 000611) as the Cost Auditors of the Company for FY 2021-22 under Section 148 and all other applicable provisions of the Act.

D. C. Dave & Co. 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.

The remuneration payable to the Cost Auditors is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution for seeking Members ratification for the remuneration payable to D. C. Dave & Co. is included at Item No. 7 of the Notice convening the AGM.

III. Secretarial Auditor

In terms of Section 204 of the Act and Rules made thereunder, Parikh & Associates, Practicing Company Secretaries (Firm Registration No. P1988MH009800), have been appointed as Secretarial Auditors of the Company to carry out the secretarial audit for FY 2021-22. The report of the Secretarial Auditors for FY 2020-21 is enclosed as Annexure 7 forming part of this Report.

There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditor in their Report.

29. Reporting of Fraud

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.

30. Other Disclosures

I. Details of Board Meetings

During the year under review, nine (9) Board Meetings were held, details of which are provided in the Corporate Governance Report.

II. Composition of Audit Committee

The Audit Committee comprised four (4) Members out of which three (3) are Independent Directors and one (1) is a Non-Executive Director. During the year under review, eleven (11) Audit Committee meetings were held, details of which are provided in the Corporate Governance Report. During the year under review, there were no instances when the recommendations of the Audit Committee were not accepted by the Board.

III. Composition of CSR Committee

The CSR Committee comprised four (4) Members out of which one (1) is an Independent Director. The Committee was reconstituted effective September 1, 2020 after which the Committee comprised three (3) Members out of which one (1) is an Independent Director. During the year under review, three (3) meetings of the CSR Committee were held, details of which are provided in the Corporate Governance Report. The Company has revised the CSR Policy and the Charter pursuant to the Companies (Corporate Social Responsibility) Amendment Rules, 2021. The revised CSR Policy is available on the website of the Company at https://www.tatachemicals.com/CSRPolicy2021.htm. During the year under review, there were no instances when the recommendations of the CSR Committee were not accepted by the Board.

IV. Secretarial Standards

The Directors have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by the Institute of Company Secretaries of India and such systems were adequate and operating effectively.

31. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available on the Companys website at https://www.tatachemicals.com/ MGT2021.htm .

32. Acknowledgements

The Directors acknowledge the support extended by the Companys Unions and all the employees for their dedicated service.

The Directors would also like to thank the financial institutions, banks, government authorities, customers, vendors and other stakeholders for the continued support and co-operation.

The Directors deeply regret the loss of lives on account of the Covid-19 pandemic and place on record their sincere appreciation to all those who have gone beyond their duties in this fight against the pandemic.