Navin Fluo.Intl. Management Discussions

Global economic overview

The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic e_ect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices decreased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended 2022 concerned that the following year would be slower. The global equities, bonds, and crypto assets reported an aggregated value drawdown of USD26 trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In 2022, there was a concurrently unique decline in bond and equity markets; 2022 was the only year when the S&P 500 and 10-year US treasuries delivered negative returns of more than 10%.

Gross FDI inflows – equity, reinvested earnings and other capital – declined 8.4% to USD 55.3 billion in April-December. The decline was even sharper in the case of FDI inflows as equity: these fell 15% to USD 36.75 billion between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023). The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3,495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around USD 120 per barrel in June 2022 to USD 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%) 2022 2021
World output 3.2 6.1
Advanced economies 2.5 5
Emerging and developing economies 3.8 6.3

Performance of major economies

United States: Reported GDP growth of 2.1% compared to 5.9% in 2021 China: GDP growth was 3% in 2022 compared to 8.1% in 2021 United Kingdom: GDP grew by 4.1% in 2022 compared to 7.6% in 2021 Japan: GDP grew 1.7% in 2022 compared to 1.6% in 2021 Germany: GDP grew 1.8% compared to 2.6% in 2021

[Source: PWC report, EY report, IMF data, OECD data]

Outlook: The global economy is expected to grow 2.8% in 2023, influenced by the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall marginally to 7%. Despite these challenges, there are positive elements withintheglobaleconomiclandscape.Thelargesteconomies like China, the US, the European Union, India, Japan, the UK, and South Korea are not in a recession. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. The energy shock in Europe did not result in a recession, and significant developments, including Chinas progressive departure from its strict zero-Covid policy and the resolution of the European energy crisis, fostered optimism for an improved global trade performance. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth (Source: IMF).

Indian economic overview

Overview:Evenastheglobalconflictremainedgeographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth is at 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation (Source: IMF, World Bank)

Growth of the Indian economy

FY 20 FY 21 FY 22 FY23
Real GDP growth(%) 3.7 -6.6% 8.7 7.2

Growth of the Indian economy quarter by quarter, FY 2022-23

Q1FY23 Q2FY23 Q3FY23 Q4FY23
Real GDP growth(%) 13.1 6.3 4.4 6.1

(Source: Budget FY24; Economy Projections, RBI projections)

According to the India Meteorological Department, the year 2022 delivered 8% higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat harvest was expected to fall to around 102 million metric tons (MMT) in 2022-23 from 107 MMT in the preceding year. Rice production at 132 MMT was almost at par with the previous year. Pulses acreage grew to 31 million hectares from 28 million hectares. Due to a renewed focus, oilseeds area increased 7.31% from 102.36 lakh hectares in 2021-22 to 109.84 lakh hectares in 2022-23. Indias auto industry grew 21% in FY23; passenger vehicle (UVs, cars and vans) retail sales touched a record 3.9 million units in FY23, crossing 3.2 million units in FY19. The commercial vehicles segment grew 33%. Two-wheeler sales fell to a seven-year low; the three-wheeler category grew 84%. Till the end of Q3FY23, total gross non-performing assets (NPAs) of the banking system fell to 4.5% from 6.5% a year ago. Gross NPA for FY23 was expected to be 4.2% and a further drop is predicted to 3.8% in FY2023-24. As Indias domestic demand remained steady amidst a global slowdown, import growth in FY23 was estimated at 16.5% to USD 714 billion as against USD 613 billion in FY22. Indias merchandise exports were up 6% to USD 447 billion in FY23. Indias total exports (merchandise and services) in FY23 grew 14 percent to a record of USD 775 billion in FY23 and is expected to touch USD 900 billion in FY24. Till Q3 FY23, Indias current account deficit, a crucial indicator of the countrys balance of payments position, decreased to USD 18.2 billion, or 2.2% of GDP. Indias fiscal deficit was estimated in nominal terms at ~ 17.55 lakh crore and 6.4% of GDP for the year ending March 31, 2023. (Source: Ministry of Trade & Commerce)

Indias headline foreign direct investment (FDI) numbers rose from USD 74.01 billion in 2021 to a record USD 84.8 billion in 2021-22, a 14% Y-o-Y increase, till Q3FY23. India recorded a robust USD 36.75 billion of FDI. In 2022-23, the government was estimated to have addressed 77% of its disinvestment target (50,000 crore against a target of 65,000 crore). Indias foreign exchange reserves, which had witnessed three consecutive years of growth, experienced a decline of approximately USD 70 billion in 2022, primarily influenced by rising inflation and interest rates. Starting from USD 606.47 billion on April 1, 2022, reserves decreased to USD 578.44 billion by March 31, 2023. The Indian currency also weakened during this period, with the exchange rate weakening from 75.91 to a US dollar to 82.34 by March 31, 2023, driven by a stronger dollar and increasing current account deficit. Despite these factors, India continued to attract investable capital. The countrys retail inflation, measured by the Consumer Price Index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index (WPI) (calculates the overall price of goods before retail) eased to 1.3% during the period. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined below 5%, its lowest in months. Indias total industrial output for FY23, as measured by the Index of Industrial Production or IIP, grew 5.1% year-on-year as against a growth of 11.4 % in 2021-22. India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in 2022. As of March 2023, Indias unemployment rate was 7.8 percent. In 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1 % Y-o-Y in RE 2022-23.

The total gross collection for FY23 was 18.10 lakh crore, an average of 1.51 lakh crore a month and up 22% from FY22, Indias monthly Goods and Services Tax (GST) collections hit the second highest ever in March 2023 to 1.6 lakh crore. For 2022–23, the government collected 16.61 lakh crore in direct taxes, according to data from the Finance Ministry. This amount was 17.6 % more than what was collected in the previous fiscal. Per capita income almost doubled in nine years to 172,000 during the year under review, a rise of 15.8 percent over the previous year. Indias GDP per capita was USD 2,320 (March 2023), close to the magic figure of USD 2,500 when consumption spikes across countries. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3 % in 2022-23. Outlook: There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and appreciable decline in consumer price index inflation to less than 5 % in April 2023. India is expected to grow around 6-6.5 % (as per various sources) in FY2024, catalysed in no small measure by the governments 35% capital expenditure growth. The growth could also be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. eadline and core inflation could trend down. Private sector investments could revive. What provides optimism is that even as the global structural shifts are creating a wider berth for Indias exports, the country is making its largest infrastructure investment. This unprecedented investment is expected to translate into a robust building block that, going ahead, moderates logistics costs, facilitates a quicker transfer of products and empowers the country to become increasingly competitive. This can benefit Indias exports in general, benefiting several sectors. The construction of national highways in 2022-23 was 10,993 kilometres; the Ministry of Road Transport and ighways awarded highway contracts of 12,375 km in the last financial year (Source: IMF). The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP estimate of 6.8% and America and Europe are experiencing its highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors. Inflation is steady. India is at the cusp of making significant investments in renewable energy and other sectors and emerging as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade. The outlook for private business investment remains positive despite an increase in interest rates. India is less exposed to Chinese economic weakness, with much less direct trade with China than many Asian peers. Broad-based credit growth, improving capacity utilisation, governments thrust on capital spending and infrastructure should bolster investment activity. Accordingly manufacturing, services and infrastructure sector firms are optimistic about their business outlook. The downside risks are protracted geopolitical tensions, tightening global financial conditions, and slowing external demand.

Union Budget FY 2023-24 provisions

The Budget 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to 10 lakh crores, equivalent to 3.3% of

GDP and almost three times the 2019-20 outlay, through various projects like PM Gatishakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. An outlay of 5.94 lakh crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly 20,000 crores was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector. An outlay of 1.97 lakh crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in FY24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a long-term provider of manufactured products and its emergence as a credible global supplier of goods and services.

Global fluorochemical industry overview

Fluorochemicals are hydrocarbons containing fluorine, the most reactive chemical element - non-flammable, viscose, electro-negative and forming stable compounds. igh resistance to organic solvents, acids and bases o_ered by fluorochemicals is anticipated to drive product demand in automotive, electronics and construction applications. The global fluorochemicals market is expected to grow to USD 29.61 Billion by 2027, growing at a CAGR of 5.06%. Fluorocarbon is a leading product with the highest share of the fluorochemicals in 2022. There is a growth of ydrofluorocarbon and ydrochlorofluorocarbons due to their large use as refrigerants and in the manufacture of polyurethane foam (used in the construction sector). The consumption of fluorocarbons is increasing on account of its use in the electronics and automotive industries warranting enhanced tensile strength and electrical insulation.

The global fluorochemicals market has been segmented across North America, Europe, Asia Pacific, Latin America, Middle East and Africa. Asia-Pacific accounts for the highest share of the fluorochemicals segment due to growing consumers and applications (from the automotive, oil and gas, pharmaceutical and transportation sectors).

Fluorinated gases are used as refrigerants for air conditioning and refrigeration systems. Moreover, a number of distinct synthetic chemicals containing fluorine in their chemical architecture are used for this purpose. The market for these gases has been growing due to an increasing demand for consumer appliances and the growing pharmaceutical industry; the choice of one refrigerant over another has been driven mainly by regulatory pressures. In the global specialty chemicals segment, FCs (refrigerant gases) enjoy a large role.

Fluorine is also used in the pharmaceutical industry; it can increase the drug selectivity, making it possible to dissolve fats, and decrease the speed at which the drug is metabolized, allowing it more time to become e_ective. More than 20% of pharmaceutical drugs contain fluorine.

(Source:, Fortune Business Insights,

Opportunities in the chemical industry

• Low penetration of fluoropolymers across the globe generates opportunities for fluorochemical players. With the growing production of aluminum, semiconductors, batteries and other electronic components there could be a growing demand for high-value fluorochemicals.

• Growing adoption of clean air systems in residential, commercial and industrial installations and increasing installation of VAC systems in automobiles, creating a huge demand for fluorochemicals.

• Increased commercial and residential construction resulting in the increased demand for VAC systems in warehouses, stores, malls, households and other applications, there has been a significant increase in the demand for frozen products and fresh food, which require temperature-controlled storage units.

Industry challenges

• Availability of fluorospar mineral, the manufacturing source for fluorochemicals.

• Government regulations and restrictions on the sector.

• Growing environmental concerns.

Growth drivers

Growing demand: The global refrigerants market is expected to reach USD 8.4 billion, by 2027 growing with a CAGR of 6.2% from 2022 to 2027. The growth drivers include a growing demand for consumer appliances (refrigeration and air conditioning equipment) and a growing pharmaceutical industry. China is expected to grow to an estimated market of USD 5.2 billion by 2027, growing at a CAGR of 6.8% from 2020 to 2027. China is the leading producer and consumer of refrigerant gases.

Automotive industry: The automotive industry is the largest market for fluorochemicals due to increased production of light commercial vehicles and its use in the production of aluminum, semiconductors and electric components. Construction industry: Fluor technology products are used in the construction and building sector to provide anti-corrosion, high durability and UV resistance to materials like architectural membranes and coatings, caulks and wire and cable. Due to urbanization and population growth, the global construction industry is estimated to reach USD 14.4 trillion in 2030. The fluoropolymers segment is expected to reach USD 10.31 billion in 2028. The APAC region is the leading contributor to this value on account of a_ordable housing and infrastructure projects leading to a surge in demand for fluoropolymer roofs.

(Source:, Moodys Outlook, Businesswire, Statista, Automotiveworld, Bloomberglaw, Reports and Data, Globalnewswire, Market Research Fututre, Frost and Sullivan)

Indian specialty chemicals sector overview

The Indian specialty chemicals industry has grown attractively in recent years. It represents 22 per cent of Indias overall chemicals and petrochemicals market and is valued at USD 32 billion. The industry is anticipated to reach USD 64 billion by 2025 at a CAGR of 12.4%. The specialty chemicals segment remains one of the fastest growing segments in the Indian manufacturing sector. This expansion can be attributed to increased demand from many end-user sectors, favorable government policies, a growing domestic customer base, and changes in consumer lifestyle among other factors.

Indian specialty chemicals industry size (US$ billion)

In terms of global market share, Indias specialty chemicals comprise approximately 4%, while China accounts for 26%. Indias specialty chemicals industry is predicted to grow rapidly, outpacing China, Japan and the rest of the world in percentage terms. owever, its market share is predicted to increase from 4 % to 6 % by 2026, on the back of strong revenue growth of 15-20 % during FY2023. (Source: KPMG)

Opportunities in the specialty chemical sector

• Rising disposable income, median age of population, urbanisation and growing penetration and demand from rural markets.

• Shift in consumer preferences towards a healthier lifestyle and environment-friendly products.

• Opportunity to produce USD 111 Bn worth of chemical products by 2023 for domestic requirements.

• Production Linked Incentives scheme for manufacturing of Advance Cell Chemistry Battery under Atmanirbhar Bharat Abhiyaan (Source: Invest India).

Growth drivers

Rising consumption: Indias consumer electronics and appliances market is expected to reach USD 160.03 billion by 2027, growing at a CAGR of 12.78% during 2023-2027. During the same period, the production of air conditioners and refrigerators are expected to double.

Research and Development (R&D): The production value chain of specialty chemical companies is widening due to additional R&D investments. These companies have also o_ered their R&D capabilities as a part of contract research and manufacturing services, which could enhance margins. Domestic availability: Various petrochemical intermediates are imported to India due to a growing demand for petrochemical intermediates by domestic specialty chemical companies that manufacture petrochemical intermediates through the diversion of ethylene and propylene.

Cost e_ective expertise: The Indian chemicals sector provides e_cient and scalable manufacturing facilities at a low cost, skilled manpower, R&D expertise and an established ES compliance framework.

Alternate strategy: India could appear as a feasible specialty chemical manufacturing destination. The cost di_erential between China and India has moderated due to Chinas enhanced pollution control regulations that has increased costs. As a result of the ‘China plus one supply chain strategy, global manufacturers are sourcing from low-cost countries like India. (Source: Invest India)

Favourable government initiatives

PCPIR policy: With the aspiration to attract investments of USD 142 billion by 2025, USD 213 billion by 2030 and USD 284 billion by 2035, the Petroleum, Chemicals and Petrochemicals Investment Region (PCPIR policy) was redrafted.

Production-Linked Incentive (PLI) scheme: To improve domestic production and exports, the PLI scheme for chemicals is at a development stage, addressing 10-20 per cent output incentives. The Government of India has recently launched PLI schemes with an incentive outlay of 1.97 lakh crore, with the aim of promoting several key end-use sectors in the country. These sectors include pharmaceuticals, telecommunications and networking equipment, automobiles, electronics, mobile devices, medical devices and textiles. The PLI schemes are expected to boost the demand for chemicals and petrochemicals in India, as these sectors are major consumers of these products.

Indian fluorochemicals industry

Fluorochemicals are the vital ingredients in a number of industries such as ACs, automobiles, cold storages, refrigerated transport, pharma, etc. Nearly 55% of the market demand in India is for CFC, while 45% is for FCs. Demand growth in any of these industries could strengthen fluorochemicals demand. By 2031, almost three-fourths of Indias national income could come from cities, strengthening the demand for better infrastructure and electronic appliances, which could strengthen fluorochemicals demand. (Source:

Growth drivers

Agrochemicals industry: The agriculture sector is a national backbone, supporting more than 60% of the population and contributing about 18 % to Indias GDP, a large fluorochemical market.

Pharmaceutical industry: India is the third largest pharmaceutical market by volume. The Indian pharmaceutical industry is expected to grow at a CAGR of 12% to reach USD 130 billion by 2030.

Automobile industry: India is expected to become the worlds third largest automobile market by volume by 2026, driven by population and aspirations growth.

Electronics industry: Indias electronics sector contributes around 3.4% of the countrys GDP; its market size is expected to reach US$ 540 billion by 2025, following a wider acceptance of electronics and digitalisation.

Company overview

Established in 1967, Navin Fluorine is one of the biggest and the most respected Indian manufacturers of specialty fluorochemicals. Being a flagship of the Padmanabh Mafatlal Group, NFIL operates as one of the largest integrated fluorochemicals complexes in India with manufacturing locations at Surat and Dahej in Western India and Dewas in Central India. The Companys long-term contracts with supply intermediate in the pharma and agrochemical industry validate its capabilities. The Companys research and development centre, named as Navin Research Innovation Centre (NRIC) is located in Surat, Gujarat. Specialization in fluorination, along with an expertise in synthesis, will empower the Company to capitalize on opportunities arising from pharma and agro chemical industries.

In FY23, Companys 100% subsidiary Navin Fluorine Advanced Sciences Limited (NFASL) commenced operations. NFASL operates one of the most advanced fluorochemicals complexes in India with manufacturing location at Dahej, Western India. NFASL has long-term contracts to supply intermediates to global players Its vision is to become a leading player in the field of advanced fluorine-based chemistry and in just first year of commercial operations, NFASL has made significant strides towards this goal.

Business performance of the Company

The detailed business performance is enumerated in Directors Report under the heading ‘Year in Retrospect.

Our financial overview

Analysis of the Consolidated Profit and Loss Statement Revenues: Consolidated revenues from operations reported a 43% growth from Rs. 1453 cr in 2021-22 to Rs. 2077 cr in 2022-23. Other income of the Company was lower by 9% and accounted for 2% share of the Companys Total Income, reflecting the Companys dependence on its core business operations.

Expenses: Total consolidated expenses of the Company increased by 41% from Rs. 1148 cr. in 2021-22 to Rs. 1617 cr. in 2022-23. Raw material costs, accounting for a 43% share of the Companys revenues, increased by 35% from Rs. 666 cr in 2021-22 to Rs. 896 cr in 2022-23 owing to increase in the operational scale of the Company. Employee expenses, accounting for a 12% share of the Companys revenues, increased 37% from Rs. 182 cr in 2021-22 to Rs. 249 cr in 2022-23.

Analysis of the Consolidated Balance Sheet Sources of funds

The consolidated capital employed by the Company increased by 56% from Rs. 1949 cr as on March 31, 2022 to Rs. 3034 cr as on March 31, 2023 owing to an strong performance by the Company. Consolidated return on capital employed, a measurement of returns derived from every rupee invested in the business was at 21%. The consolidated net worth of the Company increased by 18% from Rs. 1844 cr as on March 31, 2022 to Rs. 2185 cr as on March 31, 2023.

Applications of funds

Consolidated fixed assets (gross) of the Company increased by 210% from Rs. 547 cr as on March 31, 2022 to Rs. 1695 cr as on March 31, 2023, on account of capitalization of various projects at Dahej, Surat and Dewas sites.


Consolidated total investments (non-current and current) other than investments in subsidiaries and joint venture of the Company decreased from Rs. 117 cr as on March 31, 2022 to Rs. 43 cr as on March 31, 2023. Consolidated cash and bank balances of the Company decreased from Rs. 96 cr as on March 31, 2022 to Rs. 35 cr as on March 31, 2023 due to significant capex incurred by the Company and reflects the infusion of working capital following commencement of commercial operations at Dahej.

Working capital management

Consolidated inventories, including raw materials, work-in-progress and finished goods, among others, increased by 82% from Rs. 258 cr as on March 31, 2022 to Rs. 468 cr as on March 31, 2023. The inventory cycle was at 82 days of turnover equivalent in 2022-23 compared to 65 days in 2021-22. Growing business volumes resulted in an increase of 57% in trade receivables from Rs. 358 cr as on March 31, 2022 to Rs. 562 cr as on March 31, 2023. The debtor turnover cycle was at 99 days of turnover equivalent in 2022-23 compared to 90 days in 2021-22. The receivables and inventories management continue to be actively managed and are in line with the scope and scale of operations, particularly considering the commencement of commercial operations at Dahej during the later part of the year and the levels were well within acceptable industry norms.


Consolidated revenue increased by 43% in FY22-23. The EBITDA margin (before exceptional items) of the Company increased by 200 (bps) from 26% in FY 2021-22 to 28% in FY 2022-23 while PBT (before exceptional items) increased by 40bps.

Analysis of the Standalone Profit and Loss Statement of NFIL

Revenues: Revenues from operations reported a 16% growth from Rs. 1404 cr in 2021-22 to Rs. 1628 cr in 2022-23. Other income of the Company was higher by 9% and accounted for 2% share of the Companys Total Income.

Expenses: Total expenses of the Company increased by 14% from Rs. 1094 cr in 2021-22 to Rs. 1251 cr. in 2022-23. Raw material costs, accounting for a 44% share of the Companys revenues, increased by 12% from Rs. 638 cr in 2021-22 to Rs. 715 cr in 2022-23. owing to increase in the operational scale of the Company. Employee expenses, accounting for a 12% share of the Companys revenues, increased 32% from Rs. 153 cr in 2021-22 to Rs. 203 cr in 2022-23.

The EBITDA margin (before exceptional items) of the Company increased by 100 basis points from 27% in FY 2021-22 to 28% in FY 2022-23 while PBT (before exceptional items) increased by 97 basis points.

Key ratios




2022-23 2021-22 2022-23 2021-22
EBITDA/Turnover (%) (before exceptional items) 28 26 28 27
Return on networth (%) 17 14 16 15
Book value/share (Rs.) 441 372 432 376
Earnings per share (Rs.) 75.70 53.12 63.05 53.79
Debtors turnover (days) 99 90 88 92
Inventory turnover (days) 82 65 73 60
Current Ratio 2.81 2.65 4.91 5.39
Operating profit margin (%) 22 21 23 22
Net profit margin (%) 18 18 19 19

Return on net worth (Standalone and Consolidated) has increased on account of increase in PAT.

The Companys wholly owned subsidiary, Navin Fluorine Advanced Sciences Limited, has begun its commercial production during the current year. Accordingly, variation has been noted in the above ratios as compared to the previous year.

ow we manage risks in our business

In the post pandemic scenario, risk management has become an essential part of our business management. The Board undergoes diligent processes for risk management, supported by internal controls, to make sure that the Company meets strategic objectives and the organisation is protected from adverse events.

At Navin Fluorine, we strive to emerge as a sustainable business company by recognizing potential risks and developing policies of risk management. Risk Management is a core component of how we execute and deliver our strategy. At Navin Fluorine, the e_cacy of risk management is determined by its well-defined processes and frameworks and is underpinned by robust governance, appropriate delegation of authority and supporting management information.

The thoroughness of the process has improved corporate sustainability. ence, risk management plays an important part of our corporate philosophy and how we execute our strategy.

Risk management organization, roles and responsibilities

At Navin Fluorine, our governance principles, including overall risk tolerance, are directed by the Board of Directors. specific function committees such as Risk Management Committee, Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee and Corporate Social Responsibility Committee which also includes Board

Members report their findings to the Board of Directors. As a governance initiative, we ensure that members within our risk management structure are well versed with our risk strategy and processes, ensuring complete transparency as well as improved ability to manage everyday risks.

Strategic implementation of the risk management cycle

The Company has nine functional Risk Management Committees throughout the organization for successful risk management. Risk identification, measurement, analysis and assessment; our risk reporting, limitation (reduction to a level we have deemed appropriate) and reviewing allow us to track our major risks.

Risk identification: With the help of relevant systems and indicators (quantitative component), risks are identified by your Company. Furthermore, internal reporting protocol allows executives to report risks as and when they identify it. Risk measurement: The Company frequently strengthens risk management tools in accordance with the business function. Risk is measured at the organisational and departmental level based on the insight of the risk of the department.

Analysis and assessment: A key objective of our risk management strategy is to refine financial performance. The financial performance of our Company replicates the productivity of our risk management strategy.

Risk reporting: The Company creates awareness by regularly evaluating and reporting the e_cacy of our risk management strategy to the Risk Management and other Committees, which allows the Company to invent and execute counter-risk strategies.

Internal control systems and their adequacy

The Companys internal control systems are e_ective and robust, ensuring that there is e_cient use and protection of resources and compliance with policies, procedures,

financial reporting and statutory requirements. There are well-documented guidelines, procedures and processes, integral to the overall governance, laws and regulations. All the Companys major business processes are well integrated and currently run on SAP. The Internal control systems of the Company are e_ective and adequate, commensurate with the size and complexities of its operations. These are regularly tested for e_ectiveness by the statutory as well as the internal auditors. An independent firm carries out the internal audit across the organisation. A well-established internal audit framework is in place which extensively covers all aspects of financial and operational controls, covering all business, locations and functions. The internal auditors review the adequacy, integrity and reliability of control systems and suggest improvements in its e_ectiveness. The e_ectiveness of the controls is mapped and scores are given based on control indices. The internal audit team conducts extensive reviews and process improvements identified during the reviews are communicated to the management on an on-going basis. Significant observations made by the internal auditors and the follow-up actions thereon are reported periodically to the Audit Committee of the Board of Directors. The Audit Committee monitors the implementation of the audit recommendations.

uman resource management

uman resource management plays a critical role in the Companys growth. The R teams, through a structured induction programme, help new joinees comprehend and uphold the organisational culture, engage, attract and retain employees and provide them invaluable knowledge while o_ering the ability to perform at their best.

The R team drives employee engagement and employee connect meetings, chaired by site heads and site R heads. In these interactions, there is free flow of dialogues wherein the Companys vision and future plans are discussed, employee concerns are addressed, new initiatives are planned, suggestions are shared and any other concerns are brought to a logical conclusion. The Company undertook regular training programs - mandatory safety and quality trainings (cGMP compliances), functional and technical skill enhancement trainings and statutory trainings covering POS (Prevention of Sexual arassment of Women at Workplace) to create awareness and enhance the skills of the employees. The Company has also undertaken leadership assessment trainings to prepare leaders and strengthen succession planning for critical roles. The Company, including its subsidiaries, employed 1,413 personnel as of March 31, 2023.

By order of the Board of Directors For NAVIN FLUORINE INTERNATIONAL LIMITED

Vishad P. Mafatlal

Chairman DIN: 00011350 Date: May 13, 2023 Place: Mumbai

Registered Office:

Office No. 602, 6th floor, Natraj by Rustomjee, Near Western Express ighway, 194, Sir Mathuradas Vasanji Road, Andheri (East), Mumbai 400069, India Tel: +91 22 6650 9999; Fax: +91 22 6650 9800 E-mail ID:; Website: CIN: L24110M1998PLC115499

Annexure 2