TRUST BUILDS FAITH LASTS VALUES ENDURE th 50 Annual Integrated Report | 2020-21 DEEPAK NITRITE LIMITED Contents CORPORATE OVERVIEW STATUTORY REPORTS 02 Deepak: 66 Management Discussion and Analysis An Organisation Trusted to Deliver 81 Notice 04 Trusted across 96 Directors’ Report Diversified Business Operations 133 Corporate Governance Report 06 Manufacturing Footprint 07 Responding with Grit FINANCIAL STATEMENTS in a Challenging Year Standalone 10 Depend on Deepak 158 Independent Auditor’s Report 12 Chairman and Managing Director’s Message 166 Balance Sheet 16 CEO’s Message 167 Statement of Profit and Loss 20 Executive Director’s Message 168 Cash Flow Statement 22 Value Creation Model 170 Statement of Changes in Equity 24 Strategic Priorities for Sustained 171 Notes forming part of the Value Creation Financial Statements 26 Stakeholder Engagement 28 Managing Material Matters Consolidated 218 Independent Auditor’s Report 30 Managing Risks 224 Balance Sheet 32 Financial Capital 225 Statement of Profit and Loss 33 CFO’s Communique 226 Cash Flow Statement 38 Manufactured Capital 228 Statement of Changes in Equity 42 Human Capital 229 Notes forming part of the 46 Intellectual Capital Financial Statements 48 Social and Relationship Capital 54 Natural Capital Investor Welfare Scheme 56 Building Trust and Driving Value Creation with Strong Governance 58 BOD Profiles 62 Awards & Accolades 64 Corporate Information Fiftieth Annual General Meeting Day & Date : Friday, July 30, 2021 Time : 11:30 A.M. Through Video Conferencing/Other Audio Visual Means Forward-looking Statements Certain statements in this Report relating to our business operations and prospects may be forward-looking statements. These statements can be identified by usage of words such as ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’, ‘intends’, ‘may’, ‘will’, ‘plans’, ‘outlook’ and other words of similar meaning in connection with a discussion of future operating or financial performance. Access a digital copy of this Report at: https://50thAnnualIntegratedReport.godeepak.com These forward-looking statements are dependent on assumptions, data or methods that may be incorrect or imprecise and hence may be incapable of being realised. Such statements do not guarantee future operating, financial and other results, but constitute our current expectations based on reasonable assumptions. The Company’s actual results could materially differ from those projected in any forward-looking statements due to various future events, risks and uncertainties some of which are beyond our control. We do Scan the above QR code to read this not assume any obligation to update or revise any forward-looking statements, whether as Report on your handheld device. a result of new information, future events or otherwise. 01-65 66-156 158-217 218-274 CORPORATE STATUTORY STANDALONE CONSOLIDATED OVERVIEW REPORTS FINANCIAL STATEMENTS FINANCIAL STATEMENTS Basis of Reporting REPORTING PRINCIPLE REPORTING PERIOD AND SCOPE The Annual Report is prepared in line with the Companies Act, The Report covers financial and non-financial information 2013 (and the Rules made thereunder), Indian Accounting and activities of Deepak Nitrite Limited and our wholly-owned Standards, SEBI (Listing Obligations and Disclosure Requirements) subsidiary Deepak Phenolics Limited for the period April 1, Regulations, 2015, Secretarial Standards and IIRC’s framework. 2020 to March 31, 2021. Material events, if any, up to Board Meeting held on May 5, 2021 have been covered in this Report, where relevant, pursuant to the statutory and regulatory requirements. OUR APPROACH TO ADOPTION OF IR The Integrated Report <IR> embraces the holistic reporting approach as suggested by the International Integrated OUR APPROACH TO MATERIALITY Reporting Council (IIRC) and the Securities and Exchange Board of India’s (SEBI) circular dated February 6, 2017. While <IR> is The determination of material matters takes into consideration not yet statutorily mandated, we, at Deepak, have voluntarily our operating context which includes the regulatory compliance commenced this journey as part of our constant endeavour requirements, industry trends and risk management. We have towards transparency and disclosures beyond statutory norms. identified issues that may impact our value creation across <IR> enhances and enriches reporting primarily due to its (i) wider financial, environmental and social dimensions. Our materiality focus on creating value for all stakeholders and (ii) utilisation matters are covered in detail on page no. 28. and interlinkages of multiple capitals in the value creation process. This Report has been prepared in accordance with the guiding principles laid down in the <IR> framework to present the non-financial data in a manner that is concise, comparable and enhances the value of the Report for all the stakeholders. INTRODUCTION TO THE SIX CAPITALS Pg. 32-37 Pg. 38-41 Pg. 42-45 Financial Capital Manufactured Capital Human Capital represents the funds (equity, debt, represents our various plants and represents our motivated and reinvestment) that we deploy in our factories, machinery and equipment, committed employees whose skills, activities and operations to grow warehouses and facilities as well as all and knowledge help drive our business and generate surplus funds. physical assets that are used to produce businesses and create value for all chemical products and by-products. our stakeholders. Pg. 46-47 Pg. 48-53 Pg. 54-55 Intellectual Capital Social and Relationship Capital Natural Capital represents our chemical knowledge, represents the lasting relationships represents the renewable and non- R&D and innovation capabilities and with our customers, vendors, partners, renewable natural resources that we technology investments that enable business associates, dealers and use and the environmental impact as a value creation and provide us a distributors, others, supply chain result of our operations. competitive edge in the industry. partners and the community which provide us social licence to operate. 50th Annual Integrated Report 2020-21 01 Deepak: An Organisation Trusted to Deliver Deepak is one of India’s leading and fastest- the manufacturing of downstream products growing chemical intermediates manufacturing for multiple sectors and play a crucial role in companies. During our five decades of driving nation’s development and meeting the existence, we have consistently delivered on needs of end consumers. We are building on the expectations of all stakeholders. We are this through continuous investment in research a preferred partner for leading downstream and development, modern technologies and companies across 30 countries in 6 continents, new capacities. who trust us for our quality, supply reliability, environmentally sustainable operations and ability to meet their evolving needs. Having presence in Basic Chemicals, Fine & Speciality, Performance Products and Phenolics (Phenol, Acetone & Iso-Propyl Alcohol), we Vision play an important role in our customers’ To become the FASTEST GROWING Indian chemical value chain. Our products find application in intermediates company. 02 Deepak Nitrite Limited 01-65 66-156 158-217 218-274 CORPORATE STATUTORY STANDALONE CONSOLIDATED OVERVIEW REPORTS FINANCIAL STATEMENTS FINANCIAL STATEMENTS Our Differentiators Brand equity World-class manufacturing Committed to ESG practices Leading producer of Inorganic facilities and product quality 12.85 million+ safe man hours Salts, Xylidines, Cumidines, 6 state-of-the-art manufacturing Touching lives of 2 million people Toluidines, Phenolics, IPA etc. facilities across Nandesari and Dahej through meaningful CSR activities in Gujarat, Roha and Taloja 50+ years of expertise Operational alignment to in Maharashtra, and Hyderabad Trusted supplier of choice for Responsible Care, Together for in Telangana around 500+ customers Sustainability and Nicer Globe Products accredited by Responsible Amongst Fortune Next 500 and Care certification 25 Top Wealth Creators as per Fortune India Magazine Right to win Strong intellectual capital Global presence Diversified and integrated portfolio More than 46% of employees with Presence across 30 countries in of 100+ value-added intermediates advanced degrees 6 continents High degree of competency, 70+ scientists capabilities and reputation across each of them Innovativeness Driving not just product Ownership Structure (%) ideas but also innovation in terms of processes towards maximisation 8.49 7.64 9.04 of growth. 22.31 19.52 20.29 23.51 27.15 25.81 Agility Responsiveness Change is constant. Towards employees, This equips the customers and all 45.69 45.69 44.85 organisation to Our other stakeholders. respond rapidly to Attributes this dynamic world. FY 2020-21 FY 2019-20 FY 2018-19 Promoter & Promoter Group Institutional Shareholders Outcome-driven Ownership Resident Individual Shareholders Rewarding performers Where the vision Others across verticals, thereby becomes not just the setting examples for company goal but the leadership. individual goal as well. 50th Annual Integrated Report 2020-21 03 Trusted across Diversified Business Operations We offer a wide range of products across our diversified yet integrated business segments that meet the stringent quality and sustainability norms of marquee customers across various sectors. We are a leading player in each of these segments with multiple enablers which we leverage to strengthen our competitive positioning. Basic Chemicals Fine & Speciality Chemicals