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Directors Report of Navin Fluorine International Ltd.

Mar 31, 2016

The Directors are pleased to present the Eighteenth Annual Report together with the audited accounts for the year ended 31st March 2016.

1. FINANCIAL RESULTS:

(Rs, in lacs)

Operating Income 63,624 54,612

Other income (including non-recurring income) 2,469 2,664

EBITDA 14,084 8,996

less: Depreciation 2,092 1,864

Interest 32 324

Tax 3,025 1,870

Profit After Tax 8,647 4,938

add: Surplus brought forward from the previous year 32,827 30,427

Amount available for appropriation 41,474 35,200

Appropriation:

Transfer to general reserve - 494

dividend 978 733

Proposed final dividend 1,077 830

Corporate dividend tax 418 316 Surplus carried to Balance Sheet 39,001 32,827

Note: Figures are regrouped wherever necessary to make the information comparable.

2. DIVIDEND

The Company paid an interim dividend of Rs, 10/- per share on 97,79,497 equity shares of nominal value of Rs, 10/- each, aggregating to Rs, 977.95 lacs in the month of October 2015. The Board of Directors is pleased to recommend a final dividend for the year of Rs, 11/- per share on 97,87,297 equity shares of nominal value of Rs, 10/- each, aggregating to Rs, 1,076.60 lacs.

3. YEAR IN RETROSPECT

The Company has registered a Revenue of Rs, 63,624 lacs during the year vs. Rs, 54,612 lacs achieved during F. Y 2014- 15 i.e. a growth of 17% year on year. The growth in Top Line is principally driven by Refrigerant Gases, Specialty Chemicals & Contract Research & Manufacturing Services (CRAMS) Businesses.

Exports Turnover delivered a significant growth of 47% year on year, from Rs, 19,549 lacs in F. Y. 2014-15 to Rs, 28,751 lacs during the current year, predominantly fuelled by Specialty Chemicals and CRAMS Businesses. Domestic Sales remained more or less flat during the year.

Refrigerant Gases business grew from Rs, 19,487 lacs in F. Y. 2014-15 to Rs, 21,696 lacs during the year, a growth of 11% year on year. It contributed around 33% of overall Turnover of which, Exports contribute roughly 38%. Despite the seasonal nature of the product, Refrigerant Gases Business fared well on the domestic front on account of milder winters during the October-December quarter. However, this was marred by some headwinds in exports side of the business on account of quota renewal challenges in the Middle East as well as Foreign Exchange constraints for imports imposed in a few countries.

Specialty Chemicals business grew from Rs, 21,512 lacs in F. Y. 2014-15 to Rs, 23,875 lacs during the current year, growth of 11% year on year. It contributed around 38% of overall Turnover, of which, Exports contribute roughly 46%. This Business witnessed slower off take from global agrochemical majors as well as domestic pharma companies. However, ongoing efforts on creating a diversified portfolio of products, customers and markets enabled to offset such impact to a significant extent. Here, the focus continues to be on investing in research & development towards building a strong product portfolio with niche fluorochemicals, along with widening the reach to new customers and new markets.

CRAMS business grew almost threefold, albeit on a small base, to Rs, 8,654 lacs during the year from Rs, 3,099 lacs in F.Y. 2014-15. It contributed roughly 14% of overall Turnover for the year vis-a-vis 6% contribution in last year. The new cGMP manufacturing plant at Dewas has gone on stream as per plan. Numerous Customer Audits have been successfully completed during the year, enhancing confidence in the Business''s capability to build and operate a world class cGMP facility.

Inorganic fluorides contributed Rs, 9,399 lacs i.e. 15% of overall sales. Growing acceptance of the products in overseas markets is offsetting the weak domestic demand. Exports contributed 11% of the sales of this Business..

EBIDTA for the year is Rs, 14,084 lacs, up from Rs, 8,996 lacs in F.Y. 2014-15, a growth of 57% year on year. EBIDTA Margin for the year is 21%, up from 16% in F. Y. 2014-15, i.e. an expansion of 500 basis points.

Profit before Tax (PBT) grew by 71% year on year, to Rs, 11,672 lacs in the current year, from Rs, 6,808 lacs in F. Y. 2014-15. PBT Margin recorded a growth of 50%, i.e. from 12% in F. Y. 2014-15 to 18% in the current year.

Profit after Tax (PAT) for the year stands at Rs, 8,647 lacs , up from Rs, 4,938 lacs in F. Y. 2014-15 i.e. a growth of 75% year on year. PAT margin for the current year is 13% vs. 9% in F. Y. 2014-15 i.e. a growth of 44% year on year.

Cost of key Raw Materials have exhibited a downward trend during the year with Sulphur, Fluorspar, Chloroform & Boric Acid prices softening in the range of 5%-15% year on year. Chloroform prices continue to be subject to volatility due to supply fluctuations. Price of Bromine has, however, shown a marginal uptrend during the year. There has been a devaluation of Indian Rupee vs. US Dollar of around 7% year on year. The Company continues to import Fluorspar from diverse regions as part of supply chain security to de-risk dependence on a single source / geography.

On the energy cost front, cost of power has gone up by around 5% year on year. Non-availability of exchange traded power from other States to Southern Gujarat, continues to be a challenge. Prices of natural gas has however shown a downturn of around 18% year on year, on account of weak global cues.

Indian Rupee has devalued during the year, by around 7% vs. US Dollar. The GB Pound exchange rate remained flat year on year, whereas the Euro exchange rate has shown some appreciation by around 6% year on year. However, the Company being a net exporter, with exports predominantly executed in US Dollars; the weakening Indian Rupee has helped in higher export realisation during the year. The Exchange Loss of Rs, 114 lacs shown under Other Expenses, is on account of timing difference of foreign exchange transactions and their realisation & /or restatement.

There is an increase in the net working capital of the Company by around Rs, 816 lacs year on year, predominantly on account of Receivables due to higher sales towards the end of the year. Inventories have been maintained more or less at the same level of last year through effective planning & control. Net working capital management continues to be a key focus for the Company and the level of net working capital is in line with the scope & scale of operations of the Company and is well within acceptable industry benchmark.

The Company has reinforced focus on improving tree cash flow efficiency of the enterprise on a sustainable basis and has a commendable Treasury Income. The Company has been successful to secure an upgrade in it''s Basel II Credit Rating from "CARE AA-" in F.Y. 2014-15 to "CARE AA" during the year , signifying high degree of safety regarding timely servicing of financial obligations and very low credit risk, for borrowings with a tenure of more than one year and fund based facilities. The rating for short term facilities with a tenure of less than a year is maintained at "CARE A1 ", indicating very strong degree of safety regarding timely servicing of financial obligations and lowest credit risk. During the year, the Company has obtained "CARE A1 " rating for issuance of Standalone Commercial Papers, to the extent of Rs, 3,000 lacs.

The Company acquired the balance 49 % equity in subsidiary in the U.K., Manchester Organics Limited (M.O.L.) at an aggregate price of GBP 6.30 million, through its 100% step down subsidiary, NFIL (UK) Limited, funded by GBP 2.58 m of own funds and GBP 3.2 M of Loan from HDFC Bank, Bahrain supported by SBLC from HDFC Bank, India. Such acquisition is in line with the Company''s strategy of further leveraging the combined scope & scale and complementing strengths of both the entities in the CRAMS space, especially in the areas of Business Development, Process Management and Delivery framework optimisation; with key focus in Europe and the U.S.

During the year, the Company entered into an agreement with Honeywell for a small scale manufacturing project for the new generation refrigerant gas HFO 1234 yf. HFO-1234yf is a next-generation hydrofluoro-olefin (HFO) refrigerant with GWP less than 1 and is a near drop-in replacement for R-134a, a hydrofluorocarbon (HFC) , for use in vehicle air conditioning systems globally. This agreement depicts Honeywell''s confidence in the Company''s capabilities in developing new generation Fluoro intermediates.

The Company continues to pursue an aggressive plan to improve operating efficiencies across its manufacturing and supply chain applications, which helped the Company improve its margins and secure deeper penetration in the market. During the year these initiatives were further consolidated. The top-line growth helped a better absorption of overheads contributing to the improvements in the operating margins and set-off increase in input costs.

Research & Development and Technology functions strived persistently through the year for improvement in productivity, quality and costs of various products to enable Businesses with a competitive offering on one hand and flexibility of sourcing to the supply chain function on the other.

The Company is fully committed to its responsibilities in health, safety and environmental (HSE) management and has continued to make sizable investments in HSE during the year. The Company is amongst very few Corporates in the country who has ''Responsible Care'' accreditation from the Indian Chemical Council. ''Responsible Care'' is the chemical industry''s unique global initiative that drives continuous improvement in health, safety & environment performance together with open and transparent communications with stakeholders. The logo is awarded in recognition of a Company''s commitment to sustainability. The Surat plant of the Company has been awarded with the "Silver Trophy" and a certificate by National Safety Council of India for commendable Occupational Safety & Health performance. It is the only manufacturing unit in this category in Gujarat to get this award during F. Y. 2015-16, which exemplifies the Company''s commitment towards safety. The Company continues to invest in HSE programmes across all its locations.

4. SUBSIDIARIES AND JOINT VENTURES

The Company has four subsidiaries and two Joint Ventures:

(i) Sulakshana Securities Limited (SSL), created to settle dues of the term lenders of Mafatlal Industries Limited (MIL), continued to remain a wholly-owned subsidiary of the Company. After settling all the third-party dues, SSL now is left with 1,455 Sq. Mtrs. of commercial floor space in Mafatlal Centre, Nariman Point, Mumbai and a significant portion of this property has been leased out on contemporary terms. SSL is utilizing its current cash flows to repay its debt to the Company. During the year Rs, 260.07 lacs has been repaid by SSL and its current outstanding to the Company is Rs, 2,010 lacs.

(ii) The Company held 51% of the ordinary voting shares of Manchester Organics Limited (MOL), a specialized chemicals research Company in Runcorn, U.K. In October, 2015, the Company acquired balance 49% in MOL through NFIL (UK) Ltd., a 100% step-down subsidiary created for the purpose. During the year MOL reported a turnover of Rs, 4,485 lacs and a profit before tax of Rs, 246 lacs.

(iii) Some of the key raw materials for our specialty and CRAMS business are procured from China. The quality and the cost of these material make a significant impact on various value added products being made by the Company and therefore It was thought fit to have a strategic presence closer to the source. In view of the foregoing, it was thought prudent to have a permanent representation in China. Accordingly, a trading outfit by the name of Navin Fluorine (Shanghai) Co. Ltd. (which is a wholly owned foreign enterprise under Chinese Laws) has been incorporated. The total capital investment over a period of 20 years is proposed to be RMB 12.50 Million (Approx Rs, 1,283 lacs).

(iv) During the year a 100% step-down subsidiary by the name of NFIL (UK) Ltd was formed to acquire the balance shareholding of 49% from the shareholders of Manchester Organics Ltd. The transaction for acquisition was completed in the month of October, 2015 at an aggregate price of GBP 6.30 million.

(v) The Company has subscribed to 25% of the initial equity share capital of Swarnim Gujarat Fluorspar Private Limited. It is a Joint Venture (JV) with Gujarat Mineral Development Corporation Limited (GMDC) and Gujarat Fluorochemicals Limited (GFL) formed for the purpose of beneficiation of fluorspar ores to be supplied by GMDC from its mines. The entire quantity of the finished product viz. acid grade fluorspar will be bought out by the Company and GFL. This is a feedstock de-risking initiative for long term fluorspar supply assurance, the most critical raw material of the Company. The JV is yet to start its operations.

(vi) The Company has entered into a Joint Venture (JV) agreement with Piramal Enterprises Limited (PEL) and accordingly a Company by the name of Convergence Chemicals Private Limited (CCPL) has been formed to leverage the Company''s rich legacy in fluorine chemistry and the deep outreach of the JV partner in the healthcare space. PEL holds 51% and the Company owns 49% of the equity share capital of CCPL. The Company is currently conducting trial run of the product and the final product is under approval with the customer. Post receipt of such approvals, full scale commercial production and sale is expected to commence during the year.

The Accounts of all the above subsidiaries and joint ventures have been considered in the consolidated financial results of the Company.

The financial position of each of the said six Companies is given in the Notes to Consolidated Financial Statements.

The Company does not have any material subsidiary. Policy on material subsidiary is available on weblink http://www. nfil.in/policy/index.html The audited accounts of the subsidiary companies are placed on the Company''s website and the same are open for inspection by any member at the Registered Office of the Company on any working day between 2.00 p.m. and 4.00 p.m. and the Company will make available a copy thereof to any member of the Company who may be interested in obtaining the same.

5. REPORTS ON MANAGEMENT DISCUSSION ANALYSIS AND CORPORATE GOVERNANCE

As required under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), Management Discussion and Analysis and Corporate Governance Report are annexed as Annexure 1 and Annexure 2 respectively to this Report.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

At Navin Fluorine International Ltd. (a part of Arvind Mafatlal Group), fulfilling CSR is a way of life. Arvind Mafatlal Group has been implementing a range of CSR activities over the last fifty one years, in areas like poverty alleviation, healthcare, education, women''s welfare etc. in rural India.

Pursuant to the provision of Section 135 of the Companies Act, 2013 ("the Act") read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. Shri H.A. Mafatlal is the Chairman of the Committee and Shri S. G. Mankad, Shri H.H. Engineer and Shri V.P. Mafatlal are the other members of the Committee. The CSR Policy formulated by the Board based on the recommendations of the CSR Committee is available on weblink http://www.nfil.in/policy/index.html The amount required to be spent on CSR activities during the year under report in accordance with the provisions of Section 135 of the Act is Rs, 141.84 lacs and the Company has spent Rs, 194.81 lacs during the current financial year (as against Rs, 131.73 lacs during the previous year). Thus, the Company has spent more amount on CSR activities than legally mandated. The requisite details on CSR activities pursuant to Section 135 of the Act and as per Annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed as Annexure 3 to this Report.

7. INDUSTRIAL RELATIONS

The relationship with the workmen and staff remained cordial and harmonious during the year and the management received full cooperation from the employees.

During the year, extensive training and developmental activities were undertaken, both in-house and out-bound for the employees. Various efficiency and quality improvement initiatives, including some functional and behavioral training programs were undertaken. The total number of employees as on 31st March 2016 was 686.

8. INSURANCE

The properties and insurable assets and interests of the Company, like building, plant and machinery and stocks, among others, are adequately insured.

9. EMPLOYEE STOCK OPTION SCHEME 2007

During the year 30,023 Stock Options were granted to the employees out of the unallotted options under the employees Stock Option Scheme 2007. Pursuant to the provisions of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines 1999, as amended, the details of stock options as on 31st March 2016 under the "Employee Stock Option Scheme 2007" are annexed as Annexure 4 to this Report.

10. DIRECTORATE

Pursuant to the provisions of the Companies Act, 2013, Shri V.P. Mafatlal retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re- appointment.

11. EXTRACT OF THE ANNUAL RETURN:

Extract of the Annual Return for the Financial Year ended on 31st March, 2016 as required by Section 92(3) of the Companies Act, 2013 and Rules 12(1) of the Companies (Management & Administration), Rules 2014 is Annexed as Annexure 5 to this Report.

12. NUMBER OF BOARD MEETINGS:

During the year the Board of Directors met seven times. The details of the Board Meetings held are provided in the Corporate Governance Report.

13. DIRECTORS RESPONSIBILITY STATEMENT:

As required under the provisions of Section 134 of the Companies Act, 2013, your Directors report that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

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

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

(e) The Directors have laid down internal financial controls (as required by Explanation to Section 134(5)(e) of the Act) to be followed by the Company and such internal financial controls are adequate and are operating effectively.

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

14. DECLARATION BY INDEPENDENT DIRECTORS:

The following Directors are independent in terms of Section 149(6) of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:

i) Shri T.M.M. Nambiar

ii) Shri P.N. Kapadia

iii) Shri S.S. Lalbhai

iv) Shri S.M. Kulkarni

v) Shri S.G. Mankad

vi) Shri H.H. Engineer

vii) Smt. R.V. Haribhakti

The Company has received requisite declarations/ confirmations from all the above Directors confirming their independence.

15. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:

The requisite details as required by Section 134(3)(e), Section 178(3) & (4) and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 are annexed as Annexure 6 to this Report.

16. AUDITORS REPORT:

There are no qualifications, reservations or adverse remarks or disclaimers made by the Auditors in their report on the Financial Statements of the Company for the Financial Year ended 31st March, 2016.

17. CHANGES IN KEY MANAGERIAL PERSONNEL:

The Board of Directors at its meeting held on 29th June, 2015 appointed Shri Sitendu Nagchaudhuri as Chief Financial Officer of the Company w.e.f. 8th July, 2015 in place of Shri Partha Roychowdhury. The Directors place on record their appreciation for the contribution made by Shri Roychoudhury during his tenure.

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT:

Particulars of loans given and of the investments made by the Company as at 31st March, 2016 are given in the Notes forming part of the Financial Statements. During the Financial Year under review, the Company made the following investments:

(a) 25,84,000 equity shares of £ 1/- each of NFIL (UK) Ltd.

(b) 12,22,919 equity shares of RMB 1/- each of Navin Fluorine (Shanghai) Co. Ltd.

(c) 49,00,000 equity shares of Rs,10/- each in Convergence Chemicals Pvt. Ltd.

The Company also made investments in schemes of various mutual funds aggregating to Rs, 17,346.55 lacs and during this period realized Rs, 17,280.65 lacs on redemption of units of various mutual funds and debentures. During the year under review, no new loans were given by the Company.

19. SECRETARIAL AUDIT REPORT:

Pursuant to Section 204(1) of the Companies Act, 2013, the Secretarial Audit Report for the Financial Year ended 31st March, 2016 given by Shri Manuprasad Patel, Practicing Company Secretary is annexed as Annexure 7 to this Report.

20. RELATED PARTY TRANSACTIONS:

All related party transactions that were entered into during the year under report were on an arm''s length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company during the year. Related Party Transactions Policy is available on weblink http//www.nfil.in/policy/index.html.

21. STATEMENT OF COMPANY''S AFFAIRS:

The state of the Company''s affairs is given under the heading "Year in Retrospect" and various other headings in this Report and in Management Discussion and Analysis Report which is annexed to the Directors'' Report.

22. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors'' Report.

23. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE:

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required, to be disclosed in terms of Section 134 of the Act, read with The Companies (Accounts) Rules, 2014, is annexed as Annexure 8 to this Report.

24. RISK MANAGEMENT POLICY:

The Company has a structured risk management policy. The risk management process is designed to safeguard the organization from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventorised and integrated with the management process such that they receive the necessary consideration during the decision making. It is dealt with in greater details in the Management Discussion and Analysis section.

25. ANNUAL PERFORMANCE EVALUATION:

In compliance with the provisions of the Companies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the performance evaluation was carried out as under:

Board:

In accordance with the criteria suggested by The Nomination and Remuneration Committee, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of the Board as a whole based on various criteria. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory.

Committees of the Board:

The performance of the Audit Committee, the Corporate Social Responsibility Committee, the Nomination and Remuneration Committee and the Stakeholders Relationship Committee was evaluated by the Board having regard to various criteria such as committee composition, committee processes, committee dynamics etc. The Board was of the unanimous view that all the Committees were performing their functions satisfactorily and according to the mandate prescribed by the Board under the regulatory requirements including the provisions of the Act, the Rules framed thereunder and the Listing Agreement/ SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Individual Directors:

(a) Independent Directors: In accordance with the criteria suggested by The Nomination and Remuneration Committee, the performance of each independent director was evaluated by the entire Board of Directors (excluding the director being evaluated) on various parameters like preparedness, participation, value addition, focus on governance and communication. The Board was of the unanimous view that each independent director was a reputed professional and brought his / her rich experience to the deliberations of the Board. The Board also appreciated the contribution made by all the independent directors in guiding the management in achieving higher growth and concluded that continuance of each independent director on the Board will be in the interest of the Company.

(b) Non-Independent Directors: The performance of each of the non-independent directors (including the Chairperson) was evaluated by the Independent Directors at their separate meeting. Further, their performance was also evaluated by the Board of Directors. The various criteria considered for the purpose of evaluation included transparancy, business leadership, people leadership, focus on governance, communication, preparedness, participation and value addition. The Independent Directors and the Board were of the unanimous view that each of the non- independent directors was providing good business and people leadership

26. DEPOSITS:

The Company has not accepted or continued any public deposits as contemplated under Chapter V of the Act.

27. DISCLOSURE UNDER SECTION 197(12) AND RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

The requisite details relating to ratio of remuneration, percentage increase in remuneration etc. as stipulated under the above Rules are annexed as Annexure 9 to this Report.

28. DISCLOSURE UNDER RULE 5(2) AND 5(3) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

The requisite details relating to the remuneration of the specified employees covered under the above Rules are annexed as Annexure 10 to this Report.

29. ORDERS BY REGULATORS, COURTS OR TRIBUNALS:

No significant and/or material orders were passed by any regulator or court or tribunal impacting the going concern status and the Company''s operations in future.

30. INTERNAL FINANCIAL CONTROLS:

The existing internal financial controls are commensurate with the nature, size, complexity of operations and the business processes followed by the Company. They have been reviewed and found satisfactory by the Management on the following key control matrices:

a. Entity level controls;

b. Financial controls; and

c. Operational controls

which included authority and organization matrix, standard operating procedures, risk management practices, compliance framework within the organization, ethics and fraud risk management, management information system, self-assessment of control point, business continuity and disaster recovery planning and budgeting systems etc.

31. AUDITORS:

At the 16th Annual General Meeting held on 25th June, 2014, the members approved appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, Vadodara (Registration No.117364W) to hold office from the conclusion of the 16th Annual General Meeting until the conclusion of the 19th Annual General Meeting, (subject to ratification of the appointment by the Members, at every Annual General Meeting held after the 16th Annual General Meeting) on such remuneration as may be fixed by the Board, apart from reimbursement of out of pocket expenses as may be incurred by them for the purpose of audit.

In accordance with Section 139 of the Act, Members are requested to ratify the appointment of the Auditors for the balance term to hold office from the conclusion of the 18th Annual General Meeting till the conclusion of the 19th Annual General Meeting. The specific notes forming part of the accounts referred to in the Auditors'' Report are self- explanatory and give complete information.

32. COST AUDITORS:

As per the requirements of Section 148 of the Act, read with The Companies (Cost Records and Audit) Rules, 2014, the Audit of the Cost Accounts relating to Chemical products is being carried out every year. The Board of Directors have, based on the recommendation of the Audit Committee appointed Shri B. C. Desai, Cost Auditor, Ahmedabad (Membership No. M-1077) to audit the cost accounts of the Company for the year 2016-17 from 1st April 2016 to 31st March 2017 on a remuneration of Rs, 3,50,000. As required under the Act, necessary resolution seeking Member''s ratification for the remuneration payable to Shri B.C. Desai is included as item No. 5 of the Notice convening the 18th Annual General Meeting. The Cost Audit Report in respect of Financial Year 2015-16 will be filled on or before the due date i.e. 27th September 2016.

33. APPRECIATION:

The Directors wish to place on record their appreciation of the devoted services of the employees, who have largely contributed to the efficient management of your Company. The Directors also place on record their appreciation for the continued support from the shareholders, the lenders and other associates.

For and on behalf of the Board,

Place: Mumbai H.A. Mafatlal

Dated: 30th April, 2016 Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to present the Seventeenth Annual Report together with the audited accounts for the year ended 31st March 2015.

1. financial results

(Rs. in lacs) Current year previous year

operating income 54612 44914

other income (including non- recurring income) 2664 2936

EBiDTA 8996 9007

less: Depreciation 1864 2055

Interest 324 540

Tax 1870 1346

Profit after tax 4938 5066

add: Surplus brought forward from the previous year 30427 27695

Amount available for appropriation 35200 32762

Appropriation:

Transfer to general reserve 494 507

Interim dividend 733 732

Proposed final dividend 830 830

Corporate dividend tax 316 265

Surplus carried to Balance sheet 32827 30427

Note: Figures are regrouped wherever necessary to make the information comparable.

2. DIVIDEND

The Company paid an interim dividend of Rs. 7.50 per share on 97,69,797 equity shares of nominal value of Rs. 10/- each, aggregating to Rs. 732.73 lacs in the month of october 2014. The Board of Directors is pleased to recommend a final dividend for the year of Rs. 8.50 per share on 97,69,797 equity shares of nominal value of Rs. 10/- each, aggregating to Rs. 830.43 lacs.

3. YEAR IN RETRoSPECT

operating profits for the year increased by 20% over that of the previous year while the profit before tax (PBT) increased by 6% from Rs. 6,412 lacs (including a write-back of Rs. 380 lacs) in FY14 to Rs. 6,808 lacs during the year under review. Profit after tax (PAT) at Rs. 4,938 lacs in the current year marginally declined by 3% from Rs. 5,066 lacs in FY14.

The increase in operating profit has been mainly driven by deeper market penetration leading up to higher volumes and capacity utilisation. The marginal decline in PAT is primarily on account of recent changes in the tax laws. Until FY14 surpluses arising from certain class of investments maturing between one and three years could avail indexation benefits and a lower rate of long term capital gains tax. In the current fiscal these incomes have become taxable at the full marginal rate. The Company has a substantial income from this stream. Hence, the adverse change in taxation increased the effective tax rate for the Company in the current year thereby reducing the PAT.

During the year the Non-CER turnover reached an all-time high of Rs. 54,612 lacs, a growth of 22% over the previous year''s Rs. 44,914 lacs driven by the refrigerant, specialty and the contract research and manufacturing services (CRAMS) businesses. Inorganic fluorides registered a 7% decline in the top line. The details have been discussed in the management discussions & analysis section of this annual report.

Exports at Rs. 19,785 lacs, posted a healthy year-on-year growth of 45% over Rs. 13,518 lacs of the previous fiscal. Inorganic fluoride exports doubled during the year to reach up to 10% of the total inorganic fluoride sales and improve capacity utilisation. The domestic business grew at 12% as the robust growths in refrigerants and specialties were partially off-set by a muted inorganic fluorides sales.

The specialties and CRAMS are expected to be the growth drivers while refrigerant (HCFC 22) is already into its first year of phase-down under the Montreal Protocol.

During the year, the costs of key raw materials moved in mixed directions. The Company continued to use diverse sources for fluorspar (the most important raw material which is fully imported) and achieved an overall savings of 10% in comparison to the previous year''s cost despite a steady decline in the value of Indian Rupee against the US Dollar. Sulphur and chloroform, the other critical raw materials experienced strong inflationary trends exerting stress on the margins across product-lines. Sulphur price witnessed a sharp 30% increase and price of Chloroform has more than doubled in comparison to FY14. The key raw materials will continue to remain expensive in the near future except for fluorspar which is expected to remain stable.

The energy cost at Surat, Gujarat has been 27% higher than that of the previous year. Natural gas cost for the Company increased by 11% in the current fiscal compared to that of the previous year despite weak global prices. The other adverse factor has been non-availability of exchange traded power from other states, in South Gujarat.

The new port at Hazira, 30 kms. from Surat, has been in operation since last year. Given the fact that 34% of the Company''s turnover comes from exports and 66% of the raw material are imported, the nearness to an all weather port brings in a permanent cost advantage to the Company.

The Company is a net exporter. The INR to USD exchange moved in a bandwidth of 10% during the year with the Indian Rupee getting weaker which helped the export realisations. However, INR gained against both the British Pound (GBP) and Euro during the year by ~ 10% and 20% respectively. The exchange loss of Rs. 95 lacs booked in other expenses is on account of timing differences between the actual foreign currency transactions and their realisation or re-statements.

As you are aware, during the previous fiscal, the Company implemented an aggressive plan to improve the operating efficiencies across its manufacturing and materials management functions which helped the Company improve its margins and get more aggressive in growing the volumes, both in the domestic and international markets. During the year, these initiatives were further consolidated. The top-line growth helped a better absorption of overheads contributing to the improvements in the operating margins.

A Capex of Rs. 6,000 lacs is underway at Dewas, MP which is the hub of our Crams activities. The facility will come on stream in the first half of the FY16. This is the largest dedicated contract manufacturing set-up of the Company, ready to manufacture a diversified range of fluorinated molecules for its CRAMS customers in a cGMP environment. So far more than 40 molecules have been worked on and delivered to more than 20 global pharma majors. It is also in the process of reaching out to markets in the US West coast, Western Europe and Japan by having direct representations in those geographies in addition to the strong presence of Manchester organics Limited (MOL) in the UK. The NFIL-MOL integration has also worked well and helped gain a higher share in the CRAMS universe of fluorinated molecules.

Through the year the technology teams worked hard to improve productivity, quality and costs of various products to offer a competitive marketing edge to the businesses on one hand and flexibility of sourcing to the supply chain team on the other.

During the year, a conservative inventory policy for raw materials was followed in order to remain closer to the market prices of all the key raw materials and access the resultant movement in the finished product prices. There has been increase in receivables, inventories and payables. The overall net working capital increased by Rs. 916 lacs. The working capital remains an area of key management attention and the levels are well within acceptable industry norms.

The company maintained a good financial health with a sizeable treasury income. The Basel II rating of the Company is maintained at ''CARE AA-'' (indicating high degree of safety regarding timely servicing of financial obligations and very low credit risk) for borrowings with a tenure of more than one year and fund-based facilities. The rating for short-term facilities (less than one year) has been maintained at ''CARE A1 '' (indicating very strong degree of safety regarding timely servicing of financial obligations and lowest credit risk) for its non-fund based facilities. During the year the Company received a ''CARE A1 '' rating for issuance of unsecured commercial papers to the extent of Rs. 2,000 lacs.

The Company is fully committed to its responsibilities in health, safety and environmental (HSE) management and has continued to make sizable investments in HSE during the year. The Company received ''Responsible Care'' logo certification from the Indian Chemical Council. ''Responsible Care'' is the chemical industry''s unique global initiative that drives continuous improvement in HSE performance together with open and transparent communications with stakeholders. The logo is awarded in recognition of a company''s commitment to sustainability. With this the Company joins an exclusive club of chemical companies in India who have been awarded the privilege to use this logo.

During the year the Company''s facility at Surat received various HSE awards and recognitions and letters of appreciation from the Government of Gujarat, National Safety Council, etc. The Company run several in-house HSE awareness programmes at all its locations.

4. SUBSIDIARIES AND JOINT VENTURES

The Company has two subsidiaries and two Joint Ventures:

(i) Sulakshana Securities Limited (SSL), created to settle dues of the term lenders of Mafatlal Industries Limited (MIL), continued to remain a wholly-owned subsidiary of the Company. After settling all the third-party dues, SSL now is left with 1,455 Sq. mtrs. of commercial floor space in Mafatlal Centre, Nariman Point, Mumbai and a significant portion of this property has been leased out on contemporary terms. SSL is utilizing its current cash flows to repay its debt to the Company. During the year Rs. 337.16 lacs has been repaid by SSL and its current outstanding to the Company is Rs. 2,200 lacs.

(ii) The Company holds 51% of the ordinary voting shares of Manchester Organics Limited (MOL), a specialized chemicals research company in Runcorn, U.K. During the year MOL reported a turnover of Rs. 4,868 lacs and a profit before tax of Rs. 817 lacs and its accounts have been considered in the consolidated results of the Company.

(iii) The Company has subscribed to 25% of the initial equity share capital of Swarnim Gujarat Fluorspar Private Limited. It is a Joint Venture (JV) with Gujarat Mineral Development Corporation Limited (GMDC) and Gujarat Fluorochemicals Limited (GFL) formed for the purpose of beneficiation of fluorspar ores to be supplied by GMDC from its mines. The entire quantity of the finished product viz. acid grade fluorspar will be bought out by the Company and GFL. This is a feedstock de-risking initiative for long term fluorspar supply assurance, the most critical raw material of the Company. The JV is yet to start its operations. Its final accounts for the year ended 31st March 2015 have been considered in the consolidated results of the Company.

(iv) During the year, the Company entered into a Joint Venture (JV) agreement with Piramal Enterprises Limited (PEL) and accordingly a company by the name of Convergence Chemicals Private Limited (CCPL) has been formed to leverage the Company''s rich legacy in fluorine chemistry and the deep outreach of the JV partner in the healthcare space. PEL holds 51% and the Company owns 49% of the equity share capital of CCPL. Its final accounts for the year ended 31st March 2015 have been considered in the consolidated results of the Company.

The financial position of each of the said four Companies is given in the Notes to Consolidated financial statements.

The Company does not have any material subsidiary. Policy on material subsidiary is available on weblink http://www. nfil.in/policy/index.html

The audited accounts of the subsidiary companies are placed on the Company''s website and the same are open for inspection by any member at the Registered Office of the Company on any working day between 2.00 p.m. and 4.00 p.m. and the Company will make available a copy thereof to any member of the Company who may be interested in obtaining the same.

5. REPORTS ON MANAGEMENT DISCUSSION ANALYSIS AND CORPORATE GOVERNANCE

As required under the Listing Agreement with Stock Exchanges ("Listing Agreement"), management discussion and analysis and corporate governance report are annexed as Annexure 1 and Annexure 2 respectively to this Report.

6. CORPORATE SOCIAL RESPONSIBILITY (CSR)

At Navin Fluorine International Ltd. (a part of Arvind Mafatlal Group), fulfilling CSR is a way of life. Arvind Mafatlal Group has been implementing a range of CSR activities over the last fifty years, in areas like poverty alleviation, healthcare, education, women''s welfare in rural India, etc.

Pursuant to the provision of Section 135 of the Companies Act, 2013 ("the Act") read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company has constituted a CSR Committee. Shri H. A. Mafatlal is the Chairman of the Committee and Shri S. G. Mankad, Shri H.H. Engineer and Shri V. P. Mafatlal are the other members of the Committee. The Board of Directors, based on the recommendations of the Committee, formulated a CSR Policy encompassing the Group''s and the Company''s philosophy for describing its responsibility as a Corporate citizen, laying down the guidelines and mechanisms for undertaking socially relevant programmes for welfare and sustainable development of the community at large. CSR Policy is available on weblink http://www.nfil.in/policy/ index.html

The amount required to be spent on CSR activities during the year under report in accordance with the provisions of Section 135 of the Act is Rs. 300.29 lacs and the Company has spent Rs. 131.73 lacs during the current financial year (as against Rs. 34.60 lacs during the previous year). The shortfall in the spend during the year under report is intended to be utilized in a phased manner in future, upon identification of suitable projects within the Company''s CSR Policy. The requisite details on CSR activities pursuant to Section 135 of the Act and as per Annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed as Annexure 3 to this Report.

7. INDUSTRIAL RELATIONS

The relationship with the workmen and staff remained cordial and harmonious during the year and the management received full co- operation from the employees. During the year, a three years wage settlement was reached with the union at Bhestan, which came into effect from 1st April 2013.

During the year, extensive training and developmental activities were undertaken, both in-house and out-bound for the employees. Various efficiency and quality improvement initiatives, including some functional and behavioral training programs were undertaken. The total number of employees as on 31st March 2015 was 641.

8. INSURANCE

The properties and insurable assets and interests of the Company, like building, plant and machinery and stocks, among others, are adequately insured.

9. EMPLOYEE STOCK OPTION SCHEME 2007

During the year 86,700 Stock Options were granted to the employees out of the unalloted options under the employees Stock Option Scheme 2007. Pursuant to the provisions of Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines 1999, as amended, the details of stock options as on 31st March, 2015 under the "Employee Stock Option Scheme 2007" are annexed as Annexure 4 to this Report.

10. DIRECTORATE

Pursuant to the provisions of the Act, Shri S.S. Khanolkar retires by rotation at the ensuing Annual General Meeting, and being eligible, offers himself for re-appointment. Shri S.S. Khanolkar has been re-appointed as Managing Director for a period of five years with effect from 1st January, 2016, subject to approval of the Members at the ensuing Annual General Meeting.

The Board of Directors has appointed Smt. R.V. Haribhakti as an Additional Director w.e.f. 30th July, 2014. She will hold Office up to the ensuing Annual General Meeting, of the Company and being eligible, offers herself for re- appointment. Notice under Section 160 of the Act, has been received by the Company from a Member, signifying his intention to propose the candidature of Smt. R.V. Haribhakti as an Independent Director of the Company.

Shri A.K. Srivastava, retires as Finance Director with effect from 30th April, 2015. The Board wishes to place on record, its sincere appreciation for the services rendered by Shri A.K. Srivastava during his tenure as Finance Director of the Company. The Board of Directors has appointed Shri A.K. Srivastava as an Additional Director w.e.f. 1st May, 2015. He will hold office up to the ensuing Annual General Meeting of the Company, and being eligible, offers himself for re- appointment. Notice under Section 160 of the Act, has been received by the Company from a Member, signifying his intention to propose the candidature of Shri A.K. Srivastava as a Director of the Company.

11. extract of the annual RETURN

Extract of the Annual Return for the Financial Year ended on 31st March, 2015 as required by Section 92(3) of the Act is annexed as Annexure 5 to this Report.

12. NUMBER OF BOARD MEETINGS

During the year the Board of Directors met seven times. The details of the Board Meetings are provided in the Corporate Governance Report.

13. DIRECTORS RESPONSIBILITY STATEMENT

As required under the provisions of Section 134 of the Act, your Directors report that:

(a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures.

(b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for that period.

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

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

(e) The Directors have laid down internal financial controls (as required by Explanation to Section 134(5)(e) of the Act) to be followed by the Company and such internal financial controls are adequate and are operating effectively.

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

14. DECLARATION BY INDEPENDENT DIRECTORS

The following Directors are independent in terms of Section 149(6) of the Act and Clause 49 of the Listing Agreement:

i) Shri T.M.M. Nambiar

ii) Shri P.N. kapadia

iii) Shri S.S. Lalbhai

iv) Shri S.M. kulkarni

v) Shri S.G. Mankad

vi) Shri H.H. Engineer

vii) Smt. R.V. Haribhakti

The Company has received requisite declarations/ confirmations from all the above Directors confirming their independence.

15. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The requisite details as required by Section 134(3)(e), Section 178(3) & (4) and Clause 49 of the Listing Agreement are annexed as Annexure 6 to this Report.

16. AUDITORS REPORT

There are no qualifications, reservations or adverse remarks or disclaimers made by the Auditors in their report on the Financial Statements of the Company for the Financial Year ended 31st March, 2015.

17. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT Particulars of loans given and of the investments made by the Company as at 31st March, 2015 are given in the Notes forming part of the Financial Statements. During the Financial Year under review, the Company made investments by way of subscribing to equity shares of the face value of Rs. 10/- each at par as under:

(a) 2,94,04,900 equity shares of Rs. 10/- each of Convergence Chemicals Pvt. Ltd.

(b) 10,70,000 equity shares of Rs. 10/- each of Swarnim Gujarat Fluorspar Pvt. Ltd.

The Company also made investments in schemes of various mutual funds aggregating to Rs. 9,885.12 lacs and during this period realized Rs. 15,694.90 lacs on redemption of units of various mutual funds and debentures. During the year under review, no new loans were given by the Company.

18. SECRETARIAL AUDIT REPoRT

Pursuant to Section 204 of the Act, the Secretarial Audit Report for the Financial Year ended 31st March, 2015 given by Shri Manuprasad Patel, Practising Company Secretary is annexed as Annexure 7 to this Report.

As regards the observations made in the said Secretarial Rudit Report, regarding shortfall in the spend on CSR activities, explanation is given in this Directors'' Report under the heading "Corporate Social Responsibility".

19. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the year under report were on an arm''s length basis and in the ordinary course of business. There are no materially significant related party transactions made by the Company during the year. Related Party Transactions Policy is available on weblink http://www.nfil.in/policy/index.html

20. STATE OF COMPANY''S AFFAIRS

The state of the Company''s affairs is given under the heading "Year in Retrospect" and various other headings in this Report and in Management Discussion and Analysis Report which is annexed to the Directors'' Report.

21. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year to which the financial statements relate and the date of this Directors'' Report.

22. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required, to be disclosed in terms of Section 134 of the Act, read with The Companies (Accounts) Rules, 2014, is annexed as Annexure 8 to this Report.

23. RISK MANAGEMENT POLICY

The Company has a structured risk management policy. The Risk management process is designed to safeguard the organisation from various risks through adequate and timely actions. It is designed to anticipate, evaluate and mitigate risks in order to minimize its impact on the business. The potential risks are inventorised and integrated with the management process such that they receive the necessary consideration during decision making. It is dealt with in greater details in the management discussion and analysis section.

24. ANNUAL PERFORMANCE EVALUATION

In compliance with the provisions of the Act and Clause 49 of the Listing Agreement, the performance evaluation was carried out as under:

Board:

In accordance with the criteria suggested by The Nomination and Remuneration Committee, the Board of Directors evaluated the performance of the Board, having regard to various criteria such as Board composition, Board processes, Board dynamics etc. The Independent Directors, at their separate meetings, also evaluated the performance of the Board as a whole based on various criteria. The Board and the Independent Directors were of the unanimous view that performance of the Board of Directors as a whole was satisfactory.

Committees of the Board:

The performance of the Audit Committee, the Corporate Social Responsibility Committee, the Nomination and Remuneration Committee and the Stakeholders Relationship Committee was evaluated by the Board having regard to various criteria such as committee composition, committee, processes, committee dynamics etc. The Board was of the unanimous view that all the committees were performing their functions satisfactorily and according to the mandate prescribed by the Board under the regulatory requirements including the provisions of the Act, the Rules framed thereunder and the Listing Agreement.

Individual Directors:

(a) Independent Directors: In accordance with the criteria suggested by The Nomination and Remuneration Committee, the performance of each independent director was evaluated by the entire Board of Directors (excluding the director being evaluated) on various parameters like engagement, leadership, analysis, decision making, communication, governance and interest of stakeholders. The Board was of the unanimous view that each independent director was a reputed professional and brought his/her rich experience to the deliberations of the Board. The Board also appreciated the contribution made by all the independent directors in guiding the management in achieving higher growth and concluded that continuance of each independent director on the Board will be in the interest of the Company.

(b) Non-Independent Directors: The performance of each of the non-independent directors (including the chair person) was evaluated by the Independent Directors at their separate meeting. Further, their performance was also evaluated by the Board of Directors. The various criteria considered for the purpose of evaluation included leadership, engagement, transparency, analysis, decision making, functional knowledge, governance and interest of stakeholders. The Independent Directors and the Board were of the unanimous view that each of the non-independent directors was providing good business and people leadership

25. DEPoSITS

The Company has not accepted or continued any public deposits as contemplated under Chapter V of the Act.

26. DISCLoSURE Under SECTIoN 197(12) And rule 5(1) of the companies (appointment and remuneration of managerial personnel) RULES, 2014

The requisite details relating to ratio of remuneration, percentage increase in remuneration etc. as stipulated under the above Rules are annexed as Annexure 9 to this Report.

27. DISCLoSURE UNDER RULE 5(2) AND 5(3) OF THE companies (appointment and remuneration of MANAGERIAL PERSoNNEL) RULES, 2014

The requisite details relating to the remuneration of the specified employees covered under the above Rules are annexed as Annexure 10 to this Report.

28. orders by regulators, courts or tribunals

No significant and/or material orders were passed by any regulator or court or tribunal impacting the going concern status and the Company''s operations in future.

29. internal financial controls

The existing internal financial controls are commensurate with the nature, size, complexity and the business processes followed the Company. They have been reviewed and found generally satisfactory by an independent expert on the following key control matrices:

a. Entity level controls

b. Financial controls and

c. operational controls

which included authority and organization matrix, standard operating procedures, risk management practices, compliance framework within the organization, ethics and fraud risk management, management information system, self assessment of control point, business continuity and disaster recovery planing, budgeting system, etc.

30. AUDIToRS

At the 16th Annual General Meeting held on 25th June, 2014, the members approved appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, Vadodara (Registration No.117364W) to hold office from the conclusion of the 16th Annual General Meeting until the conclusion of the 19th Annual General Meeting, (subject to ratification of the appointment by the Members, at every Annual General Meeting held after the 16th Annual General Meeting) on such remuneration as may be fixed by the Board, apart from reimbursement of out of pocket expenses as may be incurred by them for the purpose of audit.

In accordance with Section 139 of the Act, Members are requested to ratify the appointment of the Auditors for the balance term to hold office from the conclusion of the 17th Annual General Meeting till the conclusion of the 19th Annual General Meeting. The specific notes forming part of the accounts referred to in the Auditors'' Report are self- explanatory and give complete information.

31. cost auditors

As per the requirements of Section 148 of the Act, read with The Companies (Cost Records and Audit) Rules, 2014, the Audit of the Cost Accounts relating to Chemical products is being carried out every year. The Board of Directors have, based on the recommendation of the Audit Committee, appointed Shri I.V Jagtiani, Cost Auditor, Mumbai (Membership No. M-997) to audit the cost accounts of the Company for the year 2015-16 from 1st April 2015 to 31st March 2016 on a remuneration of Rs. 3.50 lacs. As required under the Act, necessary resolution seeking member''s ratification for the remuneration payable to Shri I.V. Jagtiani is included as item Number 8 of the Notice convening the 17th Annual General Meeting. The Cost Audit Report in respect of Financial Year 2014-15 will be filed on or before the due date i.e. 27th September 2015.

32. APPRECIATION

The Directors wish to place on record their appreciation of the devoted services of the employees, who have largely contributed to the efficient management of your company. The Directors also place on record their appreciation for the continued support from the shareholders, the lenders and other associates.

For and on behalf of the Board,



Place : Mumbai H.A. Mafatlal Dated : 28th April, 2015 Chairman


Mar 31, 2013

To, The Members of Navin Fluorine International Limited

The Directors are pleased to present the Fifteenth Annual Report together with the audited accounts for the year ended 31 March, 2013.

1. FINANCIAL RESULTS Rs. in lacs

Operating Income 52469 70386

Other income (including non-recurring income) 1385 9101

EBIDTA 9428 34071

Less: aepreciation 1961 1773

Interest 610 354

Tax 2541 8820

Profit After Tax 4316 23124

Add: Surplus brought forward from the previous year 25518 13223

Amount available for appropriation 29834 36347

Appropriation Transfer to general reserve 432 2320

Interim Dividend 732 830

Proposed Final Dividend 732 634

Proposed Special Dividend - 5857

Corporate Dividend Tax 243 1188

Surplus carried to Balance Sheet 276951 25518

Note: Figures are regrouped wherever necessary to make the information comparable.

2. DIVIDEND

Your Company paid an interim dividend of Rs. 7.50 per share on 97,61,097 equity shares of nominal value of Rs.10/- each, aggregating to Rs. 732.08 lacs in the month of October 2012. The Board of Directors is pleased to recommend a final dividend for the year of Rs. 7.50 per share on 97,61,097 equity shares of nominal value of Rs. 10/- each, aggregating to Rs. 732.08 lacs.

3. YEAR IN RETROSPECT

Revenue from operations declined by 25% from Rs. 70386 lacs to Rs. 52469 lacs during the year. Though the Specialty business grew by 13% over the previous year and the Contract Research and Manufacturing (CRAMS) business grew by six times over the previous year, they were not enough to offset the decline in income from carbon credits from Rs. 25190 lacs to Rs. 5711 lacs. Due to lower income from carbon credits and reversal of provision with regard to non-current investment in the previous year of Rs. 7493 lacs, profit before tax declined by 79% from Rs. 31944 lacs to Rs. 6858 lacs and profit after tax declined by 81 % from Rs. 23124 lacs to Rs. 4316 lacs as compared to the previous year.

During the year there has been a dramatic change in the economic and regulatory environment within the European Union which was the primary market for the carbon credits generated by the company. Henceforth, carbon credits generated from destruction of Hydro fluorocarbons are not allowed to be used as a carbon offset instrument within the European Union. Further, as a consequence of lower economic activity within the European Union, the demand for carbon credits sharply declined bringing the value down to a near zero.

The weakening of the rupee against the US Dollar continued to put inflationary pressures on the economy for the second consecutive year. From a level of Rs. 49 to a US dollar in 2012, it weakened to a level of Rs. 54/55 during the last half of the current fiscal year. Inflation also remained at a fairly high level during the year. The compounded effect resulted in stagnation of govt, spends, low capex and the depressed consumer demand resulting into weakening of overall demand pull for the products of the Company.

As you are aware, the company decided to get into the global Contract Research and Manufacturing Services (CRAMS) space three years back and some initial investments were made to that end. During the year these investments have started bearing their first fruits and the revenues from this business has come along the lines of the business plan. The Contract Research Organisation (CRO) built in Surat has supported the contract manufacturing operations at Dewas as per the business plan. Manchester Organics Limited (MOL), our subsidiary in the U.K. has been an integral part of the overall CRAMS strategy of the Company. The CRO at Surat, the Contract Manufacturing Operations (CMO) at Dewas and MOL has been able to work in a well co-ordinated manner to deliver the desired objectives. During the year the company partnered with several global pharma majors in their respective R&D initiatives. In the coming years a significant growth is expected from this vertical both by improving capacity utilization and through additional capex spends.

Five new products have been introduced in the Bulk and Specialty businesses during the year for seeding the markets. We expect good potential upsides from these products in the coming years.

The Refrigerant Gases business has been under severe price pressures. This has been further accentuated by the mismatch in the movement of inputs cost and prevailing market prices of the finished products. The Bulk Fluorides business retained a steady performance along with the lines of the previous year.

As you are aware, the prices of some of the major raw materials of the Company e.g. fluorspar and chloroform increased substantially during the second half of the last fiscal and part of the inventories were carried forward into the current fiscal. This, along with weakening of the Rupee against the USD for the second consecutive year, impacted the margins of the Company adversely. As a matter of procurement strategy, now the Company has decided to reduce the inventory levels and move on to contracting smaller parcel sizes with its major suppliers.

The Rupee depreciation also resulted into higher fuel cost. There has been a more than 20% rise in the price of natural gas which travelled farther to depress the margins. Part of this negative has been made up by reducing the overall cost of power by participation in power trading, thereby moving on to sources which are cheaper than the local grid power.

The company maintained a good financial health with a sizeable treasury income. The Basel II rating of the Company is maintained at ''CARE AA-'' (indicating high degree of safety regarding timely servicing of financial obligations and very low credit risk) for borrowings with a tenure of more than one year and fund-based facilities. The rating for short-term facilities (less than one year) has been maintained at ''CARE A1 '' (indicating very strong degree of safety regarding timely servicing of financial obligations and lowest credit risk) for its non-fund based facilities.

The Company is fully committed to its responsibilities in health, safety and environmental (HSE) management and has continued to make sizable investments in HSE during the year.

During the year, the Company embarked on the "Responsible Care" an internationally acclaimed comprehensive Health, Safety and Environment (HSE) initiative which once implemented, will take the Company to an elite club of community, climate and nature conscious organizations.

The Company is conscious about its social responsibilities and during the year, it started a mobile medical facility for the neighboring areas in Surat. During the year, it also participated in supporting and upgrading a school for physically challenged children in Surat.

4. SUBSIDIARY AND ASSOCIATES

Sulakshana Securities Limited (SSL), created through the Sanctioned Scheme of Rehabilitation (SS) of Mafatlal Industries Limited (MIL) to settle dues of the term lenders of MIL, continued to remain a wholly-owned subsidiary of your Company.

The Company holds 51% stake in Manchester Organics Limited (MOL), an operating specialised chemical research company in Runcorn, U.K. Its accounts have been considered in the consolidated results of the Company.

As per the general exemption granted under Section 212(8) of the Companies Act, 1956, by the Government of India, Ministry of Corporate Affairs, New Delhi vide its General Circular No.2/2011, dated 8 February, 2011, Balance Sheet and Profit and Loss Account, Directors'' Report and the Auditors'' Report of the subsidiary companies have not been attached with the Balance Sheet of the Company.

However, other details required to be given as per the said General Circular No.2/2011, dated 8 February, 2011 have been disclosed in the Annual Report.

The Annual Accounts and related information of the subsidiary companies are open for inspection by any member/investor at the Registered Office of the Company on any working days between 2.00 p.m. and 4.00 p.m. and the Company will make available these documents/ details upon request by any member of the Company who may be interested in obtaining the same. The annual accounts and related information of the subsidiary company are also available on the Company''s website.

Your Company holds 43% of the equity share capital of Mafatlal Denim Limited (MDL) which is its only associate company. The Board of Directors of the Company at its meeting held on 17 December, 2012 consented to the Scheme of Arrangement and Amalgamation inter-alia, of MDL with Mafatlal Industries Limited, the appointed date being 1 April, 2012. On the said Scheme becoming effective, Mafatlal Denim Limited will cease to be an Associate. Consent of the Hon''ble High Courts of Gujarat and Bombay for the Scheme of Arrangement and Amalgamation was received on 8 April, 2013 and 26 April, 2013 respectively and will be filed with the Registrar of Companies shortly. As the substantive requirements of the amalgamation process have been completed, financials of Mafatlal Denim Limited have not been consolidated in the current year.

Pursuant to the agreement entered into by the Company with the Gujarat Mineral Development Corporation Limited (GMDC) and Gujarat Fluorochemicals Limited (GFL), Swarnim Gujarat Fluorspar Private Limited, a Joint Venture company (JV), has been incorporated during the year for beneficiation of fluorspar ore to be supplied by GMDC to ensure long term supply of fluorspar, which is a key raw material of the Company. The Company has subscribed to 25% of the initial equity share capital by payment of Rs. 1.25 lacs. The JV is to yet start its operations and the final accounts have not been prepared as on 31 March, 2013. No significant impact is expected on the revenue, expenses, assets and liabilities in consolidated accounts of the Company.

5. INDUSTRIAL RELATIONS

There were cordial and harmonious industrial relations during the year and the management received full cooperation from the employees. The long term wage settlement at Bhestan has expired on 31 March, 2013 and has been taken up by both the management and the employees for re-negotiation in a spirit of cooperation.

During the year, extensive training and developmental activities were undertaken, both in-house and out-bound for the employees. Various efficiency and quality improvement initiatives, including some functional and behavioral training programs were undertaken. The total number of employees as on 31 March, 2013 was 594.

6. INSURANCE

The properties and insurable assets and interests of your Company, like building, plant and machinery and stocks, among others, are adequately insured.

7. PARTICULARS OF EMPLOYEES

Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this report and will be sent on demand to the shareholders. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary.

8. ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required, to be disclosed in terms of Section 217(1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed hereto and forms part of this report.

9 . EMPLOYEE STOCK OPTION SCHEME 2007 Pursuant to the provisions of Guidelines 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines 1999, as amended, the details of stock options as on 31 March, 2013 under the "Employee Stock Option Scheme 2007" are set out in the Annexure to the Directors'' Report.

10. REPORTS ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

As required under the Listing Agreement with Stock Exchanges, reports on corporate governance as well as management discussion and analysis are attached and forms part of the Directors'' Report.

11. DIRECTORATE

The Board wishes to inform with profound grief, the sad and sudden demise of Shri R. Sankaran, a Director of the Company, on 28 February 2013. Shri Sankaran was associated with the Company since March 2007. The Board places on record its sincere appreciation of the invaluable and active contribution made by Shri Sankaran in the progress of the Company.

Shri H.A. Mafatlal has been reappointed as Chairman and Executive Director for a period of 5 years with effect from 1 May, 2013. Shri A.K. Srivastava has been reappointed as Whole Time Director designated as "Finance Director" for a period of 2 years with effect from 1 May, 2013. Both these reappointments are subject to approval of the members in the General Meeting. Accordingly the necessary approval of the members is sought at the ensuing Annual General Meeting. Shri S.M. Kulkarni and Shri S.G. Mankad both retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

12. DIRECTORS'' RESPONSIBILITY STATEMENT

As required under the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors report that:

i) In the preparation of the annual accounts, the applicable accounting standards were followed along with proper explanation relating to material departures

ii) The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent. The purpose was to give a true and fair view of the state of affairs of your Company and the profit of the Company at the end of the financial year.

iii) The Directors took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding your Company''s assets and for preventing and detecting fraud and other irregularities.

iv) The Directors prepared the annual accounts on a going concern basis.

13. AUDITORS

At the Annual General Meeting, members are requested to appoint Auditors for the current year and fix their remuneration. The specific notes forming part of the accounts referred to in the Auditors'' Report are self-explanatory and give complete information.

14. COST AUDITORS

As per the requirements of the Central Government and pursuant to the provisions of Section 233B of the Companies Act, 1956, the audit of the Cost Accounts relating to sulphuric acid is being carried out every year. The Company has appointed Shri I.V. Jagtiani, Cost Auditor, Mumbai to audit the cost accounts for the year 2012-13 from 1 April, 2012 to 31 March, 2013 for which necessary approval from the Central Government has been received. The Cost Audit Report in respect of Financial Year 2012-13 will be filed on or before the due date i.e. 27 September, 2013.

15. DONATION

During the year under review, the Company made donations of Rs. 5.22 crores for various charitable and other purposes.

16. APPRECIATION

The Directors wish to place on record their appreciation of the devoted services of the employees, who have largely contributed to the efficient management of your company. The Directors also place on record their appreciation for the continued support from the shareholders, the lenders and other associates.

For and on behalf of the Board,

H.A. Mafatlal

Chairman

Mumbai

Dated: 30 April, 2013


Mar 31, 2012

To The members of Navin Fluorine International Limited

The Directors are pleased to present the Fourteenth Annual Report together with the audited accounts for the year ended 31st March 2012.

1. Financial Results (Rupees in lacs)

Current year Previous Year

Operating Income 70386 43074

Other income (including non-recurring income) 9101 1039

EBIDTA 34071 12313

Less: Depreciation 1773 1355

Interest 354 360

Tax 8820 3434

Profit After Tax 23124 7164

Add: Surplus brought forward from the previous year 13223 8502

Amount available for appropriation 36347 15666 Appropriation

Transfer to general reserve 2320 716

Interim Dividend 830 656

Proposed Final Dividend 634 830

Proposed Special Dividend 5857 -

Corporate dividend tax 1188 241

Surplus carried to Balance Sheet 25518 13223

Note: Figures are regrouped wherever necessary to make the information comparable.

Fiscal 2012 has been significant in many ways;

- The Company achieved its highest ever sales and profits during the year.

- Money advanced to Mafatlal Industries Limited (MIL) and/or the group companies to support MIL's restructuring have been received back by the Company, including interest wherever applicable, except Rs. 3000 lacs which remained invested as on 31st March 2012 in the fully redeemable non- cumulative preference shares of MIL and which is expected to be redeemed soon.

As reported earlier, the Company invested in fully redeemable non-cumulative preference shares of MIL in the year 2004-05 pursuant to the order of the BIFR in the matter of MIL's financial restructuring. During the year 2010-11, MIL's net worth turned positive and it was out of the purview of BIFR. During the year, MIL redeemed such preference shares worth Rs. 3000 lacs (face value) as they could leverage the idle assets and improve liquidity. In view of the aforesaid, a provision of Rs. 5940 lacs made in an earlier year towards diminution in the value of investments in MIL preference shares has been written back as no longer required. Similarly, provisions made for Rs. 1552 lacs towards diminution in value of investments made in Mafatlal Denim Limited has also been written back as no longer required. On these two counts, the aggregate amount of Rs. 7493 lacs have been written back to the Profit & Loss Account of the Company.

2011-12 started on a high with strong demand pull from the FMCG, pharma, agro and chemical industries, both in and outside of India. However, as the year progressed, the financial crisis deepened in Europe, the US industry indicators continued to remain weak resulting in an overall slowdown in demand in those economies which finally impacted the finished product prices adversely, creating a price-cost imbalance in strategic raw materials.

In India, the weakening of the rupee put enormous inflationary pressures on the economy in the second half of the current year under review forcing the government to take fiscal measures which stagnated public spending, reduced capital and consumer spending which eventually resulted into weakening of overall market demand for the final products of the Company's customers. This in turn adversely impacted the Company's volumes and prices in the second half of the year.

The Indian rupee vis-a-vis the US $ started the year at 44.45 and was closely range-bound until September when it started weakening rapidly. It reached Rs. 54.26 by mid-December before starting to cool off only to reach 48.92 in the first week of February 2012. The Euro followed suit starting the year at 63.23 to a rupee, rising to 71.08 during the last week of November and coming down to 64.12 in February 2012.

Since December 2010, the issuance of carbon credits by the United Nations Framework Convention on Climate Change (UNFCCC) got regularized and no inordinate delays have been faced by the Company in the issuance of its carbon credits. However, as the financial crisis deepened and prolonged in the European Union, the primary market for carbon credits, the Certified Emission Reduction (CER) prices took a sharp hit coming down from Euro 12 per CER to a level of Euro 4 by December. No near term price correction is expected though the Company will be able to sell its full quantity of carbon credits generated till December 2012. It is now certain that the carbon credits generated by the Company, classified as CERs from industrial gases, will not be accepted as a carbon off-set instrument beyond May 2013 by the European Union Emission Trading Scheme, thereby severely restricting their marketability and value proposition.

The Company took several long-term, futuristic steps in the past three years by making sizable investments in:

- R&D and pilot plant

- Multi-product plant at Surat

- Contract Research Organization at Seurat

- Contract Research and Manufacturing Services (CRAMS) facility at Dewas

Following these significant investments and commissioning of the facilities, the Company is now ready to meet changing customer needs and provide flexible product mix from the enhanced process capabilities. This will also enhance the product pipeline for future growth of the Company.

On the 3rd May 2011, the Company made a strategic investment by taking a 51% stake in a research company called Manchester Organics Limited (MOL), in the U.K to derive value from their fluorine R&D which can eventually lead to scale-up operations in India. This will enhance presence of the Company among the R&D fraternities and customers in Europe and the United States. The integration between the Company and MOL is proceeding as per plan and the synergy advantages have already started to show up.

Your Company is alert to its responsibilities in health, safety and environmental management. The Company makes sizable investments in HSE year on year.

The rating of the Company has now been upgraded to 'CARE AA-'(indicating high degree of safety regarding timely servicing of financial obligations and very low credit risk) for borrowings with a tenure of more than one year and fund-based facilities. The rating for short-term facilities (less than one year) has been maintained at 'CARE A ' (indicating very strong degree of safety regarding timely servicing of financial obligations and lowest credit risk) for its non-fund based facilities.

During the year the Company acquired land from the Gujarat Industrial Development Corporation at Dahej for a consideration of Rs. 2596 lacs which also includes some basic land development costs. This land will be used for the future expansion plans of the Company which are currently under various stages of consideration.

During the year, the Company signed a Memorandum of Understanding (MOU) with Gujarat Mineral Development Corporation (GMDC) and Gujarat Fluorochemicals Limited (GFL) to enter into a Joint Venture for the beneficiation of fluorspar ore to be supplied by GMDC to ensure long term supply of fluorspar, which is a key raw material for the Company. It is expected to come on stream during the later part of 2012-13.

The strong cash flows during the year have been preserved and deployed in high yield, low risk financial instruments and bank fixed deposits.

During the year, residual debentures worth Rs.140 lacs were repaid and as on 31st March 2012 the Company has no long-term borrowing.

4. Subsidiary and Associates

Sulakshana Securities Limited (SSL), created through the Sanctioned Scheme of Rehabilitation (SS) of Mafatlal Industries Limited (MIL) to settle dues of the term lenders of MIL, continued to remain a wholly-owned subsidiary of your Company.

During the year, the Company acquired 5100 equity shares of £0.01 each (51% stake) in Manchester Organics Limited (MOL), a company in U.K. engaged in specialized chemical research.

Accordingly, from 3rd May 2011, the said MOL has become a subsidiary of your Company.

As per the general exemption granted under Section 212(8) of the Companies Act, 1956, by the Government of India, Ministry of Corporate Affairs, New Delhi vide its General Circular No.2/2011, dated 8th February 2011, Balance Sheet and Profit and Loss Account, Directors' Report and the Auditors' Report of the subsidiary companies have not been attached with the Balance Sheet of the Company.

However, other details required to be given as per the said General Circular No.2/2011, dated 8th February 2011 have been disclosed in the Annual Report.

The Annual Accounts and related information of the subsidiary companies are open for inspection by any member/investor at the Registered Office of the Company on any working days between 2.00 p.m. and 4.00 p.m. and the Company will make available these documents/ details upon request by any member of the Company who may be interested in obtaining the same. The annual accounts and related information of the subsidiary company are also available on the Company's website.

Your Company continues to hold 43% of the equity share capital of Mafatlal Denim Limited (MDL) which is its only associate company.

5. Industrial Relations

There were cordial and harmonious industrial relations during the year and the management received full cooperation from the employees.

During the year, extensive training and developmental activities were undertaken, both in-house and out-bound for the employees. Various efficiency and quality improvement initiatives were conducted including some functional and behavioral training programs. A new managerial performance system called Balanced Score Card has been introduced during the year to bring in higher levels of synergy among various functions and departments and align their goals and objectives to the broader organizational goals. The total number of employees as on 31st March, 2012 was 571.

6. Insurance

The properties and insurable assets and interests of your Company, like building, plant and machinery and stocks, among others, are adequately insured.

7. Particulars of Employees

Information as per Section 217 (2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 forms a part of this report and will be sent on demand to the shareholders. Any shareholder interested in obtaining a copy of the said statement may write to the Company Secretary.

8. Energy, Technology and Foreign Exchange

Additional information on conservation of energy, technology absorption, foreign exchange earnings and outgo as required, to be disclosed in terms of Section 217 (1)(e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is annexed hereto and forms part of this report.

9. Employee Stock Option Scheme 2007

Pursuant to the provisions of Guidelines 12 of the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme), Guidelines 1999, as amended, the details of stock options as on 31st March 2012 under the "Employee Stock Option Scheme 2007" are set out in the Annexure to the Directors' Report.

10. Reports on Corporate Governance and Management Discussion Analysis

As required under the Listing Agreement with Stock Exchanges, reports on corporate governance as well as management discussion and analysis are attached and forms part of the Directors' Report.

11. Directorate

Shri S. S. Lalbhai and Shri P. N. Kapadia both retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment.

12. Directors' Responsibility Statement

As required under the provisions of Section 217 (2AA) of the Companies Act, 1956, your Directors report that:

i) In the preparation of the annual accounts, the applicable accounting standards were followed along with proper explanation relating to material departures.

ii) The Directors selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent. The purpose was to give a true and fair view of the state of affairs of your Company and the profit of the Company at the end of the financial year.

iii) The Directors took proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding your Company's assets and for preventing and detecting fraud and other irregularities.

iv) The Directors prepared the annual accounts on a going concern basis.

13. Auditors

At the Annual General Meeting, members are requested to appoint Auditors for the current year and fix their remuneration. The specific notes forming part of the accounts referred to in the Auditors' Report are self-explanatory and give complete information.

14. Cost Auditors

As per the requirements of the Central Government and pursuant to the provisions of Section 233 B of the Companies Act, 1956, the audit of the Cost Accounts relating to sulphuric acid is being carried out every year. The Company has appointed Shri I.V. Jagtiani, Cost Auditor, Mumbai to audit the cost accounts for the year 2011-12 from 1st April 2011 to 31st March 2012 for which necessary approval from the Central Government has been received. The Cost Audit Report in respect of Financial year 2011-12 will be filled on or before the due date

i.e. 27th September, 2012.

15. Donation

During the year under review, the Company, as a settler, created Arvind Mafatlal Foundation for various public charitable objectives. During the year, in fulfillment of its Corporate Social Responsibilities, the Company made a donation of Rs.531.50 lacs for various charitable and other purposes.

16. Appreciation

The Directors wish to place on record their appreciation of the devoted services of the employees, who have largely contributed to the efficient management of your Company. The Directors also place on record their appreciation for the continued support from the shareholders, the lenders and other associates.

For and on behalf of the Board,

Mumbai, H. A. Mafatlal

Dated: 30th April 2012 Chairman

 
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