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Directors Report of Tamilnadu Petroproducts Ltd.

Mar 31, 2023

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

FINANCIAL RESULTS

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

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

HIGHLIGHTS OF OPERATIONS

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

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

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

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

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

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

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

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

FINANCIAL REVIEW

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

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

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

of the project helping in financial closure of these envisaged projects.

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

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

DIVIDEND

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

content/uploads/2021/07/Dividend-Distribution-Policv-2021.pdf.

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

INDUSTRY STRUCTURE AND DEVELOPMENTS

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

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

The Indian LAB sector began in 1978 with the opening of IPCL''s first LAB facility in Vadodara. Following which, Reliance Industries Limited (RIL) acquired IPCL. TPL, RIL, Nirma, and

IOC later had set up plants around India as the import substitution sector grew. However, due to globalization and legislative developments such as the Free Trade Agreement (FTA), the sector has faced stiff competition from imports primarily from Middle East, Thailand and China until last year. The expiration of anti-dumping charges against Iran, Qatar, and China has forced the industry to contend with severe competition from low-cost imports, which has affected the contribution margins during FY 2022-23.

The Indian government made BIS certification mandatory for LAB in the Indian market effective 3^rd April 2023. This has given temporary relief as low-cost LAB imports from Iran, China and Korea have not come in post implementation of BIS.

The global LAB market has reached approximately 4 million Tons and is expected to grow at a CAGR of 4.36% i.e., approximately 6.5 million Tonnes by 2032.

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

The UOP Technique, which is widely recognized as the best and most cost-effective technology has been applied by more than 95 percent of all LAB manufacturers, including TPL. Regardless, the cost of making LAB in India exceeds international standards due to the high cost of essential components and feedstock quality. Domestic firms with standalone units constantly struggle to compete with offshore suppliers and factories integrated with refineries, which allow them to achieve lower production costs.

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

It is available in two forms, liquid form which is called lye & solid form which is called Flakes

or pellets. Caustic soda is used to extract alumina from the bauxite ore.The product''s annual demand was stable. Despite the power-intensive process, national capacity utilization of the aggregate capacity of roughly 5 million tons are high and expected to further grow at a CAGR of 6.50% by FY2035.

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

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

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

OPPORTUNITIES AND THREATS

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

Your company is indirectly involved in the Fast-Moving Consumer Goods (FMCG) industry,

which remains one of our country''s most significant long-term sustainable business potential. Despite being one of the fastest growing FMCG markets in the world, India''s per capita FMCG consumption remains among the lowest in the world, providing a vast runway for growth. We operate in two key FMCG categories (detergent and dishwashing) and continue to be the lead player in South Indian market.

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

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

India is on a path towards sustainable and inclusive growth, and all businesses are required to conduct themselves properly. Our objective is to produce consistent, competitive, profitable, and responsible growth. Urban markets drove FMCG growth, aided by a return to normalcy in economic activity following a couple of years of COVID-induced disturbances.

We remained laser-focused on serving our customers'' increasing needs while also protecting our business model. As economic activity returned to normal after a couple of years of COVID, we saw consumers prioritise fundamentals above discretionary spending in a high inflationary environment. In the last three years, our Home Care business''s liquid detergent and dishwashing portfolio has been growing steadily.

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

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

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

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

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

OUTLOOKLAB

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

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

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

CAUSTIC SODA /CHLOR ALKALI

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

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

PROPYLENE OXIDE

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

RISK MANAGEMENT PROCESS

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

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

the Act, the Audit Committee also reviews the risk management process periodically.

RISKS AND CONCERNS

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

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

In the year 2020, NGT on Suo Motu basis registered a case against few industries situated at Manali (including your Company), based on the newspaper report published in November 2020 regarding emission from the industries affecting air quality in Manali, Chennai during the period April 2019 to December 2020. NGT vide its order dated 20.07.2023 had given certain directions/ recommendations to the industries at Manali, Tamilnadu Pollution Control Board and Central Pollution Control Board which includes collection of environmental compensation and creation of corpus fund for improvement of environmental

standards in Manali Industrial area. Your Company is addressing these issues and taking appropriate action in this regard. Your Company is in adherence to the prescribed environmental conditions and will continue to adhere the same.

SAFETY, HEALTH & ENVIRONMENT

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

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

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

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

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

New gas based CPP (2 X 7MW Engines) are being installed to reduce emission to new low level.

As part of National Safety Day (4^th March), various competitions were conducted for employees and other contractors to reiterate the Company''s commitment towards safety. Participation by employees and contractors were encouraging.

World Environment day is also celebrated every year and tree plantation programs are organized for planting saplings towards green initiative to promote carbon offset.

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

SUBSIDIARIES

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

Certus Investment and Trading Ltd

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

Certus Investment and Trading (S) Private Limited

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

As explained above, the subsidiaries were floated several years ago for specific purposes. Due to change in circumstances and also opportunities opening up in India, it is being examined if other opportunities would be available for the subsidiaries.

A decision on the usefulness of these subsidiaries would be taken in due course, after judiciously reviewing the situation.

HUMAN RESOURCES

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

The training needs of employees have been identified at regular intervals through performance appraisal systems and necessary training is being imparted through in-house and external programs.

The manpower strength as on 31^st March 2023 was 394.

BOARD OF DIRECTORS AND RELATED DISCLOSURES

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

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

The following changes took place in the composition of the Board since the date of last Annual General Meeting:

Mr. S Krishnan, IAS (DIN: 03439632) and Ms. Jayashree Muralidharan, IAS (DIN:03048710) nominees of TIDCO were appointed as Non-Executive Directors of the Company at the 37^th Annual General Meeting held on

29^th September 2022.

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

Declaration from Independent Directors:

All the Independent Directors (IDs) have submitted necessary declarations under Section 149(7) of the Act and Regulation 25(8) of the Listing Regulations. As per the said declarations, they meet the criteria of independence as per Section 149(6) of the Act

and the Listing Regulations. In the opinion of the Board, the IDs fulfil the conditions specified in the Act and the rules made thereunder for appointment as IDs including the integrity, expertise and experience and confirm that they are independent of the management. All the IDs have confirmed their registration with the Indian Institute of Corporate Affairs under Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014, as amended and all of them have been exempted from or passed the proficiency test.

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

KEY MANAGERIAL PERSONNEL

As on 31^st March 2023, Mr. D Senthi Kumar and Mr. KT Vijayagopal, Whole-time Directors and Ms. Sangeetha Sekar, Company Secretary were the Key Managerial Personnel of the Company.

During the year, Ms. Sangeetha Sekar was appointed as Company Secretary and Compliance Officer of the Company effective 6^th February 2023 in the place of Mr. V Balamurugan who ceased to be the Company Secretary and Compliance Officer effective close of business hours of 31^st January 2023.

ANNUAL EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

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

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

The evaluation of the two Executive Directors was done based on their assigned roles and

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

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

DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

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

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

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

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

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

CORPORATE GOVERNANCE

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

AUDITORS

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

SECRETARIAL AUDIT REPORT

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

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

MAINTENANCE OF COST RECORDS & COST AUDIT

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

M/s. M Krishnaswamy and Associates, Cost Accountants, Chennai have been appointed as the Cost Auditors of the Company for conducting

the audit of cost records for the financial year 2022-23 and 2023-24 on a remuneration of ? 2.75 lakh plus applicable taxes and duties (for each financial year) and they will hold office till submission of their Report or 30^th September of the respective year for which they are appointed, whichever is earlier.

As required under Section 148 of the Act, read with the relevant Rules, ratification of the remuneration to the Cost Auditor for the year 2022-23 and 202324 will be considered by the Members at the ensuing AGM of the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

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

CONSERVATION OF ENERGY AND OTHER DISCLOSURES

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

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

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

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

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

RELATED PARTY TRANSACTIONS

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

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

AUDIT COMMITTEE

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

VIGIL MECHANISM

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

ANNUAL RETURN

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

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

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

PARTICULARS OF EMPLOYEES AND OTHER DISCLOSURES

The disclosures prescribed under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure - IV to this Report. It is hereby affirmed that the remuneration to the employees is as per the remuneration policy of the Company.

CSR POLICY AND RELATED DISCLOSURES

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

BUSINESS RESPONSIBILTY ANDSUSTAINABILITY REPORT

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

Other Disclosures:

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

- There were no significant and material orders passed by any of the regulators / courts / tribunals impacting the going concern status and company''s operations;

Your Company has not accepted any deposits from the public during the year.

Acknowledgement

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

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

Disclaimer

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

Mar 31, 2018

Dear Shareholders,

The Directors have pleasure in presenting the Thirty Third Annual Report together with the Audited Financial Statements for the year ended 31^st March 2018. The Management Discussion & Analysis Report which is required to be furnished as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Listing Regulations) is also presented as part of the Directorsâ Report.

Economic Overview:

India has emerged as the fastest growing major economy in the world in the recent past. Though the GDP growth slowed down during the year under review to 6.5 percent lower than the previous yearâs 7.1 percent, it is expected to grow at 7.3 percent in 2018-19. Reports suggest that in the long run the overall consumption in India is expected to be four trillion $ by 2025 due to shift in consumer behavior and expenditure pattern.

With the effects of demonetization in 2016-17 and implementation of GST in 2017-18 having subsided, the growth prospects in the coming years appear to be bright. Further the focus on the rural economy in the budget for 2018-19 promises to increase the availability of disposable surplus in the hands of the consumers, which augurs well for fast moving consumer goods.

Company Performance:

During the year under review the net revenue from operations was Rs. 1048.90 crore Vis a Vis Rs. 888.85 crore in the previous year. Linear Alkyl Benzene (LAB) production was highest in the history of TPL and combined with improved performance of Heavy Chemicals Division (HCD), your Company could record better sales and profits.

FINANCIAL SUMMARY (STANDALONE OPERATIONS):

During the year under review your Company has prepared the financial statements under the Ind AS and the summary of the results are as shown below:

(Rs. In crore)

Description	2017-2018	2016-2017
Earnings Before Interest and	95.12	66.82
Depreciation
Interest	10.21	34.35
Depreciation	22.22	15.76
Exceptional Item	9.22	25.00
profit Before Tax	71.91	41.71
Tax expenses	25.20	32.41
profit after tax	46.71	9.30

From the above table it could be seen that the profitability improved significantly on account of the improved operational parameters.

Though crude prices continued to remain volatile ranging between USD 52 and USD 69 per barrel through better strategy and inventory management, the Company could achieve higher margins.

The Chlor Alkali Division producing Caustic Soda and Chlorine achieved a turnaround during the year, mainly on account of increased demand for both Caustic soda and chlorine. This coupled with higher realizations and improved plant efficiency helped in better performance.

The ECH plant remains shutdown since April 2013 on account of continuous losses incurred and the proposal for converting the facility for manufacture of Propylene Oxide (PO) is under implementation.

FINANCIAL REVIEW

Through prudent deployment of funds and optimum utilization of working capital limits, your Company could bring down the finance cost from Rs. 8.85 crore in 2016-17 to Rs. 4.87 crore in 2017-18. The figures reflected here exclude interest on tax demands which are grouped under Finance Costs as per Accounting Standards.

At present your Company has no long term debt and all the capex requirements are met from internal accruals. Based on the improved performance, CARE the credit rating agency has improved the Companyâs credit rating to BBB with outlook stable from BBB- (minus).

DIVIDEND

Your Companyâs performance has improved significantly during the year 2017-18 and it is viewed that it would be desirable to restart dividend to fulfill the expectations of the shareholders. Hence your Directors have recommended a dividend of 5% i.e fifty paise per equity share of Rs. 10/each fully paid up, for the year 2017-18, aggregating to Rs. 4.50 crore, excluding dividend distribution tax.

Details of loans, guarantees or investments

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to financial statements provided in this Annual Report.

Fixed Deposits

Your Company has not accepted any deposits from the public during the year under report.

Related Party Transactions

During the year under review, there were no transactions not at armsâ length within the meaning of Section 188 of the Companies Act, 2013 (âthe Actâ) or any material transactions with the related parties in terms of the policy framed by the Audit Committee of the Company as published in the website of the Company viz., http://tnpetro.com/corporate-governance-policies/.

Audit Committee

The details are furnished under the Corporate Governance Report (CGR) annexed to this Report. All the recommendations of the Committee were accepted by the Board.

Vigil Mechanism

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

Board of Directors and related disclosures

As at the year end, the Board comprised of ten directors of whom five were independent, including a woman director. All the Independent Directors have furnished necessary declarations under Section 149 (7) of the Act and as per the declarations they meet the criteria of independence as provided in Section 149 (6) of the Act.

The Board met four times during the year under review and the relevant details are furnished in the CGR.

The Board has approved the Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC) which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration is available in the website of the Company viz., http://tnpetro.com/corporate-governance-policies/.

The following changes took place in the constitution of the Board since the last Annual General Meeting (AGM)

- Mr T K Arun (DIN: 02163427) and Mr R. Karthikeyan (DIN: 00824621) nominees of TIDCO resigned on 9^th November 2017 and 3^rd January 2018 respectively.

- Mr. Ramesh Chand Meena, IAS (DIN: 08009394) was appointed as an Additional Director of the Company representing TIDCO on 16^th January 2018 and holds office till the ensuing AGM.

- M r. Atulya M isra, IAS (DIN: 02210369) resig ned as Chairman and Director effective 2^nd February 2018.

- Mr. K Gnanadesikan, IAS (DIN: 00111798) was appointed as an Additional Director and Chairman effective 6^th February 2018 and holds office till the ensuing AGM

- Mr. Kulbir Singh (DIN: 00204829) vacated office effective from 17^th November 2017 due to operation of law.

- Mr. S Visakan, IAS, (DIN: 06578414) was appointed as an Additional Director of the Company representing TIDCO on 5^th June 2018 and holds office till the ensuing AGM.

The Board wishes to place on record its appreciation to Mr. Atulya Misra, IAS, Mr T K Arun, Mr Kulbir Singh and Mr R Karthikeyan for their services during their tenure as Directors of the Company.

Proposals have been received for the appointment of Mr. Ramesh Chand Meena, IAS, Mr. K Gnanadesikan, IAS and Mr. S Visakan, IAS as Directors under Sec.160 of the Act at the ensuing AGM. Since their appointments have been recommended by the Nomination and Remuneration Committee, there is no requirement of security deposit for the above proposals. Proposal for approving the increased remuneration to Mr. D Senthikumar, the Whole-time Director (Operations) would be considered at the ensuing AGM for consideration and approval of the Members.

Ms. K Priya was appointed as the Company Secretary in the place of Mr. D. Hem Senthil Raj from 25^th September 2017.

In accordance with the provisions of the Act and Articles of Association of the Company, Mr. Ashwin C Muthiah, Director retires by rotation and being eligible offers himself for re-election at the ensuing Annual General Meeting of the Company.

Annual evaluation of the Board, Committees and Directors

The performance of the Board was evaluated taking the following aspects into account viz., Structure, Meetings, Functions, Risk Evaluation process adopted, grievance redressal mechanism, stakeholder value and responsibility corporate culture, ethics and other matters. Board also took into account facilitation of the Independent Directors to function independently and perform their roles as another important parameter for the evaluation.

The performance of each of the Committees was evaluated taking into account the clarity and disclosure of the composition, mandate & working procedures, effectiveness, structure and meetings, independence and contribution in decision making process.

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

In compliance with the requirements of Schedule VII to the Act and the Regulations, a separate meeting of the Independent Directors was held during the year at which the Directors evaluated the performance of the Non Independent Directors, the Chairman and also the adequacy of flow of information to the Board and Committees. No adverse comments have been made by the Independent Directors from the evaluation. directorsâ Responsibility statement

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

(a) in the preparation of the annual accounts for the financial year ended 31^st March 2018, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits of the Company for the year under review;

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

(d) the Directors had prepared the accounts for the financial year ended 31^st March, 2018 on a âgoing concernâ basis;

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

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

Corporate Governance

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

Auditors

M/s. R.G.N. Price & Co., Chartered Accountants, Chennai having Firm Registration No. 002785S was appointed as the auditors of the Company. As per the extant provisions of the Act, they will hold office for a period of five years till the conclusion of 37^th AGM to be held in the year 2022. The Audit Committee has recommended a remuneration of Rs. 20.00 lakh plus reimbursement of out of pocket expenses and applicable taxes for the audit of the accounts and all other related services as the Auditors of the Company for the year 2018-19 for approval of the Members at the ensuing AGM.

Secretarial Audit Report

The Report does not contain any qualification but a mention has been made about the Companyâs view on transfer of shares to IEPF under Section 124 of the Act. The Auditor also pointed out that there was a delay in remitting the unclaimed dividend for the year 2009-10.

Since no dividend was declared for five out of the consecutive seven years, it has been advised that the requirement to transfer of shares to IEPF under Section 124(6) of the Act is not applicable to the Company. The delay in transfer of unclaimed dividend to IEPF is attributable to the delay by the Bank in furnishing the requisite details of the dividend account for reconciliation and also in effecting the transfer. The Company has complied with the requirements of all the applicable Secretarial Standards.

Cost Audit

Pursuant to the provisions of Section 148 of the Act, the Board appointed M/s. Krishnaswamy & Co, Cost Accountants, the Cost Auditors of the Company for conducting the audit of cost records for the financial year 2017-18 on a remuneration of Rs. 2.00 lakh plus applicable taxes and reimbursement of out of pocket expenses. The Cost Auditor holds office till 27^th September 2018 or submission of his report for the year 2017-18, whichever is earlier.

As required under Section 148 of the Act, read with the relevant Rules, ratification of the remuneration to the Cost Auditor for the year 2017-18 will be considered by the Members at the ensuing AGM of the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

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

Conservation of Energy and other disclosures

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

Extract of Annual Return

The extract of the Annual Return in Form MGT-9 is given in Annexure IV to this Report.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company has in place a Committee for looking after the compliance under the provisions of Sexual Harassment at the Workplace Act and Rules 2013. During the year under review, there were no cases filed under the above Act.

Particulars of Employees and other disclosures

The disclosures prescribed under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure -V to this Report. It is hereby affirmed that the remuneration to the employees are as per the remuneration policy of the Company.

CSR POLICY AND RELATED DISCLOSURES

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

ACKNOWLEDGEMENT

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

DISCLAIMER

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

For and on behalf of the Board of Directors

D Senthikumar KT Vijayagopal

5^th June 2018 DIN: 00202578 DIN: 02341353

Chennai - 600 068 Wholetime Director (Operations) Wholetime Director (Finance)

Mar 31, 2017

The Directors have pleasure in presenting the Thirty Second Annual Report on the business and operations of the Company and the audited Statement of Accounts for the year ended 31^st March 2017.

FINANCIAL SUMMARY (STANDALONE OPERATIONS):

(INR In crore)

OPERATIONAL HIGHLIGHTS AND PRODUCT-WISE PERFORMANCE

During the year under review revenue from operations was Rs,1010.54 crore vis a vis Rs,793.55 crore in FY 2015-16. Operating profit for the year was at Rs, 67.06 crore compared to previous year figure of Rs,12.76 crore. Significant improvement in Operating profit was achieved mainly on account of managing optimum production, maintaining near zero inventory level of finished goods and reduction of costs through Normal Paraffin capacity revamp. Net profit for the year was at Rs,9.55 crore Vis a Vis Rs,38.15 crore in the previous year. It may be recalled that the profit for the year 201516 included exceptional items such as sale of property. Further the profit for the year under review is lower due to higher tax provision relating to earlier years.

Crude prices continued to remain volatile ranging from USD 55 per barrel to USD 45 per barrel impacting the top line as well the raw material costs. However through better strategy the Company managed to achieve higher margins compared to the previous year.

Linear Alkyl Benzene (LAB) product currently contributes to almost 90% of revenues for the Company and continuous efforts are put in to improve both on production and marketing fronts. The Phase II of Normal Paraffin (NP) revamp work was completed in October 2016 which helped in increasing the feed processing rate and improved NP production.

The Chlor Alkali Division producing Caustic Soda and Chlorine had to be operated at a reduced load mainly on account of lower demand and disposal issues of Chlorine. Various cost cutting measures have been taken to bring down the cost of production. Despite the Chlor alkali divisionâs operation remaining at lower levels, the caustic production was still 24% higher than the previous year.

During the month of December 2016, cyclonic storm âVardhaâ hit Chennai causing damages. Aportion of the roof sheets and insulation material in the columns were blown off in the factory. Many trees were uprooted causing obstruction to normal movement for a few days. Consequent to this, the Chlor Alkali division had to be shut-down for nearly 10 days due to non availability of power. However, LAB plant was operated at a lower capacity using captive power generators. The Company has made appropriate insurance claims for the damages..

ECH to PO Conversion:

The operation of ECH plant remains shut down since April 2013 on account of continuous losses incurred. As indicated in the earlier yearsâ reports, steps have been taken to utilize the existing facilities available in the ECH Plant for manufacture of Propylene Oxide (PO), which is the input for Polyols. Environment Clearance form Ministry of Environment, Forest and Climate Change (MOEFCC) has already been obtained and Consent to Establish (CTE) has also been received from Tamilnadu Pollution Control Board (TNPCB).

The Basic Engineering and detailed engineering work has been completed. At present, civil works are in progress at the site. A project subcommittee has been constituted by the Board to monitor the progress of the project and aid in reduction of cost and timely completion. The project is expected to be commissioned by the end of the financial year 2017-18.

Financial Review

During the year while the finance cost for operations was much lower at Rs,8.62 crore against the previous year,sRs,14.74 crore. However, the total finance cost is higher due to provision for interest on income tax relating to earlier years.

The company has been reaffirmed with ratings of CARE BBB-signifying âlow credit riskâ for long-term bank facilities and shortterm bank facilities with outlook stable and this is expected to improve further considering the performance achieved during the year.

DIVIDEND

In order to conserve resources, the Board of Directors had not recommended any dividend for the financial year 2016-17.

The training needs of employees have been identified at regular intervals through performance appraisal systems and necessary training is being imparted through in-house and external programmes.

The manpower strength as on 31^st March 2017 was 368.

Details of Loans, guarantees or investments

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to financial statements provided in this Annual Report.

Fixed Deposits

Your company has not accepted any deposits from the public during the year under report.

Particulars of contracts or arrangements made with related parties

During the year under review, there were no transactions with related parties referred to in Section 188(1) of the Companies Act, 2013. The policy on transactions with related parties framed by the Audit Committee of the Company is published in the website of the Company viz.,http://tnpetro.com/corporate-governance-policies/.

Audit Committee

The details are furnished under the Corporate Governance Report (CGR) annexed to this Report. All the recommendations of the Committee were accepted by the Board.

Vigil Mechanism

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

Risk Management Policy

The Company has over the years developed a frame work for risk management and laid down procedures to keep the Board members informed of the risk assessment and mitigation measures. A risk management plan has been framed, implemented and monitored by the Board. As required under Section 177 of the Act, the Audit Committee also reviews the risk management process periodically.

As part of the risk management plan, TPL has two employee-level Committees viz., a sub-committee and an Apex Committee which is headed by the Whole-time Director (Operations) to review and assess the risks that could affect the Companyâs business. The sub-committee brings out the matters that could affect the operations and they are reviewed by the Apex Committee, which determines issues that could become business risk. The mitigation actions are also suggested by the Committee and the report of the Risk Controller is submitted to the Risk Management Committee of Directors (RMC), constituted in compliance with the erstwhile listing regulations. Though it is not mandatory for the Company to have the RMC under the extant Regulations, considering the importance of the matter the Board has continued with the Committee, which comprises Ms. Sashikala Srikanth as Chairman and Mr. T K Arun and Mr. D Senthikumar as the Members. The RMC meets periodically reviews the report of the Risk Controller and the recommendations are presented to the Board for final decision/guidance.

In the opinion of the Directors, unabated import of LAB into India is a major risk for the Company that could affect its profitability. High cost of power coupled with policy interpretations related to power cost are yet another concern for the Company, especially for the Chlor Alkali Division.

Board of Directors and related disclosures

The Board comprises twelve directors of whom six are independent, including a woman director. All the Independent Directors have furnished necessary declarations under Section 149 (7) of the Act and as per the declarations they meet the criteria of independence as provided in Section 149 (6) of the Act.

The Board met six times during the year under review and the relevant details are furnished in the CGR

During the year under review, Mr. CV Sankar, IAS demitted his office as Chairman and Director effective 4^th August 2016 consequent to his superannuation on 30^th July 2016. Mr. Vikram Kapur, IAS was appointed as an Additional Director and Chairman effective 10^th October 2016 and held office till 3^rd April 2017. Mr. Atulya Misra, IAS has been appointed as the Chairman and Director effective 10^th April 2017 and he holds office till the ensuing Annual General Meeting The proposal for his appointment as a Director of the Company and requisite notice and deposit have been received under Section 160 of the Act, for his appointment as a Director at the AGM.

The Board wishes to place on record its appreciation to Mr. CV Sankar, IAS and Mr. Vikram Kapur, IAS for their services during their tenure as Chairman and Director of the Company.

At the meeting held on 30^th May 2016, Mr. R. Balaji was appointed as Chief Financial Officer of the Company under Section 203 of the Companies Act, 2013 who separated from the Company on 4^th August 2016. Mr. K.T Vijayagopal, Whole time Director (Finance) was designated as Chief Financial Officer in addition to his role as Whole time Director (Finance) effective 5^th August 2016.

Mr. D. Hem Senthil Raj was appointed as the Company Secretary in the place of Ms. R. Deepti from 1^st June 2016.

In accordance with the provisions of the Act and Articles of Association of the Company, Mr. R Karthikeyan, (DIN 02163427) Director retires by rotation and being eligible offers himself for re-election at the ensuing Annual General Meeting of the Company. The Board recommends his re-appointment.

Annual Evaluation of the Board and Committees

Board evaluated its performance taking the following aspects into account viz., Structure, Meetings, Functions, Risk Evaluation process adopted, grievance redressal mechanism, stakeholder value and responsibility, corporate culture and ethics and other matters. Board also took into account facilitation to the Independent Directors to function independently and perform their roles as another important parameter for the evaluation.

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

In compliance with the requirements of Schedule VII to the Act and the Regulations, a separate meeting of the Independent Directors was held during the year.

Directorsâ Responsibility Statement

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

(a) in the preparation of the annual accounts for the financial year ended 31^st March 2017, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(d) the Directors had prepared the accounts for the financial year ended 31^st March, 2017 on a âgoing concernâ basis;

(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

Corporate Governance

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

Auditors

The present Auditors of the Company, Deloitte Haskins & Sells, Chartered Accountants, Chennai hold office till the conclusion of the 32^nd Annual General Meeting (AGM) of the Company.

In compliance with the provisions for rotation of auditors, the Company is required to appoint new Auditors at the ensuing AGM.

Based on the recommendation of the Audit Committee the proposal for appointment of M/s. RGN Price & Co., Chartered Accountants, Chennai having Firm Registration No. 002785S as the auditors of the Company on a remuneration of '' 20 lakh plus applicable taxes and reimbursement of out of pocket expenses is placed for consideration of the Members at the ensuing AGM. As per the extant provisions of the Act, they will hold office for a period of five years from the conclusion of 32^nd AGM till the conclusion of 37^th AGM to be held in the year 2022 subject to the ratification of the Members at each subsequent AGM.

Secretarial Audit Report

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

Cost Audit

Pursuant to the provisions of Section 148 of the Act, the Board had appointed M/s. Krishnaswamy & Co, Cost Accountants, the Cost Auditors of the Company for conducting the audit of cost records for the financial year 2016-17 on a remuneration of Rs, 2.00 lakh plus applicable taxes and reimbursement of out of pocket expenses.

As required under Section 148 of the Act, read with the relevant Rules, ratification of the members for the remuneration to the Cost Auditor for the year 2016-17 will be considered at the ensuing AGM of the Company for ratification by the members.

Adequacy of Internal Financial Controls

Your company has in place adequate internal financial control systems with periodical review of the process. The control system is also supported by ERP, internal audits and management reviews with documented policies and procedures. The system was also earlier reviewed by an external agency, and no major weaknesses were reported.

Conservation of Energy and other disclosures

Extract of the Annual Return

The extract of the Annual Return in prescribed Form MGT-9 is given in Annexure - IV in the prescribed format.

Particulars of Employees and other disclosures

The disclosures prescribed under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure -V to this Report. It is hereby affirmed that the remuneration to the employees are as per the remuneration policy of the company.

CSR Policy and related Disclosures

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

Acknowledgement

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

Disclaimer

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

For and on behalf of the Board of Directors

D Senthikumar KT Vijayagopal

16^th May 2017 DIN 00202578 DIN 02341353

Chennai - 600 068 Whole time Director (Operations) Whole time Director (Finance)

Mar 31, 2016

DIRECTORSâ REPORT AND MANAGEMENT DISCUSSION AND ANALYSIS REPORT TO THE SHAREHOLDERS

The Directors have pleasure in presenting the Thirty First Annual Report on the business and operations of the Company and the audited Statement of Accounts for the year ended 31^st March 2016. The consolidated performance of the Company and itâs subsidiaries has been referred to wherever required.

FINANCIAL SUMMARY (STANDALONE OPERATIONS):

(INR In crores)

Description	2015- 2016	2014-2015
Earnings/Loss Before Interest and Depreciation	12.76	(17.55)
Interest	14.74	19.57
Depreciation	17.58	20.60
Exceptional Item	57.71	(13.68)
Profit/Loss Before Tax	38.15	(71.39)
Tax expenses	-	(18.32)
Profit/Loss after tax	38.15	(53.07)

OPERATIONAL HIGHLIGHTS AND PRODUCT- WISE PERFORMANCE

During the year under review, revenue from operations was INR. 700.63 crores Vis a Vis INR. 949.87 crores in FY 2014-15. The profit for the year was at INR. 38.15 crores against a loss of INR. 53.07 crores in the previous year. Crude prices continued to remain volatile ranging from USD 58 per barrel to USD 39 per barrel impacting the top line, however through better strategy the Company achieved higher margins compared to the previous year. The Company also in order to manage better cash flows sold one of itâs non moveable property and made a profit of INR 66.20 crores which is reflected under exceptional item. ECH plant which was suspended since 2013 owing to losses was impaired (INR 8.49 crores) during the year. The Operating profit achieved during the year was INR 12.76 crores as against the previous year loss of INR 17.55 crores.

Linear Alkyl Benzene (LAB) constitutes almost 90% of revenues for the Company and various efforts are being initiated both on production and marketing front. We expect this to improve further in the coming years. Normal Parafin (NP) revamp phase I was completed in January 2016 and this has already improved the feed rate and marginal improvement in NP production.

The Chlor Alkali Division producing Caustic Soda and Chlorine had to be operated at a reduced load due to lower demand and also storing and disposal issues of Chlorine. Various cost cutting measures are being initiated to bring down the cost of production.

Chennai faced heavy rains and consequent flooding in the months of December 2015 and January 2016 which resulted in shut down of plants for almost 2 months. However the combined team efforts of the Organization brought the Plant back to speedy recovery and commencement of normal production. The insurance cover also helped to recover the losses incurred from insurers.

ECH TO PO CONVERSION:

The Board of Directors have already informed the shareholders regarding the shut down of operations of ECH during March 2013 due to losses incurred. As indicated in the previous year reports, steps have been taken to utilize the existing facilities for the manufacture of propylene oxide. Clearance form MOEF has already been obtained, Basic engineering is currently in progress.

financial review

During the year under review the finance cost was lower at INR 14.74 crores against INR 19.57 crores. This was made possible through lower borrowings and repayment of long term loans out of the proceeds from sale of property.

DIVIDEND

In order to conserve resources, the Board of Directors had not recommended any dividend for the financial year 2015-16.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY STRUCTURE AND DEVELOPMENTS

Your Company has three manufacturing units viz., Linear Alkyl Benzene (LAB), Chlor Alkalis comprising Caustic Soda & Chlorine and Epichlorohydrin (ECH).

LAB, a colorless organic compound is an intermediate chemical used in the manufacture of household and industrial cleaning agent and enjoys a good demand from the detergent industry as its basic raw material. Based on application, the LAB market can be broadly segmented into Linear Alkylbenzene Sulfonate (LAS) and other applications. A major portion of the global LAB production is utilized for the production of LAS. The applications for LAS have been further segmented on the basis of the end use namely heavy-duty laundry liquids, light-duty dishwashing liquids and laundry powders, industrial and household cleaners. Heavy-duty laundry liquids are mainly used for commercial laundry purposes and are the most dominant application segment for LAS. It has been reported that the demand for household cleaners is expected to exhibit the fastest growth rate amongst all the application segments.

All the major manufacturers of LAB in India, including TPL, have adopted the technology from UOP, USA, which is considered superior to the other processes involving chlorination. The cost of production of LAB in India had been relatively higher than the international standards mainly on account of higher cost of kerosene and quality issues relating to the feedstock.

In the years before domestic demand for LAB was being met fully through indigenous sources and a substantial quantity was being exported. In the past two years, LAB imports in India were more than 3.2 lakh tons. The sudden spurt in LAB imports into India during the past few years is mainly attributable to economic slowdown witnessed all over the world and creation of surplus capacities in the Middle East and reduced capacity utilization in India. The domestic players could not compete with the overseas suppliers due to modern facilities of large capacities which ensured very low cost compared to the cost structure of your Company.

Caustic Soda, a most commonly used industrial chemical, finds wide application in Textile, Pulp & paper, Aluminum, Soaps & detergents industries in India. The capacity in India was about 34.66 lakh ton in March 2015 with a capacity utilization of around 81%. The capacity has increased to 36.70 lakh ton by March 2016 and is expected to grow by about 5 % in margin by March 2017. India has enough capacity to meet the domestic demand but due to dumping from overseas, the capacity utilization has been low.

Chlorine, a co-product of Caustic Soda is widely used in sectors like Vinyl chloride, CPW, pulp and paper, water purification, chlorinated solvents, etc. Chlorine demand will be a major driver for Chlor-alkali production rates and the reason for low capacity utilization is due to inadequate opportunity for Chlorine utilization; - Lack of integrated plants, and downstream chlorine utilization projects.

Chlorine demand has gone up during the year 2015-16 and it is expected to witness an increase in the year 2016-17 due to downstream consumption by caustic manufacturers.

Caustic soda imports during the year witnessed about 5.7 lakhs tons in FY 2015-16 compared to 5.00 lakhs tons in the previous financial year 2014-15.

OPPORTUNITIES AND THREATS

Concern about hygiene and improved standard of living has aided in considerable improvement of market conditions. This has helped the detergent markets to reach remote areas, with the facility of visual advertisements. Moreover, consumers have privilege of choosing from wide variety of product range and hence the companies are constantly upgrading their products and make every effort to bring the utmost innovative advertising campaign to increase their share in the global market. Since these companies target the bottom of the pyramid market, there is a huge potential for the LAB industry to grow.

However, India being an attractive market is targeted by the overseas LAB players and has resulted in increased imports to India. Addition of new plants in the Middle East is a big threat to the LAB market in India. Also LABIX, a new plant which was set up in Bangkok, Thailand with an annual capacity of 1 lakh ton capacity will be a major threat to the company, with Chennai being the nearest port. These will have an impact on domestic pricing which is already reeling under pressure.

Crude prices continued to be volatile. This had itâs own impact on the topline/revenue of the company. Imports from China, Thailand and Middle East continues to be a threat.

Caustic Soda continues to be an important industrial intermediary finding application in many industries. With the demand for textiles and apparels increasing on account of urbanization and more spending on personal effects, the market for Caustic Soda is expected to grow further. However, unabated increase in cost of power is curbing the profitability of the domestic manufacturers. Because of the erratic weather conditions, salt prices are unpredictable. India has adequate capacity to meet domestic demand of caustic soda, but due to heavy imports at low price from other countries, industry operating rates are low.

The per capita consumption of Chlorine in India is stated to be around 1.85 kg vis a vis 13 kg in China and hence there exists good growth opportunities. However, this could happen only if substantial investments are made in the vinyl industry, the key end-user of the product. Downstream PVC Industry in India is growing @ 10% (YOY in 2015-16) but not utilizing domestic chlorine due to non-availability of petro-chemical feedstock. In a year, nearly 30% of the PVC domestic demands are met by imports. India continues to be one of the largest importers of EDC & VCM i.e. indirect imports of chlorine leading to low utilization of domestic chlorine. The problems of storage and disposal of Chlorine during peak demand for Caustic Soda are the major limiting factors for both Caustic Soda and Chlorine.âMis-matchedâ demand for Caustic & Chlorine sets the price trend for the product and the realizations are affected considerably.

OUTLOOK

LAB

TPL has established itself as a major contributor in the LAB market, despite ever increasing LAB imports year on year, TPL has been continuously offering its best service to its customers, thereby keeping the customer base intact. TPL has been able to sustain itâs market share across pan India and dominate the South market especially.

During the year 2015-16, LAB imports were around 3.20 lakh tons against 2.20 lakh tons in 2014-15, a big jump compared to the previous yearâs imports. TPL is also focussing on increasing the NP capacity to cut down its imports and capacity augmentation proposal is under implementation.

TPL has completed Phase I of NP revamp which has resulted in increased feed rate and marginal production of NP Phase II is underway.

Caustic Soda / Chlor alkali

The Global Caustic Soda growth is expected to be 3.2% by 2018. Alumina and Pulp & Paper sectors, major consumers of Caustic Soda have been impacted by the global economic outlook. It has been stated that the growth in many of developed regions will be slow. On the other hand, with the ongoing expansion projects, the caustic soda availability from the USA, Asia and Middle East will be threatening more with further increase in the imports into India, which is already affected by huge and ever-increasing imports. The imports have more than doubled in about 5 years at 5.08 lakh tons in 2015-16 from 1.87 lakh tons in 2010-11. The imports during April 2016 were over 85,000 tons against 75,000 tons in the corresponding period of the previous year.

It has been reported that the Indian industry is capable of meeting its domestic demand but because of high input costs and poor infrastructure, is not competitive internationally. It also faces dumping of cheap imports from other countries like Iran, Saudi, Korea RP, Japan, etc. where power is available at a lower price. To overcome this, TPL is focussing on reduction of power consumption and power cost. However, under the present conditions TPL may not be able to go for integration and hence the long term survival of the HCD would depend on the success of the cost cutting efforts taken by the Company. Company is exploring the option for switch over from monopolar to bipolar technology which will result in savings by means of reduced power consumption.

ECH

The company had already received environment clearance for conversion of the ECH facility to manufacture Propylene Oxide from the Ministry of Environment, Forest and Climate Change,

Government of India. Further actions are on to operationalize the conversion which may take about 15-18 months. It may be recalled that the ECH facility remains suspended since 2013 due to unviable operations and incurring huge losses for eight years out of last ten years. On completion of the conversion the Company would be in a position to utilize the Chlorine for value paving way for enhancing the utilization of caustic soda unit and hence the production at HCD can be increased to more economic levels. Also it would have converted the otherwise unproductive facility to earn reasonable returns.

RISK AND CONCERNS

As mentioned above, the import of LAB, Caustic Soda and indirect form of Chlorine is the major risk faced by TPL. Due to the increasing transportation charges and bulk discounts offered to the customers in order to keep them intact, LAB realization may come down. The uncertainty of the normal paraffin imports and the fluctuating exchange rates is yet another major risk to the company.

Chlor Alkali Division of TPL is a power intensive industry and hence the renewable purchase obligation, which is being challenged by the Company at the appropriate forum, could be a dampener in its efforts to bring down the power cost. Continuous dip in the chlorine prices, soaring cost of salt and transportation are adding to the woes. To mitigate the risk of survival of Chlor Alkali Division in the long run, the input cost viz., power and salt is to addressed by the company.

SAFETY, HEALTH & ENVIRONMENT

Adequate safety standards have been prescribed and followed by the Company without compromise. Prime importance is given to protection of the employees, Plant & Machinery and environment at all times.

There were no reportable incidents/accidents during the year 2015-16. To spread the awareness on safety, your company celebrated National Safety Day on 4^th March 2016. World Environment Day was celebrated on 5^th June 2016 and saplings were planted as a part of green initiative and to promote carbon offset.

SUBSIDIARIES

Certus Investment and Trading Ltd., and its wholly owned subsidiaries

Your Company established Certus Investment and Trading Ltd. (CITL), Mauritius as its Wholly Owned Subsidiary (WOS) to serve as a Special Purpose Vehicle (SPV) to set up LAB and NP projects in Middle East and South East Asia.

CITL also established CITL (S) Pte. Ltd. in Singapore to function as a coordinator for TPLâs overseas procurement and marketing activities.

Proteus Petrochemical Private Ltd. (Proteus) is a subsidiary of CITL formed for setting up a Normal Paraffin Project in Singapore. The proposal is to establish a green-field Normal Paraffin (NP) project plant along with associated utilities and off-sites. The project has run into certain problems and hence there has been delay in completing the same as per schedule. The Company is examining further action to be taken in this regard.

The policy on material subsidiaries is given in the website of the Company http://tnpetro.com/Financials/fina_policies.asp

JOINT VENTURE

petro Araldite pvt. ltd. (papL)

PAPL had shut down its operations including their Basic Resins manufacturing facilities since 2014.The formulations plant was also stopped during the year 2014-15. The entire investment made by TPL in PAPL has been written off during the previous financial year.

HUMAN RESOURCES

Management strongly believes that the strength of your Company is directly proportional to the strength of its employees in terms of the knowledge, experience, analytical and decision making skills. Your Company has been practicing various HR initiatives such as recognition, empowerment, personality development, decentralization of delegation of powers etc., to retain the talents and to enhance their enabling capabilities. A balanced staffing system has been judiciously adopted in your Company wherein competent fresh talents have been engaged to infuse young blood into the stream of experienced hands.

The training needs of employees have been identified at regular intervals through performance appraisal systems and necessary training is being imparted through in-house and external programmes. Apart from the routine, job related training for personality development and leadership skills are imparted to enhance the administrative capabilities of employees.

The man power strength as on 31^st March 2016 was 334 and none of the employees of your Company was in receipt of remuneration exceeding the sum prescribed under Section 198 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Details of Loans, guarantees or investments

Loans, guarantees and investments covered under section 186 of the Companies Act, 2013 form part of the Notes to financial statements provided in this Annual Report.

FIXED DEPOSITS

Your company has not accepted any deposits from the public during the year under report.

Particulars of contracts or arrangements made with related parties

During the year under review, there were no transactions with related parties referred to in Section 188(1) of the Act and the transactions at armsâ length with such parties were not material in terms of the policy framed by the Audit Committee of the Company as published in the website of the Company viz., http://tnpetro. com/Financials/fina_policies.asp.

AUDIT COMMITTEE

The details are furnished under the Corporate Governance Report (CGR) annexed to this Report.

vigil mechanism

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

RISK MANAGEMENT POLICY

The Company has over the years developed a frame work for risk management and laid down procedures to inform Board members about the risk assessment and minimization procedures. A risk management plan has been framed and implemented and monitored by the Board. As required under Section 177 of the Act, the Audit Committee also reviews the risk management process periodically.

As part of the risk management plan, TPL has two employee-level Committees viz., a sub-committee and an Apex Committee which is headed by the Whole-time Director (Operations) to review and assess the risks that could affect the Companyâs business. The sub-committee brings out the matters that could affect the operations and the same are reviewed by the Apex Committee, which determines the issues that could become business risk. The mitigation actions are also suggested by the Committee and the report of the Risk Controller is submitted to the Risk Management Committee of Directors (RMC), constituted in compliance with the Listing Regulations. The RMC reviews the report of the Risk Controller and the recommendations are presented to the Board for final decision/guidance.

In the opinion of the Directors, unabated import of LAB and Caustic Soda into India is the major risk for the company that could affect the companyâs business and profitability. High cost of power is yet another concern for the company especially for the Chlor Alkali Division.

BOARD OF DIRECTORS AND RELATED DISCLOSURES

The Board comprises of twelve directors of whom six are independent including a woman director. All the Independent Directors have furnished necessary declarations under Section 149 (7) of the Act and as per the said declarations they meet the criteria of independence as provided in Section 149 (6) of the Act.

The Board met four times during the year under review and the relevant details are furnished in the Corporate Governance Report (CGR).

At the Board Meeting held on 4^th August 2015, Mr. K.T.Vijayagopal has been appointed as Chief Financial Officer of the Company under Section 203 of the Companies Act, 2013.

During the year under review, Mr. Muthukrishnan Ravi ceased to be Managing Director on his completion of his term of office effective from 3^rd February 2016 and Mr. M. Pazhaniandipillai, Whole time Director (Operations) has demitted his office effective from 1^st February 2016.

The Board accorded its sincere appreciation and gratitude for the services rendered by Mr. Muthukrishnan Ravi, Managing Director and Mr. M. Pazhaniandipillai, Wholetime Director (Operations) for their phenomenal support and guidance extended during their association with the company.

At the meeting held on 1^st February 2016, Mr D Senthikumar (DIN 00202578) was appointed as an Additional Director of the Company effective from 18^th February 2016. Pursuant to the recommendations of the Nomination and Remuneration Committee (NRC) he has also been appointed as the Whole time Director (Operations) for a period of three years, subject to approval of the Members. As per Section 161 of the Companies Act, 2013, he holds office till the ensuing AGM and it is proposed to appoint him as a Director under section 152 of the Companies Act, 2013 for which the required notice and deposit under section 160 of the Act have been received. It is also proposed to seek approval of the Members for his appointment and remuneration as Whole time Director (Operations).

At the meeting held on 1^st February 2016, Mr. KT Vijayagopal (DIN 02341353) was appointed as an Additional Director of the Company effective from 1^st February 2016. Pursuant to the recommendations of the Nomination and Remuneration Committee (NRC) he has also been appointed as the Whole-time Director (Finance) for a period of three years, subject to approval of the Members. As per Section 161 of the Companies Act, 2013, he holds office till the ensuing AGM and it is proposed to appoint him as a Director under section 152 of the Companies Act, 2013 for which the required notice and deposit under section 160 of the Act have been received. It is also proposed to seek approval of the Members for his appointment and remuneration as Whole-time Director (Finance).

Mr. TK Arun, (DIN 02163427) Director retires by rotation and being eligible offers himself for re-election at the ensuing Annual General Meeting of the Company. The Board recommends his reappointment.

ANNUAL EVALUATION OF THE BOARD AND COMMITTEES

The formal evaluation of the Board and its Committees was done taking into account the various parameters such as their roles and responsibilities, composition and the adequacy, decision making processes and related practices, focus on important and critical issues, progress monitoring, governance and the like.

The evaluation of the individual directors, including the independent directors was done taking into account their qualification and experience, understanding of their respective roles (as a Director, Independent Director and as a member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc.

During the year, the company had conducted familiarization programme for the Independent Directors and the details of the same are made available in the website of the company viz., http:// tnpetro.com/Financials/Fina_corp.asp

DIRECTORSâ RESPONSIBILITY STATEMENT

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

(a) in the preparation of the annual accounts for the financial year ended 31^st March 2016, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(d) the Directors had prepared the accounts for the financial year ended 31^st March, 2016 on a âgoing concernâ basis.

(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and

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

CORPORATE GOVERNANCE

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

AUDITORS

M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai were appointed as the Auditors of the Company for a period of three years at the 29^th Annual General Meeting held on 12^th August 2014 to hold office till the conclusion of 31^st Annual General Meeting.

In this connection, the Act has brought in provisions for rotation of auditors and your Company is also required to comply with the same. As per Section 139 (2) of the Act, in the case of Auditors, being a Firm, the tenor can be 2 terms of five years each. Initially a transition period of 3 years from the date of commencement of the Act had been provided for changing the Auditors who have been in office for periods exceeding the limits and accordingly the Company at the 29^th AGM appointed the existing Auditors to hold office till the ensuing AGM. However, the transition period has been extended and the change of Auditors could now be considered at the first AGM to be held three years after the commencement of the Act. Accordingly, the existing Auditors can continue till the conclusion of the next AGM to be held in the year 2017.

SECRETARIAL AUDIT REPORT

As required under Section 204 of the Act, the Secretarial Audit Report issued by Mrs. B Chandra, Company Secretary in practice is given in Annexure - II. As regards the observation of the Secretarial Auditor it is clarified the delay in filing of the FLA return with RBI within the stipulated time period was due to oversight. However the same has been filed with RBI before the date of signing of this report.

Cost Audit

M/s. Krishnaswamy & Co, Cost Accountants, was appointed as the Cost Auditors of the Company for the financial year 2015-16 on a remuneration of INR 2.00 lakh plus applicable taxes and reimbursement of out of pocket expenses.

As required under Section 148 of the Act, read with the relevant Rules, ratification of the members for the remuneration to the Cost Auditor for the year 2015-16 will be considered at the ensuing AGM of the Company.

Adequacy of internal Financial Controls

Your company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by internal audits and management reviews with documented policies and procedures. The system was also reviewed by an external agency, and no major weaknesses were reported.

CONSERVATION OF ENERGY AND OTHER DISCLOSURES

EXTRACT OF THE ANNUAL RETURN

The extract of the Annual Return in prescribed Form MGT-9 is given in Annexure - iV in the prescribed format.

PARTICULARS OF EMPLOYEES AND OTHER DISCLOSURES

The disclosures prescribed under Section 197(12) of the Companies Act, 2013, read with Rule 5(1) and Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure - V to this Report. It is hereby affirmed that the remuneration to the employees are as per the remuneration policy of the company.

CSR POLICY AND RELATED DISCLOSURES

The details are furnished in Annexure - vi

ACKNOWLEDGEMENT

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

DISCLAIMER

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

For and on behalf of the Board of Directors

Ashwin C Muthiah D Senthikumar

5^th Aug 2016 DIN 00255679 DIN 00202578

Chennai - 600 068 Vice Chairman Whole time Director (Operations)

Mar 31, 2015

The Directors have pleasure in presenting the Thirtieth Annual Report on the business and operations of the Company and the audited Statement of Accounts for the year ended 31st March 2015.

FINANCIAL RESULTS (Rs in crore)

Description 2014-15 2013-14

Loss Before Interest and Depreciation (31.22) 7.09

Interest (19.57) (32.27)

Depreciation (20.60) (30.43)

Loss Before Tax (71.39) (55.60)

Tax expenses (18.32) (18.30)

Loss after tax (53.07) (37.30)

OPERATIONAL HIGHLIGHTS AND PRODUCT-WISE PERFORMANCE

During the year under review, revenue from operations was Rs. 949.87 crore vis-a-vis Rs. 1051.82 crore in FY 2013-14. The loss for the year was higher at Rs. 53.07 crore against Rs.37.30 crore in the previous year. Also, the Company made an operating loss of Rs. 17.55 crore against operating profit of Rs. 7 crore in FY 2013-14. It may be recalled that through concerted efforts the operations improved during the first six months of the year under review and the Company recorded an operating profit of Rs. 18.12 crore against the operating loss of Rs. 14.13 crore in the corresponding period in the previous year. The unexpected fall in the crude prices during the 3rd quarter of the year resulted in sharp and sudden drop in the prices of Linear Alkyl Benzene (LAB) in the domestic market which was unprecedented. The crude prices remaining low for a long time, the high cost inventory held by the Company had to be sold at the lower prices to avoid compounding of the cash flow issues. This resulted in huge cash losses during the 3rd and 4th quarter.

Large scale import of cheaper LAB continued to wean away the domestic customers. The increase in power cost coupled with uncertainties in uninterrupted supply was also another limiting factor to recover the fixed costs in full, adding to the losses. Due to inconsistency in the supply of power from the EB grid, CPP had to be operated continuously to avoid frequent interruptions, the cost of heavy re-start and also to meet the customer commitments.

The Chlor Alkali Division producing Caustic Soda and Chlorine had to be operated at a reduced load due to lower demand and also storing and disposal issues of Chlorine. The imports of caustic soda into India increased from 3.74 lakh tons in 2013-14 to over 5 lakh tons during the year under review. The high cost of power which is the major production cost for the Division further reduced the margins and the Division continued to incur losses. The operations of the ECH Division continued to remain suspended and the effluent treatment services to Petro Araldite Private Limited, the joint venture company was also stopped as the latter also ceasing operations during the 2nd half of the year.

FINANCIAL REVIEW

During the year 2014-15 there were moderate changes in interest rates and the bank rate came down from 9% in March 2014 to 8.5% in March 2015. There was decline in the overall bank credit growth and also aggregate of bank deposits. The inflation also declined sharply mainly on account of lower crude oil prices and other steps taken by the regulators.

During the year under review the finance cost was lower at Rs. 19.57 crore against Rs. 32.27 crore during the previous year. This was made possible through lower borrowings and repayment of long term loans out of the proceeds from sale of property. CARE reaffirmed the rating at BBB, signifying the current capacity of the Company to meet its debt obligations.

DIVIDEND

In view of the losses incurred, the Board of Directors expresses its inability to recommend any dividend for the year.

The Industrial relations are cordial.

The manpower strength as on 31 st March 2015 was 392 and none of the employees of your Company was in receipt of remuneration exceeding the sum prescribed under Section 198 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Details of Loans, guarantees or investments

During the year under review the Company purchased 2,20,735 equity shares of Rs. 10/- each in OPG Power Generation Private Limited to become a Group Captive Consumer of the power generated by the said company.

Audit Committee

The details are furnished under CGR annexed to this Report. All the recommendations of the Committee were accepted by the Board.

Vigil Mechanism

As required under S. 177 of the Act and Clause 49 of the Listing Agreement, the Company has established a vigil mechanism for directors and employees to report genuine concerns through the whistle blower policy of the Company as published in the website of the Company. As prescribed under the Act and the Listing Agreement, provision has been made for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.

Fixed Deposits

Your company has not accepted any deposits from the public during the year under report.

Related Party Transactions

During the year under review, there were no transactions with related parties referred to in S.188(1) of the Act. The other transactions with such parties were not material in terms of the policy framed by the Audit Committee of the Company as published in the website viz., http://tnpetro.com/Financials/finapolicies.asp

Board of Directors and related disclosures

The Board comprises of twelve directors of whom six are independent including a woman director. All the Independent Directors have furnished necessary declarations under Section 149 (7) of the Act and as per the said declarations they meet the criteria of independence as provided in Section 149 (6) of the Act.

The Board met five times during the year under review and the relevant details are furnished in the CGR.

The Board has approved the Remuneration Policy as recommended by the Nomination and Remuneration Committee (NRC) which inter alia contains the criteria for determining the positive attributes and independence of a director as formulated by the NRC. The policy on remuneration to directors is disclosed in the CGR annexed to this Report.

Mr. Sanjiv Ralph Noronha (DIN: 01905639) resigned as a Director effective from 11th August 2014

At the Board Meeting held on 12th August 2014, Mr. Kulbir Singh (DIN: 00204829) and Ms. Sashikala Srikanth (DIN: 01678374) were appointed as Additional & Independent Directors of the Company for a period of five years under Section 149 of the Act. Approval of the members for the same under Sections 150, 152, 160 read with Schedule IV to the Act will be considered at the ensuing AGM.

Mr. Ashwin C Muthiah, (DIN 00255679) Vice Chairman retires by rotation and being eligible offers himself for re-election.

At the meeting held on 27th May 2014, Mr. K R Anandan was appointed as the Chief Financial Officer under Section 203 of the Act who separated from the Company on 30th June 2015. Ms. R Deepti was appointed as the Company Secretary in the place of Mr. R. Kothandaraman from 1st June 2014.

Annual Evaluation of the Board, Committees and Directors

The formal evaluation of the Board and its Committees was done taking into account the various parameters such as their roles and responsibilities, composition and the adequacy, decision making processes and related practices, focus on important and critical issues, progress monitoring, governance and the like.

The evaluation of the individual directors, including the independent directors was done taking into account their qualification and experience, understanding of their respective roles (as a Director, Independent Director and as a member of the Committees of which they are Members/Chairpersons), adherence to Codes and ethics, conduct, attendance and participation in the meetings, etc.

In compliance with the requirements of Schedule VII to the Act and Clause 49 of the Listing Agreement, a separate meeting of the Independent Directors was held during the year.

During the year, the company had conducted familiarization programme for the Independent Directors and the details of the same are made available in the website of the company viz., http://tnpetro.com/Financials/Finacorp.asp

Directors' Responsibility Statement

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

(a) in the preparation of the annual accounts for the financial year ended 31st March 2015, the applicable Accounting Standards had been followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for the year under review.

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

(d) the Directors had prepared the accounts for the financial year ended 31 st March, 2015 on a "going concern" basis.

(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively and

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

Corporate Governance

Your Company has complied with the requirements of Corporate Governance stipulated under Clause 49 of the Listing Agreement entered into with the Stock Exchanges. A Report on Corporate Governance is made a part of this Report and a Certificate from the Auditors regarding compliance with the requirements of Corporate Governance is given in Annexure -1.

Auditors

M/s. Deloitte Haskins & Sells, Chartered Accountants, Chennai were appointed as the Auditors of the Company at the 29th Annual General Meeting held on 12th August 2014 to hold office till the conclusion of 31st Annual General Meeting. As required under Section 139 of the Act, ratification of their appointment to hold office from the conclusion of the 30th AGM till the conclusion of the 31st AGM will be taken up at the ensuing AGM.

Reply to qualification in the Report of the Auditors on the Consolidated Financial Statement:

As regards the short term advance of Rs. 3419.54 lakh carried in the Consolidated Financial Statement (CFS), it has been confirmed that as on date the subsidiary has recovered the entire dues in full.

As regards the Long Term Loans and Advances of Rs. 1249.80 lakh in the CFS, which represent the advance paid to the technology partner for knowhow, there is time till December 2016 to avail the same. It is also being explored if the rights can be transferred to other interested parties and hence at present no adjustment is deemed necessary.

In the light of the above, it is expected that these matters will have no impact on the Consolidated Financial Statement.

Secretarial Audit Report

As required under Section 204 of the Act, the Secretarial Audit Report issued by Mrs. B Chandra, Company Secretary in practice is given in Annexure - II. As regards the observation of the Secretarial Auditor it is clarified that all the directions of the CPCB have been duly complied with and the inspection has also been completed.

Cost Audit

Mr. P.R.Tantri, Cost Accountant, Bengaluru was appointed as the Cost Auditor of the Company by the Board for the financial year 2014-15 on a remuneration of Rs. 1.25 lakh plus applicable taxes and reimbursement of out of pocket expenses.

As required under S. 148 of the Act, read with the relevant Rules, ratification of the members for the remuneration to the Cost Auditor for 2014-15 will be considered at the ensuing AGM of the Company.

Adequacy of Internal Financial Controls

Your company has in place adequate internal financial control systems combined with delegation of powers and periodical review of the process. The control system is also supported by internal audits and management reviews with documented policies and procedures. The system was also reviewed by an external agency, and no major weaknesses were reported.

Conservation of Energy and other disclosures

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

Extract of the Annual Report

The extract of the Annual Report is given in Annexure - IV, in the prescribed format.

Particulars of Employees and other disclosures

The disclosures prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure - V to this Report. It is hereby affirmed that the remuneration to the employees are as per the remuneration policy of the company.

CSR Policy and related Disclosures

The details are furnished in Annexure - VI

Acknowledgement

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

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

Disclaimer

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

For and on behalf of the Board of Directors

Muthukrishnan Ravi Ashwin C. Muthiah

4th August 2015 DIN:03605222 DIN:00255679

Chennai - 600 068 Managing Director Vice Chairman

Mar 31, 2014

TO THE SHAREHOLDERS

The Directors have pleasure in presenting the Twenty Ninth Annual Report on the business and operations of the Company and the audited Statement of Accounts for the year ended 31st March 2014.

FINANCIAL RESULTS (Rs. in crore)

Description 2013-14 2012-13 Revenue from Operations 1051.82 1281.42 Earnings before Interest Depreciation 7.09 (0.34) and Tax Less: Finance Cost (32.27) (31.83) Less: Depreciation (30.43) (38.62) Less: Exceptional Item - (1.74) Loss before tax (55.60) (72.53) Tax expenses (18.30) (21.97) Loss after tax (37.30) (50.56) Balance carried to Balance Sheet 2.88 40.19

OPERATIONAL HIGHLIGHTS AND PRODUCT-WISE PERFORMANCE

During the year under review, revenue from operations was Rs.1051.82 crore vis a vis Rs. 1281.42 crore in FY 2012-13. The los s for the year was lower at Rs. 37.30 crore against Rs. 50.56 crore in the previous year. Also the Company made an operating profit of Rs. 5 crore against operating loss of Rs. 34 lakhs in FY 2012-13. These could be achieved through concerted efforts to cut the cost and also ensure the best possible market realization, given the tough conditions faced by the Company due to unabated imports of LAB and Caustic Soda into India during the year under review.

Capacity utilization of Linear Alkyl Benzene (LAB) facilities was lower due to the domestic customers opting for imports in large scale. Increase in crude price and increase in power cost coupled with uncertainities in uniterrupted supply continued to be limiting factors to recover the fi xed costs in full, resulting in losses. In order to bring down the cost of production, use of Captive Power Plant (CPP) was curtailed on trial basis. However, due to inconsistency in the supply of power from the EB grid, the CPP had to be operated continuously to avoid frequent interruptions and the cost of heavy re-start. In spite of the cost of power from CPP being higher on account of increased fuel prices, TPL had no alternative but to resort to such a measure to meet customer commitments bringing down the margins further.

The Chlor Alkali Division producing Caustic Soda and Chlorine was operated at a reduced load to optimize the cost of production forcing a dip in capacity utilization. However, the better quality of the output reduced the erosion of margins to some extent.

The ECH Plant, operation of which has been suspended since the beginning of the year on account of the huge and perpetual losses, continued to provide effl uent treatment services to Petro Araldite Private Limited, the joint venture company.

FINANCIAL REVIEW

The fi nance cost as a ratio of total operating income was higher at 3.07% against 2.48% mainly on account of dip in the revenue by 22%. Due to the poor fi nancial performance over the lasttwo years, the Company has been facing diffi culties in raising the required funds, as the lenders are not inclined to look at any further exposures. In fact some of them have resorted to reduction in the limits, compounding the cash fl ow issues further. Under these circumstances, in order to sustain the operations, the Company had to arrange long term funds only through divestment of its major non-core asset, the TPL House for which agreement has been entered into during the year. A part of the payment consideration has been received and used to fund the working capital requirements.

Owing to losses, the CARE downgraded the rating from BBB to BBB, signifying that the Company has current capacity to meet its debt obligations. The average cost of fi nance was slightly higher than the last year mainly due to the above revision in the rating. During the year under review, there were no defaults either in servicing or repayment of debts.

DIVIDEND

In view of the losses incurred, the Board of Directors expresses its inability to recommend any dividend for the year.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Your Company has three manufacturing units viz., Linear Alkyl Benzene (LAB), Chlor Alkalis comprising Caustic Soda & Chlorine and Epichlorohydrin (ECH).

LAB, a colorless organic compound is an intermediate chemical used in the manufacture of household and industrial cleaning agent and enjoys a good demand from the detergent industry as its basic raw material. Based on application, the LAB market can be broadly segmented into Linear Alkylbenzene Sulfonate (LAS) and other applications. A major portion of the global LAB production is utilised for the production of LAS. The applications for LAS have been further segmented on the basis of the end use namely heavy-duty laundry liquids, light-duty dishwashing liquids, and laundry powders, industrial and household cleaners. Heavy-duty laundry liquids are mainly used for commercial laundry purposes and are the most dominant application segment for LAS. It has been reported that the demand for household cleaners is expected to exhibit the fastest growth rate amongst all the application segments. Other niche applications of LAB include ink solvents, agricultural herbicides, wetting agents, emulsion polymerization, electric cable oil and the paint industry.

All the major manufacturers of LAB in India, including TPL, have adopted the technology from UOP, USA, which is considered superior to the other processes involving chlorination. The cost of production of LAB in India had been relatively higher than the international standards mainly on account of higher cost of kerosene and quality issues relating to the feedstock.

Till recently, the domestic demand for LAB was being met fully through indigenous sources and a substantial quantity was being exported. However, from the year 2012-13, there has been a sudden spurt in import of LAB into India, mainly attributable to global economic slowdown and creation of new capacities in the Middle East. The imports during 2013-14 was more than 2.20 lakh tons against 1.15 lakh tons in the previous year. The sharp decline in the rupee value during the year also hit the profitability, though this led to lower imports during the period and TPL could regain some lost ground.

In sum, with very high crude price and rupee depreciation the cost of production of LAB was went up substantially but such higher cost could not be passed on in full to the customers, due to competition from overseas suppliers.

Caustic Soda, a most commonly used industrial chemical, fi nds wide application in Textile, Pulp & paper, Aluminium, Soaps & detergents industries in India. The capacity in India was about 31.34 lakh ton in March 2013 with a capacity utilization of around 81%. The capacity is expected to increase to 34.5 lakh ton by March 2015. India has enough capacity to meet the domestic demand but due to dumping from overseas, the capacity utilization has been low.

Chlorine, a co-product of Caustic Soda is widely used in sectors like Vinyl chloride, CPW, pulp and paper, water purifi cation, chlorinated solvents, etc. Since this is a co-product of Caustic Soda, the prices take a dent when the demand for caustic soda increases and hence the pricing of the product has been affected considerably.

ECH is used as a key raw material in the manufacture of epoxy resins, pesticides and certain pharmaceutical formulations. Though there has been good demand for the product at global level, most of the top manufacturers use their entire capacity for captive consumption. The market is already reeling under supply - demand mismatch and new capacities created across the globe, especially in China, have worsened the situation.

Traditionally, ECH has been produced through petro-based feedstock, viz., propylene. However, glycerine, a bio-based feedstock obtained easily as byproduct from biodiesel production, is slowly replacing propylene. It is expected that the increasing availability of bio-based glycerine from biodiesel production would make it possible to produce bio-based ECH, at a lower cost.

OPPORTUNITIES AND THREATS

Over the past few years there has been a marked improvement in awareness about hygiene and also the standard of living has shown considerable improvement in India. This has helped the detergent markets to make inroads into remote areas, with the help of visual advertisements. Therefore the production of detergents is expected to grow further, paving way for higher off- take of LAB in the years to come. However, the surplus capacity creater overseas has resulted in dumping of materials in to India leading to price war. This constraints the Company''s ability to realise the price in full.

Caustic Soda continues to be an important industrial intermediary fi nding application in many industries. With the demand for textiles and apparels increasing on account of urbanization and more spending on personal effects, the market for Caustic Soda is expected to grow further. However, unabated increase in cost of power is curbing the profitability of the domestic manufacturers. Also the ever increasing imports has been affecting the margins and the profitability of domestic players.

The per capita consumption of Chlorine in India is stated to be around 1.85 kg vis a vis 13 kg in China and hence there exists good growth opportunities. However, this could happen only if substantial investments are made in the vinyl industry, the key end-user of the product. Downstream PVC Industry in India is growing @ 14% (YOY in 2012-13) but not utilizing domestic chlorine due to non-availability of petro-chemical feedstock. India is one of the largest importers of EDC & VCM i.e. indirect imports of chlorine leading to low utilization of domestic chlorine. The problems of storage and disposal of Chlorine during peak demand for Caustic Soda are the major limiting factors for both Caustic Soda and Chlorine.

OUTLOOK

LAB

Import of LAB is increasing year on year which will impact the margins of TPL further. During the year 2013-14, the imports doubled to 2.15 lakh tons which were over 1 lakh ton in 2012-13. This trend may continue in the current year. TPL has established itself as a major player in the LAB market and hence the customer base is expected to be retained, in spite of competition through imports. To overcome the increase in input cost, various energy saving measures have been taken up and modifi cation in pre- fractionation unit has been initiated. As a step forward, TPL is also looking at increasing the NP capacity to bringdown imports.

Caustic Soda / Chlor alkali

The Global Caustic Soda growth is expected to be 3.2% by 2018. Alumina and Pulp & Paper sectors, major consumers of Caustic Soda have been impacted by the global economic outlook. It has been stated that the growth in many of developed regions will be slow. On the other hand based on the ongoing expansion projects, the caustic soda availability from the USA, Asia and Middle East will be more, threatening to further increase the imports into India, which is already affected by huge and ever-increasing imports. The imports have doubled in about 3 years at 3.79 lakh tons in 2013-14 from 1.87 lakh tons in 2010-11. The imports during April 2014 alone were over 56,000 tons, against 24,000 tons in the corresponding period in the previous year. It has been reported that the Indian industry is capable of meeting its domestic demand but because of high input costs and poor infrastructure, is not competitive internationally. It also faces dumping of cheap imports from other countries like Iran, Saudi, Korea RP, Japan, etc. where power is available at a lower price. To overcome this, focus will have to be on zero liquid discharge and reduction in power consumption which will need more of integrated plants. However, under the present conditions TPL may not be able to go for integration and hence the long term survival of the HCD would depend on the success of the cost cutting efforts taken by the Company.

ECH

TPL is looking at alternate options for using the ECH facility which at present remains moth-balled. It is being explored if the facilities can be modifi ed for the manufacture of Propylene Oxide so that the Company would be able to use the Chlorine as well and contribute to the overall operations.

RISKS AND CONCERNS

As stated earlier, the import of LAB, Caustic Soda and indirect form of Chlorine is the major risk faced by TPL. The average realization continues to be low and the efforts of the Company to curtail the imports through combined action of the domestic manufacturers did not materialize.

TPL is a power intensive industry and hence the renewable purchase obligation, which is being challenged by the Company at the appropriate forum, could be a dampener in its efforts to bring down the power cost. Also, the cost of salt and transportation are going up due to various factors. If the oil subsidy is marginalized, the input cost for TPL could go up substantially and the survival of the Chlor Alkali Division in the long run could be a major concern to be addressed by the Company.

SAFETY, HEALTH & ENVIRONMENT

Adequate safety standards have been prescribed and followed by the Company without compromise. Prime importance is given to protection of the employees, plant & machinery and environment at all times.

During the year a mock drill operation was held to show-case the preparedness of the Company to meet emergencies. The program was organized as a part of the Conference on Chemical (Industrial) Disaster Management held under the aegis of the National Disaster Management Authority and FICCI at Chennai during November 2013. More than 120 delegates from all over the country participated in the programme in addition to the dignatories from various government agencies who were appreciative of the systems and procedures being practiced by the Company. Your Company has planted saplings in and around the factory premises as part of its green initiatives and to promote carbon offset.

SUBSIDIARIES

Certus Investment and Trading Ltd., and its wholly owned subsidiaries

Your Company established Certus Investment and Trading Ltd. (CITL), Mauritius as its Wholly Owned Subsidiary (WOS) to serve as a Special Purpose Vehicle (SPV) to set up LAB and NP projects in Middle East and South East Asia. CITL in partnership with Saudi Offset Limited Partnership (SOLP) promoted Gulf Petroproduct Co. EC (GPC) to implement a LAB project in the Middle East. The project was affected due to varied factors, mainly regulatory issues in Bahrain. Therefore the project had to be abandoned and the company was liquidated voluntarily. CITL also established CITL (S) Pte. Ltd. in Singapore to function as a coordinator for TPL''s overseas procurement and marketing activities.

Proteus Petrochemical Private Ltd. (Proteus) is a subsidiary of CITL formed for setting up a Normal Paraffi n Project in Singapore. The proposal is to establish a green-fi eld Normal Paraffi n (NP) project plant along with associated utilities and off-sites. The project has run into certain problems and hence there has been delay in completing the same as per schedule. The Company is examining further action to be taken in this regard.

Information under Section 212

A statement pursuant to Section 212 of the Companies Act, 1956 (the Act) giving information on the subsidiary companies is attached hereto. In terms of the general exemption granted by the Ministry of Corporate Affairs under Section 212 of the Act, vide General Circular No. 2/2011 dated 8th February 2011 copies of the fi nancial statements and other documents of the subsidiary companies have not been attached to this Report. The Consolidated Financial Statements presented herewith include the fi nancial information of the subsidiaries, as required under Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India.

The annual accounts of the subsidiary companies and the related detailed information will be made available to the shareholders of the Company and the subsidiary companies seeking such information and shall also be available for inspection at the Registered Offi ce of the Company and the subsidiaries.

JOINT VENTURE

Petro Araldite Pvt. Ltd. (PAPL)

PAPL was set up in the year 1996 to manufacture basic resins for epoxy applications and the present JV Partner is Vantigo. PAPL has facilities to manufactuer of Basic Liquid Resin, Solid Resin and Formulated products.The performance of the JV has been cyclical, but in the recent past PAPL has been incurring losses due to changed market scenario.

With the conditions not improving, PAPL has closed down their Basic Resins manufacturing facilities during the 2nd half of the year and is now operating only its'' formulations plant.

As per the unaudited fi gures furnished by PAPL, the total revenue during the year was Rs. 219.54 crore compared to Rs. 354.54 crore during 2012-13. The company incurred a loss of Rs. 8.29 crore against Rs. 14.45 crore in the previous year.

HUMAN RESOURCES

Management strongly believes that the strength of your Company is directly proportional to the strength of its employees in terms of the knowledge, experience, analytical and decision making skills. Your Company has been practicing various HR initiatives such as recognition, empowerment, personality development, decentralization of delegation of powers etc., to retain the talents and to enhance their enabling capabilities. A balanced staffi ng system has been judiciously adopted in your Company wherein competent fresh talents have been engaged to infuse young blood into the steam of experienced hands.

The training needs of employees have been identifi ed at regular intervals through performance appraisal systems and necessary training is being imparted through in-house and external programmes. Apart from the routine, job related training for personality development and leadership skills are imparted to enhance the administrative capabilities of employees.

The wage settlement dispute with LAB/ECH wokmen pending since 2005 was settled through negotiations. However, this has not helped restoring the cordial industrial relations owing to the indifference and unfair practices of the workmen. A stiff resistance by the workmen to the various measures taken by the Management to cut-down cost and increase productivity is snow-balling and the Management is adopting a wait and watch approach to avoid precipitating the issues further for the overall benefi t of all the stakeholders.

The man power strength as on 31st March 2014 was 429 and none of the employees of your Company was in receipt of remuneration exceeding the sum prescribed under Section 217(2A) of the Act.

DIRECTORS

The Board at the meeting held on 29th October 2013 recorded the resignation of Mr N S Palaniappan, IAS, Director & Chairman. The Board places on record its appreciation for the invaluable services rendered by Mr. Palaniappn during his association with the Company.

Mr Hans Raj Verma, IAS, Chairman and Managing Director of TIDCO was transfered and consequently he resigned as a Director of TPL which effective from 18th June 2014. The Board places on record its appreciation for the invaluable services rendered by Mr. Verma during is association with the Company.

Mr C V Sankar, IAS appointed as Director & Chairman by the Board at the meeting held on 29th October 2013 holds offi ce upto the date of the ensuing Annual General Meeting.

Mr. M Pazhaniandy Pillai was appointed as an Additional Director under Section 152 of the Act and Whole-time Director (Operations) by the Board at the meeting held on 27th May 2014. His appointment as a Director liable to retire by rotation under Section 160 of the Act and approval for his appointment as Whole-time Director (Operations) and his remuneration will be considered at the ensuing AGM.

At the aforesaid meeting of the Board, Mr. C Ramachandran, IAS, (Retd.), Mr. N R Krishnan, IAS (Retd.), Dr. K U Mada and Mr. Dhananjay Mungale have been appointed as Independent Directors under Section 149 of the Companies Act, 2013 (the new Act) and are not liable to retire by rotation. As per the provisions of the new Act, their appointment are to be approved by the shareholders in the general meeting and hence the same is proposed to be considered at the ensuing AGM.

Mr. R Karthikeyan, Director, retires by rotation and being eligible, offers himself for re-election.

DIRECTOR RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217(2AA) of the Act, your Directors hereby confi rm that: -

(i) In preparing the Annual Accounts for the year ended 31st March 2014, all the applicable accounting standards have been followed; (ii) Prescribed accounting policies were adopted and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2014 and of the loss of the Company for year ended on that date; (iii) Proper and suffi cient care for the maintenance of adequate accounting records have been taken in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities; and (iv) The Annual Accounts have been prepared on a "going concern" basis.

ADEQUACY OF INTERNAL CONTROLS

Your company has in place adequate internal control systems combined with delegation of powers and periodical review of the process. The control system is also supported by internal audits and management reviews with documented policies and procedures.

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges. A Report on Corporate Governance is made a part of this Report and a Certifi cate from the Auditors regarding compliance with the requirements of Corporate Governance is attached to this report.

AUDITORS

M/s. Deloitte Haskins & Sells, appointed as the Auditors of the Company at the 28th Annual General Meeting held on

5th August 2013 hold offi ce till the conclusion of 29th Annual General Meeting and are eligible for re-appointment. As per Section 139 of the new Act, they can hold offi ce from the conclusion of the 29th AGM till the conclusion of the 31st AGM. Their re-appointment will have to be ratifi ed by the Members at the AGM, each year. In compliance with the requirements of the new Act, it is proposed to appoint the retiring Auditors to hold offi ce till the conclusion of the 31st AGM to be held in the year 2016 and subject to ratifi cation at the 30th AGM.

COST AUDIT

The Cost Audit Report for the year ended 31st March 2013, duly certifi ed by Mr. P R Tantri, Cost Accountant, was fi led on the due date i.e. on 27th September 2013. Mr. P.R. Tantri, Cost Accountant has been appointed as the Cost Auditor of the Company for the fi nancial year 2013-14 pursuant to Section 233B of the Act.

FIXED DEPOSITS

Your Company has not accepted any deposits from the public during the year under report.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Act, are attached, to the extent applicable, and form part of the Report.

ACKNOWLEDGEMENT

Your Directors are grateful to the Government of India, the Government of Tamilnadu, fi nancial institutions, banks, other lending institutions, promoters, technical collaborators, suppliers, customers, joint venture partners and marketing agents for their assistance, co-operation and support. The Directors wish to thank the shareholders for their continued support. The Directors also place on record their appreciation for the contributions by the employees.

DISCLAIMER

Estimates and expectations stated in the Reports of the Directors and Management Discussion and Analysis may be "forward- looking" statements within the meaning of applicable securities laws and regulations. Actual results could materially differ from those expressed or implied in these reports on account of any change economic conditions affecting demand / supply and price of the products, input cost, in the domestic and international markets, changes in the Government regulations, tax laws, statues and other incidental matters over which the Company has no direct or indirect control.

For and on behalf of the Board of Directors 1st July 2014 C V SANKAR, IAS Chennai - 600 068 Chairman

Mar 31, 2013

To The Shareholders

The Directors have pleasure in presenting the Twenty Eighth Annual Report on the business and operations of the Company and the audited Statement of Accounts for the year ended 31!l March 2013.

FINANCIAL RESULTS

(Rs. in crore)

Description 2012-13 2011-12

Revenue from Operations 1281.42 1248.19

Profit / (Loss) before Depreciation (0.34) 75.30

and Finance Cost

Less: Finance Cost 31.83 31.66

Less: Depreciation 38.62 37.19

Less: Exceptional Item 1.74

Profit / (Loss) before tax (72.53) 6.45

Tax expense (21.97) 0.51

Profit/(Loss) after tax (50.56) 5.94

Balance carried to Balance Sheet 40.19 90,75

OPERATIONAL HIGHLIGHTS AND PRODUCT-WISE PERFORMANCE

During the year under review, revenue from operations was Rs. 1281 crore vis a vis Rs. 1248 crore in FY 2011-12. Though there was some increase in the topline, the profitability was impacted severely primarily on account of astronomical increase in input cost, depreciation of rupee value and imported goods flooding the market. The Company could not pass on the additional costs to the customers due to intense competition from overseas suppliers and hence the results were negative.

During the year under review, there was a marginal dip in the capacity utilization of Linear Alky! Benzene (LAB) due to fall in demand from domestic users. Crude price increases and higher exchange rate, coupled with additional cost for alternate power to meet energy shortage resulted in lower margins. To overcome these, steps have been taken to bring down the input cost through implementation of Advanced Process Control System and energy audits.

The Captive Power Plant (CPP), run on furnace oil, was operated at a higher capacity to meet the residual power requirements. However due to increased fuel costs, the cost of power from the CPP also went up, bringing down the margins further. In order to moderate the power cost, the Company has gone for purchase of power from third parties.

During the year under review, the Chlor Alkali Division producing Caustic Soda and Chlorine performed well, recording a 95% capacity utilization. However, due to increased cost of production and Chlorine prices continuing to be low, there was a reduction in margins, with resultant erosion in profits.

The operations of Epichlorohydrin (ECH) division were also hampered due to higher input cost and surge in imports, bringing down the market prices sharply. The Company could not even recover the product cost in full, resulting in heavy cash losses during the year. Under the circumstances, the Unit was operated only to honour contractual commitments to Petro Araldite Private Limited, (PAPL) the Joint Venture Company.

FINANCIAL REVIEW

The year 2012-13 witnessed moderate changes in interest rates. The repo rate increases during the year 2011-12 resulted in steep increase in lending rates of banks and other operators. However, during the year under review, Reserve Bank of India retained these rates at the previous year''s level in the first half which were slightly brought down during the second half, to induce economic growth. On the forex front, there was a sharp decline in rupee value by about 6.7%.

The Company maintained its financial rating at BBB from Credit Analysis and Research Limited (CARE) during the year under review. This rating coupled with favorable key financial ratios, enabled the Company to obtain additional working capital limits for operations and financing cost was maintained at the previous levels through proactive steps.

During the year under review, there were no defaults either in servicing or repayment of debts. The proceeds from dis-investment of shares in SPIC Electric Power Corporation Private Limited (SEPC) were utilized as long term source for operations.

DIVIDEND

In view of the losses incurred, the Board of Directors expresses its inability to recommend any dividend for the year.

CORPORATE GOVERNANCE

Your Company has complied with the requirements of Corporate Governance as required under Clause 49 of the Listing Agreement entered into with the Stock Exchanges. A Report on Corporate Governance is made a part of this Report and Auditors'' Certificate regarding compliance with the requirements of Corporate Governance is attached to this Report.

AUDITORS

M/s. Deloitte Haskins & Sells, appointed as the Auditors of the Company at the 27th Annual General Meeting held on 18th September 2012 hold office till the conclusion of 28* Annual General Meeting and are eligible for re-appointment.

COST AUDIT

The Cost Audit Report for the year ended 31st March 2012, duly certified by Mr. A.N. Raman, Cost Accountant, the then Cost Auditor was filed on 1st February 2013 against the extended due date of 28* February 2013. Mr. P.R. Tantri, Cost Accountant has been appointed as the Cost Auditor of the Company for the financial year 2012-13 pursuant to Section 233B of the Companies Act, 1956.

FIXED DEPOSITS

Your Company has not accepted any deposits from the public during the year under review.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217(1) (e) of the Companies Act, 1956, are attached, to the extent applicable, and form part of the Report.

ACKNOWLEDGEMENT

Your Directors are grateful to the Government of India, the Government of Tamilnadu, financial institutions, banks, other lending institutions, promoters, technical collaborators, suppliers, customers, joint venture partners and marketing agents for their assistance, co-operation and support. The Directors wish to thank the shareholders for their continued support and also place on record their appreciation for the consistent good work put in by all cadres of employees.

DISCLAIMER

Estimates and expectations stated in the Reports of the Directors and Management Discussion and Analysis may be "forward-looking" statements within the meaning of applicable securities laws and regulations. Actual results could materially differ from those expressed or implied in these reports on account of any change economic conditions affecting demand / supply and price of the products, input cost, in the domestic and international markets, changes in the Government regulations, tax laws, statues and other incidental matters over which the Company has no direct or indirect control.

For and on behalf of the Board of Directors

22nd April 2013 N.S. PALANIAPPAN, IAS

Chennai - 600 068 Chairman

Mar 31, 2012

The Directors have pleasure in presenting the Twenty Seventh Annual Report on the business and operations of your Company and the audited Statement of Accounts for the year ended 31st March 2012.

FINANCIAL RESULTS (Rs. in crores)

2011-12 2010-11

Revenue from Operations 1309.35 1066.46

Profit before Depreciation and Finance 75.30 73.68 Cost

Less: Interest and Finance Cost 31.66 28.54

Less: Depreciation 37.19 37.99

Add: Exceptional Item - 22.22

Profit before tax 6.45 29.38

Provision for tax 0.51 -0.09

Profit/(loss) after tax 5.94 29.47

Balance carried to Balance Sheet 90.75 90.04

FINANCIAL REVIEW

The year 2011-12 witnessed vast changes and volatility in interest rates and forex markets making the cost of funds dearer. Your Company has been constantly working towards achieving interest reduction despite unfavourable macro economic factors. The efforts taken by your Company helped to restrict the weighted average Cash Credit interest to 14.64% as against 16.50% being the average lending rate for the Financial Year. This was possible due to improvement in the financial rating by Credit Analysis and Research Limited (CARE) during the year under review to BBB plus. Your Company also leveraged on the Buyers credit arrangements with Banks to save on interest cost.

Your Company was supported by additional working capital limits from working capital lenders which enabled to achieve budgeted production and sales of the three divisions. There was no additional term loan borrowing during the year, while one of the term loans was repaid in full.

With the forex markets remaining extremely volatile during this period your Company managed to mitigate partly the currency exposure risks by a combination of natural hedge of exports against imports and through appropriate forward covers.

DIVIDEND

Your Company has achieved a net profit after tax of Rs. 5.94 crores for the year 2011-12 as against Rs. 29.47 crores during 2010-11. Your Company came back into the dividend paying stream two years ago in 2009-10 after a gap of 3 years. In order to continue paying dividend and reward the shareholders, the Board of Directors, despite lower profits, take pleasure in recommending payment of dividend of 5% (0.50 paise per equity share) on the paid up equity share capital of your Company.

OPERATIONAL HIGHLIGHTS Linear Alkyl Benzene (LAB)

The performance of LAB operations continued to be good throughout the year and comparable with the previous year. LAB production was maintained at high levels during the year due to the installation of new molecular sieves in 2010.

Crude prices continued to be unstable. The acute power shortage in the State of Tamilnadu and the obligation on the part of the HT consumer to buy Renewable Energy Certificates has increased the cost of power. However, every effort is taken through energy audit, advance process control, etc., to reduce the energy consumption and optimal use of raw material. This has helped in controlling the cost of production. The first phase of Prefrac revamp was completed during end March 2012 and the benefit will be realised from the second quarter of 2012-13 onwards.

Continuous efforts are being made to identify and develop new markets. Your Company continues to meet sizeable demand of the domestic market for LAB and supplies to major international detergent manufacturers.

Epichlorohydrin (ECH)

The ECH unit has performed reasonably well compared to the previous year. The capacity utilisation was about 85%. The crude price variation has impacted the raw material prices largely. However, the finished product price also moved directionally in line with raw material price. Your Company continues to supply majority of the volume to the joint venture company M/s Petro Araldite Private limited. Large quantities of imported ECH and Epoxy resin are landing into the country from European sources due to sluggish demand in those places. The impact on cost of production due to power cut and rupee appreciation is partly being mitigated by carrying out energy optimisation and process optimisation.

Caustic Soda/ Chlor Alkali

The Chlor Alkali Division performance was better during the year over the previous year. The capacity utilisation was above 90%. However, the acute power shortage in the State of Tamilnadu has increased the power cost heavily. Due to high crude prices, the fuel oil prices increased and so the energy cost. The caustic market was very attractive with better realisation. However, the chlorine market has taken a beating as chlorine has to be disposed at throw away prices because of lower demand. The increase in cost of production due to energy cost rise is being combated by introducing various energy conservation and optimisation measures.

SAFETY, HEALTH & ENVIRONMENT

Your Company continuously follows adequate process safety standards to run the plants safely. Protection of employees, plant and machinery and the environment is accorded prime importance at all times. Your Company has won safety award from National Safety Council of India during 2011 for LAB plant. Safe operating days of 396, 1769 and 862 in LAB, ECH and CAD plants respectively were achieved as on 31st March 2012. Health of the employees is taken care bestowing fullest attention. As part of corporate social responsibility, your Company is preparing inventory of green house gases in the plants, to achieve carbon emission reduction. Your Company also provided class room amenities to a Primary School in Manali.

RESEARCH & DEVELOPMENT

On the R&D front main focus was given to improve the finished product quality. Studies related to improvement of production processes and development of new products using existing by-products as raw materials was also carried out. R&D wing also focussed environment performance assessment and source identification.

SUBSIDIARIES

SPIC Electric Power Corporation Private Ltd. (SEPC)

SEPC has been pursuing with various agencies to move forward on the 525 MW Thermal Power Plant at Tuticorin (the Project). During the year, M/s VO Chidambaranar Port Trust permitted SEPC to enter upon the alternate land for starting the Project work as SEPC had paid the lease rent dues and also obtained Environmental Clearance. SEPC therefore commenced various site development work such as Joint Physical Survey, Corner stone laying work, Name Board installation and site leveling work. With regard to the allocations / permissions for the foreshore facilities comprising of Coal jetty, Conveyor routing and Pump-house, SEPC had held discussions with VOCPT

In response to the petition filed by SEPC before Hon'ble TNERC during April 2010, an order was delivered on 9.5.2011 informing that there is no impediment in implementing the Project and further directed certain amendments to the PPA already executed by SEPC and TANGEDCO. Subsequently, SEPC and TANGEDCO negotiated and signed the amendments to the PPA on 10.1.2012 as ordered and submitted the same to Hon'ble TNERC. Consent to Establish the Project to be given by

Tamilnadu Pollution Control Board is in the advanced stage of issuance. SEPC would be continuing with its efforts so that the financial closure could be achieved early.

Certus Investment and Trading Ltd., and its Wholly owned Subsidiaries

Your Company established M/s. Certus Investment and Trading Ltd. (CITL) Mauritius as a Wholly Owned Subsidiary (WOS) of TPL to serve as a Special Purpose Vehicle (SPV) and set up LAB and NP projects in regions with encouraging demand potential viz., Middle East and South East Asia. M/s CITL in partnership with M/s. Saudi Offset Limited Partnership (SOLP) established a Company viz., M/s Gulf Petroproduct Co., EC (GPC) to set up a LAB project in the Middle East. Pre-project activities are in progress.

Proteus Petrochemical Private Ltd.(Proteus)

Proteus is a subsidiary of CITL formed for setting up a Normal Paraffin Project in Singapore. The proposal is to establish a green-field Normal Paraffin (NP) project plant along with associated utilities and off-sites.

A statement pursuant to Section 212 of the Companies Act, 1956, giving information on the subsidiary companies is attached hereto. The consolidated financial statements presented by your Company include the financial information of its subsidiaries, as required under Accounting Standard AS-21, issued by the Institute of Chartered Accountants of India.

In terms of the general exemption granted by the Ministry of Corporate Affairs under Section 212(8) of the Companies, Act, 1956 during February 2011, copies of the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies that are required to be attached to the Balance Sheet of your Company have not been attached. The Annual Accounts of the subsidiary will be made available to the shareholders and the subsidiary company investors who seek such information. The Annual Accounts of the subsidiary companies will also be kept for inspection by any investor at the Registered Office of TPL and of the subsidiary company concerned.

STATUS OF ACTIVE INVESTMENTS

Petro Araldite Pvt. Ltd. (PAPL)

In 2011-12, PAPL produced a total of 29,510 MTs (as against 30,536 MTs in 2010-11) comprising of Basic Liquid Resin, Solid Resin and Formulated products. Sales during the year was Rs.339.57 crores compared to Rs.327.42 crores during 2010-11.

During the financial year 2011-12, PAPL incurred a net loss of Rs.7.49 crores (unaudited) as against a net profit of Rs.10.11 crores during the previous year. The reason for the dip in performance was mainly due to sluggish demand for epoxy resins. PAPL declared a dividend of 10% on the paid up equity share capital for the year 2010- 11 and your Company received a dividend of Rs.136.80 lacs on its equity investment.

Henkel India Limited (HIL)

Your Company after the sale of 14.90% of the equity share capital of HIL to M/s. Jyothy Laboratories Ltd. (JLL) terminated the Shareholders' Agreement with Henkel AG & Co., KGaA on 6th April 2011. Subsequently, your Company sold the balance holding of 1.76% of the equity share capital of HIL to JLL on 2nd August 2011.

EMPLOYEES

Management strongly believes that the strength of your Company is directly proportional to the strength of its employees in terms of the knowledge, experience, analytical and decision making skills. Your Company has been practicing various HR initiatives such as recognition, empowerment, personality development, decentralization of delegation of powers etc., to retain the talents and to enhance their enabling capabilities. A balanced staffing system has been judiciously adopted in your Company wherein competent fresh talents have been engaged to infuse young blood into the steam of experienced hands.

Effective communication system prevalent in your Company facilitates the employees positioned at various levels in various functions to be a large vibrant cohesive team. Regular flow of upward communication to the top Management by way of MIS from various functions and percolation of Management messages, corporate goals and objectives of your Company to the junior most team member contributes to a great extent to the efficiency of the employees with perfection.

To improve the efficiency of manpower, a scientific system of performance planning and review system has been established to bring about a healthy competition among the employees by motivating them through recognition by way of rewards linked with progressions/promotions based on performance scores. Your Company has introduced a scheme titled as "Best Employee of the Quarter" to identify the Best Employee. The Best Employee is identified in each unit viz., LAB/ECH and HCD for every quarter and suitable reward is given with the title of - "The Best Employee of the Quarter".

The training needs of employees have been identified at regular intervals through performance appraisal systems and necessary training are imparted through in-house and external programmes. Apart from the routine job related training for personality development and leadership skills are imparted to enhance the administrative capabilities of employees.

The HR Management systems and procedures are constantly bench marked to excel in all the HR activities and to take care of internal and external challenges in the rapidly changing business scenario.

The wage settlement for LAB/ECH is pending from 1.1.2005. The case was referred to Industrial Tribunal (IT). The IT have given award for LAB / ECH division. However, the Management challenged the Award in the Madras High Court. The Madras High Court stayed the award with the condition of matching the salary as per 18(1) settlement to the unsigned employees and deposit 50% of the Industrial Tribunal award in the Court. The Management duly fulfilled the order of the High Court and the main case is in trial. In the meanwhile, talks are also going on to complete the settlement.

During the year, no employee of your Company was in receipt of remuneration exceeding the sum prescribed under Section 217(2A) of the Companies Act, 1956. Hence, furnishing of particulars under the Companies (Particulars of Employees) Rules, 1975 does not arise.

DIRECTORS

Since the date of the last Directors Report, Thiru K. Dhanavel, I.A.S. was appointed as an additional Director of your Company representing TIDCO at the Board Meeting held on 26th April 2012.

Pursuant to the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Tvl. Dhananjay N. Mungale, T.K. Arun, Directors and V. Ramani, Director & Chief Financial Officer shall retire by rotation and being eligible, offer themselves for re-election.

The term of office of Thiru K. Dhanavel, IAS, shall be upto the date of the ensuing Annual General Meeting. Notice in writing pursuant to Section 257 of the Companies Act, 1956 has been received from TIDCO proposing the candidature for appointment as Director of your Company liable to retirement by rotation.

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217(2AA) of the Companies Act, 1956 (the Act), your Directors hereby confirm that: -

(i) in preparing the Annual Accounts for the year ended 31st March 2012, all the applicable accounting standards have been followed;

(ii) prescribed accounting policies were adopted and applied consistently and judgements and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2012 and of the profit or loss of the Company for year ended on that date;

(iii) proper and sufficient care for the maintenance of adequate accounting records have been taken in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities; and

(iv) the Annual Accounts have been prepared on a "going concern" basis.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Report on Corporate Governance with Auditors' Certificate on compliance with the conditions of Corporate Governance and a Management Discussion and Analysis Report have been attached to form part of the Annual Report.

AUDITORS

M/s. Deloitte Haskins & Sells, appointed as Statutroy Auditors at the 26th Annual General Meeting held on 16th September 2011 retire at the conclusion of 27th Annual General Meeting and are eligible for re-appointment.

COST AUDITORS

Thiru A.N. Raman, Cost Accountant was appointed as the Cost Auditor of your Company for the financial year 2011-12 pursuant to Section 233B of the Companies Act, 1956 to carry out the audit of your Company's cost records of its three products viz. Linear Alkyl Benzene, Epichlorohydrin and Chlor Alkali. The Cost Audit Report for the year ended 31st March 2011, was duly certified by Thiru A.N. Raman, Cost Auditor and filed within the due date with the Ministry of Corporate Affairs on 12th September 2011.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Companies Act, 1956, are attached to form part of the Report.

ACKNOWLEDGEMENT

The Management is grateful to the Government of India, the Government of Tamilnadu, the Reserve Bank of India, financial institutions, banks, other lending institutions, insurance companies, promoters, shareholders, technology suppliers, raw material suppliers, valued customers, joint venture partners, statutory auditors, contractors, marketing agents and vendors for their continued support and co-operation.

The Directors also wish to place on record their appreciation of the persistent efforts, involvement and contribution of all the employees which have been instrumental for the improved performance.

For and on behalf of the Board of Directors

Chennai - 600 068 DR N. SUNDARADEVAN

26th April 2012 Chairman

Mar 31, 2011

The Shareholders

The Directors have pleasure in presenting the Twenty Sixth Annual Report on the business and operations of your Company and the audited Statement of Accounts for the year ended 31st March 2011.

FINANCIAL RESULTS (Rs. in crores)

2010-11 2009-10

Sales (Gross) 1182.74 973.49

Profit before Depreciation and Interest 68.28 65.44

Less: Interest and Financial charges 23.13 21.29

Profit after Interest 45.15 44.15

Less: Depreciation 37.99 30.82

Add: Exceptional Item 22.22 Ã

Profit before tax 29.38 13.33

Provision for tax -0.09 2.56

Profit/(loss) after tax 29.47 10.77

Balance carried to Balance Sheet 90.04 71.02

FINANCIAL REVIEW

The companyÃs debt equity ratio and Debt Service Coverage Ration DSCR as at 31st March, 2011 stands at 0.22 and 2.01 times respectively. Your Company continues to maintain the confidence of lenders as short term working capital requirements for enhanced additional production were fully met from the working capital lenders by first quarter of 2009-10. Further, improved rating of BBB determined by Credit Analysis and Research Limited (CARE) helped the company to negotiate interest rates with lenders. With repayment of long term debts, the companyÃs debt profile is skewed towards short term lending. With the upswing in interest rates due to policy announcements of RBI, the interest rate saw upward swings from quarter to quarter during the financial year 2009-10. Despite these developments, the company by judiciously managing the working capital, could limit the interest cost with only a marginal increase. The cash chest built out of disinvestment of equity shares of Henkel India Limited augurs well for your company as it would help to leverage the availing of working capital limits during 2011-12.

DIVIDEND

Your company has achieved a net profit after tax of Rs. 29.47 crores for the year 2010-11 as against Rs. 10.77 crores during 2009-10. Considering the satisfactory financial health, availability of funds and with a view to reward the shareholders, the Board of Directors have pleasure in recommending payment of dividend of 10% (Rs. 1/- per equity share) on the paid up equity share capital of your Company.

OPERATIONAL HIGHLIGHTS Linear Alkyl Benzene (LAB)

The overall performance of LAB operations has surpassed that of the previous year with increased production and sales. The installation of new molecular sieves in the n-paraffin unit in January 2010 has yielded results improving the normal paraffin plant capacity utilization. LAB production during the year was higher at 98,682 MT.

The steady increase in crude prices during the year has not affected the performance much. Your Company still derives energy conservation benefits year after year through advanced process controls and other stringent measures. During the year, your Company has taken up revamp of the pre-fractionation unit, to be followed by the revamp of the balance section of the n-paraffin unit. This will help to increase further the n-paraffin capacity in the years to come. New markets are being identified for increasing the sales volume.

Among the Indian Companies, your Company continued to be the leader in meeting the domestic supplies of LAB to leading international detergent manufacturers like Henkel AG & Co., KGaA, Germany and Procter & Gamble.

Epichlorohydrin (ECH)

The performance of ECH plant was profitable with improved production and sales. The capacity utilization of the plant was 80%. The higher sales volume compared to the previous year was due to higher off-take in India. The margins improved in line with the price trend in international market. The international price trend seems to be moving north due to shut down of plants in Japan and reduced availability of products from Russia. Margins could have been better but for the high price of propylene and cost of power. Although the low duty on imports continues to be a major deterrent, M/s. Petro Araldite Private Ltd., the Joint Venture Company is relying on your Company for its ECH requirements.

Caustic Soda / Chlor Alkali

The performance of the Chlor Alkali division, in terms of production and sales, was maintained in 2010-11 as well. Profitability was, however, greatly affected due to non-availability of industrial grade salt resulting in higher prices, power cuts /restrictions on usage of power by TNEB leading to higher reliance on captive power based on fuel oil with higher attendant costs. The increased cost of production could not be passed on to the consumer due to surplus supply and stiff competition.

SAFETY, HEALTH & ENVIRONMENT

Strict safety standards, on site and off site required to protect the employees, plant and machinery and the environment were maintained. The Company won safety awards for safe operation of the plants. Safe days of operation reckoned as per safety practices achieved in LAB, ECH and Chlor-alkali plants as on 31st March 2011 stood at 31, 1403 and 498 respectively. Health of the employees is given utmost attention. As a contribution to the cause of environment and service to the society your Company undertook a tree plantation programme in a school in Manali.

RESEARCH & DEVELOPMENT

Research and development was given due importance to improve the quality of the products. Process improvements to achieve better specific consumptions and superior quality were the areas of concentration. Studies relating to the improvement of environmental performance of the organization were carried out. In the ECH plant, studies aimed at improving the quality of side stream products and converting them into value added products was carried out.

SUBSIDIARIES

SPIC Electric Power Corporation Private Ltd. (SEPC)

Project related activities to develop the 525 MW Thermal Power plant at Tuticorin are fast progressing. The investor company, Trinity Infraventure Limited, has been infusing funds and has contributed Rs.1191.45 lakhs so far. Tuticorin Port Trust (presently known as ÃVO Chidambaranar Port TrustÃ) have communicated to SEPC that the Ministry of Shipping, Government of India have approved the proposal of allocation of alternate land for the project. Action has been initiated to take possession of the land. Environmental clearance from the Ministry of Environment and Forests has been obtained for the project. SEPC filed a Petition during April 2010 before the HonÃble Tamil Nadu Electricity Regulatory Commission (TNERC) seeking its direction to pass an order directing the Tamil Nadu Electricity Board (TNEB) to act in accordance with the terms contained in the already concluded PPA (Power Purchase Agreement) with SEPC. Hearing is over and final orders are reserved in the matter. SEPC has filed an application for financial assistance which is under consideration.

Certus Investment and Trading Ltd., and its Wholly owned Subsidiaries With the objective of setting up LAB and NP projects in regions with encouraging demand potential viz., Middle East and South East Asia, your Company established M/s. Certus Investment and Trading Ltd. (CITL) Mauritius as a Wholly Owned Subsidiary Company (WOS) of TPL to serve as a Special Purpose Vehicle (SPV).

M/s CITL in partnership with M/s. Saudi Offset Limited Partnership (SOLP) established a Company viz., M/s Gulf Petroproduct Co., EC (GPC) to set up a LAB project in the Middle East.

Pre-project activities for setting up the LAB unit are in the final stage. Steps are afoot to enter into a firm feedstock supply agreement with a Qatar based supplier who proposes to supply the feedstock, n-paraffin, from its gas to liquid plant. The gas to liquid plant is in the final stage of completion. The project will pick up momentum once the feedstock supply agreement is firmed up.

Proteus Petrochemicals Private Ltd.

CITL has set up a subsidiary, M/s.Proteus Petrochemicals Private Ltd., as the Project Company for setting up a Normal Paraffin Project in Singapore. The proposal is to establish a green-field Normal Paraffin (NP) project plant along with associated utilities and off-sites. The plant capacity is 125000 MTs per annum. CITL has proposed to invest 28% of the equity with the balance equity contribution being met by a foreign Investor and the Singapore Economic Development Board.

During the year under review, M/s.Proteus Petrochemicals Private Limited has recorded significant progress in its project activities. The Basic Engineering Agreement with UOP has been signed and the kick off meeting took place during December 2010. LOI on a lump sum fixed price basis was given to Mitsubishi Kakoki Kaisha Ltd. (a subsidiary of Mitsubishi Heavy Industries) for Engineering, Procurement and Design with completion and process guarantees. A definitive agreement is expected to be signed by July 2011. Financial closure is expected by May 2011 and commencement of commercial production by November 2012.

A statement pursuant to Section 212 of the Companies Act, 1956, giving information on the subsidiary companies is attached hereto.The consolidated financial statements presented by your Company include the financial information of its subsidiaries, as required under Accounting Standard AS-21, issued by the Institute of Chartered Accountants of India.

In terms of the exemption granted to your Company by the Central Government under Section 212(8) of the Companies, Act, 1956, copies of the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies that are required to be attached to the Balance Sheet of your Company have not been attached. The Annual Accounts of the subsidiary will be made available to the shareholders and the subsidiary company investors who seek such information. The Annual Accounts of the subsidiary companies will also be kept for inspection by any investor at the Registered Office of TPL and of the subsidiary company concerned.

STATUS OF ACTIVE INVESTMENTS

Henkel India Limited (HIL)

Henkel India Limited achieved a turnover of Rs. 553 crores for the year ending 31st December 2010 compared to Rs. 592 crores in the previous year with Profit (before exceptional items) of Rs. 51.80 crores as against a Profit of Rs. 57.60 crores in the previous year.

Your Company has been looking for an opportunity to disinvest its equity holdings in HIL as part of its business restructuring. M/s. Jyothy Laboratories Ltd., Mumbai (JLL), a leading FMCG player in the country, with presence in detergent for fabric care and dish-wash categories and in household insecticides evinced interest in purchasing the equity shares of HIL held by TPL. After mutual discussions JLL offered to buy 14.90% of the equity share capital of HIL and the sale was completed on 16th March 2011. Subsequently, both Henkel AG & Co., KGaA, Germany and your Company mutually agreed to terminate the ShareholdersÃ Agreement entered into between them with no further liability or claim against each other. An understanding to this effect was signed on 6th April 2011.

Petro Araldite Pvt. Ltd. (PAPL)

In 2010-11 PAPL produced a total of 30,536 MT comprised of basic liquid resin, solid resin and formulated products. Sales during the year were Rs. 327.80 crores compared to Rs. 270.15 crores during the previous year. Total exports during the period were 3478 MTs compared to 3768 MT during the same period of last year.During the financial year 2010-11, PAPL earned a net profit of Rs. 14.22 crores (unaudited) as against Rs. 13.53 crores during the previous year. PAPL declared a dividend of 10% on the paid up equity share capital for the year 2009-10 and your Company received a dividend of Rs.136.80 lacs on its equity investment.

EMPLOYEES

The Management strongly believes that the strength of the Company lies in the morale, loyalty, knowledge and ability of its employees. The Company has been practising multiple HR initiatives such as recognition of good performance, empowerment, personality development, decentralization and delegation of powers and authority among other things to retain talent and to nurture it. A balanced and judicious staffing system has been adopted by the Company wherein fresh talent has been made to engage with age and experience.

The effective communication system prevalent in the company facilitates employees positioned at various levels and in various functional areas to weave into large vibrant cohesive team. Regular flow of upward communication to the top Management by way of MIS from various functions and perculation of Management messages, corporate goals and objectives of the Company to the junior most team member contributes, to a great extent, to the efficiency of the employees.

To improve manpower efficiency further, a scientific system of performance planning and review system has been established. This brings about a healthy competition among the employees by motivating them through rewards linked with progressions / promotions based on performance scores. The Company has introduced a scheme titled ÃBest Employee of the QuarterÃ in each unit viz. LAB/ECH and HCD every quarter and a suitable reward is given to the chosen employee along with the title of ÃThe Best Employee of the QuarterÃ.

Training Needs of employees have been identified at regular intervals through performance appraisal systems and necessary training is imparted through in-house and external programmes. Apart from routine job related training, special programmes for personality development and leadership skills are organized to enhance the administrative capabilities of employees.

The CompanyÃs HR Management systems and procedures are constantly benchmarked with an eye on excellence and to take care of internal and external challenges in the rapidly changing business scenario.

Wage settlement with employees of LAB/ECH and HCD are pending from 1.1.2005 and 1.7.2005 respectively. The disputes have been referred to the Industrial Tribunal. An Award was passed by the Industrial Tribunal for employees of LAB / ECH divisions. Management has challenged the Award in the Madras High Court and a stay has been granted with the condition to match the salary of unsigned employees, as per Section 18(1) settlement, and deposit 50% of amount payable as per the Industrial Tribunal award with the High Court . The Management has duly complied with the order of the High Court and the main case is pending. In respect of employees of HCD, the matter is pending before the Industrial Tribunal.

During the year, no employee of the Company was in receipt of remuneration exceeding the sum prescribed under Section 217(2A) of the Companies Act, 1956. Hence, furnishing of particulars under the Companies (Particulars of Employees) Rules, 1975 does not arise.

DIRECTORS

The changes that had occurred in the composition of the Board of Directors from the date of last DirectorsÃ Report are given below:

The Board of Directors

a) on 29th July 2011 recorded the withdrawal by TIDCO of the nomination of Thiru Rajeev Ranjan, IAS, as Director and Chairman. On the same day, Dr. N. Sundaradevan, IAS, nominee of TIDCO was co-opted as Director not liable to retirement by rotation and appointed as Chairman in the place of Thiru Rajeev Ranjan, IAS.

b) on 29th July 2011 recorded the withdrawal by TIDCO of the nomination of Thiru Sunil Paliwal, IAS, as Director of the Company.

The Board of Directors wish to place on record their appreciation of the valuable services rendered by Thiru Rajeev Ranjan, IAS, as Director & Chairman and Thiru Sunil Paliwal, IAS as Director during their tenure.

Pursuant to the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Tvl. C. Ramachandran, Dr. K.U. Mada and R. Karthikeyan shall retire by rotation and being eligible, offer themselves for re-election.

DIRECTORSÃ RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217(2AA) of the Companies Act, 1956 (the Act), your Directors hereby confirm that: -

(i) in preparing the Annual Accounts for the year ended 31st March 2011, all the applicable accounting standards have been followed;

(ii) accounting policies were adopted and applied consistently and made judgements and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2011 and of the profit or loss of the Company for year ended on that date;

(iii) proper and sufficient care for the maintenance of adequate accounting records have been taken in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities; and

(iv) the Annual Accounts have been prepared on a Ãgoing concernÃ basis.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Report on Corporate Governance with AuditorsÃ Certificate on compliance with the conditions of Corporate Governance and a Management Discussion and Analysis Report have been attached to form part of the Annual Report.

AUDITORS

M/s. Deloitte Haskins & Sells, appointed as Statutory Auditors at the 25th Annual General Meeting held on 11th August 2010, retire at the conclusion of the Twenty Sixth Annual General Meeting and are eligible for re-appointment.

With reference to the comments contained in the AuditorsÃ Report pertaining to the Assets held by the Company amounting to Rs. 2,123.63 lacs and expected to be transferred to the proposed overseas project, the Board of Directors wish to state that the Company is confident that the assets which are in the form of equipment and drawings for paraffin production can be transferred to its overseas project at a value not less than their cost as explained in Note No.19 of Notes to the Accounts.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Companies Act, 1956, are attached to form part of the Report.

ACKNOWLEDGEMENT

The Management is grateful to the Government of India, the Government of Tamilnadu, the Reserve Bank of India, financial institutions, banks, other lending institutions, insurance companies, promoters, shareholders, technology suppliers, raw material suppliers, valued customers, joint venture partners, statutory auditors, contractors, marketing agents and vendors for their continued support and co-operation.

The Directors also wish to place on record their appreciation of the persistent efforts, involvement and contribution of all the employees which have been instrumental for the improved performance.

For and on behalf of the Board of Directors

29th July, 2011 Dr. N. SUNDARADEVAN

Chennai Ã 600 068 Chairman

Mar 31, 2010

The Directors have pleasure in presenting the Twenty Fifth Annual Report on the business and operations of your Company and the audited Statement of Accounts for the year ended 31 st March 2010.

FINANCIAL RESULTS (Rupees in crores)

2009-10 2008-09

Sales (Gross) 973.49 1052.40

Profit before Depreciation and interest 65.44 60.17

Less: Interest and Financial charges 21.29 25.68

Profit after Interest 44.15 34.49

Less: Depreciation 30.82 32.58

Profit before tax 13.33 1.91

Provision for tax 2.56 (4.63)

Profit after tax 10.77 6.54

Balance carried to Balance Sheet 71.02 65.52

FINANCIAL REVIEW

Your Company was able to garner support from its bankers on account of improved performance during the year. This facilitated your Company to obtain additional working capital limit both fund and non fund based, besides availing one time credit facility to meet the urgent working capital needs. Your Company has been continuously working to reduce the overall interest cost and as a means to achieve the same during 2008-09, sale of non-core assets were made to pre pay high cost debt. Despite non-acceleration of debt repayment during 2009-10, the overall interest cost reduced from Rs. 25.68 crores in 2008-09 compared to Rs. 21.28 crores during current year, primarily due to reduction in working capital interest.

Your Company availed term loan from two of its existing bankers for replacement of Adsorbent chamber internals and Molecular Sieves in LAB plant molex section at interest rates below the prime lending rate of the respective banks and with a longer tenor. In view of the incremental revenues arising from the increased captive paraffin production, the loan can be liquidated without strain. The support extended by the working capital lenders and the extended credit support by suppliers helped your Company to tie up raw materials required to maintain production schedules for 2009-10.

DIVIDEND

Your Company declared dividend for the financial year 2005-06 and thereafter could not reward the shareholders

considering the loss incurred. The good turnaround performance during the year under review ended up with a net profit after tax of Rs. 10.77 crores. The Board of Directors therefore considers it imperative to declare dividend for 2009-10 and have recommended payment of dividend of 5% (Rs.0.50 per equity share) on the paid up equity share capital.

OPERATIONAL HIGHLIGHTS

During the year your Company has completed 25 years, since its inception in 1984. Over the years, your Company has grown to be recognized as one of the major Petrochemical manufacturers in India. At this juncture, your Company has redefined its vision to sustain and excel foreseeing the opportunities and threat considering the dynamic and highly competitive business environment.

Linear Alkyl Benzene (LAB)

The performance of the LAB operations during the year showed signs of reasonably improved margins and profitability in view of a fairly steady oil price scenario and with the specific consumption of key raw materials being maintained within the norms. LAB production during the year was higher at 85,068 MTs compared to the previous year. However the capacity utilization could have been higher but forthe plant turnaround during January 2010 for replacement of adsorbent chamber internals and sieves in the Molex unit. The sieves replacement is expected to restore the captive normal paraffin production to installed capacity levels thereby reducing the imports substantially in future. Your Company continues to enjoy the benefits of process efficiency and energy optimization gained through Advanced Process Control implemented earlier. LAB imports from the Middle-east countries are still a matter of concern as imports are increasing year after year. Your Company has therefore taken up the matter with the Government of India to impose anti dumping duty from specific countries which are trying to dump LAB into India at very low prices. Despite this scenario, your Company continues to be the sole supplier to Procter & Gamble and Henkel, KGaA, the leading international detergent manufacturers for their domestic requirements.

Epichlorohydrin (ECH)

The performance of the ECH operations during the year showed a reduced loss. Though the Sales quantity improved compared to the previous year, the realization has not been commensurate in view of subdued international price of ECH. The rising trend of input costs and particularly, the energy cost coupled with theinverted duty structure has greatly affected the margins. M/s. Petro Araldite Private Ltd. continues to source their ECH requirements from your Company.

Caustic Soda / Chlor Alkali

The performance of Chlor Alkali operations during the year diminished considerably due to various extraneous factors. The profitability was greatly affected due to increased variable costs consequent to high cost of captive power consumption in view of severe power cut imposed in Tamilnadu, which prevailed for most part of the year coupled with depressed caustic soda price due to cheaper imports. Your Company therefore decided to operate the plant at optimum capacity levels to the extent of using grid power and hence the capacity utilization was not comparable with the previous years level of production. This strategy however helped to minimize the loss of the division. Imposition of safeguard duty by the Government on temporary basis has not provided the desired relief to realize better margins.

SAFETY, HEALTH & ENVIRONMENT

Your Company has been maintaining safety standards required for the safety of employees and the society. During the year, your Company has won awards from the Factories Inspectorate for safe operations of the plant for the years 2006 and 2007. The safe days of operation achieved in the LAB, ECH and Chlor Alkali plant as on 31st March 2010 are 4997, 1038 and 133 respectively. Adequate care and attention is bestowed towards the health of the employees and the environment in and around the plant.

RESEARCH & DEVELOPMENT

Research and Development activities were mainly focused on quality improvement of products. Attention was paid towards process improvements to achieve specific consumptions of new bench mark levels. Focus was also on studies related to improving over all environmental performance of the organization. A few activities towards value addition of side stream products were carried out during the year.

SUBSIDIARIES

SPIC Electric Power Corporation Private Ltd. (SEPC)

The efforts to develop the 525 MW Thermal power project atTuticorin has gained momentum with the signing of the Shareholders and Share Subscription Agreement during last year with an investor company, Goldstone Exports Ltd. (name changed as Trinity Infraventures Ltd.). The investor company has been infusing funds and has so far contributed Rs. 1.51 crores.

A joint committee consisting of representatives from Central Electricity Authority (CEA) / Tamilnadu Electricity Board (TNEB) / Tuticorin Port Trust (TPT) has recommended an alternative site for locating the power project. SEPC after making preliminary investigations has found the land suitable. Thereafter the alternate site has been approved by TNEB/TPT/CEA. Consequent to the above development, the Arbitration proceedings initiated earlier to settle the dispute between SEPC and TPT over the earlier land allocation have been kept in abeyance.

Certus Investment and Trading Ltd. and its Wholly owned Subsidiaries Taking cognizance of its core strength in LAB business,your Company envisioned to be a dominant global producer by building new capacities in regions with promising growth potential viz. Middle East and South East Asia for setting up of LAB & Normal Paraffin projects. With the perspective of setting up such Projects overseas on joint venture basis, your Company established M/s. Certus Investment and Trading Limited (CITL), Mauritius, as a Wholly owned Subsidiary Company (WOS) of TPL, to serve as a Special Purpose Vehicle (SPV). CITL, in partnership with M/s Saudi Offset Limited Partnership (SOLP), established a company, M/s Gulf Petroproduct Co. to set up a LAB Project in the Middle East.

The Project proposal is to construct a 80,000 MT per annum standalone LAB Plant together with associated offsite facilities in Yanbu Industrial City, Kingdom of Saudi Arabia. The equity investment in the Project company would be made through Gulf Petroproduct Co. (GPC) in which CITL, the wholly owned subsidiary of TPL, has 50% shareholding.

The Project Company is in discussion with M/s Shell to finalize the terms of Feedstock Agreement, proposed to be supplied from the Pearl Shell Gas to Liquids (GTL) Project under construction in Qatar, with whom a Heads of Agreement (HoA) has earlier been executed in 2008. The feedstock supply will be made available from Pearl Shell GTL Projects 2nd phase which is slated for completion in 2012.

Based on the Information Memorandum & Financial Model of the Project, an investment bank in Middle East has evinced interest in Equity participation. A firm investment decision is expected from the investor after approval from their Board. Renewal of Investment license from Saudi Arabian General Investment Authority (SAGIA) & request for Site allocation will be initiated subsequent to firming of Feedstock supply Agreement with M/s Shell and tie up of Equity partners. The Project completion schedule is revised to the last quarter of 2012, to be in line with the Feedstock availability.

CITL has also established M/s Certus Investment & Trading (S) Pte Ltd., to function as co-ordinator of TPLs procurement and marketing services for its business operations outside India.

Proteus Petrochemicals Private Ltd.

CITL has set up a subsidiary, M/s Proteus Petrochemicals Private Limited as the project company for setting up a Normal Paraffin Project in Singapore. The proposal is to establish a green-field Normal Paraffin (NP) Project plant along with the associated utilities and off-sites. The Project was originally conceived for a capacity of 100,000 Metric tons per annum and was estimated to cost USD 125 Million, to be funded on a Debt: Equity ratio of 70:30. CITL had proposed to invest 51% of the Equity, with the balance Equity contribution coming from a Foreign Investor and Singapores Economic Development Board (EDBi).

The Project Company has now firmed up feedstock tie-up with Shell Singapore at a more competitive price than the earlier arrangement, for which the final Board approval from Shell Management is expected by May 2010. In view of the superior quality of feedstock to be obtained from Shell, the production capacity will be higher for the same quantity of feedstock to be processed. Accordingly in line with the higher design of Plant Capacity for 125,000 MTs per annum, the Project cost has been revised upwards to USD 150 Million. The Debt: Equity structure of the Project has also been changed to 65:35. However, to maintain the investment amount as envisaged earlier, CITL will now take only 28% of the Equity. Singapores EDBi and another Associate Investor will be investing 5% & 22% respectively towards Equity. In view of this arrangement, the Management control will still be with TPL. Balance 45% of the Equity is to be taken up by M/s Toyota Tsusho, a group company of Toyota Motor Corporation, Japan. Presence of Toyota Tsusho is expected to add value as it will be providing guarantee for 100% of debt, besides providing marketing support by virtue of their experience in LAB/NP trading business.

The Process Licensor Agreement & Engineering Agreement with M/s UOP has been finalized and is due for execution. The Detailed Engineering Contractor too has been finalized. The Project is now scheduled to kick-off in June 2010 with a target for commencement of commercial production by June 2012.

A statement pursuant to Section 212 of the Companies Act, 1956, giving information on the subsidiary companies is attached hereto. The consolidated financial statements presented by your Company include the financial information of its subsidiaries, as required under Accounting Standard AS-21, issued by the Institute of Chartered Accountants of India.

In terms of the exemption granted to your Company by the Central Government under Section 212(8) of the Companies Act, 1956, copies of the Balance Sheet, Profit and Loss Account and other documents of the subsidiary companies that are required to be attached to the Balance Sheet of your Company have not been attached. The Annual Accounts of the subsidiary companies and the related detailed information will be made available to the shareholders and the subsidiary company investors who seek such information. The Annual Accounts of the subsidiary companies will also be kept for inspection by any investor at the Registered Office and that of the subsidiary company concerned.

STATUS OF ACTIVE INVESTMENTS

Henkel India Limited (HIL)

Henkel India Limited achieved a turnover of Rs.509 crores for the year ended 31st December 2009 compared to Rs.508 crores in the previous year with Profit (before exceptional items) of Rs. 12.71 crores as against Profit of Rs.4.19 crores in the previous year. Henko and Mr.White, the main laundry care brands recorded a sales volume growth of 11 % and 2% respectively. Pril Utensil Cleaner registered a 22% growth in volume. In the Cosmetics and toiletries business of the Company, Soap category grew by 10.1% in value, Fa deodorant sales grew by 4% while Neem Active toothpaste witnessed a sales growth of 6.2%. The Schwarzkopf Professional Hair-Care Division (SKP) posted an impressive growth of 34%. SKP was official hair and styling partner for the Femina Miss India 2009, besides establishing a Hair-care Academy in Chennai.

Petro Araldite Pvt. Ltd. (PAPL)

During the financial year 2009-10, PAPL has earned a net profit of Rs. 13.53 crores (unaudited) *as against Rs.5.07 crores during previous year. The capacity utilization was 88% compared to 82% during the previous year. Total exports during the period was 3768 MT compared to 5030 MT during the same period last year. PAPL declared a maiden dividend of 5% on the paid up equity share capital for the year 2008-09 and your Company received a dividend of Rs.68.40 lacs on its equity investment.

FIXED DEPOSITS

During the year, the unclaimed deposit of Rs. 10,000/- was repaid to the deposit holder based on the claim received by your Company. Consequently, there is no unclaimed deposit as on 31st March 2010.

EMPLOYEES

Management is strongly committed to the belief that the sustenance and viability of the Company is commensurate with the quantity and quality of its manpower in terms of understanding, experience, decision making and problem solving skills both individually and as members of a well knit team.

In order to concretize this concept, the Company has been pursuing various HR initiatives and interventions with special focus on employee empowerment, multi- skilling and personality development both to recognize and retain the talents as well as to enhance their capabilities.

The HR Policy seeks to retain and re-orient the existing hands while infusing new blood and faces for a judicious balance. The HR department pursues a practice of continuing the Companys long built traditions, while gradually welcoming transition to newer concepts and tools in the context of globalization.

The communication system has been so structured as to enable information and messages to flow smoothly and without distortion both horizontally and vertically. Both to remove ennui and lassitude among employees, the Company has devised a system of progressions / promotions oriented to career development to ensure employee satisfaction and productivity. With a view to identify and recognize the extraordinary merits and contributions by employees, a system has been evolved to institute "The Best Employee of the Quarter" award in each and every Unit. Through a system of Performance Appraisal, employees contribution and achievements are objectively graded and suitable correctives are timely applied by purposeful training sessions and counselling.

Thanks to the approach to HR adopting the latest techniques, the disciplinary aspect and the Industrial Relations have been deftly managed impacting on production and harmony.

A statement giving information and particulars of Employees, as required under Section 217(2A) of the Companies Act, 1956, is attached to form part of this Report.

DIRECTORS

The details of changes in the composition of the Board of Directors since the date of last Directors Report are given below:

The Board of Directors on 28th January 2010

(a) recorded the withdrawal of nomination of Thiru M.F. Farooqui, I.A.S. as Director and Chairman by TIDCO. On the same day, Thiru Rajeev Ranjan, I.A.S. was co-opted as Director and appointed as Chairman vice Thiru M.F. Farooqui, I.A.S.

(b) co-opted Thiru Sunil Paliwal, I.A.S. as a Director of the Company representing TIDCO vice Tmt. Anita Praveen, I.A.S. and

(c) co-opted Thiru R. Karthikeyan as Director of the Company representing TIDCO vice Thiru T.S. Surendranath.

The Board of Directors wish to place on record their appreciation of the valuable services rendered by Tvl. M.F. Farooqui, I.A.S. as Director & Chairman, T.S. Surendranath and Tmt. Anita Praveen, I.A.S. as Directors during their tenure on the Board.

Pursuant to the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Tvl.N.R. Krishnan, Ashwin C. Muthiah and T.K. Arun shall retire by rotation and being eligible, offer themselves for re-election.

DIRECTORS RESPONSIBILITY STATEMENT

In compliance with the provisions of Section 217(2AA) of the Companies Act, 1956 (the Act), your Directors hereby confirm that: -

(i) in preparing the Annual Accounts for the year ended 31st March 2010, all the applicable accounting standards have been followed;

(ii) accounting policies were adopted and applied consistently and made judgements and estimates, that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2010 and of the profit or loss of the Company for year ended on that date;

(iii) proper and sufficient care for the maintenance of adequate accounting records have been taken in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing/detecting fraud and irregularities; and

(iv) the Annual Accounts have been prepared on a "going concern" basis.

CORPORATE GOVERNANCE

Pursuant to Clause 49 of the Listing Agreements with the Stock Exchanges, a Report on Corporate Governance with Auditors Certificate on compliance with the conditions of Corporate Governance and a Management Discussion and Analysis Report have been attached to form part of the Annual Report.

AUDITORS

M/s. Deloitte Haskins & Sells, appointed as Statutory Auditors at the 24th Annual General Meeting held on 23rd September 2009, retire at the conclusion of the 25th Annual General Meeting and are eligible for re-appointment.

With reference to the comments contained in the Auditors Report

(a) pertaining to SPIC Electric Power Corporation (Private) Limited (SEPC), the Board of Directors wish to state that the Company, SPIC Electric Power Corporation Private Limited (SEPC) and an investor company have signed a Shareholders and Share Subscription Agreement on 28th May 2009 for implementation of Power Project. The investor company has agreed to bring in 74% of the equity and has been meeting all the expenses of SEPC since August 2007. An alternative site for the project was identified and approved by TNEB/Tuticorin Port Trust (TPT)/Central Electricity Authority. SEPC has found the land suitable for the project. Demarcations under the Coastal Zone Regulation, Contour Survey, preliminary soil investigation have been completed. The process of obtaining environmental clearance from the Ministry of Environment,and Forests for setting up the project is at an advanced stage. SEPC will pay the arrears of lease rentals on taking possession of the land. The Detailed Project Report with the revised project cost is under consideration by SEPC. Consequent to the above developments, the arbitration proceedings between SEPC and TPT over the land allotted to SEPC and sought to be repossessed by the latter have been

kept in abeyance. The Ministry of Power, Government of India has clarified by its letter dated 24th February 2010 that the change of the alternate site would not alter the legal enforceability of the already concluded Power Purchase Agreement between SEPC and TNEB. In view of the substantial progress made in respect of this power project, no provision in the value of investment and advance against equity is considered necessary as explained in Note No. 21 of Notes to the Accounts.

(b) pertaining to the Assets held by the company amounting to Rs. 2123.63 lacs and expected to be transferred to the proposed overseas project, the Board of Directors wish to state that the Company is confident that the assets which are in the form of equipment and drawings for paraffin production can be transferred to its overseas project at a value not less than their cost as explained in Note No. 22 of Notes to the Accounts.

ENERGY, TECHNOLOGY AND FOREIGN EXCHANGE

Particulars relating to conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217(1)(e) of the Companies Act, 1956, are attached to form part of the Report.

ACKNOWLEDGEMENT

The Management is grateful to the Government of India, the Government of Tamilnadu, the Reserve Bank of India, financial institutions, banks, other lending institutions, insurance companies, promoters, shareholders, technology suppliers, raw material suppliers, valued customers, joint venture partners, statutory auditors, contractors, marketing agents and vendors for their continued support and co-operation.

The Directors also wish to place on record their appreciation of the co-operation, understanding of the corporate goals and active involvement and dedication of all the employees which enabled he Company to achieve its growth plans.

For and on behalf of the Board of Directors

Chennai - 600 068 RAJEEV RANJAN

5th May 2010 Chairman

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