Directors Report of NACL Industries Ltd.

Mar 31, 2023

Your Directors have pleasure in presenting the 36^th Annual Report of the Company together with the Audited Accounts for the year ended March 31,2023.

Operating Results:

Your Company''s performance during the year as compared with that during the previous year is summarized below:

(Rs. in Lakh)
Particulars	Consolidated		Standalone
	2022-23	2021-22	2022-23	2021-22
Total Income (including Other Income)	2,12,550	1,64,677	2,12,855	1,64,975
Profit before Share of profit from associate, Finance Cost, Depreciation and Tax	20,251	15,425	20,777	15,725
Finance Costs	4,733	2,665	4,409	2,984
Depreciation and Amortization Expense	2,815	2,496	2,594	2,495
Profit before Share of profit from associate, exceptional items and tax	12,703	10,264	13,774	10,246
Share of profit/(loss) from associate	138	(280)	-	-
Profit before tax	12,841	9,984	13,774	10,246
Current Tax	3,575	2,691	3,573	2,691
Deferred Tax	(221)	(49)	(78)	(49)
Profit for the year	9,487	7,342	10,279	7,604
Other Comprehensive Income	(56)	(51)	(59)	(43)
Total Comprehensive Income	9,431	7,291	10,220	7,561
Balance of profit brought forward from previous year	29,478	23,339	29,052	22,643
TOTAL	38,909	30,630	39,272	30,204
Appropriation
Dividend on equity shares	1,191	1,088	1,191	1,088
Less: Effective portion of cash flow hedges	25	64	25	64
Balance profit carried forward to balance sheet	37,693	29,478	38,056	29,052

Performance:

The Company has achieved highest ever consolidated revenue (including other income) of ^2,12,550 Lakh for yet another year as against ^1,64,677 Lakh achieved in the previous year, an increase of 29%. The Company''s profit before exceptional item and tax is ^12,841 Lakh during the year under review against profit of ?9,984 Lakh during the previous, an increase of 29%. The Company earned a profit after tax of ?9,487 Lakh against the profit of ?7,342 Lakh in the previous year, an increase of 29%. The growth in revenue can largely be attributed to Exports and Domestic Retail sales, which grew by 41% and 27% respectively over the preceding financial year.

Domestic Markets:

Domestic retail business of NACL empowers Indian farmers with sustainable and affordable solutions for crop protection. Retail business of the company has been growing at a CAGR of 61% for last 3 years while industry is growing at 5 to 7% by leveraging its brand equity supported by large field force and distribution network spread across India. During FY 2022-23 team focused on farmer centric approach by strengthening field marketing activities. We are working at creating long term

sustainable relationship with key channel partners through dealer club programs.

The year under review received 6% more rainfall during the principal monsoon season i.e June - September but East & Northeast India received 18% deficit rains. Even though monsoon was normal there was deficit rainfall during the sowing period i.e June - July leading to resowing. Later part of the season had heavy down pour impacting the liquidation of agrochemical products. Even though there was good acreage under rabi season, but demand was muted due to high kharif inventory in market.

Despite all the challenges, the Company has achieved domestic sales of ^1,25,395 Lakh (out of which domestic retail sales are ^83,755 Lakh) for the year under review against ^99,730 Lakh (out of which domestic retail sales were ^65,851 Lakh) in the previous year, a growth of about 26%. The growth is mainly attributable to our consistent efforts in enhancing our field marketing activities, New product introduction, focusing on key account management, supportive trade policies and strengthening our sales and marketing team.

Insecticides:

During the year under review, the domestic retail business under Insecticide category has achieved a revenue of ^48,834 Lakh against the revenue of ^39,115 Lakh in the previous year, an increase of 25%.

Despite the challenges in liquidation of insecticides during Kharif season owing to continuous rains for 2 months from mid July to end of September team has put in their best efforts in field activities to register tremendous growth in the product line. During the Rabi season there was heavy infestation of Stem borer and leaf folder in Paddy crop which enhanced the volumes of products under the category. During the year under review, the company successfully launched Nagarjuna Mantle a combination product for White fly & Mites in Chilli crop.

Herbicides:

During the year under review, the domestic retail business under Herbicide category has achieved a revenue of ?16,287 Lakh against the revenue of ^11,374 Lakh in the previous year, an increase of 43%.

Herbicide product line is being the fastest growing product line in Indian market due to increasing acceptance in India farmers to mitigate cost and labour availability challenges. This trend is expected to continue and to tap these opportunities, the Company has been strengthening its portfolio across crops like paddy, sugarcane, maize, wheat, and soybean which is also reflected in the growth of herbicide product line during the year. During the year under review, company has successfully launched Nagarjuna Dicaught Plus a combination product to control weeds in Cotton crop.

Fungicides:

During the year under review, the domestic retail business under Fungicide category has achieved a revenue of ?15,502 Lakh against the revenue of ^13,311 Lakh in the previous year, an increase of 16%.

Fungicide demand was relatively low due to favourable weather conditions in crops like Grape, Chilli Potato and Tomato. Despite the challenges the Company achieved decent growth leveraging its strong portfolio and marketing activities. During the year under review, company has successfully launched one 9(3) molecule under brand name Oscar to control Sheath Blight in Paddy and Fruit rot / Powdery Mildew in Chilli. Product received good traction in the market. The company also launched one 9(4) under brand name Kazan to control Sheath Blight in Paddy.

Plant Growth Regulators:

During the year under review, the domestic retail business under PGR / Bio Stimulant category has achieved a revenue of ?3,132 Lakh against the revenue of ?2,051 Lakh in the previous year, an increase of 53%.

Tremendous growth in this product line can be attributed to superior product performance and intense marketing activities.

Export Market:

The industry witnessed a growth of 6.9 % in the global markets in the FY 2022-23. The growth was largely driven by Latin America (17%), followed by north America (9%). Asian market grew at 4% and Europe, MEA and Africa consolidated reporting a degrowth of more than 3%.

NACL international business also represented a similar trajectory but was able to register a growth rate much better than the Industry. The Export sales were ^84,376 Lakh in the year under review as compared to ^60,049 Lakh in the previous year, an increase by 41%. The growth was driven by increased uptake of our two key products by multinationals in the American continent, especially in the first half of the year.

The business has also taken steps to diversify its presence across channels as well as strengthen its formulation product portfolio. The business initiated more than 60 registrations in almost 15 countries in the financial year for its existing product range as well as new formulations.

America:

The business witnessed good growth in North America and Latin America. The growth was steered by fungicide offtake to North America and insecticide business in Latin America. Fungicide business from new key account in North America also contributed to the growth. Business expansion is in process by initiating source addition for one fungicide in Latin America by two major multinationals and one new fungicide in North America.

APAC markets:

The business registered strong growth in Asian markets despite the initial dry spell in Australia. The business leveraged the recovery of the markets like Srilanka in first half of the year and demand picked up in Oceana region in the later half of the year. The business is expanding its channel network in Bangladesh, Philippines and Thailand by initiating registrations with key National players in the countries.

AFRICA market:

The business was able to grow its business in the eastern Africa market with its existing channel partners. Despite the challenge with limited forex availability in some of the major markets, the business was able to register revenue growth owing to the strength of its Channel partner in the country.

It is also strengthening its presence in the central African market, established subsidiary in Nigeria. The business expects to leverage its position with the focus on agricultural production for food security measures by the national governments in the region in coming years.

Europe market:

The business faced head wind in the region due to the impact on its Russian business for one of the manufactured fungicide. This was the only region where the business registered a degrowth in its export revenue.

Plant Operations:

The Srikakulam technical plant has witnessed a record annual production of 10,290 MT as compared to 9,372 MT in the previous year. The plant could achieve the desired results due to growth in the export, domestic, institutional business and introduction of new products. With improved productivity and asset utilization, the plant could record higher production to meet the market requirement. The plant continued to take various initiatives for energy conservation and cost savings. Zero Liquid Discharge facility operated efficiently during the year.

Ethakota formulation unit has been able to satisfactorily meet the market demand continuously. It achieved production of 24,002 MT/KL during the year under review, compared to the previous year''s production of 25,164 MT/KL. This unit has been taking various initiatives for debottlenecking, safety and quality.

An encouraging working environment in both units enabled cordial relationship with all levels and improved productivity.

Dividend & Dividend Distribution Policy:

Your Directors are pleased to recommend a final dividend of ?0.25/- per equity share (i.e. 25% on equity shares of face value of ?1/- each) for the financial year ended March 31, 2023. The payment of the final dividend is subject to the approval of the members at the ensuing Annual General Meeting (AGM) of the Company. The aforesaid final dividend is in addition to the interim dividends of ?0.30 (30%) and ?0.15 (15%) per equity share of ?1 each respectively declared for the year under review. The total dividend amount for the financial year 2022-23, including the proposed final dividend, amounts to ?0.70 per equity share (i.e. 70% on equity shares of face value of ?1/- each) and the total outflow towards dividend on equity shares for the year amounts to ?1,191 Lakh (previous year ?1,088 Lakh). In view of the changes made under the Income-tax Act, 1961, by the Finance Act, 2020, dividends paid or distributed by the Company shall be taxable in the hands of the members. The Company shall, accordingly, make the payment of the final dividend after deduction of tax at source.

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (''Listing Regulations''), the Company has adopted a Dividend Distribution Policy and the same is available on the website of the Company at https://naclind.com/wp-content/uploads/2023/02/Dividend-Distribution-Policy.pdf.

Credit Rating:

During the year under review, the CRISIL Ratings Limited (CRISIL) has assigned the rating for the Long-Term Bank facilities and Short-Term Bank facilities of the Company, the details of which are given herein below:

a) Long-term Bank facilities: CRISIL A; Stable; and

b) Short-term Bank facilities: CRISIL A1.

Fire Insurance Claim:

An appeal has been filed by the Insurance Company (The Oriental Insurance Company Limited) against the Arbitration Award in favour of the Company before the Hon''ble High Court of Delhi. Pending final disposal of the above appeal, the Company has filed the Execution Petitions before Hon''ble High Court of Delhi for deposit of awarded amount in Material Damage (MD) Claim of ?1,048 Lakh (including interest) and Business Interruption Policy claim of ^1,352 Lakh (including interest) with the Court. With respect to the execution petition filed by the Company in both the cases, the Hon''ble High Court of Delhi has passed an order vide its order dated March 19, 2021 and April 9, 2021 directed the Insurance Company to deposit the awarded amount towards Material Damage claim and Business Interruption Policy respectively together with the interest upto the date of deposit with Court. During the previous year, the amount deposited by the Insurance Company has been released by the Court to the Company after submission of equivalent bank guarantee. As the matter is subjudice and as advised by its legal council, the Company has not recognized the deposit amount received as income and the interest cost, if any in the books of account.

Subsidiary Companies:

A) NACL Spec-Chem Limited (''NSCL''), India:

Throughout the year, NACL Spec-Chem Limited has showcased its capabilities by successfully executing a Greenfield Project. NSCL secured all essential statutory approvals.

During the year under review, the initiation of plant commissioning marks a significant milestone in our journey. The Plant was commissioned on December 28, 2022, a target accomplished through meticulous planning, technical expertise, and collaborative teamwork exhibiting our dedication to operational excellence and streamlined manufacturing processes.

We have effectively reached our design capacity goals for commissioned products. The unwavering dedication of our workforce has ensured that our operations remain efficient, sustainable, and capable of fulfilling market demands while upholding the highest quality benchmarks.

Your Board of Directors had earlier approved investing ?5,700 Lakh in NSCL for the ongoing capex and the balance amount to be mobilized through debt finance. However, due to escalation in project cost, the Board of Directors has approved additional investment of ?3,800 Lakh by way of subscription the equity shares, debt instrument and other securities, to be issued by NSCL.

As on the date of report, your Company has already invested ?9,500 Lakh. NSCL has successfully commenced its commercial operations under first phase of the Project with capacity of 6,000 MT per annum.

The revenue from operations of the Company for the year ended March 31, 2023 was ?1,622 Lakh as against nil for the previous year. The Company had incurred a loss after tax of ?754 Lakh as against the loss of ?36 Lakh for the previous year.

B) NACL Multichem Private Limited (''NMPL''), India:

With reference to the green-field project by NMPL, the Ministry of Environment, Forest and Climate Change (''MoEF&CC'') has granted the Environment Clearance to NMPL with respect to its proposed establishment ofmanufacturing facility at Ranastalam Mandal, Srikakulam District, Andhra Pradesh for manufacturing of various Agrochemicals, Synthetic Organic chemicals and Fluorine based chemicals with a production capacity of 264.615 TPD and Co-Generation Power Plant (6 MW).

The process of obtaining statutory approvals from state-level and local authorities is currently in progress.

Your Board of Directors had earlier approved investing ?100 Lakh in NMPL for the ongoing capex and the balance amount to be mobilized through debt finance. As on the date of report, your Company has already invested ?51 Lakh. Due to escalation in project cost, the Board of Directors has approved additional investment of ?1,000 Lakh by way of subscription the equity shares, debt instrument and other securities, to be issued by NMPL.

The revenue from operations of the Company for the year ended March 31, 2023 was nil and incurred a loss after tax of ?33 Lakh as against the profit of nil for the previous year.

C) LR Research Laboratories Private Limited (''LRRLPL''), India:

The revenue from operations of the Company for the year ended March 31, 2023 was nil as against ?25 Lakh for the previous year.

D) Nagarjuna Agrichem (Australia) Pty Limited (''NAAPL''), Australia

The revenue from operations of the Company for the year ended March 31, 2023 was ?12 Lakh as against ?12 Lakh for the previous year. The Company had a profit after tax of ?2 Lakh as against the profit of ?4 Lakh for the previous year.

E) NACL Industries (Nigeria) Limited (''NINL''), Nigeria:

NINL is incorporated on January 13, 2023 as a wholly-owned subsidiary of the Company. NINL is incorporated with a purpose to hold the local registrations on behalf of the Company in order to enable it to sell the products in Nigeria. These registrations are granted by the local government body of each country to a local entity established in that country.

F) NACL Agri-Solutions Private Limited (''NASPL''), India:

NASPL is incorporated on May 02, 2023 as a wholly-owned subsidiary of the Company. NASPL is incorporated with an objective to provide integrated farm solutions to customers.

New Products Launched:

The Company has successfully commercialized manufacturing of the following two new Technical / Active Ingredients namely:

1) ROZZER - Topramezone 336 g/L w/v SC - Maize Herbicide.

2) TEMBOGUARD - Tembotrione 34.4 % SC - Maize Herbicide.

Research & Development:

In the pursuit of innovation in developing products and improving processes, the Company''s R&D Centre at Shadnagar, near Hyderabad, has been working on new products and better processes for manufacture of Active Ingredients (AIs)/Technical and Intermediates for Herbicides, Insecticides and Fungicides. To take advantage of the Make in India manufacturing initiative, processes for many generic products are under various stages of development for manufacturing by the Company.

The Company''s R&D Facilities in Hyderabad and Ethakota both received ISO 17025:2017 Certificate of Accreditation from the National Accreditation Board for Testing and Calibration of Laboratories (NABL) and is also recognized by the Department of Scientific and Industrial Research (DSIR), Government of India. Similarly, developing novel formulation products and their registration is a major activity of R&D to introduce products in domestic as well as in international market. The R&D has received GLP certification in 2021 and started studies to support international registration in Countries in Africa and SE Asia to enable marketing the products

The work done by the Company''s R&D Center significantly helps in the registration of products both India and abroad through their testing and documentation services. NACL has 491 number of registrations in India and 95 for exports.

Environment and Sustainability

Your Company continues to maintain high standards in environmental management with its manufacturing facilities operating well within stipulated norms due to the efficient running of the Zero Liquid Discharge (ZLD) facilities in Srikakulam and Ethakota. Srikakulam manufacturing site has an online effluent and emission monitoring devices that continuously upload the data to Pollution Control Board website. These sites have also increased plantation area within the factory premises.

Your Company continues to enjoy the certifications ISO:9001:2015, ISO:14001:2015 and ISO 45001:2018 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively. Both Srikakulam and Ethakota Units are accredited by National Accreditation Board for Testing and Calibration of Laboratories (NABL).

Responsible Care Management System (RCMS):

Across all our sites, NACL has effectively implemented the Responsible Care Management System (RCMS), underscoring our dedication to the safe and sustainable management of chemicals and processes.

Energy Efficiency and Emission Reduction:

At the Ethakota site, we have made significant improvements in adopting energy-efficient technologies, resulting in a marked reduction in both operational costs and carbon emissions. Notably, we transitioned from diesel fuel to LPG gas for our boiler fuel, resulting in a remarkable 50% cost savings compared to the previous year''s expenses. This transition has not only yielded substantial financial benefits but has also contributed to a commendable reduction in carbon emissions.

On an organizational wide, specific energy consumption was reduced by 13.68% in FY 21-22 and was largely stabilized with an increase of only 0.02% in FY22-23. Similarly, the specific power consumption was reduced by 14.13% in FY 21-22, and with a subsequent increase of 5.48% in FY22-23. While specific water consumption grew by 5.83% in FY 21-22, the Company was able to take active measures to reduce it by 3.05% in FY 22-23.

Specific carbon emissions was reduced by 14.84% in FY 21-22 and was largely stabilized with an increase of only 0.35% in FY22-23. While specific hazardous waste generation was successful reduced by 29% in FY21-22 it grew by 18.06% in FY22-23.

Water Conservation and Reuse:

Our commitment to responsible water usage is evident through the implementation of water harvesting systems at all sites. Rainwater is efficiently collected and stored for reuse in our plantation and utility needs.

Share Capital:

During the year under review, your Company has allotted 56,043 fully paid equity shares, under Nagarjuna Agrichem Ltd.-Employee Stock Option Scheme-2015 and 4,78,336 fully paid equity shares under NACL Employee Stock Option Scheme - 2020, upon exercise of Stock Option by the eligible employees of the Company under the respective ESOS Schemes and these shares were duly admitted for trading on the Stock Exchange(s). The equity shares issued pursuant to the above Employee Stock Option Schemes rank pari-passu with the existing equity shares of the Company.

Subsequent to the above allotments, the paid up capital of your Company stand increased from ?19,83,07,464 (comprising of 19,83,07,464 fully paid up equity shares of ?1 per equity share) to ^19,88,41,843 (comprising of 19,88,41,843 fully paid up equity shares of ?1 per equity share).

Employee Stock Option Scheme:

The Company has two stock option schemes namely, Nagarjuna Agrichem Ltd. Employee Stock Option Scheme-2015 (ESOS 2015 Scheme) and NACL Employee Stock Option Scheme-2020 (ESOS 2020 Scheme). The Schemes are in compliance with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

a) ESOS 2015 Scheme:

During the year under review, the Company has allotted 56,043 fully paid equity shares to the eligible employees upon exercise of the vested stock options. The granting process under the ESOS 2015 Scheme was completed on January 31, 2022. However, the options already granted under the ESOS 2015 Scheme are eligible for exercise, in terms of the Scheme.

b) ESOS 2020 Scheme:

During the year under review, the Company has granted 5,20,000 stock options under ESOS 2020 Scheme to the eligible employees. Each option would entitle the holders of the option to apply for one equity share of the Company.

The Company has allotted 4,78,336 fully paid equity shares to the eligible employees upon exercise of the vested stock options.

In compliance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, a certificate from the Secretarial Auditor of the Company confirming that the ESOS 2015 Scheme and ESOS 2020 Scheme are being implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolutions passed by the members, will be placed at the ensuing Annual General Meeting. The applicable disclosure, as stipulated under the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as on March 31,2023 with regard to the ESOS 2015 and ESOS 2020 is attached as Annexure - I.

Material Changes and Commitments:

Except the changes specifically described in this report, there have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Subsidiary and Associate Companies and Consolidation of Financial Statements:

Pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), along with other applicable provisions of the Companies Act, 2013 and as per Indian Accounting Standards (Ind AS 110 - "Consolidated Financial Statements"), the Audited Consolidated Financial Statements for the year ended on March 31, 2023 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiaries M/s.NACL Spec-Chem Limited, M/s.NACL Multichem Private Limited, M/s. LR Research Laboratories Private Limited, M/s.NACL Industries (Nigeria) Limited and M/s.Nagarjuna Agrichem (Australia) Pty, Ltd with its financial statements in line-by-line basis. The investments of the Company in M/s.Nasense Labs Private Limited, an Associate Company, have been accounted for in these consolidated financial statements under the equity method in accordance with Ind AS 28 - "Investments in Associates and Joint Ventures".

The Statement required under Section 134 of the Act is attached as Annexure - II (Form AOC-1) to this Directors'' Report.

The Company has incorporated following two new Wholly Owned Subsidiary Companies:

a) NACL Industries (Nigeria) Limited, with effect from January 13, 2023; and

b) NACL Agri-Solutions Private Limited, with effect from May 02, 2023.

No other Company has become/ceased to be Subsidiary or Joint Venture or Associate Company during the year under review. There has been no material change in the nature of the business of the aforesaid Subsidiaries and Associate.

The Company has no Subsidiary which can be considered as material in terms of the Listing Regulations.

In accordance with the provisions of Section 136(1) of the Act, read with Regulation 46 of the Listing Regulations the following have been placed on the website of the Company www.naclind.com:

a) Annual Report of the Company, containing therein its Standalone and the Consolidated Financial Statements; and

b) Annual accounts of each of the Subsidiary Companies.

Internal Financial Control Systems and their adequacy:

The Company has in place adequate internal financial controls commensurate with the size and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedure in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards and the Companies Act, 2013. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company''s internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company''s policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and regulations and safeguarding of assets from unauthorized use.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors, including audit of the internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by Management and the relevant Board and Committees including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2022-23.

Auditors:

a) Statutory Auditor and Audit Reports:

M/s. BSR and Co Chartered Accountants, (Firm Registration No. 128510W), were appointed as Statutory Auditors of the Company at the 35th Annual General Meeting held on

September 29, 2022 for a period of 5 years commencing form the conclusion of 35th Annual General Meeting till the conclusion of 40th Annual General Meeting to be held in the year 2027. The firm has consented and confirmed that the appointment is within the limit specified under Section 141(3)(g) of the Companies Act, 2013. The Statutory Auditors have also confirmed that they are not disqualified to be appointed as such in terms of the proviso to Section 139(1), 141(2) and 141(3) of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014.

The Audit Report of BSR and Co on the Financial Statements of the Company for the Financial Year 2022-23 is a part of Annual Report. The notes on the financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. There are no qualifications, reservations, adverse remarks or disclaimers by the statutory auditors in their report.

b) Internal Auditor:

The Board of Directors of the Company has appointed M/s. M.Bhaskara Rao & Co Chartered Accountants, Hyderabad, as Internal Auditors to conduct internal audit of the Company for the financial year ended March 31,2023 and their reports are reviewed by the Audit Committee from time to time. The Internal Auditors monitor and evaluate the efficiency of the internal control system of the Company, its compliance with applicable laws/regulations, accounting procedure and policies. Based on the reports of the Internal Auditor, corrective actions will be undertaken, thereby strengthening the controls. Significant audit observations and action plans were presented to the Audit Committee of the Board on a quarterly basis.

The Board of Directors re-appointed M/s. M. Bhaskara Rao & Co., Chartered Accountants, Hyderabad as Internal Auditors for the financial year ending March 31, 2024.

c) Cost Auditor:

Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors of the Company, on the recommendation of the Audit Committee appointed M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad as Cost Auditors to conduct cost audits relating to Insecticides (Technical Grade and Formulations), of the Company for the year ending March 31, 2024. The Company has received their written consent that the appointment will be in accordance with the applicable provisions of the Companies Act, 2013 and rules framed thereunder. Pursuant to the provisions of Section 148 of the Act read with Rules made thereunder, members are requested to consider the ratification of the remuneration of ?8 Lakh payable to M/s. K. Narasimha Murthy & Co., Cost Accountants for the financial year 2023-24. As a matter of record, relevant cost audit report for financial year ended 2022 were filed with the Central Government, within a stipulated timeline.

Pursuant to Section 204 of the Companies Act, 2013 read with the Rule 9 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s.B S S & Associates, Company Secretaries, to carry out secretarial audit in terms of the Companies Act, 2013 for the FY 2022-23. The secretarial audit report for the FY 2022-23 issued by M/s.B S S & Associates, in form MR-3 is enclosed to this report as Annexure - III and the report does not contain any qualification, reservation, adverse remark or disclaimer. Pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has obtained the Annual Secretarial Compliance Report from M/s. B S S & Associates and submitted the same to the stock exchange where shares of the Company are listed.

Reporting of Frauds by Auditors:

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of fraud committed in the Company by its Officers or Employees to the Audit Committee under Section 143(12) of the Companies Act, 2013.

Directors:

As on the date of this report, Company''s Board comprises of 13 (thirteen) Directors, out of which, 3 (three) are Non-Executive, Non-Independent Directors (NEDs) including 1 (one) Woman Director. Further, out of the remaining Directors, 7 (seven) are Non-Executive Independent Directors, including 1 (one) Women Independent Director, 2 (two) are Investors Nominee Directors and 1 (one) is an Executive Director.

a) Director(s) to retire by rotation:

In accordance with the provisions of Section 152 of the Companies Act, 2013 and Articles of Association of the Company, Mrs. K. Lakshmi Raju, Director (DIN:00545776) of the Company, retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer herself for re-appointment.

The necessary resolution for re-appointment of Mrs. K. Lakshmi Raju forms part of the Notice convening the AGM. The profile and particulars of experience that qualify Mrs. K. Lakshmi Raju for Board membership, are disclosed in the said Notice.

b) Re-appointment of Mr. M. Pavan Kumar as a Managing Director & CEO:

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have re-appointed Mr. M. Pavan Kumar as Managing Director & CEO for a period of 3 years effective from June 01, 2022. His re-appointment was approved by the members of the Company through postal ballot.

c) Appointment of Mr. Chantati Varada Rajulu:

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have appointed Mr. Chantati Varada Rajulu as Whole Time Director designated as Executive Director - Corporate Affairs for a period of 1 year effective from June 24, 2022. His appointment was approved by the members of the Company through postal ballot.

d) Change in designation of Mr. Chantati Varada Rajulu:

Mr. Chantati Varada Rajulu (DIN: 09219298) was appointed as a Whole Time Director designated as "Executive Director-Corporate Affairs" for a period of one year w.e.f. June 24, 2022 and as per his term of appointment his tenure was completed on June 23, 2023. Post completion of the tenure as "Whole Time Director" on June 23, 2023, Mr. Chantati Varada Rajulu, vide a letter dated May 22, 2023, has consented to act as Non-Executive and Non-Independent Director of the Company. Accordingly, the Board of Directors, in its meeting held on May 22, 2023, have approved his continuation as Non-Executive and Non-Independent Director of the Company with effect from June 24, 2023.

Mr. Chantati Varada Rajulu is not related to any Director or Key Managerial Personnel of the Company. Further, Mr. Chantati Varada Rajulu is not debarred from holding the office of Director by virtue of any SEBI order or any other such authority.

e) Re-appointment of Mr. Sudhakar Kudva as an Independent Director:

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors have re-appointed Mr. Sudhakar Kudva as an Independent Directors for a second term of 5 years effective from August 05, 2022. His re-appointment was approved by the members of the Company through postal ballot.

f) Appointment and re-designation of Mr. N.

Vijayaraghavan as an Independent Director:

Based on the recommendation of Nomination and Remuneration Committee, the Board of Directors have appointed and re-designated Mr. N. Vijayaraghavan as an Independent Director for a term of 5 years, with effect from July 28, 2022. The same was approved by the members of the Company through postal ballot.

g) Appointment of Mr. Raj A Kaul as a Non-Executive and Non-Independent Director:

Based on the recommendation of Board, Mr. Raj A Kaul, was appointed as a Non-Executive and Non-Independent Director of the Company with effect from May 05, 2023. As per Regulation 17(1A) of Listing regulations, prior approval of the members of the Company was obtained by passing a postal ballot.

h) Appointment of Mr. Santanu Mukherjee as an Independent Director:

Pursuant to the provisions of Sections 149, 161 and other applicable provisions of the Act and applicable provisions of Listing Regulations, the Board at its meeting held on July 27, 2023, based on recommendation of Nomination and Remuneration Committee and subject to the approval of the members, has appointed Mr. Santanu Mukherjee as an Independent Directors for a term of five consecutive years w.e.f July 27, 2023. The Board recommend his appointment at the ensuing AGM. In the opinion of the Board he possess requisite qualifications, experience, expertise, proficiency and hold high standards of integrity.

The Company has received requisite notice(s) from a member under Section 160 of the Companies Act, 2013 proposing his appointment as Independent Director.

i) Key Managerial Personnel:

In terms of Section 203 of the Companies Act, 2013 the following are the Key Managerial Personnel of the Company:

i) Mr. M. Pavan Kumar, Managing Director & CEO

ii) Mr. R.K.S. Prasad, Chief Financial Officer

iii) Mr. Satish Kumar Subudhi, Vice President - Legal & Company Secretary.

During the year under review, there were no changes to the Key Managerial Personnel of the Company.

j) Independent Directors:

In terms of Sections 149, 152, Schedule IV and all other applicable provisions of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory amendment(s), modification(s) or re-enactment thereof for the time being in force), the Independent Director can hold office for a term of up to five (5) consecutive years on the Board of Directors of the Company and shall not be liable to retire by rotation.

All the Independent Directors have given a declaration that they meet the criteria of independence laid down under Section 149(6) of the Companies Act, 2013 read with Regulation 16(b) of Listing Regulations.

In the opinion of the Board, there has been no change in the circumstances which may affect their status as Independent Directors of the Company and the Board is satisfied of the integrity, expertise, and experience (including proficiency in terms of Section 150(1) of the Companies Act, 2013 and applicable rules thereunder) of all Independent Directors on the Board. Further, in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended, Independent Directors of the Company have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs.

k) Evaluation of performance of the Board of Directors:

Pursuant to the provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out the evaluation of its own performance and Committees of the Board, the performances of Directors individually, the Executive Director, the Chairperson of the Board etc. Various parameters under the guidance note issued by the Institute of Company Secretaries of India and SEBI, were considered for evaluation and after receiving the inputs from the Directors, the performance evaluation exercise was carried out. The parameters include attendance of Directors at Board and Committee meetings, integrity, credibility, expertise and trustworthiness of Directors, Board''s monitoring of various compliances, laying down and effective implementation of various policies, level of engagement and contribution of the Directors, safeguarding the interest of all stakeholders etc. The performance evaluation of each Independent Director was carried out by the Board. The Directors expressed their satisfaction with the evaluation process.

In a separate meeting, the Independent Directors evaluated the performance of the Non-Independent Directors and performance of the Board as a whole. They also evaluated the performance of the Chairperson taking into account the views of Executive Director and Non-Executive Directors.

l) Meeting of Independent Directors:

The details on the separate meeting of the Independent Directors are reported in the Report on Corporate Governance.

m) Familiarization Programme for the Independent Directors:

In compliance with the requirement of Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The same is available on the website of the Company i.e., www.naclind.com.

Through the Familiarization programme, the Company apprises the Independent Directors about the business model, corporate strategy, business plans and operations of the Company. These Directors are also informed about the financial performance, annual budgets, internal control system, statutory compliances etc. They are also familiarized with Company''s vision, core values, ethics and corporate governance practices.

At the time of appointment of Independent Director, necessary information including various documents such as the information''s about Company, Memorandum and Articles of Association, Annual Reports for previous 2 years, Investor Presentations and recent Media Releases, Brochures, Organization policies are provided. Further, a formal letter of

appointment has also given, explaining fiduciary duties, roles, responsibility and the accompanying liabilities that come with the appointment as an Independent Director of the Company.

On an on-going basis, periodic presentations are made at the Board and Committee meetings, on the performance updates of the Company, Industry scenario, business strategy, internal control and risks involved and mitigation plan. The Directors are also provided with quarterly update on relevant statutory changes, judicial pronouncements and important amendments.

Board Meeting:

During the year under review, 8 (eight) Board Meetings were held. The details of the same are given in the Corporate Governance Report which forms part of this Annual Report. The provisions of the Act and the Listing Regulations were adhered to, while considering the time gap between two meetings.

Audit Committee:

The Audit Committee comprising of Mr. Sudhakar Kudva as the Chairman and Mr. Raghavender Mateti, Mr. N. Sambasiva Rao, Mr. N. Vijayaraghavan as the members. The details about the Audit Committee including the brief description of its terms of reference and number of meetings held during the year are mentioned in the Corporate Governance Report. There have been no instances during the year when recommendations of the Audit Committee were not accepted by the Board.

Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management:

Your Company has laid down well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel. The details of the same forming part of Company''s Nomination and Remuneration Policy are available at the Company''s website at www.naclind.com.

Criteria for making payment to Non-Executive Directors of the Company:

Your Company has laid down well-defined criteria for making payment to Non-Executive Directors of the Company. The details of the same are available at the Company''s website at www.naclind.com.

Directors'' Responsibility Statement:

Pursuant to Section 134(3)(c) and 134(5) of the Companies Act, 2013 (the Act) the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

b) it has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view

of the state of affairs of the Company as at March 31, 2023 and of the Profit/Loss of the Company for the year ended on that date;

c) it has 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) it has prepared the Annual Accounts of the Company on a ''going concern'' basis;

e) it has 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) it has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Corporate Social Responsibility:

Corporate Social Responsibility (CSR) has been an integral part of your Company''s culture and it has been associated, directly or indirectly, for contributing towards society''s development. For the year under review, the Company did a number of CSR activities in surrounding areas of Srikakulam and Ethakota where the Company''s factories are situated. Such activities includes RO Water Supply to surrounding Villages, Village & Community Development, Scholarships to Merit students, contribution to Vidhya Volunteer Scheme, street lightning and bore-well maintenance, development of school facilities, community centers and bus shelters in the surrounding villages of the factories, providing medical services and vocational courses and conducting various medical camps, etc. These projects are largely covered under Schedule VII of the Companies Act, 2013 (''Act'').

In accordance with the CSR provisions in the Act, the Company has formed a CSR Committee and the CSR Policy is in conformity with the provisions of the Act. The CSR Policy can be accessed on the Company''s website at http://www.naclind.com. The Annual Report of CSR activities are annexed herewith as Annexure-IV and forming part of this Report.

Change in the nature of business:

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators or Courts:

During the year, the Company has not received any significant and material orders passed from Regulators or Courts or Tribunals impacting the going concern status and the Company''s operations in future.

Particulars of Loans, Guarantees or Investments under Section 186:

The Company makes investments or extends loans/guarantees to its wholly-owned subsidiaries for their business purposes.

Details of loans, guarantees and investments covered under Section 186 of the Act, along with the purpose for which such loan or guarantee was proposed to be utilized by the recipient, form part of the notes to the financial statements provided in this Annual Report.

Annual Return:

Pursuant to Section 92(3) and 134(3)(a) of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014, as amended, a copy of the Annual Return of the Company and can be accessed through the web-link https://naclind.com/ investor-relations/financial-results/annual-reports/

Risk Management Policy:

Pursuant to the provisions of Section 134, and other applicable provisions if any, of the Companies Act, 2013 and Listing Regulations, the Company constituted the Risk Management Committee and framed Risk Management Policy, which inter-alia covers implementation and monitoring of the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Related Party Transactions:

All the related party transactions are entered into during the financial year were on arm''s length basis and in the ordinary course of Company''s business and are in compliance with the applicable provisions of the Act and Regulation 23 of Listing Regulations. The Company has not entered into any contract, arrangement or transactions with any related party which could be considered as material within the meaning of Regulation 23 of the Listing Regulations. Related Party Transactions (RPTs) under Ind AS (Indian Accounting Standards) -24 are disclosed in the notes to the financial statement.

Necessary disclosures and the statement of all related party transactions are presented before the Audit Committee and the Board of Directors on a quarterly basis specifying the nature, value and terms and conditions of the transactions. All Related Party Transactions are approved by the Audit Committee and omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company''s website www.naclind.com. The details of the transactions with Related Parties are provided in the accompanying financial statements.

Vigil Mechanism/Whistle Blower Policy:

The Company has implemented Whistle Blower Policy to deal with any fraud, irregularity or mismanagement in the

Company. The policy enables any employee or Director to directly communicate to the Chairman of the Audit Committee to report any fraud, irregularity or mismanagement in the Company. The policy ensures strict confidentiality while dealing with concerns and also that no discrimination or victimization is meted out to any whistleblower. The Whistle Blower Policy as approved by the Board is uploaded on the Company''s website www.naclind.com. During the year under review, your Company has not received any complaints under the said policy of the Company. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

Nomination and Remuneration Policy:

Pursuant to Section 178(3) of the Act, the Company has adopted a policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualification, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Companies Act, 2013 and as per Regulation 19 of the Listing Regulations. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report.

Corporate Governance:

In compliance with Regulation 34 read with Para-C of Schedule V of Listing Regulations, a separate report on Corporate Governance has been included in this Annual Report together with the Secretarial Auditor''s Certificate confirming compliance of the Corporate Governance as stipulated under the said Regulations. All the Board members and the Senior Management Personnel have affirmed compliance with the Companies "Code of Conduct for Board and Senior Management Personnel" for the financial year 2022-23.

A certificate signed by the Managing Director & CEO and Chief Financial Officer (CFO) certifying the financial statements and other matters as required under Regulation 17(8) of the Listing Regulations, forms part of this Annual Report.

Management Discussion and Analysis Report and Business Responsibility and Sustainability Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 16(b) of the Listing Regulations, is presented in a separate section forming part of this Annual Report. A Business Responsibility and Sustainability Report containing the requisite details under Regulation 34 of the Listing Regulations has been included in this Annual Report.

Policy on Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a "Policy on Sexual Harassment of Associates" in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The

Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, and framed with the objective of providing a safe working environment, where employees feel secure. There were no cases reported during the financial year 2022-23 under the said Policy.

Brand Protections:

Your Company has taken appropriate actions against counterfeits, fakes and other forms of unfair competitions/trade practices.

Deposit:

Your Company has not accepted any deposits from the public, covered under Chapter V of the Act during the year under review and no such amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Industrial Relations:

The industrial relations at the factories and head office continued to be cordial.

Insurance:

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Particulars of Employees and Remuneration:

Pursuant to the provisions of Section 136 (1) of the Act and as advised, the particulars of employees as required under Section 197 (12) of the Act read with Rule 5 (1) and 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure-V to this report.

During the year under review, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology Absorption and Foreign Exchange Outgo and Earning are set out in a separate statement attached hereto as Annexure-VI and forms part of this report.

Other Confirmation

No application under the Insolvency and Bankruptcy Code, 2016 (IBC) was made on the Company during the year. Further, no proceeding under the IBC was initiated or is pending as at March 31, 2023. There was no instance of one time settlement with any Bank or Financial Institution.

Acknowledgement:

Your Directors thank the Company''s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its Stakeholders, Customers, Agents, Suppliers, Employees, various Government/Non-Government Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers/Customers of the Company. Your Directors look forward to the future with confidence.

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Mar 31, 2018

DIRECTORS’ REPORT

To,

The Members,

The Directors have pleasure in presenting the 31^st Annual Report of the Company together with the Audited Accounts for the year ended 31^st March, 2018.

Operating Results:

Your Company’s performance during the year as compared with that during the previous year is summarized below:

(Rs, in lakhs)

Particulars	Consolidated		Standalone
	2017-18	2016-17	2017-18	2016-17
Gross Turnover (including Other Income)	88,487	85,038	88,423	84,977
Profit/(-) Loss before Finance Cost, Depreciation and Tax (EBIDTA)	6,768	7,104	6,777	7,113
Finance Charges	3,342	3,787	3,342	3,787
Depreciation and Amortization	1,977	2,823	1,977	2,823
Profit before exceptional items and tax.	1,449	494	1,458	503
Exceptional Items	-	2,557	-	2,557
Share of profit from associate	94	-	-	-
Profit before tax (PBT)	1,543	3,154	1,458	3,060
Provision for Tax	540	842	540	841
Deferred Tax	(154)	(954)	(154)	(953)
Profit after tax (PAT)	1,157	3,266	1,072	3,172
Other Comprehensive Income	46	(48)	46	(48)
Total Comprehensive Income	1,203	3,218	1,118	3,124
Profit for the year	1,203	3,218	1,118	3,124
Balance of profit brought forward from previous year	16,921	13,891	16,615	13,679
TOTAL	18,124	17,109	17,733	16,803
Appropriation
Dividend on equity shares	195	195	195	195
Dividend distribution tax	40	40	40	40
Balance profit carried forward to balance sheet	17,889	16,921	17,498	16,615

Dividend:

Your Board of Directors pleased to recommend a dividend of 12.50 paise per equity shares of Rs, 1/- each (i.e.12.50% of the paid up share capital) for the financial year ended 31^st March, 2018. If the dividend, as recommended above, is approved by the members at the Annual General Meeting, the total outflow towards dividend on Equity Shares for the year would be Rs, 235.55 lakhs (including dividend distribution tax).

Performance:

Your Directors are pleased to inform that your Company has received the following awards during the year 2017-18:

i) Conferred with ‘INDIA’S BEST COMPANY OF THE YEAR AWARD-2017”, by International Brand Consulting Corporation (IBC), USA. This award is a distinctive recognition for a company recognized as, “BEST COMPANY” in its industry category based on current year market standing, innovation, leadership, governance, CSR and other such factors.

ii) Srikakulam Technical unit and Ethakota Formulation unit have been awarded with the “Best Management Award” by the Government of Andhra Pradesh for Management Practices for yet another year 2017. They were handed over by the Hon’ble Chief Minister of Andhra Pradesh. These awards were received for the second time for each of the units in last four years.

iii) Srikakulam Plant received the prestigious “Suraksha Puraskar” Award by the National Safety Council of India for the year 2017 in Group-B category for its best Safety Practices by Hon’ble Minister of the State Labour and Employment, Government of India. The Company was given the top ranking among various Indian crop protection products manufacturing Companies.”

The Company achieved a consolidated revenues of Rs, 88,487 lakhs during the year under review as against Rs, 85,038 lakhs achieved in the previous year. The Company’s profit before exceptional item and tax is '' 1,449 lakhs during the year under review against '' 494 lakhs during the previous year. The growth in revenue has been mainly attributable to growth in the Exports by 16% and in domestic formulations by 11%. The revenue for financial year 2016-17 are inclusive of Excise Duty (ED), whereas in the financial year 201718 ED is included upto 30^th June, 2017 as GST has been implemented effective 01^st July, 2017. The revenue, as per the Accounting Standards, for the remainig period of nine months of the financial year under rview do not include GST. During the year under review, the Company has adopted the Accounting Standards as per the IndAS. Accordingly the figures are strictly not comparable.

Plant Operations:

With the overall satisfactory performance during the year under review, the Srikakulam technical plant has achieved highest ever annual production of 6,023 MT as compared to 5,302 MT in the previous year, recording an increase in production by about 14% over previous year. The plant could achieve the desired results mainly due to growth in the export segment and its alignment for the production of various intermediates for captive consumption as well as marketing both in export and domestic market. The plant has continued to take various initiatives for cost savings and capacity utilization, besides regular efforts of streamlining, debottlenecking and augmenting plant efficiencies and enhancing productivity.

Ethakota formulation unit has been able to satisfactorily meet not only the domestic formulation market demand but also the demand from the newer and expanding export market. The unit also achieved highest ever production of 24,738 MT/KL during the year under review, comparing to the previous year production of 21,333 MT/KL registering a growth of about 16%. The higher production was mainly due to increase in demand of Granules. The unit has been in continuous growth mode being capable of handling any market demand both in terms of flexibility in product mix and demand in higher volumes. The continued focus on areas of improving flexibility, enhancing capacities, increased productivity, de-bottlenecking, quality control and better supply chain initiatives are yielding results.

An amicable working environment in both units has enabled maintaining cordial relationship with workers Unions and other Stakeholders.

Domestic Markets:

The southwest monsoon in 2017 was below normal for India with the countrywide rainfall standing at 95 percent of the long period average (LPA). Although the same is termed as normal rainfall keeping in view the long period average (LPA) rainfall that India received, it was not evenly distributed. In the overall comfortable situation, whereas excess monsoon rains were recorded by the states of Andhra Pradesh, Gujarat, West Rajasthan and NMMT (Nagaland, Manipur, Mizoram, and Tripura), there were pockets of deficiencies with Punjab, Haryana, Uttar Pradesh and Vidarbha getting less than their usual share of rains. Adding to it, although the

northeast monsoon has ended with overall normal for various parts of south east regions of India, with a good rainfall for Tamil Nadu & Puducherry, it was not without hiccups. After initial spell of good rains, it witnessed weeks of prolonged dry spells in various pockets of those regions.

Despite the very competitive market conditions, your Company achieved domestic sales of Rs, 52,249 lakhs for the year under review (as against Rs, 47,031 lakhs in the previous year), a net increase of approximately 11% over the previous year. This growth is mainly attributable to aggressive positioning, focus on sale of priority products, addition of new products and improved flexibility of Ethakota formulation plant. Given the favorable monsoon predicted for the year 2018, the prospects for the domestic market looks promising in quarters ahead.

Export Market:

The normalization of agrochemical inventories in the distribution channels has helped in resuming the agrochemical business in certain markets. With the inventory situation in Brazil easing out, your company’s technical business to Brazil has contributed positively to the exports sales. Enforcement of increasingly stricter environment norms in China, has provided trading opportunities to supply Technicals to new customers in Australia, New Zealand and Vietnam. Contract manufacturing business was affected due to lack of campaigns of certain products and low off take of one formulation to China due to bleak demand. Delay in the renewal of registrations, political situation in Yemen, price pressure and inventory levels at distributor level continued to impact the formulation business. However, with market and product development activities and branding, the outlook for this business segment looks positive in the coming years. Your company continued its efforts to register its brands in South East Asia and Africa and got three registrations in Ethiopia.

In spite of inconsistency in the global agrochemical market, the performance of Exports function has increased by nearly 16% when compared to that of the last year. The sales were '' 12,741 lakhs in the year under review as compared to '' 10,989 lakhs in the previous year. This was possible due to the business development activities that have been initiated post fiscal 2013 and your company’s continued attempt in maintaining strong relation with the Contract Manufacturing Customers.

Credit Rating:

During the year under review, the Credit Analysis and Research Limited (CARE) has upgraded the rating for Long Term and Short Term Bank facilities of the Company, as follows:

a) Long-term Bank facilities: ‘CARE A- Stable (‘Single A minus; Outlook: Stable) from CARE BBB positive (Triple B plus: outlook positive) and

b) Short-term Bank facilities: ‘CARE A2 (A two) from CARE A3 (A three Plus)’.

Change of Name:

Consequent to the approval of the Shareholders of the Company in the last Annual General Meeting held on 05^thAugust, 2017, the Company has changed its name from ‘Nagarjuna Agrichem Limited’ to ‘NACL Industries Limited’ vide the ‘Certificate of Incorporation pursuant to change of name’ dated 04^th September, 2017 issued by the Registrar of Companies, Hyderabad, for Andhra Pradesh and Telangana, Ministry of Corporate Affairs, Government of India. However, there was no change in the nature of the business of the Company.

Fire insurance Claim:

Further to the Insurance Company’s final assessment on account fire accident at Srikakulam Plant on 30^th June, 2012 and releasing the final payment in the previous year, your Company has initiated necessary Arbitration process, as there were many deductions made by the Insurance Company, besides not considering claim for ‘Loss of Profit’ (LoP) and interest for delayed settlement of claim. Based on the legal opinion and consultation, the Company has filed necessary application under the provisions of Arbitration and Conciliation Act, 1996 before the Hon’ble High Court, New Delhi in terms of both the policies i.e. Fire Policy & Loss of Profit Policy (LoP) covering the differential claims towards Material Damage & Business Interruption respectively. On hearing both the applications, the Hon’ble High Court of Delhi has passed an order favoring Arbitration through a sole Arbitrator, who is a retired Supreme Court judge for both the policies. The arbitration proceedings are progressing satisfactorily.

New Projects/Products:

With a view to focus on cost efficiencies and innovation, the Company’s R&D Centre at Shadnagar, near Hyderabad, continues to develop cost effective processes for manufacture of Active Ingredients (AIs)/Technical and Intermediates for Herbicides, Insecticides and Fungicides. To take advantage of the Make in India manufacturing initiative, processes for many generic products are under various stages of development for manufacturing by your Company.

Your Directors are pleased to inform that the R&D Centre has received the Certificate of Accreditation from the National Accreditation Board for Testing and Calibration of Laboratories (NABL).

The Company has strengthened its Registration department to cater to the growth opportunities in India and other countries. It has initiated the process of applying for registration of various Products in countries in Africa and South East Asia. Your Company presently has around 360 registrations in India and 84 for exports.

Environment Protection:

Your Company continues to maintain high standards in environmental management with its manufacturing facilities operating well within stipulated norms due to the efficient running of the Zero Liquid Discharge (ZLD) facilities in Srikakulam and Ethakota. Srikakulam manufacturing site has an online effluent and emission monitoring devices that continuously upload the data to Pollution Control Board website. These sites have also increased plantation area within the factory premises.

Your Company continues to enjoy the certifications ISO:9001:2008, ISO:140001 and OHSAS: 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Transfer to Reserves

The Company does not propose to transfer any amount to General Reserves for the financial year ended 31^stMarch, 2018.

Share Capital:

a) During the year under review, your Company has allotted 1,64,376 fully paid equity shares, upon exercise of stock options by the eligible Employees of the Company pursuant to the ‘Nagarjuna Agrichem Ltd., -Employee Stock Option Scheme - 2015’ (‘ESOS-2015’) of the Company and these shares were duly admitted for trading on the stock exchange(s). Subsequent to the above allotment, the paid up capital of your Company stand increased from Rs, 15,61,44,008/-(comprising of 15,61,44,008 fully paid up equity shares of Rs, 1/per equity share) to Rs, 15,63,08,384/- (comprising of 15,63,08,384 fully paid up equity shares of Rs, 1/- per equity share).

b) During the year under review, the shareholders vide there resolution passed in their Extraordinary General Meeting held on 03^rd February, 2018 approved the increase of Authorized Share Capital of the Company has been increased from Rs, 20,00,00,000/- (consisting

20.00.00.000 Equity shares of Rs, 1/- each) to Rs,

25.00.00.000/- (consisting 25,00,00,000 Equity shares of Rs, 1/-each).

Employee Stock Option Scheme:

Your Company implemented “Nagarjuna Agrichem Ltd., -Employee Stock Option Scheme - 2015” (hereinafter referred to as “ESOS-2015”) in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended from time to time and as approved by the members of the Company at their Annual General Meeting held on 28^th September, 2015. In terms of the said ESOS-2015, the Compensation Committee is authorized and empowered to administer and implement the Company’s Employees Stock Option Scheme (ESOS-2015) including deciding and reviewing the eligibility criteria for grant, issuance of stock options under the Scheme, allotment of shares upon exercise of the options etc., with regard to the 11,50,000 (eleven lakhs fifty thousand only) options reserved under the ESOS-2015. During the previous years 2016-17 and 2017-18, 9,30,000 (nine lakhs thirty thousand only) and 60,000 (sixty thousand only) respectively, stock options were granted to the eligible employees with a vesting period spread over a period of five years. Each option would entitle the holders of the Option to apply for one equity share of the Company.

Upon exercise of the vested stock options by eligible employees under the ESOS-2015, 1,64,376 equity shares were allotted during the year under review. Applicable disclosures relating to Employees Stock Options as at 31^stMarch, 2018, pursuant to Regulation 14 and other applicable Regulations of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time, are set out in the Annexure-I to this Report and the details are also placed on the website of the Company. There has been no material change in the said Scheme i.e., ESOS-2015 during the year under review.

Material Changes and Commitments:

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Subsidiary Companies and Consolidation of Financial Statements:

Pursuant to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”), along with other applicable provisions of the Act, and as per Indian Accounting Standards (IND AS 110 - “Consolidated Financial Statements”), which is applicable to the company from the year under review. The Audited Consolidated Financial Statements for the year ended on 31^st March, 2018 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiaries M/s.LR Research Laboratories Private Limited and M/s. Nagarjuna Agrichem (Australia) Pty, Ltd (which are yet to commence their operations) with its financial statements on line by line basis. The investments of the Company in M/s. Nasense Labs Private Limited, an Associate Company, have been accounted for in these consolidated financial statements under the equity method in accordance with IND AS 28-“Investments in Associates and Joint Ventures”.

The Audited Annual Accounts and related information of Subsidiaries and Associate as applicable will be made available upon request. The Statement required under Section 134 of the Act is attached as Annexure - II (Form AOC-1) to this Directors’ Report.

No other Company has become/ceased to be subsidiary or joint venture or associate Company during the financial year. There has been no material change in the nature of business of the aforesaid Subsidiaries and Associate. The Company has no Subsidiary which can be considered as material in terms of the Listing Regulations.

In accordance with the provisions of Section 136(1) of the Companies Act, 2013 (‘Act’) read with Regulation 46 of the Listing Regulations the following have been placed on the website of the Company www.naclind.com:

a) Annual Report of the Company, containing therein its standalone and the consolidated financial statements; and

b) Annual accounts of each of the subsidiary Companies.

Internal Financial Control Systems and their adequacy:

The Company has in place adequate internal financial controls commensurate with the size and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedure in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company’s internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company’s policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and regulations, and safeguarding of assets from unauthorized use.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors, including audit of the internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by Management and the relevant Board and Committees including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2017-18.

Indian Accounting Standards (Ind AS):

The Ministry of Corporate Affairs vide its notification dated 16^th February, 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015. The Company has adopted Indian Accounting Standards (“Ind AS”) from April 01, 2017 with transition date of April 01, 2016 and accordingly these financial statements have been prepared in accordance with the recognition and measurement principles laid down in the Indian Accounting Standard (Ind AS) as prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and other accounting principles generally accepted in India, as applicable.

Auditors: a) Statutory Auditors and Audit Reports:

M/s. Deloitte Haskins & Sells LLP, (Deloitte) Chartered Accountants, Secunderabad (Firm Registration No.117366W/W100018), Chartered Accountants, were appointed as Statutory Auditors of the Company at the 30^thAnnual General Meeting held on 05^th August, 2017, for a period of 5 years commencing form the conclusion of 30^th Annual General Meeting till the conclusion of 35^th Annual General Meeting to be held in the year 2022, subject to the ratification of such appointment by shareholders every year.

The Audit Report of Deloitte on the Financial Statements of the Company for the Financial Year 2017-18 is a part of Annual Report and the report does not contain any qualification, reservation, adverse remark or disclaimer.

The audit committee and the board of directors recommend to the shareholder the ratification of appointment of M/s.Deloitte Haskins & Sells LLP, (Deloitte) Chartered Accountants, Secunderabad (Firm Registration No.117366W/W100018), Chartered Accountants, as statutory auditors of the Company from the conclusion of the 31^st Annual General Meeting till the conclusion of 32^nd Annual General Meeting.

b) internal Auditors:

The Board of Directors of the Company have appointed M/s. M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad, as Internal Auditors to conduct internal audit of the Company for the financial year ended 31^st March, 2018 and their reports are reviewed by the Audit Committee from time to time.

c) Cost Auditors:

M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct cost audits relating to Insecticides (Technical Grade and Formulations) of the Company for the year ended 31^st March, 2018. Pursuant to the provisions of Section 148 of the Act read with Rules made thereunder, members are requested to consider the ratification of the remuneration payable to M/s. K.Narasimha Murthy & Co., Cost Accountants, Hyderabad for the financial year 2018-19. As a matter of record, relevant cost audit report for financial year 2017 were filed with the Central Government, within a stipulated timeline.

d) Secretarial Auditor and Secretarial Audit Report:

As per the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K.V. Chalama Reddy, Practicing Company Secretary to carry out secretarial audit in terms of the Act for the financial year 2017-18. The secretarial audit report issued by Mr.K.V.Chalama Reddy, in form MR-3 is enclosed to this report as Annexure - III. The Secretarial Auditor has not expressed any qualification or reservation in his report and the report is self-explanatory.

Directors:

As on the date of this report, Company’s Board comprises of 8 (Eight) Directors, out of which, 2 (two) are Non-Executive, Non-Independent Directors (NEDs) including 1 (One) Woman Director. Further, out of the remaining Directors, 5 (five) are Non-Executive Independent Directors, and 1 (one) is an Executive Director.

a) Director(s) to retire by rotation:

In accordance with the provisions of Section 152 of the Act, and Articles of Association of the Company, Mrs.K.Lakshmi Raju, Director (DIN: 00545776) of the Company, retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer herself for re-appointment.

b) Key Managerial Personnel (KMP):

In terms of Section 203 of the Companies Act, 2013 the following are the Key Managerial Personnel of the Company:

i) Mr.V.Vijay Shankar, Managing Director

ii) Mr.R.K.S Prasad, Chief Financial Officer

iii) Mr.Satish Kumar Subudhi, Company Secretary & Head-Legal.

During the year no KMP has been appointed or has retired/resigned.

c) independent Directors:

In terms of Sections 149, 152, Schedule IV and all other applicable provisions of the Companies Act, 2013 read with Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force), the Independent Director can hold office for a term of up to five (5) consecutive years on the Board of Directors of the Company and shall not be liable to retire by rotation.

All the Independent Directors have given declaration that they meet the criteria of independence laid down under Section 149(6) of the Act read with Regulation 16(b) of Listing Regulations.

d) Evaluation of performance of the Board of Directors:

Pursuant to the provisions of the Act and Listing Regulations, the Board has carried out the evaluation of its own performance and Committees of the Board, the performances of Directors individually, the Executive Director, the Chairman of the Board etc. Various parameters including the guidance note issued by the Institute of Company Secretaries of India were considered for evaluation and after receiving the inputs from the Directors, the performance evaluation exercise was carried out. The parameters include attendance of Directors at Board and Committee meetings, integrity, credibility, expertise and trustworthiness of Directors, Board’s monitoring of various compliances, laying down and effective implementation of various policies, level of engagement and contribution of the Directors, safeguarding the interest of all stakeholders etc. The performance evaluation of the Board as a whole was carried out by the Independent Directors. The performance evaluation of each Independent Director was carried out by the Board. The Directors expressed their satisfaction with the evaluation process.

e) Familiarization Programme for the Independent Directors:

In compliance with the requirement of Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The same is available on the website of the Company i.e., www.naclind.com.

Through the Familiarization programme, the Company apprises the Independent Directors about the business model, corporate strategy, business plans and operations of the Company. These Directors are also informed about the financial performance, annual budgets, internal control system, statutory compliances etc. They are also familiarized with Company’s vision, core values, ethics and corporate governance practices.

At the time of appointment of Independent Director, necessary information including various documents such as the information’s about Company, Memorandum and Articles of Association, Annual Reports for previous 2 years, Investor Presentations and recent Media Releases, Brochures, Organization policies are provided. Further, a formal letter of appointment has also given, explaining fiduciary duties, roles, responsibility and the accompanying liabilities that come with the appointment as an independent director of the Company.

Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior

Management Personnel

Your Company has laid down well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel.

Criteria for making payment to Non-Executive Directors of the Company.

Your Company has laid down well-defined criteria for making payment to Non-Executive Directors of the Company. The details of the same are available at the Company’s website at www.naclind.com.

Directors’ Responsibility Statement:

Pursuant to Section 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

b) it has selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2018 and of the Profit/Loss of the Company for the year ended on that date;

c) it has 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) it has prepared the Annual Accounts of the Company on a ‘going concern’ basis;

e) it has 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) it has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Transfer of un-claimed Dividend:

Pursuant to Section 124 and other applicable provisions of the Act as amended from time to time, the following un-claimed dividends were transferred to the Investors Education and Protection Fund during the year under review:

a) Unclaimed dividend amount of '' 10,68,609/- pertaining to the final dividend paid during the year 2009-10.

b) Unclaimed dividend amount of '' 6,30,108/- pertaining to the interim dividend paid during the year 2010-11.

Corporate Social Responsibility:

Corporate Social Responsibility (CSR) has been an integral part of your Company’s culture and it has been associated, directly or indirectly, for contributing towards society’s development. For the year under review, Company did a number of CSR activities in and around Srikakulam and Ethakota where the Company’s factories are situated. Such activities includes ongoing drinking water supplies to villages and maintenance of the Company installed RO plants in the neighboring villages, contribution to Vidhya Volunteer Scheme, street lightning and bore-well maintenance, development of school facilities, community centers and bus shelters in the surrounding villages of the factories, providing medical services and vocational courses, conducting various medical camps, etc. These projects are largely covered under Schedule VII of the Companies Act, 2013 (‘Act’).

In accordance with the CSR provisions in the Act, the Company has formed a CSR Committee and a CSR Policy is in conformity with the provisions of the Act. The CSR Policy can be accessed on the Company’s website at http://www.naclind.com. The Annual Report of CSR activities are annexed herewith as Annexure-IV and forming part of this Report.

Change in the nature of business:

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators or Courts:

During the year the Company has not received any significant and material orders passed from Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations in future.

Particulars of Loans, Guarantees or investments:

The details of Loans, Guarantees and Investments made during the financial year ended 31^st March, 2018 in compliance with the provisions of Section 186 of the Act read with the Companies (Meetings of the Board and its Powers) Rules, 2014 have been disclosed in the Financial Statements forming part of this Annual Report.

Extract of Annual Return:

The Extracts of the Annual Return in form MGT-9 as per the provisions of Section 92 of the Act read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure-V to this Directors Report.

Number of Board Meetings:

During the year under review, five (5) Board Meetings were held during the year under review. The details of the same are given in Corporate Governance Report which forms part of this Annual Report. The provisions of Act and the Listing Regulations were adhered to, while considering the time gap between two meetings.

Audit Committee:

The Audit Committee comprising of Mr.D.Ranga Raju as the Chairman and Mr. Sudhakar Kudva, Mr.K.Raghuraman, Mr.Raghavender Mateti as the members. The details about

Audit Committee including the brief description of its terms of reference and number of meetings held during the year are mentioned in the Corporate Governance Report.

Risk Management Policy:

Pursuant to the provisions of Section 134 and other applicable provisions if any, of the Act and Listing Regulations, the Company constituted the Risk Management Committee and framed Risk Management Policy, which inter-alia covers implementation and monitoring of the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Meeting of independent Directors:

The details on the separate meeting of the Independent Directors are reported in the Report on Corporate Governance.

Related Party Transactions:

All the related party transactions are entered into during the financial year were on arm’s length basis and in the ordinary course of Company’s business and are in compliance with the applicable provisions of the Act and Regulation 23 of Listing Regulations. The Company has not entered into any contract, arrangement or transactions with any related party which could be considered as material within the meaning of Regulation 23 of the Listing Regulations. Related Party Transactions under Accounting Standard-18 (AS-18) are disclosed in the notes to the financial statement.

As there are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel’s etc., which may have potential conflict with the interest of the Company at large, the disclosure in Form AOC-2 is not applicable. Necessary disclosures and the statement of all related party transactions is presented before the Audit Committee and the Board of Directors on a quarterly basis specifying the nature, value and terms and conditions of the transactions. All Related Party Transactions are approved by the Audit Committee and omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company’s website www.naclind. com. The details of the transactions with Related Parties are provided in the accompanying financial statements.

Vigil Mechanism/Whistle Blower Policy:

The Company has implemented Whistle Blower Policy to deal with any fraud, irregularity or mismanagement in the Company. The policy enables any employee or Director to directly communicate to the Chairman of the Audit Committee to report any fraud, irregularity or mismanagement in the Company. The policy ensures strict confidentiality while dealing with concerns and also that no discrimination or victimization is meted out to any whistleblower. The Whistle Blower Policy as approved by the Board is uploaded on the Company’s website www.naclind.com. During the year under review, your Company has not received any complaints under the said policy of the Company. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.

Nomination and Remuneration Policy:

Pursuant to Section 178(3) of the Act, the Company has adopted a policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualification, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and as Listing Regulations. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report.

Corporate Governance:

In compliance with Regulation 34 read with Para-C of Schedule V of Listing Regulations, a separate report on Corporate Governance has been included in this Annual Report together with the Auditor’s Certificate confirming compliance of the Corporate Governance as stipulated under the said Regulations. All the Board members and the senior management personnel have affirmed compliance with the Company’s “Code of Conduct for Board and Senior Management Personnel” for the financial year 2017-18.

A certificate signed by the Managing Director and Chief Financial Officer (CFO) certifying the financial statements and other matters as required under Regulation 17(8) of the Listing Regulations, forms part of this Annual Report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 16(b) of the Listing Regulations, is presented in a separate section forming part of this Annual Report.

Policy on Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a “Policy on Sexual Harassment of Associates” in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Policy aims to provide protection to employees at the workplace, and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, and framed the policy with the objective of providing a safe working environment, where employees feel secure. There were no cases reported during the financial year 2017-18 under the said Policy.

Brand Protections:

Your Company has taken appropriate actions against counterfeits, fakes and other forms of unfair competitions/ trade practices.

Fixed Deposit:

Your Company has not accepted any fixed deposits from the public during the year under review, and no such amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Industrial Relations:

The industrial relations at the factories and head office continued to be cordial.

Insurance:

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Particulars of Employees and Remuneration:

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure-VI to this report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the Section 134(3)(m) of the Act relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of Rule 8 of the Companies (Accounts) Rules, 2014, are set out in a separate statement attached hereto as Annexure-VII and forms part of this report.

Acknowledgement:

Your Directors thank the Company’s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its Stakeholders, Customers, Agents, Suppliers, Employees, various Government/Nongovernment Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers/Customers of the Company. Your Directors look forward to the future with confidence.

For and on behalf of the Board

N.Vijayaraghavan V.Vijay Shankar

Director Managing Director

(DIN:02491073) (DIN:00015366)

Place : Hyderabad

Date : 19^th May, 2018

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Mar 31, 2017

The Directors have pleasure in presenting the 30^th Annual Report of the Company together with the Audited Accounts for the year ended 31^st March, 2017.

Operating Results:

Your Company’s performance during the year as compared with that during the previous year is summarized below:

(Rs. in lakhs)

Particulars	Consolidated		Standalone
	2016-17	2015-16	2016-17	2015-16
Gross Turnover (including Other Income)	85,229	79,282	85,167	79,252
Profit before Interest and Depreciation (EBIDTA)	10,312	7,450	10.321	7,465
Finance Charges	3,773	3,703	3,773	3,703
Depreciation and Amortization	2,823	2,676	2,823	2,676
Total Expenditure	84,072	78,211	73,999	88,166
Exceptional items	(2,557)	-	(2,557)	-
Net Profit Before Tax (PBT)	3,715	1,071	3,725	1,086
Add: Share of profit from Associate Company	105	92	-	-
Less: Provision for Tax	106	189	106	188
Net Profit After Tax (PAT)	3,714	974	3,619	898
Balance of Profit brought forward	12,613	11,827	12,401	11,691
Balance available for appropriation	16,327	12,801	16,020	12,589
Proposed Dividend on Equity Shares	195	156	195	156
Tax on Proposed Dividend	40	32	40	32
Surplus carried to Balance Sheet	16,092	12,613	15,785	12,401

Dividend:

Your Board is pleased to recommend a dividend of 0.125 paisa per equity shares of Re.1/- each (i.e.,12.50% of the paid up Capital) for the financial year ended 31^st March, 2017. If the dividend, as recommended above, is declared by the Members at the Annual General Meeting, the total outflow towards dividend on Equity Shares for the year would be Rs.234.92 lakhs (including dividend distribution tax).

Performance:

Given the challenging market environment, your Company recorded (Consolidated) revenue of Rs.852.29 crores during the year under review as against Rs.792.82 crores achieved in the previous year, showing an increase of 7.50%. The EBIT and Cash profit (Consolidated) stood at Rs.49.31 crores and Rs.39.81 crores (before exceptional items) respectively during the year under review, compared to Rs.47.74 crores and Rs.37.47 crores respectively in the previous year. The growth in revenue has been mainly attributable to improved performance of domestic formulations sales.

Domestic & Export Markets:

The southwest monsoon ended the 2016 season with three percent deficit against IMD’s (India Meteorological Department) earlier projections of rains being “above normal”. Although the same is termed as normal rainfall keeping in view the long period average (LPA) rainfall that India received, it was not evenly distributed. In the overall comfortable situation, there were pockets of distress with Karnataka, Punjab, parts of Gujarat and Kerala getting less than their usual share of rains. Adding to it, the Northeast Monsoon has ended with a deficit rainfall of 60%, leaving South India affected for the second year in a row. Tamil Nadu and parts of Karnataka were badly affected and thus severely affected agrochemical usage both in Khariff and Rabi crops. This has resulted in less than expected off take, inventory built up, depressed margins and liquidity constraints in the market.

Despite the adverse market conditions, your Company achieved domestic sales of Rs.625.00 crores for the year under review as against Rs 545.00 crores in the previous year, a net increase by 14.68% to the previous year. This growth is mainly attributable to aggressive positioning, focus on sale of priority products, addition of new products,, improved flexibility of Ethakota formulation plant. Given the favorable monsoon predicted for the year 2017, the prospects for domestic market looks promising in quarters ahead. In it’s to efforts to keep introducing new products in tune with the changing market needs, your Company has launched two new products namely “Atonik”, a plant growth regulator and “Slogan”, a Fungicide, during the year under review. The same have been well received by farming community.

On the Exports front, the bleak situation for insecticides demand in Brazil and other importing Countries continued during the year under review, resulting in Contract Customers not buying products. Large volume products such as Profenofos, T ricyclozole and Acephate were impacted. With regard to Company’s initiatives of direct marketing of branded formulated products in other geographies mainly in African and South Asian Countries during the previous few years is growing albeit slowly. Although, factors like delay in the renewal of registrations in few countries, prolonged drought in Zambia, political instability in Yemen, high inventory levels at distributor levels in many countries, strengthening of dollar, price pressure for few formulations etc., have resulted in the low formulation off-take, the outlook for this segment of business looks positive and promising. In the direction of exploring newer business opportunities by way of direct marketing branded products in other geographies, your Company continue to focus on obtaining various product registrations in other Countries. Your Company is also in process of registering various branded products in other African and South Asian Countries towards penetrating those markets.

Despite all odds, the Exports Division could maintain the performance because of various initiatives taken earlier. It could achieve export sales of Rs.109.87 crores in the year under review as compared to Rs.146.49 corers in the previous year. Keeping in view the future growth prospects in Contract (toll) manufacturing activities, your Company has been maintaining continued amicable and better relationship with the contract manufacturing customers. This has helped the Company to restore the confidence and enabled it to get renewed orders from them.

Plant Operations:

With the overall satisfactory performance during the year under review, the Srikakulam technical plant has achieved an annual production of 5,302 MT as compared to 4,160 MT in the previous year, recording an increase in production by about 27% over previous year. Despite continued slackening of demand both in domestic and export market in the wake of unfavorable market conditions, the plant could achieve the desired results mainly due to its alignment for the production of various intermediates for captive consumption as well as marketing both in export and domestic market. The plant has continued to take various newer initiatives for cost savings and capacity utilization, besides regular efforts of streamlining, debottlenecking and augmenting plant efficiencies and enhancing productivity.

Your Directors are pleased to inform that the Quantitative Assessment lab of the Srikakulam plant was awarded the Certificate of Accreditation from the National Accreditation Board for Testing and Calibration of Laboratories (NABL) and also received an Appreciation Award for its best safety practices from National Safety Council, during the year under review.

Ethakota formulation unit has been able to satisfactorily meet not only the domestic formulation market demand but also the demand from the newer and expanding export market. The unit achieved a production of 21,333 MT/KL during the year under review, comparing to the previous year production of 17,365 MT/KL registering a growth of about 22.85%. The continued focus on areas of improving flexibility, enhancing capacities, increased productivity, de-bottlenecking, quality control, and better supply chain initiatives are yielding results.

The working environment in both the units has been amicable led to maintaining cordial relationship with workers Unions and other Stakeholders. Your Company has been successful in renewing the periodic contracts with those Unions.

Credit Rating:

During the year under review, the Credit Analysis and Research Limited (CARE) has reaffirmed the ratings to the bank facilities of the Company, as follows:

a) Long-term Bank facilities: ‘CARE BBB (Triple B Plus)’.

b) Short-term Bank facilities: ‘CARE A3 (A Three Plus)’. Fire Insurance Claim:

During the year under review, the Insurance Company has completed its assessment of the claim on the fire affected Block-5 of Srikakulam Plant at Rs.45.64 crores and released the balance payment of Rs.32.43 crores, in addition to the earlier release of provisional amount of Rs.10.00 crores and scrap realization of Rs.3.21 crores. As there are many deductions made by the Insurance Company, besides not considering claim for LoP and interest for delayed settlement of claim, the Company has initiated the arbitration process. Your Company has accounted the above claim as per the Accounting Standards, the details of which are given in the Notes to Accounts of the Financial Statements.

New Projects/Products:

In the direction focusing on cost efficiencies and innovation, the Company’s R&D Centre at Shadnagar, near Hyderabad, has been equipped with the State of Art facilities, equipments and instruments. It continues to develop cost effective processes for manufacture of Active Ingredients (AIs)/ Technical and Intermediates for Herbicides, Insecticides and Fungicides. The Center has developed processes for Technicals for Export Customers for contract manufacturing at Srikakulam, and also for Indigenous markets.

It continues efforts to develop new formulations, combination products and improving upon the efficiencies of existing processes for better productivity/cost effectiveness and has successfully developed processes for many such formulations, which are undergoing preliminary field trials. The R&D Centre is also improving upon the efficiencies of existing processes of AI and intermediates for better productivity/cost effectiveness.

Registration of the active ingredients and the final products is a major activity. This Department works on applying for registration in India as well as in Countries in Africa and SE Asia, to enable marketing of the products.

Your Directors are pleased to inform that the R&D Centre has received the Certificate of Accreditation from the National Accreditation Board for Testing and Calibration of Laboratories (NABL).

Environment Protection:

Your Company continues to maintain high standards in environmental management with its manufacturing facilities operating well within stipulated norms due to the efficient running of the Zero Liquid Discharge(ZLD) facilities in Srikakulam and Ethakota. To increase transparency, strengthen the environmental performance and standardize compliance through self-monitoring, Srikakulam manufacturing site has an online effluent and emission monitoring devices that continuously upload the data to Pollution Control Board website. These sites have also increased plantation area within the factory premises.

Your Company continues to enjoy the certifications ISO:9001:2008, ISO:140001 and OHSAS: 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Transfer of amount to Reserves:

The Company does not propose to transfer any amount to General Reserves for the financial year ended 31^st March, 2017.

Share Capital:

During the year under review, your Company has allotted 2,32,500 fully paid equity shares, upon exercise of Stock Option by the eligible Employees of the Company, pursuant to the ‘Nagarjuna Agrichem Limited Employee Stock Option Scheme-2015’(‘ESOS-2015’) of the Company and these shares were duly admitted for trading on the stock exchange(s). Subsequent to the above allotment of further equity shares, the paid up capital of your Company stand increased from Rs.15,59,11,508/-(comprising of 15,59,11,508 fully paid up equity shares of Rs.1/- per equity shares) to Rs.15,61,44,008/-(comprising of 15,61,44,008 fully paid up equity shares of Rs.1/- per equity share).

Employee Stock Option Scheme (ESOS-2015):

Your Company implemented “Nagarjuna Agrichem Ltd. -Employee Stock Option Scheme - 2015” (hereinafter referred to as “ESOS-2015”) in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended from time to time and as approved by the members of the Company at their Annual General Meeting held on 28th September, 2015. In terms of the said ESOS-2015, the Compensation Committee is authorized and empowered to administer and implement the Company’s Employees Stock Option Scheme (ESOS-2015) including deciding and reviewing the eligibility criteria for grant, issuance of stock options under the Scheme, allotment of shares upon exercise of the options etc., with regard to the 11,50,000 (eleven lakhs fifty thousand only) options reserved under the ESOS-2015. During the previous year 2015-16, 9,30,000 (nine lakhs thirty thousand only) stock options were granted to the eligible Employees with a vesting period spread over a period of five years. Each option would entitle the holders of the Option to apply for one equity share of the Company.

Upon exercise of the vested stock options by eligible Employees under the ESOS-2015, 2,32,500 paid equity shares were allotted during the year under review. Applicable disclosures relating to Employees Stock Options as at 31^st March, 2017, pursuant to Regulation 14 and other applicable Regulations of SEBI (Share Based Employee Benefits) Regulations, 2014, as amended from time to time, are set out in the Annexure-I to this Report and the details are also placed on the website of the Company. It was informed that there has been no material change in the said Scheme i.e., ESOS-2015 during the year under review.

Material Changes and Commitments:

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Subsidiary Companies and Consolidation of Financial Statements:

Pursuant to the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015 (Listing Regulations), along with other applicable provisions of the Act , and as per Accounting Standard (AS) 21, the Audited Consolidated Financial Statements for the year ended on 31st March, 2017 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiaries M/s. LR Research Laboratories Private Limited and M/s.Nagarjuna Agrichem (Australia) Pty, Ltd (which are yet to commence their operations) with its financial statements on line by line basis. The investments of the Company in M/s. Nasense Labs Private Limited, an Associate Company, have been accounted for in these consolidated financial statements under the equity method in accordance with AS 23 -“Accounting for Investments in Associates”.

The Audited Annual Accounts and related information of Subsidiaries and Associate as applicable will be made available upon request. The Statement required under Section 134 of the Act is attached as Annexure - II (Form AOC-1) to this Directors’ Report.

No other Company has become/ceased to be subsidiary or joint venture or associate Company during the financial year. There has been no material change in the nature of the business of the aforesaid Subsidiaries and Associate. The Company has no Subsidiary which can be considered as material within the meaning Regulation 23 of the Listing Regulations.

In accordance with the provisions of Section 136(1) of the Act , read with Regulation 46 of the Listing Regulations the following have been placed on the website of the Company www.nagarjunaagrichem.com:

a) annual report of the Company, containing therein its standalone and the consolidated financial statements; and

b) Annual accounts of each of the subsidiary Companies.

Internal Financial Control Systems and their adequacy:

The Company has in place adequate internal financial controls commensurate with the size and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedure in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company’s internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company’s policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and Regulations and safeguarding of assets from unauthorized use.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors, including audit of the internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by Management and the relevant Board and Committees including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2016-17.

Indian Accounting Standards -IndAs:

The Ministry of Corporate Affairs vide its notification dated 16^th February, 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015. In pursuance of the said notification, the Company will adopt Indian Accounting Standards with effect from 01^st April, 2017. The implementation of Indian Accounting Standards (IndAS) is a major change process for which the Company has set up a dedicated team and is providing desired resources for its completion within the time frame

Auditors:

a) Statutory Auditors and Audit Reports:

Pursuant to Section 139, 142 and other applicable provisions of the Act read with Rules made there under, the Shareholders in their 27^th Annual General Meeting (AGM) of the Company held on 09^th August, 2014 appointed M/s.M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad (Firm Registration No. 000459S) as Statutory Auditors of the Company to hold office from the conclusion of the 27^th AGM till the conclusion of this ensuing 30^th AGM. As their term is expiring and being not eligible for re-appointment, the Board of Directors, in its meeting held on 27^th May, 2017, has recommended to appoint M/s. Deloitte Haskins & Sells LLP, (Deloitte) Chartered Accountants, Secunderabad (Firm Registration No.1 17366W/ W100018), Chartered Accountants as the Statutory Auditors of your Company for a term of 5 (five) years commencing from the conclusion of the ensuing AGM till the conclusion of the 35^th AGM of the Company to be held in the calendar year 2022. The Company has received necessary written consent and confirmation from the said Deloitte, to the effect that their appointment, if made, would be within the limits prescribed under Section 141 of the Act, and rules framed there under, and that they satisfy the eligibility criteria provided thereunder for the appointment as Statutory Auditors of the Company.

The Audit Report of M/s M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad, the outgoing Statutory Auditors, on the Financials Statements of the Company for the financial year ended 31^st March, 2017 read with relevant Notes thereon are self-explanatory and do not call for any further explanation. The Auditors Report does not contain any qualification, reservation, or adverse remark. During the year under review, the Statutory Auditors had not reported any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca) of the Act.

b) Internal Auditors:

The Board of Directors of the Company have appointed M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Secunderabad as Internal Auditors to conduct internal audit of the Company for the financial year ended 31^st March, 2017 and their reports are reviewed by the Audit Committee from time to time.

c) Cost Auditors:

M/s.K.Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct cost audits relating to Insecticides (Technical Grade and Formulations), of the Company for the year ending 31^st March, 2017. Pursuant to the provisions of Section 148 of the Act read with Rules made there under, Members are requested to consider the ratification of the remuneration payable to M/s.K.Narasimha Murthy & Co., Cost Accountants, Hyderabad. The Company has duly filed the Cost Audit Reports for the financial year 2015-16 with the Ministry of Corporate Affairs.

d) Secretarial Auditor and Secretarial Audit Report:

As per the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K.V.Chalama Reddy, Practicing Company Secretary, to carry out secretarial audit in terms of the Act for the financial year 2016-17. The secretarial audit report issued by Mr. K.V.Chalama Reddy, Practicing Company Secretary in form MR-3 is enclosed to this report as Annexure - III. The Secretarial Auditors have not expressed any qualification or reservation in their report and the report is self-explanatory.

Directors:

As on the date of this report, Company’s Board comprises of 8 (Eight) Directors, out of which, 3 (three) are Non-Executive Non-Independent Directors (NEDs) including 1 (One) Woman Director. Further, out of the remaining Directors, 3 (three) are Non-Executive Independent Directors, 1 (One) Additional Director and 1 (One) is an Executive Director.

a) Director(s) to retire by rotation:

In accordance with the provisions of Section 152 of the Act, and Articles of Association of the Company, Mr.N.Vijayaraghavan, Director of the Company, retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer himself for reappointment.

b) Changes in Directorship

Mr.K.S.Raju has tendered his resignation from the Directorship position of the Board effective 03^rd February, 2017. The Board of Directors places on record his valuable and constructive contribution to the Company during his long association with the Company.

Pursuant to the provisions of Section 161(1) and other applicable provisions of the Act read with Articles of Associations of the Company, Mr.R.S.Nanda, has been appointed as an Additional Director of the Company (under Non-Executive-Independent Category) with effect from 27^th May, 2017 and he shall be hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a Member proposing Mr.Nanda for appointment as an Independent Director for a period of five years, effective the date of ensuing Annual General Meeting(AGM), subject to approval of shareholders at the ensuing AGM.

Mr.Sudhakar Kudva (DIN:02410695) being eligible to be appointed as an Independent Director of the Company in terms of the provisions of the Act and Listing Regulations. The Board of Directors in its meeting held on 27^th May, 2017 has accorded its approval to appoint Mr. Kudva as an Independent Director for a period of five years with effect from 05^th August, 2017. The said approval is however subject to the approval of shareholders in the ensuing Annual General Meeting.

In compliance with the provisions of Section 149 read with Schedule IV of the Act, the appointments of the aforesaid Mr.R.S.Nanda and Mr.Sudhakar Kudva as Independent Directors for a period of five years are being placed before the Members in this Annual General Meeting for approval. The Company has received necessary declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both Regulation 16 (1) (b) of Listing Regulations. In the opinion of the Board, they fulfill the conditions specified in the Act and the Rules made there under for appointment as Independent Directors and they are independent of the Management. Members are requested to refer to the Notice of the Annual General Meeting and the Explanatory Statement for details of the qualifications and experience of the Directors and the period of their appointment. The Board commends the passing of the Resolutions at Item Nos.6 and 7 of the Annual General Meeting Notice.

Pursuant to Section 196, 197 read with Schedule V and other applicable provisions of the Act, Mr.V.Vijay Shankar has been re-appointed as Managing Director of the Company for further period of three years with effect from 11^th May, 2017, subject to approval of the Shareholders. The Board commends the passing of the Resolutions at Item No.8 of the Annual General Meeting Notice.

Mr.D.Ranga Raju has stepped down from the Chairmanship position of the Board of Directors of the Company, effective 27^th May, 2017. However, he will continue as a Non-Executive and Independent Director of the Company. Consequent to the above, Mrs.K.Lakshmi Raju, appointed as Chairperson of the Board with effect from 27^th May, 2017.

c) Independent Directors:

In terms of Sections 149,152 read with Schedules IV and all other applicable provisions of the Act and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force), the Independent Director can hold office for a term of up to five (5) consecutive years on the Board of Directors of the Company and will not be liable to retire by rotation.

All the Independent Directors have given declaration that they meet the criteria of independence laid down under Section 149(6) of the Act read with Regulation 16(b) of Listing Regulations .

d) Evaluation of performance of the Board of Directors:

Pursuant to the provisions of the Act, and Listing Regulations, the Board has carried out the evaluation of its own performance and Committees of the Board, the performances of Directors individually, the Executive Director, the Chairman of the Board etc. Various parameters as recommended in the guidance note issued by the Institute of Company Secretaries of India, were considered for evaluation and after receiving the inputs from the Directors, the performance evaluation exercise was carried out. The parameters include integrity, credibility, expertise and trustworthiness of Directors, Board’s monitoring of various compliances, laying down and effective implementation of various policies, level of engagement and contribution of the Directors, safeguarding the interest of all stakeholders etc. The performance evaluation of the Board as a whole was carried out by the Independent Directors. The performance evaluation of each Independent Director was carried out by the Board. The Directors expressed their satisfaction with the evaluation process.

e) Familiarization Programme for the Independent Directors:

In compliance with the requirement of Listing Regulations, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The same is available on the website of the Company i.e., www.nagarjunaagrichem.com.

Through the Familiarization programme, the Company apprises the Independent Directors about the business model, corporate strategy, business plans and operations of the Company. These Directors are also informed about the financial performance, annual budgets, internal control system, statutory compliances etc. They are also familiarized with Company’s vision, core values, ethics and corporate governance practices.

At the time of appointment of Independent Director, a formal letter of appointment is given to him, which explains his role, responsibility and rights in the Company.

Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel

Your Company has laid down well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel.

Criteria for making payment to Non-Executive Directors of the Company.

Your Company has laid down well-defined criteria for making payment to Non-Executive Directors of the Company. The details of the same are available at the Company’s website at www.nagarjunaagrichem.com.

Directors’ Responsibility Statement:

Pursuant to Section 134(3)(c) and 134(5) of the Act , the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2017 and of the Profit/Loss of the Company for the year ended on that date;

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

d) the Directors have prepared the Annual Accounts of the Company on a ‘going concern’ basis.

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

Transfer of Un-claimed Dividend:

Pursuant to Section 124 and other applicable provisions of the Act, as amended from time to time, the following un-claimed dividends were transferred to the Investors Education and Protection Fund during the year under review:

a) Unclaimed dividend amount of Rs.13,32,603/- pertaining to the final dividend for the year 2008-09;

b) Unclaimed dividend amount of Rs.7,75,742/- pertaining to the first interim dividend paid during the year 2009-10.

Corporate Social Responsibility:

Corporate Social Responsibility (CSR) has been an integral part of your Company’s culture and it has been associated, directly or indirectly, for contributing towards society’s development.

Although, your Company did not fall under the criteria of implementing CSR as defined under Section 135 of the Act, for the year under review, it did a number of CSR activities in and around Srikakulam and Ethakota where the Company’s factories are situated. Such activities includes ongoing drinking water supplies to villages and maintenance of the Company installed RO plants in the neighboring villages, contribution to Vidhya Volunteer Scheme and Mythri Police, street lightning and bore-well maintenance, development of school facilities, community centers and bus shelters in the surrounding villages of the factories, providing medical services and vocational courses and conducting various medical camps, etc.

In accordance with the CSR provisions in the Act, the Company has formed a CSR Committee and a CSR Policy is in conformity with the provisions of the Act. The CSR Policy can be accessed on the Company’s website at http:// nagarjunaagrichem.com.

Change in the nature of business:

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators or Courts:

During the year, the Company has not received any significant and material orders passed from Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations in future.

Particulars of Loans, Guarantees or Investments under Section 186:

The details of Loans, Guarantees and Investments made during the financial year ended 31^st March, 2017 in compliance with the provisions of Section 186 of the Act, read with the Companies (Meetings of the Board and its Powers) Rules, 2014 have been disclosed in the financial statements forming part of this Annual Report.

Extract of Annual Return:

The Extracts of the Annual Return in form MGT-9 as per the provisions of Section 92 of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure-IV to this Directors Report.

Number of Board Meetings:

During the year under review, four (4) Board Meetings were held during the year under review. The details of the same are given in Corporate Governance Report which forms part of this Annual Report. The provisions of the Act, and the Listing Regulations were adhered to, while considering the time gap between two meetings.

Audit Committee:

The Audit Committee comprising of Mr.D.Ranga Raju as the Chairman and Mr.Sudhakar Kudva, Mr.Raghuraman, Mr.Raghavender Mateti as the members. The details about Audit Committee including the brief description of its terms of reference are mentioned in the Corporate Governance Report.

Risk Management Policy:

Pursuant to the provisions of Section 134, and other applicable provisions if any of the Act, the Company constituted the Risk Management Committee. and framed Risk Management Policy, which inter-alia covers implementation and monitoring of the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Meeting of Independent Directors:

The details on the separate meeting of the Independent Directors are reported in the Report on Corporate Governance.

Related Party Transactions:

All the related party transactions are entered into during the financial year were on arm’s length basis and in the ordinary course of Company’s business and are in compliance with the applicable provisions of the Act, and Regulation 23 of Listing Regulations. The Company has not entered into any contract, arrangement or transactions with any related party which could be considered as material within the meaning of Regulation 23 of the Listing Regulations. Related Party Transactions under Accounting Standard-18 (AS-18) are disclosed in the notes to the financial statement.

As, there are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel’s etc., which may have potential conflict with the interest of the Company at large, the disclosure in Form AOC-2 is not applicable. Necessary disclosures and the statement of all related party transactions is presented before the Audit Committee and the Board of Directors on a quarterly basis specifying the nature, value and terms and conditions of the transactions. All Related Party Transactions are approved by the Audit Committee and omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company’s website www. nagarjunaagrichem.com. The details of the transactions with Related Parties are provided in the accompanying financial statements.

Vigil Mechanism/Whistle Blower Policy:

The Company has implemented Whistle Blower Policy to deal with any fraud, irregularity or mismanagement in the Company. The policy enables any employee or Director to directly communicate to the Chairman of the Audit Committee to report any fraud, irregularity or mismanagement in the Company. The policy ensures strict confidentiality while dealing with concerns and also that no discrimination or victimization is meted out to any whistleblower. The Whistle Blower Policy as approved by the Board is uploaded on the Company’s website www. nagarjunaagrichem.com. During the year under review, your Company has not received any complaints under the said policy of the Company.

Nomination and Remuneration Policy:

Pursuant to Section 178(3) of the Act, the Company has adopted a policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualification, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and Listing Regulations . The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Corporate Governance:

In compliance with Regulation 34 read with Para-C of Schedule V of Listing Regulations, a separate report on Corporate Governance has been included in this Annual Report together with the Auditor’s certificate confirming compliance of the Corporate Governance as stipulated under the said Regulations. All the Board members and the Senior Management Personnel have affirmed compliance with the Companies “Code of Conduct for Board and Senior Management Personnel” for the financial year 2016-17.

A certificate signed by the Managing Director and Chief Financial Officer (CFO) certifying the financial statements and other matters as required under Regulation 17(8) of the Listing Regulations , forms part of this Annual Report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 16(b) of the Listing Regulations, is presented in a separate section forming part of this Annual Report.

Policy on Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a “Policy on Sexual Harassment of Associates” in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. The Policy aims to provide protection to employees at the workplace, and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, and framed with the objective of providing a safe working environment, where employees feel secure. There were no cases reported during the financial year 2016-17 under the said Policy.

Brand Protections:

Your Company has taken appropriate actions against counterfeits, fakes and other forms of unfair competitions/ trade practices.

Listing with NSE and Fees:

Your Directors pleased to inform the members that the Company’s equity shares has been listed with National Stock Exchange of India Limited (NSE) and the trading on the bourses has commenced with effect from 7^th April, 2017. The Company has paid the Listing Fees for the year 2017-18 to both BSE Limited (BSE) and NSE, the Stock Exchange(s) where the Company’s shares are listed. Fixed Deposit:

Your Company has not accepted any fixed deposits from the public during the year under review, and no such amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet. Industrial Relations:

The industrial relations at the factories and head office continued to be cordial.

Insurance:

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Particulars of Employees and Remuneration:

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure -V to this report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the Section 134(3)(m) of the Act, relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of Rule 8 of the Companies (Accounts) Rules, 2014, are set out in a separate statement attached hereto as Annexure-VI and forms part of this report.

Acknowledgement:

Your Directors thank the Company’s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its Stakeholders, Customers, Agents, Suppliers, Employees, various Government / Non-Government Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers/Customers of the Company. Your Directors look forward to the future with confidence.

For and on behalf of the Board

N.Vijayaraghavan V.Vijay Shankar

Director Managing Director

(DIN:02491073) (DIN:00015366)

Place: Hyderabad

Date: 27^th May, 2017

---

Mar 31, 2016

To, The Members,

The Directors have pleasure in presenting the 29^th Annual Report of the Company together with the Audited Accounts for the year ended 31⁵¹ March, 2016.

Operating Results:

Your Company''s performance during the year as compared with that during the previous year is summarized below:

(Rs. in lakhs)

Particulars	Consolidated		Standalone
	2015-16	2014-15	2015-16	2014-15
Gross Turnover (including Other Income)	71,027	77,147	70,996	77,147
Profit before Interest and Depreciation (EBIDTA)	7,450	6,998	7,465	7,006
Finance Charges	3,703	3,492	3,703	3,492
Depreciation and Amortization	2,676	2,464	2,676	2,464
Total Expenditure	69,956	76,106	69,910	76,097
Net Profit Before Tax (PBT)	1,071	1,042	1,086	1,050
Add: Share of profit from Associate Company	92	75	-	-
Less: Provision for Tax	189	282	188	282
Net Profit After Tax (PAT)	974	835	898	768
Balance of Profit brought forward	11,827	11,484	11,691	11,415
Less: Depreciation on transition to schedule II of the Companies Act, 2013 (net of deferred tax)	-	304	-	304
Balance available for appropriation	12,801	12,015	12,589	11,879
Proposed Dividend on Equity Shares	156	156	156	156
Tax on Proposed Dividend	32	32	32	32
Surplus carried to Balance Sheet	12,613	11,827	12,401	11,691

Dividend:

Your Board of Directors pleased to recommend a dividend of 0.10 paisa per equity shares of Re. 1/- each (i.e.,10% of the paid up Capital) for the financial year ended 31^st March, 2016. If the dividend, as recommended above, is declared by the Members at the Annual General Meeting, the total outflow towards dividend on Equity Shares for the year would be Rs. 187.65 lakhs (including dividend distribution tax).

Performance:

Your Company recorded (Consolidated) revenue of Rs. 710.27 crores during the year under review as against Rs. 771.47 crores achieved in the previous year, showing a decline of 7.93%. The EBIT and Cash profit (Consolidated) stood at Rs. 47.74 crores and Rs. 37.47 crores respectively during the year under review, compared to Rs. 45.34 Crores and Rs. 35.06 crores respectively in the previous year. Though a deficit noted in top line by 7.93% for the year under review, an improvement of 17% recorded of bottom line consolidated as compared to the previous year, is satisfying. The decrease in the revenue is mainly attributable to deficit monsoon and serious drought conditions prevailed in the Country during the reporting period.

Domestic & Export Markets:

The Country received a shortage in rainfall of around 14% to normal during the second quarter. However due to the large rain fall deficiency in almost 40% of India, seasonal rainfall over the Country as a whole ended as deficit by about 12% of Long Period Average (LPA). This deficit in monsoon is continuing for second year in a row mainly with the EI-Nino effect. The World Meteorological Organization has described 2015 as one of the warmest year on record with strong EI-Nino. South-West Monsoon was severally affected resulting in a severe drought these regions. The North-East monsoon was excess in the East, resulting in floods in some States; but was deficit in South India. This aggravated the situation in South India, which is one of the largest consumers of Pesticides in the Country. Such adverse climatic conditions have severely affected the agrochemical usage, both in Kharif and Rabi crops resulting poor off-take of agrochemical products, inventory built up, depressed prices & margins and liquidity constraints in the market. The prevailing adverse conditions for back to back two years has negatively impacted the performance almost every Agrochemical Industry player in the Country. Your Company achieved domestic sales of Rs. 545 crores for the year under review, a net decrease by 9% to the previous year. This could be achieved with expanded market area and crops, product portfolio management, supply chain initiatives and production flexibility of Ethakota Formulation plant facilities. Your Company launched two new products in the domestic market, a new rice herbicide and, a nematicide during the year under review and is working on more products for introduction in the coming years.

The Exports were also not encouraging during the reporting period mainly due to lower prices of agricultural commodities, high inventory levels at distributor level in many Countries, strengthening of US dollar against most major currencies, variable weather patterns including a weak monsoon due to the ongoing EI- Nino phenomenon. Globally, the planted areas of wheat and soybeans rose, while all other major crops including Maize and rice planting areas marginally declined; while cotton, oilseed, rape and sunflower areas suffered a greater fall in planted areas. Despite these adverse conditions, the Exports Division achieved a sales Rs. 146.49 corers in the year under review as compared to Rs. 148.36 corers in the previous year registering a downfall by a meager ~ 1.30 %. Although the Srikakulam technical plant is fully geared up, to meet the export demand, but for such negative global market factors which has taken a toll on the expected growth. However, your Company could maintain the performance because of the of various initiatives taken. Keeping in view the future growth prospects in Contract (toll) manufacturing activities, your Company has been maintaining continued amicable and better relationship with the contract manufacturing customers. This has helped the Company to restore the confidence and enabled it to get renewed orders from them.

In the direction of exploring newer business opportunities by way of direct marketing branded products in other geographies, your Company continue to focus on obtaining various product registrations in other Countries. It has also successfully launched few of its own branded products in Countries like Myanmar and Zambia. Your Company is also in process of registering various branded products in other African Countries towards penetrating those markets.

Plant Operations:

Your Directors are pleased to inform that Srikakulam Unit has been honored with “Best Management Award” for the year 2015-16 by State Government of Andhra Pradesh on the ‘Labour Day'' i.e., on 01^st May, 2016, in recognition of its efforts to maintain harmonious industrial relations and productive work environment. It''s a matter of pride that such honor is the second time in a row as the Company''s Ethakota formulation unit was honored with the same ‘Best Management Award'' for the previous year 2014-15.

The Srikakulam plant has achieved an annual production of 4160 MT as compared to 4545 MT in the previous year, recording a reduction in production by about 8% over previous year. The reason attributable for the shortfall in production is mainly due to slackening demand both in the domestic and export market in the wake of unfavorable monsoon conditions in India and lower demand in various Countries mainly Brazil, US and other Latam Countries. The plant lined up various intermediates for captive consumption, enabling it to be more competitive. Besides regular efforts for streamlining, debottlenecking and augmenting plant efficiencies and enhancing productivity, various initiatives taken for cost & energy savings and better capacity utilization are yielding results.

Ethakota formulation unit has been able to satisfactorily meet not only the domestic formulation market demand but also the demand from the newer and expanding export market. The unit achieved a production of 17,365 MT/ KL during the year under review, comparing to the previous year production of 19,258 MT/KL. Due to the low demand on account of the deficit monsoons, production has been low in both Kharif and Rabi seasons. As such, the Agrochemical Industry suffered with lesser market demand, huge inventory built-up and liquidity problems. However, the initiatives in the areas of production volume increase, quality control, automations, increased productivity, de-bottlenecking and better supply chain initiatives are continuously being taken to meet the enhanced market demand and effective / efficient customer services.

The working environment in both the units has been amicable led to maintaining cordial relationship with workers Unions and other Stakeholders. Your Company has been successful in renewing the periodic contracts with those Unions.

Credit Rating

During the year under review, the Credit Analysis and Research Limited (CARE) has upgraded the ratings to the bank facilities of the Company, as follows:

a. Long-term Bank facilities: revised from ''CARE BBB (Triple B)'' to ''CARE BBB (Triple B Plus)''.

b. Short-term Bank facilities: revised from ''CARE A3 (A Three)'' to ''CARE A3 (A Three Plus)''.

Fire Insurance Claim:

The final assessment of the claim made with the Insurance Company in respect of damages occurred in the fire affected Block-5 of the Srikakulam plant is under process. Necessary Adjustment in the accounts and the financial impact, if any in respect of the above will be made on completion of final assessment. Your Company is optimistic that the Insurance Company will settle the claim.

New Projects/Products:

In the direction focusing on technology and innovation, the Company’s R & D Centre at Shadnagar, near Hyderabad has been equipped with the State of Art facilities, equipments and instruments. It has been strengthened in developing various cost effective processes for manufacture of Active Ingredients (AIs)/Technical and Intermediates for Herbicides, Insecticides and Fungicides. The Center has developed processes for Technicals for Export Customers for contract manufacturing at Srikakulam, and also for Indigenous markets. It continues efforts to develop new formulations, combination products and improving upon the efficiencies of existing processes for better productivity/cost effectiveness and has successfully developed processes for many such formulations, which are undergoing preliminary field trials.

Registration of the active ingredients and the final products is a major activity. This Department works on applying for registration in India as well as in Countries in Africa and SE Asia, to enable marketing of the products.

Environment Protection:

The Company started a sustainability initiative with the aim of going green and minimizing our impact on the environment. The Company is committed to sustain and continually improve its Safety Standards / Practices and preservation of clean environment in the pursuit of being one of the safest and best agrochemical Manufacturing Company.

The Company has taken various initiatives for environmental protection and pollution prevention for sustainable development of the society and to reduce harm to the environment. Towards this, Effluent Treatment Plant (ETP) at Ethakota Unit and the Zero Liquid Discharge (ZLD) facility at Srikakulam Unit have been operating satisfactorily. Steps and efforts are in place in the direction of demonstrating constantly improved environmental performance. All Units are operating with valid Consents and Authorization applicable to the Units and all the Returns/Reports are submitted on time.

Further, your Company continues to enjoy the certifications ISO: 9001:2008, ISO: 140001 and OHSAS: 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Transfer of amount to Reserves:

The Company does not propose to transfer any amount to General Reserves for the financial year ended 31^st March, 2016.

Share Capital:

The paid up equity share capital of the Company as on 31^st March, 2016 was Rs. 15.59 crores. There was no public issue, right issue, bonus issue or preferential issue, etc. made by the Company during the year under review. However under the “Nagarjuna Agrichem Ltd.- Employee Stock Option Scheme, 2015” your Company has granted an aggregate of 9,30,000 (Nine Lakhs Thirty Thousand) options for issuing the same number of equity shares of the Company, to the eligible employees under the said Scheme.

No disclosure is required under Section 67(3)(c) of the Companies Act, 2013, in respect of voting rights not exercised directly by the employees of the Company, as the provisions of the said Sections are not applicable.

Employees Stock Option Scheme (ESOS)

Your Company implemented the “Nagarjuna Agrichem Ltd.-Employee Stock Option Scheme-2015” (hereinafter referred to as ‘ESOS-2015’), in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, (hereinafter referred to as ‘SEBI (SBEB) Regulations, 2014’) and as approved by the members of the Company at their 28^th Annual General Meeting of the Company, as a measure to reward and retain the Key Managerial Personnel (KMP) and Senior Managerial Personnel (SMP), and to encourage them to increase their efforts to make the Company’s business more successful. During the year under review, 9,30,000 (Nine Lakhs Thirty Thousand Only) stock options were granted to the eligible employees, out of the 11,50,000 options reserved under the Scheme. Each Option would entitle the holders of the Option to apply for one equity share of the Company.

The Company has also received a certificate from the auditors of the Company that the Scheme has been implemented in accordance with the SEBI (SBEB), Regulations, 2014 and the resolutions passed by the Shareholders in this regard. The Certificate will be placed at this Annual General Meeting for the inspection by the members.

The necessary disclosures as required under the provisions of the Companies Act, 2013 and Regulation 14 of the SEBI (SBEB) Regulation, 2014 are set out herewith as Annexure-I forming part of this Director''s Report.

Material Changes and Commitments:

There have been no material changes and commitments affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Subsidiary Companies and Consolidation of Financial Statements:

Pursuant to the Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, along with other applicable provisions of the Companies Act, 2013, and as per Accounting Standard (AS) 21, the Audited Consolidated Financial Statements for the year ended on 31^st March, 2016 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiaries M/s. LR Research Laboratories Private Limited and M/s. Nagarjuna Agrichem (Australia) Pty, Ltd (which are yet to commence their operations) with its financial statements on line by line basis. The investments of the Company in M/s. Nasense Labs Private Limited, an Associate Company, have been accounted for in these consolidated financial statements under the equity method in accordance with AS 23 - “Accounting for Investments in Associates”.

The Audited Annual Accounts and related information of Subsidiaries and Associate as applicable will be made available upon request. The Statement required under Section 134 of the Companies Act, 2013 is attached as Annexure - II (Form AOC-1) to this Directors'' Report.

No other Company has become/ceased to be subsidiary or joint venture or associate Company during the financial year. There has been no material change in the nature of the business of the aforesaid Subsidiaries and Associate. The

Company has no Subsidiary which can be considered as material within the meaning Regulation 23 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In accordance with the provisions of Section 136(1) of the Companies Act, 2013, read with Regulation 46 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the following have been placed on the website of the Company www.nagarjunaagrichem.com:

a) annual report of the Company, containing therein its standalone and the consolidated financial statements; and

b) Annual accounts of each of the subsidiary Companies.

Internal Financial Control Systems and their adequacy:

The Company has in place adequate internal financial controls commensurate with the size and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design or operations were observed. The Company has policies and procedure in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information.

The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. These are in accordance with generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the Auditors and are approved by the Audit Committee.

The Company''s internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company''s policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and Regulations and safeguarding of assets from unauthorized use.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the Internal, Statutory, Cost and Secretarial Auditors, including audit of the internal financial controls over financial reporting by the Statutory Auditors, and the reviews performed by Management and the relevant Board and Committees, including the Audit Committee, the Board is of the opinion that the Company''s internal financial controls were adequate and effective during the financial year 2015-16.

Indian Accounting Standards - IFRS converge standards:

The Ministry of Corporate Affairs vide its notification dated 16^th February, 2015 has notified the Companies (Indian Accounting Standards) Rules, 2015. In pursuance of the said notification, the Company will adopt Indian Accounting Standards with effect from 01^st April, 2017 with the comparatives for the period ending 31^st March, 2016. The implementation of Indian Accounting Standards (IAS) is a major change process for which the Company has set up a dedicated team and is providing desired resources for its completion within the time frame. The impact of the change on adoption of said IAS is being assessed.

Auditors: a) Statutory Auditors:

Pursuant to Section 139, 142 and other applicable provisions of the Companies Act, 2013 read with Rules made there under, the Shareholders in their 27^th Annual General Meeting (AGM) of the Company held on 09^th August, 2014 appointed M/s. M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad (Firm Registration No. 000459S) as Statutory Auditors of the Company to hold office from the conclusion of the 27^th AGM till the conclusion of the 30^th AGM subject to ratification of their appointment by Members in every AGM.

M/s. M. Bhaskara Rao & Co., have confirmed their eligibility under Section 141 of the Companies Act, 2013 read with Rules framed thereunder for appointment as Auditors of the Company. As required under Regulation 18 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Auditors also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The members are requested to ratify the appointment of M/s.M.Bhaskara Rao & Co., Chartered Accountants as Statutory Auditors of the Company and fix their remuneration for the year 2015-16.

The notes on financial statements referred to in the Auditors Report are self explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservations or adverse remarks or disclaimer.

b) Internal Auditors:

The Board of Directors of the Company have appointed M/s. Deloitte Touche Tohmatsu India Private Limited, Chartered Accountants, Hyderabad as Internal Auditors to conduct internal audit of the Company for the financial year ended 31^st March, 2016 and their reports are reviewed by the Audit Committee from time to time.

c) Cost Auditors:

M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct cost audits relating to Insecticides (Technical Grade and Formulations), of the Company for the year ending 31^st March, 2016. Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with Rules made there under, Members are requested to consider the ratification of the remuneration payable to M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad. The Company has duly filed the Cost Audit Reports for the financial year 2014-15 with the Ministry of Corporate Affairs.

d) Secretarial Auditor and Secretarial Audit Report:

As per the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K.V. Chalama Reddy, Practicing Company Secretary, to carry out secretarial audit in terms of the Companies Act, 2013 for the financial year 2015-16. The secretarial audit report issued by Mr. K. V. Chalama Reddy, Practicing Company Secretary in form MR-3 is enclosed to this report as Annexure - III. The report does not contain any qualification, reservation or adverse remark.

Directors:

As on the date of this report, Company''s Board comprises of 8 (Eight) Directors, out of which, 4 (Four) are Non-Executive Non- Independent Directors (NEDs) including 1 (One) Woman Director. Further, among the remaining Directors, 3 (three) are Non-Executive Independent Directors and 1 (one) among them is an Executive Director.

a) Director(s) to retire by rotation:

In accordance with the provisions of Section 152 of the Companies Act, 2013, and Articles of Association of the Company, Mr. K.S.Raju, Director of the Company, retires by rotation at the forthcoming Annual General Meeting of the Company and being eligible, offer himself for reappointment.

b) Changes in Directorship:

During the year, Mr. K.S.Raju has stepped down from the Chairmanship position of the Board, and continues as a Director on the Board of the Company. Consequent to the above, Mr. D.Ranga Raju appointed as Chairman of the Board with effect from 06^th February, 2016. Further, Mr.N.Vijayaraghavan, has renounced from Independent Directorship position with effect from 06^th February, 2016, however continuing as a Non-Executive Non Independent Director on the Board.

c) Independent Directors:

In terms of Sections 149, 152 read with Schedules IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force), the Independent Director can hold office for a term of up to five (5) consecutive years on the Board of Directors and will not be liable to retire by rotation.

All the Independent Directors have given declaration that they meet the criteria of independence laid down under Section 149 (6) of the Companies Act, 2013 read with Regulation 16(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

d) Evaluation of performance of the Board of Directors:

Pursuant to the provisions of the Companies Act, 2013, and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the evaluation of its own performance and Committees of the Board, the performances of Directors individually, the Executive Director, the Chairman of the Board etc. Various parameters as recommended in the guidance note issued by the Institute of Company Secretaries of India, were considered for evaluation and after receiving the inputs from the Directors, the performance evaluation exercise was carried out. The parameters include integrity, credibility, expertise and trustworthiness of Directors, Board’s monitoring of various compliances, laying down and effective implementation of various policies, level of engagement and contribution of the Directors, safeguarding the interest of all stakeholders etc.

The performance evaluation of the Board as a whole was carried out by the Independent Directors. The performance evaluation of each Independent Director was carried out by the Board. The Directors expressed their satisfaction with the evaluation process.

e) Familiarization Programme for the Independent Directors:

In compliance with the requirement of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, the Company has put in place a familiarization programme for the Independent Directors to familiarize them with their role, rights and responsibility as Directors, the working of the Company, nature of the industry in which the Company operates, business model etc. The same is available on the website of the Company i.e., www.nagarjunaagrichem.com.

Through the Familiarization programme, the Company apprises the Independent Directors about the business model, corporate strategy, business plans and operations of the Company. These Directors are also informed about the financial performance, annual budgets, internal control system, statutory compliances etc. They are also familiarized with Company’s vision, core values, ethics and corporate governance practices.

At the time of appointment of Independent Director, a formal letter of appointment is given to him, which explains his role, responsibility and rights in the Company.

Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel

Your Company has laid down well-defined criteria for the selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel.

Criteria for making payment to Non-Executive Directors of the Company.

Your Company has laid down well-defined criteria for making payment to Non-Executive Directors of the Company. The details of the same are available at the Company’s website at www.naaarjunaaarichem.com .

Directors'' Responsibility Statement:

Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures:

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2016 and of the Profit/Loss of the Company for the year ended on that date.

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the Annual Accounts of the Company on a ‘going concern'' basis.

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

Transfer of Un-claimed Dividend:

Pursuant to Section 124 and other applicable provisions of the Companies Act, 2013 as amended from time to time, the following un-claimed dividends were transferred to the Investors Education and Protection Fund during the year under review:

a) Unclaimed dividend amount of Rs. 6,00,617/- (Rupees Six Lakhs Six Hundred and Seventeen Only) pertaining to the final dividend for the year 2007-08;

b) Unclaimed dividend amount of Rs. 4,74,747/- (Rupees Four Lakh Seventy Four Thousand Seven Hundred and Forty Seven Only), pertaining to the first interim dividend paid during the year 2008-09;

c) Unclaimed dividend amount of Rs. 5,21,061/- (Rupees Five Lakhs Twenty One Thousand and Sixty One Only), pertaining to the second interim dividend during the year 2008-09.

Corporate Social Responsibility:

Pursuant to Section 135 and Schedule VII of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility) Rules, 2014, the Board has constituted the Corporate Social Responsibility (CSR) Committee comprising of Mr. D. Ranga Raju, Chairman, Mr. Sudhakar Kudva, Mr. V. Vijay Shankar and Mr. N. Vijayaraghavan, members of the Committee. A detailed CSR Policy has also been framed which is placed on the Company''s website. During the year under review the Company does not fall under the criteria of implementing CSR, as defined under Section 135 of the Companies Act, 2013.

Even though, not falling under the criteria for mandating CSR, your Company does a lot of CSR activity in Srikakulam and Ethakota where the Company''s factories are situated. Such activities includes ongoing drinking water supplies to villages and maintenance of the Company installed RO plants in the neighboring villages, contribution to Vidhya Volunteer Scheme and Mythri Police, street lightning and borewell maintenance, development of school facilities, community centers and bus shelters in the surrounding villages of the factories, providing medical services and vocational courses and conducting various medical camps, etc.

Change in the nature of business:

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators or Courts.

During the year the Company has not received any significant and material orders passed from Regulators or Courts or Tribunals impacting the going concern status and the Company''s operations in future.

Particulars of Loans, Guarantees or Investments under Section 186:

The details of Loans, Guarantees and Investments made during the financial year ended 31^st March, 2015 in compliance with the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of the Board and its Powers) Rules, 2014 have been disclosed in the financial statements forming part of this Annual Report.

Extract of Annual Return:

The Extracts of the Annual Return in form MGT-9 as per the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure-IV to this Directors Report.

Number of Board Meetings:

During the year under review, six (6) Board Meetings were held during the year under review. The details of the same are given in Corporate Governance Report which forms part of this Annual Report. The provisions of Companies Act, 2013 and the Listing Regulations were adhered to, while considering the time gap between two meetings.

Audit Committee:

The Audit Committee comprising of Mr. D. Ranga Raju as the Chairman and Mr. Sudhakar Kudva, Mr. Raghuraman, Mr. Raghavender Mateti as the members. The details about Audit Committee including the brief description of its terms of reference are mentioned in the Corporate Governance Report.

Risk Management Policy:

Pursuant to the provisions of Section 134, and other applicable provisions if any of the Companies Act, 2013, the Company constituted the Risk Management Committee and framed Risk Management Policy, which inter-alia covers implementation and monitoring of the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Meeting of Independent Directors:

The details on the separate meeting of the Independent Directors are reported in the Report on Corporate Governance.

Related Party Transactions:

All the related party transactions are entered into during the financial year were on arm’s length basis and in the ordinary course of Company’s business and are in compliance with the applicable provisions of the Companies Act, 2013 and Regulation 23 of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015. The Company has not entered into any contract, arrangement or transactions with any related party which could be considered as material within the meaning of Regulation 23 of the Listing Regulations, 2015. Related Party Transactions under Accounting Standard-18 (AS-18) are disclosed in the notes to the financial statement.

There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel’s etc. which may have potential conflict with the interest of the Company at large. Thus the disclosure in Form AOC-2 is not applicable. Necessary disclosures and the statement of all related party transactions is presented before the Audit Committee and the Board of Directors on a quarterly basis specifying the nature, value and terms and conditions of the transactions. All Related Party Transactions are approved by the Audit Committee and omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed on a quarterly basis by the Audit Committee.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company’s website www. nagarjunaagrichem.com. The details of the transactions with Related Parties are provided in the accompanying financial statements.

Vigil Mechanism/Whistle Blower Policy:

The Company has implemented Whistle Blower Policy to deal with any fraud, irregularity or mismanagement in the Company. The policy enables any employee or Director to directly communicate to the Chairman of the Audit Committee to report any fraud, irregularity or mismanagement in the Company. The policy ensures strict confidentiality while dealing with concerns and also that no discrimination or victimization is meted out to any whistleblower. The Whistle Blower Policy as approved by the Board is uploaded on the Company’s website www.naaariunaaarichem.com. During the year under review, your Company has not received any complaints under the said policy of the Company.

Nomination and Remuneration Policy:

Pursuant to Section 178(3) of the Companies Act, 2013, the Company has adopted a policy on Nomination and Remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. The Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualification, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and as SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report.

Corporate Governance:

In compliance with Regulation 34 read with Para C of Schedule V SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on Corporate Governance has been included in this Annual Report together with the Auditor’s certificate confirming compliance of the Corporate Governance as stipulated under the said Regulations.

All the Board members and the senior management personnel have affirmed compliance with the Companies “Code of Conduct for Board and Senior Management Personnel” for the financial year 2015-16.

A certificate signed by the Managing Director and Chief Financial Officer (CFO) certifying the financial statements and other matters as required under Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Regulation 16(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of this Annual Report.

Policy on Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a “Policy on Sexual Harassment of Associates” in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. The Policy aims to provide protection to employees at the workplace, and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, and framed with the objective of providing a safe working environment, where employees feel secure. There were no cases reported during the financial year 2015-16 under the said Policy.

Brand Protections:

Your Company has taken appropriate actions against counterfeits, fakes and other forms of unfair competitions / trade practices.

Listing Fees:

The Company has duly paid the listing fees for the year 2016-17 to the BSE Limited, the Stock Exchange where the equity shares of the Company are listed.

Fixed Deposit:

Your Company has not accepted any fixed deposits from the public during the year under review, and no such amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Industrial Relations:

The industrial relations at the factories and head office continued to be cordial.

Insurance:

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Particulars of Employees and Remuneration:

The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure -V to this report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the Section 134(3)(m) of the Companies Act, 201 3 relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of Rule 8 of the Companies (Accounts) Rules, 2014, are set out in a separate statement attached hereto as Annexure-VI and forms part of this report.

Acknowledgement:

Your Directors thank the Company''s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its Stakeholders, Customers, Agents, Suppliers, Employees, various Government / NonGovernment Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers/Customers of the Company. Your Directors look forward to the future with confidence.

For and on behalf of the Board

K.S.Raju V.Vijay Shankar

Place : Hyderabad Director Managing Director

Dated : 06^th August, 2016 (DIN:00008177) (DIN:00015366)

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Mar 31, 2015

The Directors have pleasure in presenting the 28th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2015.

Operating Results:

Your Company's performance during the year as compared with that during the previous year is summarized below:

(Rs. in lakhs)

Particulars 2014-15 2013-14

Gross Turnover (including Other 77,147 65,518 Income)

Profit before Interest and 7,006 2,980

Depreciation (EBIDTA)

Finance Charges 3,492 2,800

Depreciation and Ammortisation 2,464 2,188

Exceptional items - 331

Net Profit Before Tax (PBT) 1,050 (2,338)

Less: Provision for Tax 282 (217)

Net Profit After Tax (PAT) 768 (2,121)

Balance of Profit brought forward 11,415 13,536

Balance available for appropriation 11,879 11,415

Proposed Dividend on Equity Shares 156 -

Tax on Proposed Dividend 32 -

Surplus carried to Balance Sheet 11,691 11,415

Dividend:

Considering the turnaround in Company's performance, your Board of Directors pleased to recommend payment of dividend of Rs. 0.10 paisa per equity shares of Rs. 1/-each (i.e.,10% of the paid up Capital) for the fi nancial year 2014-15 for your consideration and approval at the ensuing Annual General Meeting. The dividend outgo would be Rs. 187.65 lakhs (including dividend distribution tax).

Performance:

In a challenging market environment, your Company recorded its highest revenue of Rs. 771.47 crores during the year under review as against Rs. 655.18 crores achieved in the previous year, showing a growth of 18%. One of the main reasons for this has been the availability of the damaged Block 5 during the year under review. This has resulted in growth in both domestic and export sales. Further, opening up new export markets for formulations and expanding product range has also contributed to the growth. The EBIT and Cash Profit stood at Rs. 45.41 Crores and Rs. 35.14 Crores during the year under review, compared to Rs. 7.92 crores and Rs. 1.81 Crores respectively in the previous year. The increase in finance cost is mainly due to increase in working capital requirements.

Domestic & Export Markets:

Although the country received near normal rainfall (94% of LPA) during the second quarter, however due to the large rainfall deficiency in June, the 2014 season rainfall over the country as a whole (88% of LPA) ended as deficient (<90% of LPA). The large temporal and spatial variation in the rainfall during the season had adverse impact on the productivity and production of major kharif crops over the country except rice. The Rabi season has not been good for the second year consecutively due to insufficient rain fall. This has impacted sales in some of the southern states. This has resulted in buildup of inventories in the field. This had an adverse impact on agrochemical market conditions. Despite of the above your Company achieved 9% growth in domestic sales, increasing from Rs. 541.00 crores in the previous year to Rs. 590.00 crores in the year under review. This growth is mainly attributable to the expanded market area and crop, product portfolio, supply chain initiatives, production flexibility of Ethakota formulation plant.

In the direction of enhancing the product portfolio, your Company launched two new products in the domestic market, a new rice herbicide and, a nematicide during the year under review.

Exports have shown significant improvement over the previous year, mainly due to production resumption out of fire affected Block 5 restored during fag end of the previous year, and overall stabilization of the Srikakulam plant. The Exports Sales has increased from Rs. 93.00 crores to Rs. 148.00 crores in the year under review registering a growth of 60%. In the Contract (toll) manufacturing from Srikakulam Unit, your Company has been maintaining continued amicable and good relationships with the Contract manufacturing customers. This has helped the Company restore confidence and enabled to get renewed orders from them. A new product was introduced in the year under review. The contract manufacturing business is expected to grow.

In the direction of exploring newer business opportunities by way of direct marketing in other geographies, during the year under review your Company successfully registered and launched few of its own branded products in Asian countries. Your Company is also in process of registering various brand products in African countries towards penetrating those markets.

Plant Operations:

The operations at Srikakulam technical plant have been satisfactory throughout the year under review, except for a period of about one month in October due to Hudhud cyclone. The plant has achieved an annual production of

4545 MT during the year under review compared to 3177 MT of the previous year. Export orders for some of Block 5 products have been received, enabling to improve the plant utilization considerably. The plant has also lined-up for production of few intermediates for captive consumption and the production will commence during the current fi nancial year 2015-16. Various newer initiatives for cost savings and capacity utilization have been taken up besides regular efforts for streamlining, debottlenecking and augmenting plant efficiencies and enhancing productivity. The working environment has been amicable led to maintaining cordial relationship with workers Unions and other stakeholders.

The Ethakota formulation unit was honored with "Best Management Award" for the year by State Government of Andhra Pradesh on 01st May, 2015. This is matter of pride for Company. The unit achieved a production of 19,258 MT/ KL in the year under review comparing to the previous year production of 20,324 MT/KL. This has been due to poor Rabi season. However, the plant could not only meet the domestic demand but also geared up to meet the additional demand from the newer Export markets. Various initiatives in the areas of production volume increase, quality control, automations, increased productivity, debottlenecking and supply chain have been taken to meet the enhanced marketing demand and effective / better customer services.

Fire Insurance Claim:

During the year under review, the Insurance Company has accepted the Company's provisional insurance claim in respect of damages occurred in the fire affected Block-5 of the Srikakulam plant and an interim on-account payment has been released. The claim made by the Company is in process for settlement.

New Projects/Products:

The Company's 'State of the art' R & D Centre at Shadnagar, near Hyderabad has been active and strengthened in developing various cost effective process for manufacture of Active Ingredients(AIs)/Technical and Intermediates for Herbicides, Insecticides and Fungicides. One such technical has been commercialized and toll manufactured at Srikakulam technical plant for a multinational Company. Processes for few more technical are also developed successfully. They are at pilot plant stage and are expected to commercialize during the current year.

In its efforts to develop new formulations and improving upon the existing processes for better productivity/cost effective, the centre has successfully developed processes for new formulations during the year under review. These are undergoing preliminary field trials.

Strategic Alliance:

During the year under review, your Company and M/s Helm AG (HELM) a German based Company entered into an agreement which is in the nature of strategic and long term business alliance covering Company's R&D facility, manufacturing facilities, and introduction of HELM products into the Indian market through the Company's marketing network.

Environment Protection:

During the year under review your Company continued to focus on safety, health and environmental protection at all location with all manufacturing plant mainting at high safety standards.

Your Company laid great emphasis on safety in the plant operations and proper environment management. Towards this, Efl uent Treatment Plant (ETP) at Ethakota Unit and the Zero Liquid Discharge (ZLD) facility at Srikakulam Unit has been operating satisfactorily. Steps and efforts are in place in the direction of demonstrating constantly improved environmental performance. Both the manufacturing units at Srikakulam and Ethakota has renewed their respectively approvals from the Pollution and Fire Authorities.

Your Company continues to enjoy the certifications ISO: 9001:2008, ISO: 140001 and OHSAS: 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Transfer of amount to Reserves:

The Company does not propose to transfer any amount to the general reserve for the financial year ended 31st March, 2015.

Share Capital:

The paid up equity share capital as on 31st March, 2015 is Rs. 15.59 crores. There was no public issue, right issue, bonus issue or preferential issue during the year under review. The Company has also not issued any other shares or shares with differential voting rights. It has neither issued employee stock options to its employees.

Employee Stock Option Scheme-2015 (ESOS-2015):

The Board of Directors ("the Board") of the Company at its meeting held on 07th August, 2015, has approved introduction of the 'Nagarjuna Agrichem Limited Employee Stock Option Scheme-2015' (hereinafter referred to as the "ESOS-2015"), subject to the approval of the Members and compliance of the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, as amended and any of its modifications from time to time (the "SEBI Regulations"). The ESOS-2015 is for the limited purpose of extending the options to Key Managerial Personnel and Senior Managerial Personnel in the Company, Holding Company(ies), Subsidiary Company(ies) and Associate Company(ies) both in India and abroad. The said Scheme reserves 11,50,000 equity shares of the Company, to be alloted against stock options to be granted to the eligible employees.

Material Changes and Commitments:

There have been no material changes and commitments affecting the fi nancial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

Subsidiary Companies and Consolidation of Financial Statements:

Pursuant to clause 32 of the Listing Agreement entered with Stock Exchanges(s), along with other applicable provisions of the Companies Act, 2013, and as per Accounting Standard (AS) 21, the Audited Consolidated Financial Statements for the year ended on 31st March, 2015 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiaries M/s. LR Research Laboratories Private Limited and M/s. Nagarjuna Agrichem (Australia) Pty, Ltd (which are yet to commence their operations) with its fi nancial statements on line by line basis. The investments of the Company in Nasense Labs Private Limited, an Associate Company, have been accounted for in these consolidated financial statements under the equity method in accordance with AS 23 – "Accounting for Investments in Associates".

The Audited Annual Accounts and related information of Subsidiaries and Associate as applicable will be made available upon request. The Statement required under Section 134 of the Companies Act, 2013 is attached as Annexure - I (as Form AOC-1) to the Directors' Report of the Company.

No other Company has become/ceased to be subsidiary or joint venture or associate Company during the financial year. There has been no material change in the nature of the business of the aforesaid Subsidiaries and Associate. The Company has no Subsidiary which can be considered as material within the meaning of clause 49(V)(E) of Listing Agreement.

In accordance with the provisions of section 136(1) of the Companies Act, 2013, the following have been placed on the website of the Company www.nagarjunaagrichem.com:

a) annual report of the Company, containing therein its standalone and the consolidated financial statements; and

b) Annual accounts of each of the subsidiary Companies.

Directors and Key Managerial Personnel:

In accordance with the provisions of Section 152 read with rules made thereunder of the Companies Act, 2013 Mrs. K.Lakshmi Raju, Director of the Company retires by rotation and is eligible for re-appointment.

Pursuant to the provisions of the section 149 of the Companies Act, 2013, Mr.D.Ranga Raju, Mr.K.Raghuraman, Mr.N.Vijayaraghavan and Mr.Raghavender Mateti have been appointed as Independent Directors for a period of five years, at the Annual General Meeting of the Company held on 09th August, 2014. Mr. V.Vijay Shankar, Managing Director, Mr. R.K.S. Prasad, Chief Financial Officer and Mr. Satish Kumar Subudhi, Company Secretary & Head-Legal are KMP of the Company in terms of Section 203 of the Companies Act, 2013.

In the opinion of the Board, the Independent Directors possess appropriate balance of skills, experience and knowledge, as required. A brief note on Directors retiring by rotation and eligible for re-appointment is furnished in the report on Corporate Governance.

Auditors:

a) Statutory Auditors:

Pursuant to Section 139, 142 and other applicable provisions of the Companies Act, 2013 read with rules made thereunder, the Shareholders in their 27th Annual General Meeting (AGM) of the Company held on 09th August, 2014 appointed M/s. M.Bhaskara Rao & Co., Chartered Accountants, Hyderabad (Firm Registration No. 000459S) as Statutory Auditors of the Company to hold office from the conclusion of the 27th AGM till the conclusion of the 30th AGM subject to ratification of their appointment by Members in every AGM.

M/s.M.Bhaskara Rao & Co., have confirmed their eligibility under Section 141 of the Companies Act, 2013 read with rules framed thereunder for appointment as Auditors of the Company. As required under clause 49 of the Listing Agreement, the Auditors also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

The members are requested to ratify the appointment of M/s.M.Bhaskara Rao & Co., Chartered Accountants as Statutory Auditors of the Company and fix their remuneration for the year 2015-16.

The notes on financial statements referred to in the Auditors Report are self explanatory and do not call for any further comments. The Auditors Report does not contain any qualification, reservations or adverse remarks or disclaimer.

b) Internal Auditors:

The Board of Directors of the Company have appointed M/s. Deloitte Touche Tohmatsu India Private Limited, Chartered Accountants, Hyderabad as Internal Auditors to conduct internal audit of the Company for the financial year ended 31st March, 2015 and their reports are reviewed by the Audit Committee from time to time.

c) Cost Auditors:

M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct cost audits relating to Insecticides (Technical Grade and Formulations), of the Company for the year ending 31st March, 2016. Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with rules made thereunder, Members are requested to consider the ratification of the remuneration payable to M/s. K. Narasimha Murthy & Co., Cost Accountants Hyderabad. The Company has duly filed the Cost Audit Reports for the financial year 2013-14 with the Ministry of Corporate Affairs.

d) Secretarial Auditor and Secretarial Audit Report:

As per the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Mr. K.V. Chalama Reddy, Practicing Company Secretary, to carry out secretarial audit under the Companies Act, 2013 for the financial year 2014-15. The secretarial audit report issued by Mr. K. V. Chalama Reddy, Practicing Company Secretary in form MR-3 is enclosed to this report as Annexure - II . The report does not contain any qualification, reservation or adverse remark.

e) Internal financial control systems and their adequacy:

The Company's internal audit systems are geared towards ensuring adequate internal controls commensurate with the size and needs of the business, with the objective of efficient conduct of operations through adherence to the Company's policies, identifying areas of improvement, evaluating the reliability of financial statements, ensuring compliances with applicable laws and regulations and safeguarding of assets from unauthorized use. The Board is of the opinion that the Company's internal financial control are adequate and effective during the financial year 2014-15.

Directors' Responsibility Statement:

Pursuant to the requirement under Section 134(3)(c) of the Companies Act, 2013, with respect to Directors Responsibility Statement, it is hereby confirmed that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2015 and of the Profit / Loss of the Company for the year ended on that date.

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the Annual Accounts of the Company on a 'going concern' basis.

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

Transfer of Un-claimed Dividend:

Pursuant to Section 124 and other applicable provisions of the Companies Act, 2013 as amended from time to time,

the following un-claimed dividends were transferred to the Investors Education and Protection Fund during the year under review:

a) Unclaimed dividend amount of Rs. 7,50,420/- (Rupees seven lakhs fifty thousand four hundred and twenty only) pertaining to the final dividend for the year 2006- 07;

b) Unclaimed dividend amount of Rs. 3,46,536/- (Rupees three lakhs forty six thousand five hundred and thirty six only), pertaining to the interim dividend paid during the year 2007-08;

c) Unclaimed dividend amount of Rs. 3,83,460/- (Rupees three lakhs eighty three thousand four hundred and sixty only) pertaining to the interim dividend paid during the year 2007-08; and

d) Unclaimed dividend amount of Rs. 4,55,774/- (Rupees four lakhs fifty five thousand seven hundred and seventy four only), pertaining to the final dividend for the year 2007-08.

Corporate Social Responsibility:

Pursuant to Section 135 and Schedule VII of the Companies Act, 2013, read with the Companies (Corporate Social Responsibility) Rules, 2014, the Board has constituted the Corporate Social responsibility (CSR) Committee comprising of Mr. D. Ranga Raju, Chairman, Mr. Sudhakar Kudva, Mr. V.Vijay Shankar and Mr. N. Vijayaraghavan, members of the Committee. A detailed CSR Policy has also been framed which is placed on the Company's website. During the year under review the Company does not fall under the criteria of CSR Policy.

Despite the non applicability as per the Companies Act, 2013, your Company does a lot of CSR activity in Srikakulam and Ethakota. These activities are centered on education and providing essential supplies to various villages.

Change in the nature of business:

There is no change in the nature of business of the Company. Signifi cant and Material Orders passed by the Regulators or Courts. During the year the Company has not received any significant and material orders passed from Regulators or Courts or Tribunals impacting the going concern status and the Company's operations in future.

Particulars of Loans, Guarantees or Investments under Section 186:

The details of Loans, Guarantees, and Investments made during the fi nancial year ended 31st March, 2015 in compliance with the provisions of Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 have been disclosed in the financial statements forming part of this Annual Report.

Extract of Annual Return:

The Extracts of the Annual Return in form MGT-9 as per the provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed as Annexure-V to this Directors Report.

Number of Board Meetings:

During the year under review, six (6) Board Meetings were held during the year under review. The details of which are given in Corporate Governance Report which forms part of this Annual Report. The provisions of Companies Act, 2013 and the Listing Agreement were adhered to, while considering the time gap between two meetings.

Audit Committee:

The Audit Committee constituted comprising of Mr. D. Ranga Raju as the Chairman and Mr.Sudhakar Kudva, Mr. Raghuraman, Mr. Raghavender Mateti as the members. The details about Audit Committee including the brief description of its terms of reference are given in the Corporate Governance Report.

Risk Management Policy:

Pursuant to the provisions of Section 134, and other applicable provisions if any of the Companies Act, 2013, the Company constituted the Risk Management Committee and framed Risk Management Policy, which inter-alia covers implementation and monitoring of the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

Meeting of Independent Directors:

The details on the separate meeting of the Independent Directors and familiarization programme are reported in the Report on Corporate Governance.

Related Party Transactions:

All the related party transactions are entered into during the fi nancial year were non-material and were on arm's length basis and were in the ordinary course of Company's business and are in compliance with the applicable provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The Company has not entered into any contract, arrangment or transactions with any related party which could be considered as material with in the meaning of Clause 49 (VII) (C) of Listing Agreement. Related party transactions under Accounting Standard- (AS)18 are disclosed in the notes to the financial statement.

There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel's etc. which may have potential confl ict with the interest of the Company at large. Thus the disclosure in Form AOC-2 is not applicable. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. Necessary disclosures and the statement of all related party transactions is presented before the Audit Committee and the Board of Directors on a quarterly basis specifying the nature, value and terms and conditions of the transactions.

The Related Party Transactions Policy as approved by the Board is uploaded on the Company's website at the web link: http://www.nagarjunaagrichem.com/admin/products/ NACL_Related_Party_Transactions.pdf. The details of the transactions with Related Parties are provided in the accompanying financial statements.

Vigil Mechanism/Whistle Blower Policy:

The Company is committed to developing a culture where it is safe for all employees to raise concerns about any unethical, fraud and unacceptable practice and any event of misconduct adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear or punishment or unfair treatment. In view of this the Company has formulated Whistle Blower Policy for the sake of employees and Directors to raise their concerns.

The Whistle Blower Policy as approved by the Board is uploaded on the Company's website at the web link: http:// www.nagarjunaagrichem.com/admin/products/NACL_ Whistle_Blower_Policy.pdf.

Manner in which formal annual evaluation has been made by the Board of its own performance and that of its Committees and Individual Directors:

Pursuant to the provisions of the Companies Act 2013 and Clause 49 of the Listing Agreement, the Board has carried out evaluation of

a) its own performance,

b) the Directors individually and

c) working of its Committees.

The manner in which the evaluation was carried out is reported in the Report on Corporate Governance forming part of this Annual Report.

Nomination and Remuneration Policy:

Pursuant to Section 178(3) of the Companies Act, 2013, the Company has adopted a policy on remuneration of Directors, Key Managerial Personnel and other employees. The Nomination and Remuneration Committee (NRC) has formulated the criteria for determining qualification, positive attributes and independence of Directors in terms of provisions of section 178(3) of the Act and Clause 49 of the Listing Agreement. The details about Committee including the brief description of its terms of reference are given in the Corporate Governance Report.

Statement of Declaration given by Independent Directors under Sub-Section (6) of Section 149:

The Company has received necessary declarations from each Independent Director of the Company under Section 149(7) of the Companies Act, 2013 and Clause 49(II)(D) (2) of the Listing Agreement that the Independent Directors of the Company meet the criteria of their independence as laid down in Section 149(6) of the Companies Act, 2013.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49(VIII)(D) of the Listing Agreement entered with the Stock Exchanges in India, is presented in a separate section forming part of this Annual Report.

Policy on Sexual Harassment:

The Company has zero tolerance for sexual harassment at workplace and has adopted a "Policy on Sexual Harassment of Associates" in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, and framed with the objective of providing a safe working environment, where employees feel secure. During the year ended 31st March, 2015 the Company has not received any complaints pertaining to sexual harassment.

Brand Protections:

Your Company has taken appropriate actions against counterfeits, fakes and other forms of unfair competitions / trade practices.

Listing Fees:

The Company has paid the listing fees for the year 2015-16 to the Bombay Stock Exchange where the equity shares of the Company are listed.

Corporate Governance:

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013, and as stipulated under the Listing Agreement with the Stock Exchange. A separate section on Corporate Governance under the Listing Agreement, along with a certificate from the auditors confirming the compliance, is annexed and forms part of this Annual Report.

Fixed Deposit:

Your Company has not accepted any fixed deposits from the public during the year under review, and no such amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

Industrial Relations:

The industrial relations at the factories and head office continued to be cordial.

Insurance:

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Particulars of Employees and Remuneration:

The information required under Section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2015 is annexed as Annexure –III to this report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the provisions of Section 134(3) (m) of the Companies Act, 2013 relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of Rule 8 of the Companies (Accounts) Rules, 2014, are set out in a separate statement attached hereto as Annexure-IV and forms part of this report.

Acknowledgement:

Your Directors thank the Company's Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its Stakeholders, Customers, Agents, Suppliers, Employees, various Government / Non-Government Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers/Customers of the Company. Your Directors look forward to the future with confidence.

For and on behalf of the Board

K.S.Raju V.Vijay Shankar

Place : Hyderabad Chairman Managing Director

Dated : 07th August, 2015 (DIN:00008177) (DIN:00015366)

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Mar 31, 2014

The Members,

The Directors have pleasure in presenting the 27th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2014.

Operating Results:

Your Company''s performance during the year as compared with that during the previous year is summarized below:

(Rs. in lakhs)

Particulars 2013-14 2012-13

Sales 63,584 60,058

Other Income 1,933 1,819

Total Income 65,517 61,877

Operating Expenditures 67,525 6,3870

Exceptional items 330 -

Profit / Loss Before Taxation (-) 2,338 (-)1,993

Less: Provisions for Taxations (-) 216 (-)727

Profit After Taxation (-) 2,122 (-)1,266

Performance:

The dampening effect of the fire incident of June 2012 in Block-5 of Srikakulam plant continued to have an impact on the performance for the year under review.

Your Company has reported revenue of Rs.655.17 Crores for the year 2013-14, as against Rs.618.77 crores recorded in 2012-13, registering a growth of 6 % despite the non availability of Block 5 of Srikakulam. The growth in your Company''s revenues has been mainly due to improved performance of the Domestic Formulation Sales.

The EBIT and Cash Profit stood at Rs.7.92 Crores and Rs.(-)1.50 Crores during the year under review, compared to Rs.10.77 Crores and Rs.5.35 Crores respectively in the previous year.

Domestic & Export Markets:

The monsoon rains were good as well as wide spread in 2013. Most parts of the Country barring North East received normal rains in the first half of the year under review. This has a positive impact on various crop acreages. However, the continued rain in the second half of the year and impact of Phailin and Helen cyclones have created flood like situation in most of the south eastern states, causing damage to various crops mainly the standing kharif crops. Raw material supplies were a constraint faced by the Industry as a whole and your Company has tried to meet this challenge by changes in the product mix, crop mix and procurement planning.

Despite challenging market environment, your Company could achieve the Domestic Sales of Rs.477 Crores as against Rs.417 Crores in the previous year recording a growth of 14%. This growth is mainly attributable to the expanded market area and crops, product portfolio management, new supply chain initiatives and production flexibility of Ethakota Formulation Plant.

Exports and Institutional Sales have been affected due to the continued closure of fire affected Block-5 of Srikakulam Plant. The sale has accordingly decreased by around 9% from that of the previous year.

Plant Operations:

The Ethakota plant was able to meet the requirements of the Domestic Formulation Market. The higher demand could have been met but for raw material supply constraints, which was an Industry wide phenomenon. It has achieved a production of 20,298 MT/KL in the year under review, comparing to the previous year record production of 22,327 MT/KL. Your Company continued to focus on streamlining and enhancing the production capabilities by adding new lines and other infrastructure facilities, debottlenecking, quality control and enhanced productivity. Although the efforts taken in the past have yielded the desired results, however the factors like rising input costs, raw material supply constraints, erratic & irregular power supply from Electricity Board, manpower shortage issues etc. continue to be causes of concerns.

The rebuilding work of fire affected Block-5 of the Srikakulam plant has been successfully completed and the same was re-commissioned on 9th March 2014 and the first output of the product was received on 30th March 2014. Despite the affected block, which contributes about 40% of the plant capacity, the plant could achieve the annual production of 3,139 MT/KL as against 2,129 MT/KL in the previous year. As a part of risk mitigation measures and in order to prevent any such untoward events in future, the plant has continued focusing on various initiatives and additional safety measures. The working environment has been amicable that led to maintaining a cordial relationship with workers Unions and other stakeholders. Your Company has been successful in renewing the periodic contracts with those unions.

New Projects/Products:

The ''State-of-the-art'' R&D Centre commissioned at Shadnagar, near Hyderabad, during the previous year, has been active during the year under review and successful in developing various cost effective processes for manufacture of Active Ingredients (AI) and the intermediates for Herbicides, Insecticides & Fungicides. Emphasizing the need for developing new Formulations of Pesticides and improving the existing processes for better productivity, it has initiated various steps with a expectation to achieve the desired results in the days to come. It is also planning to have an accredited GLP (Good Laboratory Practices).

Dividend:

Keeping in view the need for continuing investment in its operations, improve the cash flow position, sustainable development and also with an eye to improved production in the plants, your Directors have considered it prudent not to declare any dividend for the year under review.

Increase in paid up Share Capital:

In compliance with the requirements of Clause 40A of the Listing Agreement with the Stock Exchange to raise public shareholding of the Company to not less than 25% and as per the terms of the resolution passed by Shareholders in the Extra-ordinary General Meeting held on 22nd May, 2013, your Company has issued 69,29,938 Bonus Shares only to the public shareholders in the ratio of three Equity

Shares for every fourteen Equity Shares of the Company, resulting the Company''s paid- up Capital increased from 14,89,81,570 to 15,59,11,508 Equity Shares of Re.1/- each.

Windmills:

Pursuant to the approval accorded by Shareholders by way of postal ballot, your Company has disposed off the 3 Windmills having total capacity of 6.3 MW, located near Tirunelveli in Tamilnadu State during the year under review.

Subsidiary Companies and Consolidation of Financial Statements:

In Accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other Financial Statements / Documents of the Subsidiary Companies viz., Nagarjuna Agrichem (Australia) Pty Ltd and LR Research and Laboratories Pvt.Ltd (which are yet to commence it operations / activities) are not being attached with the Balance Sheet of the Company. The Audited Annual Accounts and related information of Subsidiaries as applicable will be made available upon request. The Statement required under Section 212 of the Companies Act, 1956 is attached to the Annual Accounts of the Company.

Pursuant to clause 32 of the Listing Agreement with Stock Exchanges, applicable provisions of the Companies Act, 1956 and as per Accounting Standard (AS) 21 and other applicable Accounting Standards, the Audited Consolidated Financial Statements for the year ended on 31st March, 2014 are provided in this Annual Report. The Company has prepared consolidated financial statements by incorporating the financial statements of its wholly owned subsidiary L.R.Research Laboratories Pvt. Ltd. with its financial statements on line by line basis. There are no operations in the wholly owned subsidiary namely Nagarjuna Agrichem (Australia) Pty. Ltd and hence, there is no consolidation of Statement of Profit and Loss in respect of the same. The investments of the company in Nasense Labs Private Ltd., an Associate Company, have been accounted for in these consolidated statements under the Equity Method in accordance with AS 23 – "Accounting for Investments in Associates"

Environment Protection:

Your Company laid great emphasis on safety in the plant operations and proper environment management. Towards this, new ETP was commissioned at Ethakota Unit and a new Scrubber System was commissioned at Shadnagar during the year. The operations of Zero Liquid Discharge (ZLD) facility at Srikakulam Unit have been stabilized. Steps and efforts are in place in the direction of demonstrating constantly improved environmental performance.

Your Company continues to enjoy the certifications ISO: 9001:2008, ISO: 140001 and OHSAS : 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Corporate Social Responsibility:

Your Company is carrying out various social activities in diverse fields in Srikakulam and Ethakota, where the factories are situated. Such activities include but not limited to ongoing drinking water supplies to villages and installing RO plants in neighboring villages, contribution to Vidya Volunteer Scheme and Mythri Police, contributions during Phailine Helen Cyclones, streetlight & borewell maintenance, development of school facilities, community centers & bus shelters in surrounding villages of the factories, providing medical services & vocational courses and conducting various medical camps etc.

Directors:

We regret to report the sad demise of Dr.Nitish K Sengupta, Chairman and an Independent Non-Executive Director of the Company on 03rd day of November, 2013. The Directors place on record his valuable and constructive contribution to the Company during his long association of about 18 years with the Company.

In accordance with the provisions of the Companies Act, 2013 Mr.Sudhakar Kudva, Director of the Company will be retiring by rotation at the ensuing Annual General Meeting and is eligible for re-appointment.

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company, Mr.Raghavender Mateti was appointed as an Additional Director designated as an Independent Director with effect from 26th February, 2014 and he shall hold office up to the date of ensuing Annual General Meeting. The Company has received requisite notice in writing from a Member proposing Mr.Mateti for appointment as an Independent Director. As per the provisions of Section 149 of the Act, which has come into force with effect from 1st April, 2014, an Independent Director shall hold office for a term upto five consecutive years on the Board of a Company and is not liable to retire by rotation.

In compliance with the provisions of Section 149 read with Schedule IV of the Act, the appointment of Mr.D.Ranga Raju, Mr.K.Raghuraman, Mr.N.Vijayaraghavan, and the aforesaid Mr.Raghavender Mateti as Independent Directors is being placed before the Members in this Annual General Meeting for approval. The Company has received necessary declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149 of the Companies Act, 2013 and under clause 49 of the Listing Agreement with Stock Exchange. In the opinion of the Board, they fulfill the conditions specified in the Act and the Rules made there under for appointment as Independent Directors and are independent of the Management. Members are requested to refer to the Notice of the Annual General Meeting and the Explanatory Statement for details of the qualifications and experience of the Directors and the period of their appointment. The Board commends the passing of the Resolutions at Item Nos. 5 to 8 of the Annual General Meeting Notice.

Pursuant to Section 196, 197 read with Schedule V and other applicable provisions of the Companies Act, 2013, Mr.V.Vijay Shankar is proposed to be re-appointed as Managing Director of the Company for further period of three years with effect from 11th May, 2014.

Auditors:

At the Annual General Meeting, Members will be required to appoint Auditors for the next term. M/s.M. Bhaskara Rao & Co., Chartered Accounts, Hyderabad, the existing

Auditors have furnished a certificate, confirming that if re-appointed, their re-appointment will be in accordance with Section 139 read with Section 141 of the Companies Act, 2013. The Members are requested to consider their re-appointment as Auditors of the Company for the next term of three years, and authorize the Board of Directors to fix their remuneration.

Cost Auditor:

M/s. K. Narasimha Murthy & Co., Cost Accountants, Hyderabad have been appointed to conduct Cost Audits relating to Insecticides (Technical Grade and Formulations), Company for the year ending 31st March, 2015. Pursuant to the provisions of Section 148 of the Companies Act, 2013 and the Rules made there under, Members are requested to consider the ratification of the remuneration payable to M/s. K. Narasimha Murthy & Co. The due date for filing of the Cost Audit Reports for the financial year 2012-13 was 30th September, 2013. The Company has duly filed the Reports with the Ministry of Corporate Affairs on 19th September, 2013.

Directors'' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

I. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

II. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the Profit / Loss of the Company for the year ended on that date.

III. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

IV. the Directors have prepared the Annual Accounts of the Company on a ''going concern'' basis.

Transfer of Un-claimed Dividend:

Pursuant to Section 205C (2) of the Companies Act,1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001 as amended from time to time, the un-claimed dividends amounting Rs.6,73,532/- (Rupees Six Lakhs Seventy Three Thousand Five Hundred Thirty Two only) and Rs.6,37,640/- (Rupees Six Lakhs Thirty Seven Thousand Six Hundred Forty only) pertaining to the Final Dividend for the year 2005-06 and the Interim Dividend declared during the year 2006-07 respectively were transferred to the Investors Education and Protection Fund during the year under review. The un-claimed Final Dividend for the year 2006-07 and Interim Dividend declared during the year 2007-08 are due for transfer to the said fund.

Fixed Deposit:

Your Company has not accepted any Fixed Deposits from the Public during the year.

Industrial Relations:

The Industrial Relations at the factories and Head Office continued to be cordial.

Insurance

All the assets and insurable interests of your Company including inventories, buildings, plant and machinery, enactments are adequately insured.

Personnel:

Your Directors would like to place on record their deep sense of appreciation of the devoted services of the executives, staff and workers of your Company. In terms of the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time, the names and particulars of the employees are set out in the Annexure-II to the Directors'' Report.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the provisions of Section 217 (1) (e) of the Act relating to conservation of Energy, Technology Absorption and Foreign Exchange outgo and earning, in terms of the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988, are set out in a separate statement attached hereto (Annexure – I) and forms part of this report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate Section forming part of this Annual Report.

Corporate Governance:

A separate Section on Corporate Governance and a Certificate from the Auditors of the Company regarding Compliance of Conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange forms part of this Annual Report.

Acknowledgement:

Your Directors thank the Company''s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from it''s Stakeholders, Customers, Agents, Suppliers, Employees, various Government / Non-Government Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers / Customers of the Company. Your Directors look forward to the future with confidence.

For and on behalf of the Board

Place : Hyderabad K.S.Raju V.Vijay Shankar

Dated : 30th May, 2014 Director Managing Director

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Mar 31, 2013

To, The Members,

The Directors have pleasure in presenting the 26th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2013.

Operating Results:

Your Company''s performance during the year as compared with that during the previous year is summarized below:

(Rs. In Lakhs)

Particulars 2012-13 2011-12

Sales / Income from Operations 61444 64306

Other Income 784 386

Operating Expenditure 64222 63268

Total Income 62228 64692

Profit Before Taxation (-)1994 1424

Less : Provision for Taxation (-)727 693

Profit After Taxation (-)1267 731

Add : Surplus Brought Forward 14803 14372

Amount available for Appropriation 13536 15103

Appropriations

Your Directors recommend Appropriations as under:

Transfer to General Reserve 40

Dividend:

- Final (Proposed) 223

- Provision for Corporate Dividend Tax 36

Surplus Carried Forward 13536 14803

Total Appropriations 13536 15102

Performance:

The major fire incident in June 2012 and the subsequent closure of the Srikakulam plant had a dampening effect on the performance of your Company. Your Company has reported annual sales revenue of Rs.614.44 Crores for the year 2012-13, as against Rs.643.07 Crores recorded in 2011-12.

Despite the closure of the Srikakulam plant, your Company has been able to achieve turnover close to that of the previous year. This has been mainly due to the growth in domestic sales.

The Operating Profit and Cash Profit stood at Rs.12.48 Crores and Rs.5.35 Crores during the year under review, compared to Rs.47.47 Crores and Rs.41.21 Crores respectively in the previous year.

Domestic & Export Markets:

The monsoon was delayed last year and the rainfall was below normal, particularly in the key months of June and July, 2012 triggering drought in some parts of the country. This affected sowing particularly in Paddy and resulted in a lower growth rate of agriculture and allied sectors. Despite challenging market environment, your Company could achieve the record domestic sales of Rs.407.00 Crores as against Rs.316.00 Crores in the previous year recording a growth of 29%. This growth is mainly attributable to various policy decisions taken by the Company coupled with the production support of Ethakota Formulation Plant and various newer supply chain initiatives. Exports have been significantly affected due to the closure of Srikakulam Plant for about 5 months and the incapacitation of Block 5 which was affected by the Fire, during the year under review. Block 5 is the largest Block in the plant and contributes to around 40% of the total capacity. The sales has accordingly decreased to Rs.128.35 Crores in the year under review from Rs.208.04 Crores in the previous year.

However, the Export customers have been understanding and co-operative during the period.

Plant Operations:

As you are aware the unfortunate fire incident occurred in the Company''s Srikakulam Technical Plant in the month of June, 2012, it has resumed its operation after closure of approximately 5 months, effective from November 26, 2012, as per terms of the statutory approvals/ permissions accorded for manufacture a few products in few of the Blocks. The plant has taken various initiatives and additional safety measures as per the regulatory requirement, to prevent any such untoward events in future. The operations in the other Blocks, except the affected Block and in other Products, were also resumed as soon as their approvals are received. Given the above, the plant could achieve the annual production of 2129 MT/KL during the year under review as against 5309 MT/KL in the previous year.

Your Company has started work on rebuilding Block 5 and has lodged claim with the Insurance Company.

The Ethakota plant has been able to meet the increased demand of domestic markets. It has achieved a record production of 22327 MT/KL in the year under review, comparing to the previous year production of 12514 MT/KL. The continued focus on streamlining the production facilities, debottlenecking, quality control and enhanced productivity has yielded the desired results. However, rising input costs, erratic & irregular power supply from Electricity Board, manpower issues etc. continue to be causes of concerns. The operations in the Formulation unit in Shadnagar were suspended in the year under review, as focus in the location is on the R&D Unit.

Dividend:

Keeping in view the continuing investment in its operations, restoration of fire affected block in Srikakulam plant, sustainable development / improvement and also with an eye to improved production in the plants, your Directors have considered it prudent not to declare any dividend for the year under review.

Bonus Issue:

In compliance with the requirements of Clause 40A of the Listing Agreement with the Stock Exchanges to raise public shareholding of the Company to not less than 25%, your Directors have recommended issue of bonus shares only to the public shareholders in the ratio of three Equity Shares for every fourteen Equity Shares of the Company. Necessary steps are being taken to give effect to the same, including obtaining approval of the Shareholders for such bonus issue and also for amendment of the Articles of Association of the Company.

Windmills:

As you are aware, your Company has 3 Windmills having a total capacity of 6.3 MW, located near Tirunelveli in Tamilnadu State. The operations of these are managed by M/s Suzlon Limited and the performance of the Windmills for the year was satisfactory. During the year under review, there are delays in getting the receivables from TNEB, who purchase the entire power generated as per the terms of the PPA. However, as per the Court directives, interest is being paid for the delayed payments.

New Projects/Products:

During the year under review your Company has commissioned a ''State-of-the-art R&D Centre'' at Shadnagar, Nandigaon Village, Kothur Mandal, Mahaboobnagar District, Andhra Pradesh. This facility is intended to further assist the Company in leveraging the substantial opportunities in the Crop Protection Business. The main objectives of setting up the said R&D centre are to develop cost effective processes for manufacture of Active Ingredients (AI) and the intermediates for Herbicides, Insecticides & Fungicides and to develop new Formulations of Pesticides. It is planned to have an accredited GLP (Good Laboratory Practices) Lab also.

The Company lays emphasis on Research and Development (R&D) for improvement in existing processes for better productivity and development of new products.

Subsidiary Companies and Consolidation of Financial Statements:

In Accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other financial statements /documents of the Subsidiary Companies viz., Nagarjuna Agrichem (Australia) Pty Ltd and LR Research and Laboratories Pvt.Ltd (which are yet to commence it operations / activities) are not being attached with the Balance Sheet of the Company. The Audited annual accounts and related information of subsidiaries as applicable will be made available upon request. The Statement required under section 212 of the Companies Act, 1956 is attached to the annual accounts of the Company.

Pursuant to clause 32 of the Listing Agreement with Stock Exchanges, applicable provisions of the Companies Act, 1956 and as per Accounting Standard (AS) 21 and other applicable Accounting Standards, the audited Consolidated Financial Statements for the year ended on 31st March, 2013 are provided in this Annual Report.

Environment Protection:

Emphasis on safety in the operations and proper environment management towards this, new ETP was commissioned at Ethakota Unit and a new Scrubber system was commissioned at Shadnagar during the year. The operations of Zero Liquid Discharge (ZLD) facility at Srikakulam Unit have been stabilized. Steps and efforts are in place in the direction of demonstrating constantly improved environmental performance.

Your Company continues to enjoy the certifications ISO: 9001:2008, ISO : 140001 and OHSAS : 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Corporate Social Responsibility:

As a responsible corporate citizen, the Company is carrying out various social activities in diverse fields. Such activities include but not limited to ongoing drinking water supplies to villages and installing RO plants in neighboring villages, contribution to Vidya Volunteer Scheme and for Mythri Police, streetlight & borewell maintenance, development of school facilities, community centers & bus shelters in surrounding villages of the factories, providing medical services & vocational courses and conducting various medical camps etc.

Directors:

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Dr. Nitish K Sengupta, Mr.K.S.Raju and Mr.N.Vijayaraghavan, Directors of the Company will be retiring by rotation at the ensuing Annual General Meeting and are eligible for re-appointment. Mr. K. Rahul Raju, Director has resigned with effect from 29th December, 2012. The Board wishes to place on record the significant contribution that Mr. K. Rahul Raju made to your Company during his association, for over one decade. Auditors:

M/s. M. Bhaskara Rao & Company, Chartered Accountants, Hyderabad, the Company''s Auditors, retire at the conclusion of the ensuing Annual General Meeting. They have signified their willingness to accept re-appointment and have further confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

Directors'' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that :

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures;

(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit of the Company for the year ended on that date.

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the annual accounts of the Company on a ''going concern'' basis.

Transfer of Un-claimed Dividend:

Pursuant to Section 205C (2) of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001 as amended from time to time, the un-claimed dividend amounting Rs..2,61,480/-(Rupees two Lakhs sixty one thousands four hundred eighty only) for the final dividend of the year 2004-05 were transferred to the Investors Education and Protection Fund. The un-claimed final dividend for the year 2005-06 is due for transfer to the said fund account.

Fixed Deposit:

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

Industrial Relations:

The industrial relations at the factories and head office continued to be cordial. The agreement with the Workers Union at Srikakulam was signed in the first week of April, 2013.

Personnel:

Your Directors would like to place on record their deep sense of appreciation of the devoted services of the executives, staff and workers of your Company. In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules 1975 as amended from time to time, the names and particulars of the employees are set out in the Annexure-II to the Directors'' Report.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the provisions of Section 217 (1) (e) of the Act relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of the Companies (Disclosure of particulars in the report of the Board of Directors) Rules 1988, are set out in a separate statement attached hereto and forms part of this report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of this Annual Report. Corporate Governance:

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange forms part of this Annual Report.

Acknowledgement:

Your Directors thank the Company''s Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from it''s stakeholders, customers, agents, suppliers, employees, various Government /Non-Government Departments, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers / Customers of the Company.

Your Directors look forward to the future with confidence.

For and on behalf of the Board

Place : Hyderabad Dr.Nitish K.Sengupta

Date : 18th May, 2013 Chairman

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Mar 31, 2012

The Directors have pleasure in presenting the 25th Annual Report of the Company together with the Audited Accounts for the year ended 31st March, 2012.

Operating Results:

Your Company's performance during the year as compared with that during the previous year is summarized below:

(Rs. in Lakhs)

Particulars 2011-12 2010-11

Sales / Income from Operations 64307 57008

Other Income 386 527

Total Income 64693 57535

Profit Before Tax 1424 643

Less : Provision for Taxation 693 335

Profit After Tax 731 308

Add : Surplus brought forward 14372 14360

Amount available for appropriation 15103 14668

Appropriations

Transfer to General Reserve 40 35

Dividend

- Interim Paid - 223

- Interim Corporate Dividend Tax - 38

- Final (Proposed) 224 -

- Provision for Corporate 36 -

Dividend Tax

Surplus Carried Forward 14803 14372

Total Appropriations 15103 14668

Dividend:

Your Directors are pleased to recommend payment of Dividend of Rs. 1.50 paise per Equity share (i.e., 15% of the paid up Capital) for the Financial Year 2011-12, for your consideration and approval at the ensuing Annual General Meeting of the Company. The total dividend outgo would be Rs. 259.72 Lakhs (including Dividend Distribution Tax).

Performance:

For the year 2011-12, your Company reported annual sales revenue of Rs. 643.07 Crores against Rs. 570.08 Crores recorded in 2010-11 registering an increase of 12.80%. This increase in sales could be achieved due to increase in production volumes and widening product range with focus on value added products. The Company recorded an Operating Profit (PBIDT) of Rs. 47.47.Crores and Profit After Tax of Rs. 7.31 Crores with respective growth of 33.98% and 137% over the previous year. The increase in interest cost is mainly due to higher current asset levels in the form of higher inventory and receivables due to the monsoon failure & other market conditions. The cash profits for the year under review were Rs. 38.35 Crores as compared to Rs. 28.20 Crores during the previous year.

Plant Operations:

Your Company's Srikakulam's Technical Unit achieved an Annual production of 5307 MT during the year under review compared to 4335 MT of the previous year.

The plant at Srikakulam has been stable since May, 2011 after the labour issues were settled. Since then production has been steadily improving. Debottlenecking was done for few plants by investing about Rs. 4.00 Crores.

The continued focus on streamlining the production facilities, augmenting the plant efficiencies and enhance the productivity during the year have started yielding results.

The Ethakota & Shadnagar formulating units continued to be normal as well and could meet the demand of domestic customer base. Various initiatives in the areas of production volume increase, quality control and supply chain have been taken to meet the enhanced marketing demand and effective / better customer services.

However, rising input costs, erratic & irregular power supply from Electricity Boards, Rupee depreciation, manpower attrition etc. are the causes of concern.

Fire incident in Srikakulam plant:

As the Shareholders are aware, a fire was broke out in the block -5 of the Company's plant at Srikakulam on 30th June, 2012. Although, there were no casualties, 19 people who sustained minor injuries, were treated in nearby hospitals and discharged within 5 days. The safety mechanisms and systems in place had helped to keep the injuries to a minimum. The unfortunate incident drew extensive media coverage resulting panic reaction by the nearby villagers. The concerned Government Authorities such as Inspectorate of Factories, Pollution Control Board and RDO, have issued necessary orders. The main reason for the fire is being investigated by Factories Department. Your Company has initiated various measures towards meeting the additional requirements /compliances of the said Government authorities and improving upon various safety measures. Your management is confident of the addressing the concerns of all stakeholders viz: local villagers, public, employees / laborers, Government Authorities etc. and hopeful to restart the operations at the earliest.

Domestic & Export Markets:

The Indian Agrichemical market continues to be under pressure due to significant drop in rabi acreages in certain parts of the country coupled with excess availability of product. The local pesticide industry in general is stuck in a spiraling loop of falling price realizations, inability to pass on increased input cost, tough competition, credit problems and stock returns. The delayed monsoon in the previous year has also joined impacting the crops particularly in South India. This resulted in your Company's domestic sale reducing from Rs. 331.10 Crores to Rs. 316.57 Crores in the year under review.

Towards focusing on farmers reach & touch, Marketing & Product Development department has been strengthened. Your Company has also initiated discussions with different leading International Manufacturers to introduce new products into India.

Exports have shown significant improvement compared to the previous year, mainly due to stabilization of the Srikakulam plant. The Sales has increased from Rs.158.59 Crores to Rs. 208.04 Crores in the year under review.

Contract (toll) manufacturing continues to be an important aspect of the Srikakulam production. The output is being increased in a few products due to increased demand, by debottlenecking. Relationship continues to be good with the Contract Manufacturing Customers. Work has commenced on selecting new products to offer to various existing and new customers.

Windmills:

Your Company has 3 windmills having a total capacity of 6.3 MW, located near Tirunelveli in Tamil Nadu. The operations of these are managed by M/s Suzlon Limited. The performance of the Windmills for the year was satisfactory. During the year under review, receivables from TNEB, who purchase the entire power generated as per the terms of the PPA, have been delaying their payments. The Industry has taken up the matter with TNEB.

Sub-division of Shares:

In order to facilitate the Shareholders to avail various inherent advantages of sub-division of face value of Equity Share of the Company viz: to improve liquidity of the Company's shares, to bring the share price down to a popular trading range, to attract new investors etc., the Board of Directors at its meeting held on 19th May, 2012 approved the proposal to sub-divide the nominal face value of the Equity Shares of the Company from Rs. 10/- per Equity Share to Rs. 1/- per equity share. The proposal is subject to approval of the Members and the requisite resolutions for such approval have been set out in the Notice convening this 25th Annual General Meeting.

Strategic Investment:

As part of growth strategy, your Company has inclined to expand its business activities and identified Fine Chemicals as an area of opportunity and accordingly identified USP Organics Private Limited (USP) as a Company worthwhile being associated with and made investment in order to expand its products. Your Company has invested a 26% stake in USP. USP has new and good production facilities located near Hyderabad. They have a an operating capacity of 225 MT per month. Your Company has started procuring certain chemicals used for manufacture from them.

Subsidiary Companies and consolidation of Financial Statements:

In Accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Profit and Loss Account and other Financial Statements /documents of the related Subsidiary Companies i.e., Nagarjuna Agrichem (Australia) Pty Ltd and LR Research and Laboratories Pvt.Ltd (which are yet to commence it operations / activities) are not being attached with the Balance Sheet of the Company. The Audited annual accounts and related information of subsidiaries as applicable will be made available upon request.

Since the subsidiaries are yet to commence their business activities, as per clause 32 of the Listing Agreement with Stock Exchanges, applicable provisions of the Companies Act, 1956 and Accounting Standard (AS) 21, 17 and other applicable Accounting Standards, Consolidated Financial Statements and the Segment Reporting for the year ended on 31st March, 2012 are not provided in this Annual Report.

Environment Protection:

Emphasis on environment and preference of operations in healthy conditions remains a focus area for your Company. Towards driving various initiatives, new ETP was commissioned at Ethakota Unit and a new Scrubber System was commissioned at Shadnagar during the year. The operations of new Zero Liquid Discharge (ZLD) facility at Srikakulam Unit are in the process of being stabilized. Steps and efforts are in place in the direction of demonstrating improved environmental performance constantly.

Your Company continues to enjoy the certifications ISO 9001:2008, ISO 14001 and OHSAS 18001 accredited for its proven standards covering in the areas of Quality, Environment, Safety and Health Management Systems respectively.

Corporate Social Responsibility:

As a responsible Corporate Citizen, the Company is carrying out various social activities in diverse fields. Such activities include but not limited to ongoing drinking water supplies to villages, contribution to Vidya Volunteer scheme and for construction of temple, providing land and other amenities for School playground, Mythri Police, Streetlight & borewell maintenance, development of school facilities, Community Centers & bus shelters in surrounding villages of the factories, providing medical services & vocational courses etc.

Directors:

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Mrs.K.Lakshmi Raju, Mr.K.Raghuraman and Mr.D.Rangaraju, Directors of the Company will be retiring by rotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Mr.N.Vijayraghavan has resigned from the position of Whole- Time Director with effect from 29th October, 2011, However, he is continuing as a Director of the Company.

Mr.Sukhendu Ray and Mr.P.K.Mallik, Directors have resigned with effect from 29th October, 2011 and 27th January, 2012 respectively.

Mr.R.S.Nanda has resigned from the position of Director with effect from 18th April, 2012.

The Board wishes to place on record the significant contribution that Mr. Ray and Mr. Mallik have provided to your Company during their association, with your Company for over 2 decades. The Board also wishes to place on record the contributions made by Mr. Nanda during his association with your Company.

Auditors:

M/s. M. Bhaskar Rao & Company, Chartered Accountants, Hyderabad, the Company's Statutory Auditors, retire at the conclusion of the ensuing Annual General Meeting. They have signified their willingness to accept re-appointment and have further confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

Directors' Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that :

i. In the preparation of the annual accounts the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the profit of the Company for the year ended on that date.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

vi. The Directors have prepared the annual accounts of the Company on a 'going concern' basis.

Transfer of Un-claimed Dividend:

Pursuant to Section 205C (2) of the Companies Act, 1956 read with the Investor Education and Protection Fund (awareness and protection of investors) Rules, 2001 as amended from time to time, the un-claimed dividend aggregating to Rs. 10,21,665/-(Rupees Ten Lakhs Twenty One Thousands Six Hundred Sixty Five only) for the final dividend of the year 2003-04 and interim dividend declared during year 2004-05 were transferred to the Investors Education and Protection Fund. The un-claimed final dividend for the year 2004-05 is due for transfer to the said fund account.

Fixed Deposit:

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

Industrial Relations:

The Industrial Relations at the Factories and Head Office continued to be cordial.

Personnel:

Your Directors would like to place on record their deep sense of appreciation of the devoted services of the Executives, Staff and Workers of your Company. In terms of the provisions of section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended from time to time, the names and particulars of the employees are set out in the Annexure-II to the Directors report.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

Disclosures required under the provisions of Section 217 (1) (e) of the Companies Act, 1956 relating to conservation of energy, technology absorption and foreign exchange outgo and earning, and in terms of the Companies (Disclosure of particulars in the report of the Board of Directors) Rules 1988, are set out in a separate statement attached hereto and forms part of this report.

Management Discussion and Analysis Report:

Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, is presented in a separate section, forming part of this Annual Report.

Corporate Governance:

A separate section on Corporate Governance and a Certificate from the Auditors' of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange forms part of the Annual Report.

Acknowledgement:

Your Directors thank the Company's Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its stakeholders, customers, agents, suppliers, employees, Associates and Community in the vicinity of the plants. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the Dealers / Customers of the Company.

Your Directors look forward to the future with confidence.

On behalf of the Board

Place : Hyderabad Dr.Nitish K Sengupta

Date : 9th August, 2012 Chairman

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Mar 31, 2011

The Members

The Directors have pleasure in presenting the Twenty Fourth Annual Report of the Company together with the Audited Accounts for the year ended 31st March 2011.

Operating Results

Your Company's performance during the year as compared with that during the previous year is summarised below:

(Rs in Lakhs) Particulars 2010-11 2009-10

Sales / Income from 57008 65287 Operations

Other Income 527 866

Total Income 57535 66153

Profit Before Taxation 645 9127

Less Provision for 337 3151 Taxation

Profit After Taxation 308 5976

Add: Surplus brought 14360 9856 forward

Amount available for 14668 15832 appropriation

Appropriations

Your Directors recommend appropriations as under

Transfer to General 35 600 Reserve

Dividend

- Interim Paid 223 298

- Interim Corporate 38 51 Dividend Tax

- Final (Proposed) - 447

- Provision for Corporate - 76 Dividend Tax

Surplus Carried Forward 14372 14360

Total Appropriations 14668 15832

Performance

During the year under review, Sales were Rs. 570.08 Crores as compared to Rs. 652.87 Crores during the previous year. The Profit after Tax for the year under review was 3.08 Crores as compared to Rs. 59.76 Crores during the previous year. The cash profits for the year under review were Rs.28.20 Crores as compared to Rs. 80.18 Crores during the previous year. The main reason for the reduced profits is the reduction in export orders coupled with severe curtailment in production at Srikakulam due to contract labour disputes .Interest cost have been higher due to capex in Srikakulam and Working Capital. Certain one time write off have also been made in the current year.

Domestic & Export Markets

Agriculture in India witnessed buoyancy in acreage of cotton and soya at the expense of some cereals and a static level of activity in paddy and wheat. Climatically, while inadequacy of water delayed crops in some states in the North during Kharif, the coastal areas of the southern India were affected by unseasonal rains in Rabi. In terms of product categories herbicides continued to grow due to depressed manpower availability, fungicides too registered a growth and usage of insecticides showed a nominal increase.

The growth of domestic sales by your company was in line with the overall increase in the Indian market for crop protection chemicals during the year at around 10%. Continued high inventory levels of company's key product across the major export markets, coupled with depressed demand due to lower fungal attacks in major user countries during most of the calendar year of 2010, resulted in a deep fall in export volumes. The last quarter of the year saw the market off-takes return to the original levels and consequently the export business witnessed a strong upswing. However, the conversion of these orders to business was not complete in the last quarter due to the constraints posed by the labour situation in the plant manufacturing technicals.

Your company has commenced firming up enhanced export volumes for a few key molecules with its customers and also has initiated necessary steps to broaden its portfolio to protect it from the effects of seasonal vagaries in the world markets. Addition of a few pesticides and fine chemicals to the product range for the next year is in process. The out look for the company in the export segment looks optimistic during 2011.

Dividend

The Board of Directors of the Company at their meetings held on 29th October, 2010 had declared interim dividends aggregating to Rs.1.50 for each equity share Rs. 10/-. The dividends were paid to the shareholders on due dates. No further dividend is being proposed in view of the performance of the Company.

Change in the Registered Office

Your directors informed that during the year the Registered Office of your Company has been shifted from Plot No.61 ,Nagarjuna Hills, Panjagutta, Hyderabad to Plot No.l2-A, "C" Block, Lakshmi Towers, No.8-2-248/1/7/78, Nagarjuna Hills, Panjagutta, Hyderabad-500 082 which is within State of Local limits of Andhra Pradesh.

Plant Operations

Your company received certifications ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 in the areas of Quality, Environment and Safety and Occupational Health Management Systems respectively .

A comprehensive evaluation of debottlenecking areas in all the plants was carried out during the year. Implementation of the recommendations in 2011 is expected to result in enhanced productivity in operations and place your company in a stronger position to exploit the opportunities presented by the market in the coming years.

At Srikakulam, a major step towards efficient effluent management was taken during the year by the installation and commissioning of a Zero Liquid Discharge (ZLD) facility at a cost of Rs.24.06 Crores. The ZLD project bears witness to your company's endeavour to be a responsible corporate citizen as well as builds in certain amount of flexibility to manufacture a larger portfolio of products for which necessary clearances were obtained during the year. However, in an atmosphere of unrest in the district, your company too suffered severe curtailment of operations in the second half of the year bringing a major constraint to the execution of orders primarily from export markets and domestic bulk buyers. Normalcy in operations was attained towards the very end of the year.

The operations of the formulating units at Ethakota and Shadnagar continued to be normal. Since they cater to a large domestic customer base, a series of initiatives in the areas of production, quality control and supply chain have been taken to significantly enhance customer service.

The company informed that it has put up 3 no. of wind turbine generators (WTG) of 2.1 MW each totally of 6.3 MW in Tirunelveli Dist., Tamilnadu with cost of Rs. 34 crores and the estimated power generation is 46 lakhs KWH/PA per WTG. The Company has entered into power purchase agreement with Tamilnadu Electricity Board.

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Mr. P.K Mallik , Mr. K.S Raju , Mr.Sudhakar Kudva and Mr. R.S Nanda, Directors of the Company will be retiring by rotation at the forthcoming Annual General Meeting and are eligible for re- appointment. During the Financial Year Mr. CM. Ashok Muni resigned as Director & COO of the Company.

As required under the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 forms part of this report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Members without the statement of particulars under Section 217(2A). Any Member interested in obtaining a copy of this statement may write to the Company Secretary at the Registered Office of the Company.

Strategic Investment

Your Company proposes to start a wholly owned overseas subsidiary in Australia for the purpose of applying and holding new product registrations for the Company's products as well as trade in molecules for which market exits in the Country .

Environment Protection:

Your Company has been continuously committed to the environment protection and responsible care for all its stake holders. It is also driven as a corporate culture through its various welfare activities.

Your Company has been recommended ISO 9001:2008 certification accreditation for its proven standards covering Quality , Environment, Safety and Health.

Energy Conservation, Technology Absorption and Foreign Exchange earnings and outgo

Disclosures required under the provisions of Section 217 (1) (e) of the Act relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of the Companies (Disclosure of particulars in the report of the Board of Directors) Rules 1988, are set out in a separate statement attached hereto and forms part of this report.

Auditors

M/s. M Bhaskara Rao & Company, Chartered Accountants, Hyderabad, the Company's Auditors, retire at the conclusion of the ensuing Annual General Meeting. They have signified their willingness to accept re-appointment and have further confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

Directors' Responsibility Statement

1. Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that:

2. In the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures;

3. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit of the Company for the year ended on that date.

4. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

5. The Directors have prepared the annual accounts of the Company on a 'going concern' basis.

Personnel

Industrial relations at the factory and at Head Office continued to be cordial.

Corporate Governance

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange forms part of the Annual Report.

Management's Discussion and Analysis Report

Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the support, co-operation and assistance received from the Customers, Government authorities, State Bank of India, HDFC Bank Limited, ICICI Bank Limited,, IDBI Bank Limited and New India Co-Operative Bank Ltd., Mumbai , Shareholders, Suppliers, Employees, Associates and the community in the vicinity of the plants.

On behalf of the Board

Dr. Nitish K Sen Gupta Chairman

Place: Hyderabad Date: 11th May, 2011

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Mar 31, 2010

The Directors have pleasure in presenting the Twenty Third Annual Report of the Company together with the Audited Accounts for the year ended 31stMarch, 2010 .

Operating Results

Your Companys performance during the year as compared with that during the previous year is summarised below:

(Rs. in Lakhs)

Particulars 2009-10 2008-09

Sales / Income from Operations 65031 60536

Other Income 867 166

Total Income 65898 60702

Profit Before Taxation 9127 8040

Less : Provision for Taxation 3151 3114

Profit After Taxation 5976 4926

Add : Surplus brought forward 9856 6301

Amount available for appropriation 15832 11227

Appropriations

Your Directors recommend appropriations as under: Transfer to General Reserve 600 500

Dividend - Interim Paid 298 298

- Interim Corporate Dividend Tax 51 51

- Final (Proposed) 447 447

- Provision for Corporate Dividend Tax 76 75

Surplus Carried Forward 14360 9856

Total Appropriations 15832 11227

Dividend

The Board of Directors of the Company at their meeting held on 29th October, 2009 had declared an interim dividend of Rs.2.00 for each equity share of Rs.10/-. The dividend was paid to the shareholders on due date.

The Board of Directors are pleased to recommend a final dividend of Rs.3/- for each equity share of Rs.10/- on the equity Share Capital of the Company for the financial year ended 31st March 2010.

Performance

During the year under review, Sales were Rs.650.31 Crores as compared to Rs 605.36 Crores during the previous year. The Profit After Tax for the year under review was Rs.59.76 Crores as compared to Rs.49.26 Crores during the previous year. The cash profits for the year under review were Rs.80.18 Crores as compared to Rs.69.41 Crores during the previous year.

Domestic & Export Markets

The Agro Chemical industry has witnessed a growth of 2% in the domestic market during the year under review due to deficit rain.

This year Kharif / Rabi acreage was affected adversely and continued dry spells in many parts of the Country resulted in less pest infestation. Against all the odds your Company saw 21% growth in branded sale while this segment grew only by 2% which placed it ahead of many competitors.

Exports dropped by 15% largely owing to global recession and climatic vagaries. Initially panic liquidation of stocks has scuttled the demand supply equation and at later part of the year there was a roll back of stocks due to lesser fungal attack and pest infestation as a common global phenomena.

The Climatic adversity, severe competition and crop specific business dynamic has stretched the credit market. Also strategic placement of products resulted in inventory built up.

The over all business scenario in your Company in both export and domestic market put together proved to be favorable, despite various market constraints so far, due to the improved operational efficiency and proactive steps taken to grab business opportunity. The focus on the aforesaid areas will continue to be stronger in the coming year.

Your Company gained due to natural hedging in a fairly stable forex market.

New Project

As a support to its growth plan in the technical export market, your Company is planning to set up a green filed project which is expected to be operational during first half of the Financial Year 2012-13.

Environment Protection

Your Company is continuously committed to the environment protection and responsible care for all its stake holders. It is also driven as a corporate culture through its various welfare activities.

Your Company is recommended ISO 9001:2008, ISO 14001:2004; OHSAS 18001:2007 certification accreditation for its proven standards covering Quality, Environment, Safety and Occupational Health Management Systems.

Energy Conservation, Technology Absorption and Foreign Exchange earnings and outgo

Disclosures required under the provisions of Section 217 (1) (e) of the Act relating to conservation of energy, technology absorption and foreign exchange outgo and earning, in terms of the Companies (Disclosure of particulars in the report of the Board of Directors) Rules 1988, are set out in a separate statement attached hereto and forms part of this report.

Fixed Deposits

The Company has not accepted any public deposits and as such no amount on account of principal or interest on public deposits was outstanding as on the date of the Balance Sheet.

Directors

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company Dr.Nitish K Sen Gupta, Mr. Sukhendu Ray and D.Ranga Raju, Directors of the Company will be retiring by rotation at the forthcoming Annual General Meeting and are eligible for re-appointment.

During the year under review the Company has appointed Mr.K.Raghuraman as an additional director on the Board of Directors of the Company on 30th July, 200S and he cease to be director on the date of this Annual General Meeting. Notice under Section 257 has been received proposing their appointment as Director on the Board.

The Board of Directors at their meeting held on 29th October, 2009 re-appointed Mr. N. Vijayaraghavan as Whole Time Director for a period of one year with effect from 24th October, 2009 as recommended by the members in the Remuneration Committee Meeting.

As required under the provisions of Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 forms part of this report. However, as per the provisions of Section 219(1) (b) (iv) of the Companies Act, 1956, the reports and accounts are being sent to all the Members without the statement of particulars under Section 217(2A). Any Member interested in obtaining a copy of this statement may write to the Company Secretary at the Registered Office of the Company.

Auditors

M/s. M Bhaskara Rao & Company, Chartered Accountants, Hyderabad, the Companys Auditors, retire at the conclusion of the ensuing Annual General Meeting. They have signified their willingness to accept re- appointment and have further confirmed their eligibility under Section 224(1-B) of the Companies Act, 1956.

Directors Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors Responsibility Statement, it is hereby confirmed that :

(i) In the preparation of the annual accounts the applicable accounting standards have been followed along with proper explanations relating to material departures;

(ii)The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the profit of the Company for the year ended on that date.

(iii)The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv)The Directors have prepared the annual accounts of the Company on a going concern basis.

Personnel

Industrial relations at the factory and at Head Office continued to be cordial.

Corporate Governance

A separate section on Corporate Governance and a Certificate from the Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange forms part of the Annual Report.

Managements Discussion and Analysis Report

Managements Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report.

Acknowledgement

Your Directors wish to place on record their appreciation of the support, co-operation and assistance received from the Customers, Government authorities, State Bank of India, HDFC Bank Limited, ICICI Bank Limited, IDBI Bank Limited and.New India Co-Operative Bank Ltd., Mumbai, Shareholders, Suppliers, Associates and the community in the vicinity of the plants.

On behalf of the Board

Mr.K.S.Raju Mr.C.M.Ashok Muni Director Director &Chief Operating Officer

Place:Hyderabad Date :26th April,2010