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TATA CHEMICALS LTD.

07 October 2022 | 03:59

Industry >> Chemicals - Inorganic - Caustic Soda/Soda Ash

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ISIN No INE092A01019 BSE Code / NSE Code 500770 / TATACHEM Book Value (Rs.) 716.48 Face Value 10.00
Bookclosure 22/06/2022 52Week High 1194 EPS 49.37 P/E 23.94
Market Cap. 30107.10 Cr. 52Week Low 773 P/BV / Div Yield (%) 1.65 / 1.06 Market Lot 1.00
Security Type Other

DIRECTOR'S REPORT

You can view full text of the latest Director's Report for the company.
Year End :2022-03 

The Directors hereby present their Eighty-Third (83rd) Annual Report on the performance of Tata Chemicals Limited ('the Company') together with the Audited Financial Statements for the Financial Year ('FY') ended March 31,2022.

1. Financial Results

' in crore

Standalone Consolidated

Particulars

Year ended March 31, 2022

Year ended March 31, 2021

Year ended March 31, 2022

Year ended March 31, 2021

Revenue from continuing operations

3,721

2,999

12,622

10,200

Profit before depreciation and finance costs

1,229

830

2,550

1,735

Depreciation and amortisation expense

222

197

806

760

Profit before finance costs

1,007

633

1,744

975

Finance costs

19

19

303

367

Profit before share of profit of joint ventures and tax

988

614

1,441

608

Share of profit of joint ventures

-

-

226

26

Profit before tax

988

614

1,667

634

Tax expense

201

135

267

198

Profit from continuing operations after tax

787

479

1,400

436

Profit from discontinued operations after tax

15

-

5

-

Profit for the year

802

479

1,405

436

Attributable to:

- Equity shareholders of the Company

802

479

1,258

256

- Non-controlling interests

-

-

147

180

Other comprehensive income ('OCI')

1,538

1,081

2,960

1,417

Total comprehensive income

2,340

1,560

4,365

1,853

Balance in retained earnings at the beginning of the year

6,078

5,860

6,254

6,186

Profit for the year

(attributable to equity shareholders of the Company)

802

479

1,258

256

Remeasurement of defined employee benefit plans (net of tax)

17

21

359

93

Dividends including tax on dividend*

(255)

(280)

(255)

(280)

Others

-

(2)

-

(1)

Balance in retained earnings at the end of the year

6,642

6,078

7,616

6,254

*Dividend declared in the previous year and paid during the respective reporting year

2. Dividend

For FY 2021-22, the Board of Directors has recommended a dividend of ' 12.50 per share i.e. 125% (previous year ' 10 per share i.e. 100%) on the Ordinary Shares of the Company. If declared at the ensuing Annual General Meeting ('AGM'), the total dividend outgo during FY 2022-23 would amount to ' 318 crore (previous year ' 255 crore).

3. Performance Review & State of Company's Affairs

3.1 Consolidated:

On a consolidated basis, the revenue from operations increased to ' 12,622 crore in FY 2021-22 from ' 10,200 crore in FY 2020-21. The increase was mainly on account of higher soda ash volumes i.e. 3.7 million tonne in FY 2021-22 against 3.0 million tonne in FY 2020-21. The soda ash realisations too remained robust and were higher than previous year's levels. The profit before tax from continuing operations increased to ' 1,667 crore in FY 2021-22 from ' 634 crore in FY 2020-21, up 163%.

3.2 Standalone:

On a standalone basis, the revenue from operations increased to ' 3,721 crore for FY 2021-22 from ' 2,999 crore in FY 2020-21. The increase was mainly on account of higher soda ash volumes i.e. 0.68 million tonne in FY 2021-22 against 0.62 million tonne in FY 2020-21. Profit before tax from continuing operations stood at ' 988 crore in FY 2021-22 against ' 614 crore in FY 2020-21, up 61%.

For more details on the Consolidated and Standalone performance, please refer to Management Discussion & Analysis.

4. Management Discussion & Analysis

The Management Discussion & Analysis, as required in terms of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('SEBI Listing Regulations'), forms part of this Integrated Annual Report.

5. Business Overview

The Company has two business segments viz. Basic Chemistry Products and Specialty Products.

Basic Chemistry segment comprises inorganic chemicals led by Soda Ash, Salt and Sodium Bicarbonate. Scale, supply chain efficiencies and customer relationships drive this business. This segment has manufacturing operations spread across four continents viz. North America (USA),

Europe (UK), Africa (Kenya) and Asia (India). These inorganic chemicals primarily service industries such as Glass (Automotive, Architectural & Container), Detergent, Food, Pharma, Animal Feed and Industrial Chemicals.

Specialty Products portfolio is driven by Chemistry-led differentiation. The Company has three key products in this segment comprising Specialty Silica, Prebiotics and Agri inputs. Specialty Silica range serves Food, Rubber and Tyre industry. Prebiotics and Formulations are targeted at Food, Animal Feed and Pharmaceutical applications. Rallis India Limited, a listed subsidiary of the Company, produces and markets range of Agri inputs including Seeds for Indian and overseas farmers.

The Company is increasing its focus on Green Chemistry with Sustainability as a key driver of value. Basic Chemistry will scale further by adding capacities of the core products and leveraging cost competitiveness. The growth in Soda Ash demand is also driven by Solar Glass (used in Solar Electricity generation) and Lithium Carbonate. The Specialty Products will focus on maximising value with a sustainable portfolio, low carbon footprint Specialty Silica and Prebiotics based on fermentation platform.

5.1 Basic Chemistry Products Standalone (India)

For FY 2021-22, the revenues from the Basic Chemistry Products business stood at ' 3,475 crore, higher by 22%.

Soda Ash

The year started with the second wave of COVID-19 which suppressed the demand and prices in the first quarter. However, demand improved to pre-COVID levels by the end of first half of the year. Subsequently, as the impact of COVID-19 subsided and the economy started opening up with easing of restrictions, a gradual increase in demand was visible. Imports were significantly lower due to global tightening of supplies and supply chain disruptions. This period also witnessed significant cost increases due to rising energy, freight and raw salt costs. Realisations improved which helped the Company absorb these cost pressures. The skew in demand versus supplies has spilled over to FY 2022-23 as supply chain disruptions continue.

Sales of soda ash for FY 2021-22 stood at 6,78,130 metric tonne ('MT'), an increase of 9% over the previous year.

Sodium Bicarbonate

Sales of sodium bicarbonate stood at 1,20,186 MT and witnessed a solid growth of 19% over the previous year.

The Company markets four value-added grades of Bicarb -Medikarb (pharma grade), Sodakarb (food grade), Alkakarb (feed grade) and Speckarb (industrial grade).

Salt

The demand for salt was higher from the Company's key customer, Tata Consumer Products Limited, during the year and the production was increased appropriately to meet the increased requirement even amid the pandemic. The Company recorded highest ever production of salt at 12.61 lakh MT during FY 2021-22. In addition, a project is under implementation to increase the salt manufacturing capacity to meet the projected demand increase.

Other Products

Sale of cement stood at 4.37 lakh MT, an improvement of 11% in FY 2021-22. Cement realisations and margins remained healthy and Bromine production was impacted due to bittern dilution.

Subsidiaries

Tata Chemicals North America Inc., USA ('TCNA')

(as per USGAAP)

During FY 2021-22, overall sales volumes were up by 26%, a record for TCNA, which was driven by an increase in volumes in the export markets.

TCNA posted a revenue of US$ 495 million (' 3,688 crore) for FY 2021-22 compared to US$ 388 million (' 2,878 crore) in the previous year, registering a growth of 28%. For FY 2021-22, EBITDA at TCNA was US$ 106.2 million (' 791 crore) against US$ 48.1 million (' 357 crore) in FY 2020-21.

This sharp increase in volumes led to TCNA posting a profit after tax and non-controlling interest of US$ 49.9 million (' 372 crore) during FY 2021-22 compared to a loss of US$ 12.8 million (' 95 crore) in FY 2020-21.

TCE Group Limited, UK ('TCE group') (as per IFRS)

TCE Group Limited's business consists of soda ash, sodium bicarbonate and energy units and British Salt Limited which manufactures and sells food and industrial grade white salt. Together they are referred as 'UK Operations' of the Company in this Report.

The turnover from the UK Operations for FY 2021-22 was £ 191.5 million (' 1,949 crore) against £ 145.2 million (' 1,409 crore) in the previous year registering a growth of 38%.

Soda ash sales volumes were strong during the year with consistent demand witnessed throughout the year. Sales of sodium bicarbonate were consistent although slightly down over FY 2020-21. The UK Operations maintained its core UK market share and robust export demand into Europe and rest of the world including navigating into the post-Brexit period from January 2021.

The combined heat and power (CHP) facility at Winnington performed well throughout the year.

In the Salt business, sales volumes were better than those recorded in FY 2020-21 amid rising energy costs and price increases in the market reflecting the same.

EBITDA for FY 2021-22 for the UK Operations was £ 12.2 million (' 124 crore) against £ 14.2 million (' 138 crore) and the loss after tax was £ 8.4 million (' 85 crore) against the loss of £ 5.8 million (' 56 crore) in the previous year.

Tata Chemicals Magadi Limited, Kenya ('TCML')

(as per IFRS)

During FY 2021-22, sales volumes were higher by 37% over FY 2020-21. TCML achieved a revenue of US$ 77.6 million (' 577 crore) for FY 2021-22 as against revenue of US$ 55.4 million (? 413 crore) in the previous year, an increase of 40%. For FY 2021-22, TCML registered an EBITDA of US$ 20.1 million (' 150 crore) against the EBITDA of US$ 9.6 million (' 71 crore) in the previous year, higher by 108%. The increase in EBITDA was due to better realisations and cost control.

TCML recorded a net profit of US$ 12.7 million (' 94 crore) in FY 2021-22 against a net profit of US$ 2.8 million (' 20 crore) in FY 2020-21.

The county government had issued a demand during FY 2018-19 for an arbitrary increase in land rates which was struck down subsequently by the Hon'ble High Court. TCML has filed an appeal for reconsideration of the other related issues raised in the petition before the Hon'ble High Court and the appeal is pending. TCML is working with Kenya national authorities and government to arrive at a fair and transparent resolution of the issues.

5.2 Specialty Products Standalone Silica

The Company manufactures Specialty Silica products and sells to tyre and food industries. Silica is a versatile material with varied applications. With focus on green products and regulatory matters, its use in the tyre industry is expected to accelerate. During FY 2021-22, capacity utilisation improved with increasing approvals from leading tyre companies in India. As a mark of recognition, the Company was awarded the 'Best Supplier in Innovation category for HDS Silica' by a leading tyre company.

The Company's products are well accepted in new segments of Silicone rubber applications and Battery separator segments.

Prebiotics & Formulations

The state-of-the-art manufacturing facility using

fermentation technology of the Company is located in Mambattu, Nellore District, Andhra Pradesh and has successfully stabilised its operations. There have been various optimisation projects which have been

implemented with all key certifications, like Food Safety System Certification - FSSC 22000 and FDA registration coupled with qualification from Key Global customers, which will enable the Company to increase volumes and reach 100% capacity utilisation in the coming year.

Subsidiary

Rallis India Limited ('Rallis')

(as per TCL consolidated books)

Rallis is the Company's listed subsidiary focussed on specialty products for the farm and agricultural sector consisting mainly of Crop Care and Seeds business. Rallis achieved a consolidated revenue from operations of ' 2,602 crore in FY 2021-22 compared to ' 2,424 crore in FY 2020-21, an increase of 7%. The profit after tax stood at ' 164 crore, down by 28% against a profit after tax of ' 229 crore in FY 2020-21.

During FY 2021-22, the Domestic business of Rallis achieved a revenue of ' 1,468 crore as against ' 1,287 crore in FY 2020-21, an increase of 14% on account of robust farm demand. Key crops which have shown major growth are Paddy, Cotton, Sugarcane, Soybean, Pulses, Chilli, Tea, Tomato and Grapes.

The International business of Rallis grew by 6% to ' 787 crore in FY 2021-22 from ' 741 crore in FY 2020-21. The International business gained 17 new registrations in the overseas market through strategic and partnership model. This model has helped Rallis register a healthy growth during the year under review and has also built the road for achieving the revenue in line with its long-term strategic planning.

Revenue of Seeds division of Rallis decreased by 13% over the previous year to ' 349 crore during the year under review mainly due to reduction in hybrid crop acres in Paddy and Millet and reduced availability of flagship hybrids in the Maize category. Changing weather and climate patterns impacted hybrid seed production and higher commodity prices led to increased cost of seed procurement, creating pressure on gross margins.

6. Responding to unprecedented challenges with resilience

As the global economy and society at large were gradually and steadily recovering from the after effects of the COVID-19 pandemic in FY 2021-22, the Russia-Ukraine crisis and supply chain disruptions created inflation headwinds.

Throughout the pandemic, the Company practiced extreme care and caution towards the health and well-being of its employees and partners while ensuring this care and caution was extended to the community at large. The Company regularly adhered to various guidelines and advisories issued by the authorities from time to time including maintaining social distancing at all its plant operations.

The Company's UK business was impacted towards the end of FY 2021-22 due to the Russia-Ukraine crisis. The impact was high on the natural gas prices that substantially went up. The Company took timely measures of hedging mechanism.

7. Finance and Credit Ratings

During the year under review, while the focus continued on the liquidity, cash flows and working capital, intensified efforts were made towards: a) bringing down interest costs at overseas subsidiaries through a series of refinancing and loan re-pricing exercises; and b) improving the yield on cash surplus investments amid a low interest rates scenario through broadening the spectrum of investment avenues without compromising with safety and liquidity.

The overseas subsidiaries of the Company undertook a re-pricing exercise for US$ 275 million facility in TCNA, USA refinancing exercises of US$ 100 million in Valley Holdings Inc., USA, US$ 45.5 million in Homefield Pvt UK Limited and US$ 46 million in TCML, Kenya. The interest rates have been negotiated at rates lower than the erstwhile levels.

During FY 2021-22, Rallis, a subsidiary and IMACID, a joint venture, paid dividends of ' 29 crore (FY 2020-21: ' 24 crore) and ' 28 crore (FY 2020-21: ' 26 crore) respectively to the Company. Valley Holdings Inc., the Company's step-down overseas subsidiary, which holds investments in the US operations, paid dividends aggregating to US$ 21.1 million (' 157 crore) [FY 2020-21: US$ 20.9 million (' 155 crore)]. Another overseas subsidiary of the Company, Tata Chemicals South Africa (Pty) Limited paid a dividend of South African Rand 30 million (' 15 crore) [FY 2020-21: Nil].

Despite global disruptions due to COVID-19 pandemic, the Company's credit ratings were reaffirmed during the year under review. The Company as on March 31, 2022 had the following credit ratings:

- Long Term Corporate Family Rating - Foreign Currency of Bal/Stable from Moody's Investors Service

- Long Term Issuer Default Rating (IDR) of BB with Stable outlook from Fitch Ratings

- Long Term bank facilities (fund-based limits) of ' 1,300 crore and short term bank facilities (non-fund based limits) of ' 2,000 crore are rated at CARE AA (Outlook: Stable) and CARE A1 respectively, by CARE Ratings and

- Commercial Paper of ' 100 crore is rated at CRISIL A1 by CRISIL Ratings

8. Dividend Distribution Policy

In accordance with Regulation 43A of the SEBI Listing Regulations, the Board of Directors of the Company has adopted a Dividend Distribution Policy which endeavours for fairness, consistency and sustainability while distributing profits to the shareholders. The same is available on the Company's website at https://www.tatachemicals.com/DividendDistPolicy.htm.

9. Transfer to Reserves

The Board of Directors has decided to retain the entire amount of profits for FY 2021-22 in the retained earnings.

10. Deposits from Public

The Company has not accepted any deposits from public and as such no amount on account of principal or interest on deposits from public was outstanding as on March 31, 2022.

11. Business Responsibility & Sustainability Report

The Company endeavours to cater to the needs of the communities it operates in thereby creating maximum value for the society along with conducting its business in a way that creates a positive impact and enhances stakeholder value. As per Regulation 34(2)(f) of the SEBI Listing Regulations and in line with the SEBI Circulars dated May 5, 2021 and May 10, 2021, though voluntary for FY 2021-22, the Company has, as a matter of good governance, adopted the Business Responsibility & Sustainability Report ('BRSR') disclosing initiatives by the Company taken from an environmental, social and governance perspective. The BRSR forms part of this Integrated Annual Report.

12. Related Party Transactions

In line with the requirements of the Companies Act, 2013 ('the Act') and SEBI Listing Regulations, as amended from time to time, the Company has formulated a Policy on Related Party Transactions ('RPT Policy') for identifying, reviewing, approving and monitoring of Related Party Transactions. The RPT Policy was revised pursuant to the amendment to the SEBI Listing Regulations and the same is available on the Company's website at https://www.tatachemicals.com/RPTPolicy.htm.

All related party transactions entered into during FY 2021-22 were on arm's length basis and in the ordinary course of business and were reviewed and approved by the Audit Committee. With a view to ensure continuity of day-to-day operations, an omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and on an arm's length basis. A statement giving details of all related party transactions entered pursuant to the omnibus approval so granted is placed before the Audit Committee on a quarterly basis for its review. The related party transactions entered into pursuant to the omnibus approval so granted are also reviewed as part of the internal audit by an independent external firm on a half-yearly basis.

The Company did not enter into any contracts or arrangements with related parties in terms of Section 188(1) and no material related party transactions were entered into by the Company during the year under review. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act in Form No. AOC-2 is not applicable to the Company for FY 2021-22 and hence does not form part of this Integrated Annual Report.

In terms of Regulation 23 of the SEBI Listing Regulations, the Company submits details of related party transactions on a consolidated basis as per the format specified in the relevant accounting standards to the stock exchanges on a half-yearly basis.

The details of the transactions with related parties are provided in the accompanying Financial Statements.

13. Risk Management

Risk Management at Tata Chemicals forms an integral part of Management focus.

The Risk Management Policy of the Company, which is approved by the Risk Management Committee of the Board ('RMC') and the Board of Directors, provides the framework of Enterprise Risk Management ('ERM') by describing mechanisms for the proactive identification and prioritisation of risks based on the scanning of the external environment

and continuous monitoring of internal risk factors. The ERM framework identifies, evaluates, manages and reports risks arising from the Company's operations and exogenous factors.

During the year under review, the ERM Policy and Terms of Reference of the RMC were revised in line with the SEBI Listing Regulations to, inter-alia, set up strategic policies including focus on ESG related risks, risks revolving around cyber security and defining the role and responsibilities of the RMC.

The Company has deployed bottom-up and top-down approaches to drive enterprise-wide risk management. The bottom-up process includes identification and regular assessment of risks by the respective business units and implementation of mitigation strategies. This is complemented by a top-down approach where the Risk Management Group (Senior Leadership Team) as well as the RMC identifies and assesses long-term, strategic and macro risks for the Company.

The RMC oversees the risk management process in the Company. The RMC is chaired by an Independent Director and the Chairperson of the Audit Committee is also a Member of the RMC. Further, the Chairman of the RMC briefs the Board at its Meetings about the significant discussions at each of the RMC Meetings. This robust governance structure has also helped in the integration of the ERM with the Company's Strategic Planning Process where emerging risks are used as inputs in such process. Identified risks are used as one of the key inputs in the strategy and business plans.

A systematic review of risks identified is subject to a series of focussed meetings of the empowered Risk Management Group (Senior Leadership Team), respective Business-level / Subsidiary-level Committees and the RMC. The RMC meets periodically to review all the key risks and assess the status of mitigation measures.

Considering the volatility, uncertainties and unprecedented challenges involved in the businesses, the risk management function has gained more importance over the last few years and it is imperative to manage and address such challenges effectively. With a view to have a focussed approach in doing so, the Company has appointed a Chief Risk Officer effective April 1, 2022, to oversee the Risk Management function of the Company.

Based on benchmarking and inputs from global standards on ERM, the Risk Management process has been deployed across geographies and businesses.

Some of the risks identified are set out in the Management Discussion & Analysis which forms part of this Integrated Annual Report.

14. Corporate Social Responsibility

The Corporate Social Responsibility ('CSR') activities of the Company are governed through the Corporate Social Responsibility Policy ('CSR Policy') approved by the Board. The CSR Policy guides in designing CSR activities for improving quality of life of society and conserving the environment and biodiversity in a sustainable manner. The CSR Committee of the Board oversees the implementation of CSR Projects in line with the Company's CSR Policy.

The Company has adopted a participatory approach in designing need-based CSR programmes which are implemented through Tata Chemicals Society for Rural Development ('TCSRD') in partnership with the Tata Trusts and with various government and nongovernment institutions. The Company's CSR programme framework focusses on building economic capital, ensuring environmental integrity, enablers for social, economic and environmental development and building social capital.

Building economic capital: The Company focusses on poverty alleviation and creating livelihoods, linked to farm and non-farm based activities.

Ensuring environmental integrity: The Company's main focus is on management of natural resources and conservation of environment. The key programmes include land and water management activities, waste management, preservation of biodiversity and mitigation of climate change impacts.

Enablers for social, economic and environmental development: The Company's key programme is the Holistic Nutrition Programme which targets the first 1,000 days of a child. Additionally, in the neighbourhood, the Company conducts regular health and nutrition camps.

The education programme focusses on students starting from primary to the post-graduation level. Educational support is provided for enrolment of children and improving quality of education.

The Company helps to provide clean water through roof rainwater harvesting structures, repair of hand pumps, supporting households with water purifier systems through Swach Tarang Project.

Building social capital: Building the social capital for longterm sustainability is a key cross-cutting theme in all these programmes.

Women empowerment, reducing inequality of marginalised communities (through Affirmative Action), partnerships for achieving goals and setting up sustainable social enterprise models (Okhai and Ncourage Social Enterprise Foundation) are key initiatives for achieving the same.

During the COVID-19 pandemic, the Company proactively supported the communities and the Government. The Company also endeavours to respond to disasters that affect any part of India and in the neighbourhood of all its manufacturing plants.

In line with the amended Companies (Corporate Social Responsibility Policy) Rules, 2014, the Company revised its CSR Policy and Charter of the CSR Committee during the year. The revised CSR Policy, inter alia, includes changes in definitions, CSR expenditure, treatment of surplus and setting off of excess spent, guiding principles for selection, implementation and monitoring of activities and approach, direction and annual action plan of the Board and CSR Committee of the Company. The CSR Policy is available on the website of the Company at https://www.tatachemicals. com/CSRPolicy2021.htm.

The Annual Report on CSR activities for FY 2021-22 is enclosed as Annexure 1 to this Report.

15. Whistleblower Policy and Vigil Mechanism

The Company has devised an effective whistleblower mechanism enabling stakeholders, including individual employees and their representative bodies to communicate their concerns about illegal or unethical practices freely. The Company has also established a vigil mechanism for stakeholders to report concerns about any unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. Protected disclosures can be made by a whistleblower through several channels. The Whistleblower Policy ('the Policy') of the Company provides for adequate safeguards against victimisation of employees who avail of the mechanism. No personnel of the Company has been denied access to the Chairperson of the Audit Committee. The Policy also facilitates all employees of the Company to report any instance of leak of unpublished price sensitive information.

A dedicated third-party Ethics Helpline has been setup which is managed by an independent professional organisation for confidentially raising any ethical concerns or practices that violate the Tata Code of Conduct. The Ethics helpline services include toll free number, web access, postal services and email facilities.

The Policy is available on the website of the Company at: https://www.tatachemicals.com/WhistleblowerPolicy.htm.

16. Prevention of Sexual Harassment

Pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ('POSH Act') and Rules made thereunder, the Company has formed

an Internal Committee ('IC') for its workplaces to address complaints pertaining to sexual harassment in accordance with the POSH Act. The Company has a detailed policy for prevention of sexual harassment at workplace which ensures a free and fair enquiry process with clear timelines for resolution.

The Policy is uploaded on the website of the Company at http://www.tatachemicals.com/POSHPolicy.htm.

No complaints were pending at the beginning of the financial year. During the year under review, one concern was reported which was investigated and appropriate action was taken. No complaint was pending as at the end of the financial year.

To build awareness in this area, the Company has been conducting awareness sessions during induction of new employees and also periodically for permanent employees, third-party employees and contract workmen through online modules and webinars.

17. Particulars of Loans, Guarantees and Investments

The Company has not given any loans during the year under review. The Company has made investments of ' 18 crore and ' 115 crore in equity shares through rights issue of The Indian Hotels Company Limited and Tata Projects Limited, respectively.

During the year under review, the Company has provided additional corporate guarantee of £ 14.4 million (' 147 crore) to Tata Chemicals Europe Limited, a subsidiary of the Company.

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.

18. Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its subsidiaries for FY 2021-22 are prepared in compliance with the applicable provisions of the Act and as stipulated under Regulation 33 of the SEBI Listing Regulations as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The Audited Consolidated Financial Statements together with the Auditor's Report thereon form part of this Integrated Annual Report.

Pursuant to the provisions of Section 136 of the Act, the Financial Statements of the Company, Consolidated Financial Statements along with relevant documents and separate annual accounts in respect of subsidiaries are available on the website of the Company.

The annual accounts of the subsidiaries and related detailed information will be made available to investors seeking information till the date of the AGM. They are also available on the website of the Company at https://www.tatachemicals. com/investors/agm-documents.

19. Subsidiary Companies, Joint Ventures and Associate

As on March 31, 2022, the Company had 28 (direct and indirect) Subsidiaries (2 in India and 26 overseas), 3 Joint Ventures ('JV') and 1 Associate. There has been no material change in the nature of the business of the subsidiaries.

The changes pertaining to Subsidiaries, JVs and Associate during the year are as under:

1. Following wholly-owned step-down subsidiaries of the Company which were dormant in nature have dissolved and accordingly ceased to be subsidiaries with effect from the dates given below:

- NHO Canada Holdings Inc. effective August 30, 2021

- General Chemical International, Inc. effective August 30, 2021

- Irish Feeds Limited effective September 14, 2021

- TCNA (UK) Limited effective November 30, 2021

2. PT Metahelix Lifesciences Indonesia, a subsidiary of Rallis, received approval for the cancellation of its Tax Identification Number on March 23, 2022 and accordingly ceased to be a subsidiary of the Company with effect from such date.

3. The name of Tata Chemicals Africa Holdings Limited, subsidiary of the Company was changed to TC Africa Holdings Limited effective October 11,2021.

4. Tata Chemicals International Pte. Ltd.'s ('TCIPL', subsidiary of the Company) holding in JOil (S) Pte. Ltd., JV reduced from 33.78% to 17.07% and consequently JOil has been classified as an associate of TCIPL and that of the Company with effect from September 21,2021.

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) (Second Amendment) Regulations, 2021, the Company's Policy on determining material subsidiaries was amended during the year and the same is uploaded on the Company's website at https://www.tatachemicals.com/ policy-on-determining-material-subsidiaries.pdf.

A report on the financial position of each of the subsidiaries, joint ventures and associate as per Section 129(3) of the Act is provided in Form No. AOC-1 enclosed to the Financial Statements.

20. Internal Financial Controls

Internal financial control systems of the Company are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards and relevant statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company has a well-defined delegation of authority with specified limits for approval of expenditure, both capital and revenue. The Company uses an established Enterprise Resource Planning (ERP) system to record day-today transactions for accounting and financial reporting.

The Audit Committee deliberated with the members of the Management, considered the systems as laid down and met the internal audit team and statutory auditors to ascertain their views on the internal financial control systems. The Audit Committee satisfied itself as to the adequacy and effectiveness of the internal financial control systems as laid down and kept the Board of Directors informed. However, the Company recognises that no matter how the internal control framework is, it has inherent limitations and accordingly, periodic audits and reviews ensure that such systems are updated on regular intervals.

Details of internal control system are given in the Management Discussion & Analysis which forms part of this Integrated Annual Report.

21. Directors' Responsibility Statement

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 and external consultant(s), including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by the Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during FY 2021-22.

Accordingly, pursuant to Sections 134(3)(c) and 134(5) of the Act, the Directors, to the best of their knowledge and ability, confirm that for the year ended March 31, 2022:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed and that there are no material departures;

b) they have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to

give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) they 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) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are 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.

22. Corporate Governance and Compliance

The Company strives to evolve and follow the best governance practices, not just to boost long-term shareholder value, but also to respect minority rights.

The Company considers the same as its inherent responsibility to disclose timely and accurate information to its stakeholders regarding its operations and performance, as well as the leadership and governance of the Company. The Company is committed to the Tata Code of Conduct which articulates values and ideals that guide and govern the conduct of the Tata companies as well as its employees in all matters relating to business. The Company's overall governance framework, systems and processes reflect and support its Mission, Vision and Values.

At Tata Chemicals, human rights is also an integral aspect of doing business and the Company is committed to respect and protect human rights to remediate adverse human rights impacts that may be resulting from or caused by the Company's businesses. In furtherance to this, the Company has adopted the 'Tata Business and Human Rights Policy' which aligns with the principles contained in the Universal Declaration of Human Rights, International Labour Organsations (ILO), Declaration on Fundamental Principles and Rights at Work and the United Nations Guiding Principles on Business and Human Rights and is consistent with the Tata Code of Conduct.

The Company's governance guidelines cover aspects mainly relating to composition and role of the Board, Chairman and Directors, Board diversity, retirement age for the Directors and Committees of the Board.

The Company has in place an online compliance management system for monitoring the compliances across its various plants and offices. A compliance certificate is also placed before the Board of Directors every quarter. In compliance with the SEBI Listing Regulations, the Corporate Governance Report and the Secretarial Auditor's Certificate form part of this Integrated Annual Report.

23. Directors and Key Managerial Personnel Directors Appointment

At the 82nd AGM of the Company held on July 2, 2021, the Members of the Company appointed Mr. Rajiv Dube as an Independent Director for a term of five (5) consecutive years and Mr. N. Chandrasekaran as a Non-Executive, Non-Independent Director of the Company.

Re-appointment

In accordance with the provisions of Section 152 of the Act and the Articles of Association of the Company, Mr. S. Padmanabhan, Non-Executive, Non-Independent Director of the Company, retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment.

Independent Directors

In terms of Section 149 of the Act, Ms. Vibha Paul Rishi, Ms. Padmini Khare Kaicker, Dr. C. V. Natraj, Mr. K. B. S. Anand and Mr. Rajiv Dube are the Independent Directors of the Company. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and are independent of the Management. In terms of Regulation 25(8) of the SEBI Listing Regulations, they have confirmed that they are not aware of any circumstance or situation which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgement and without any external influence. The Board of Directors of the Company has taken on record the declaration and confirmation submitted by the Independent Directors after undertaking due assessment of the veracity of the same.

The Board is of the opinion that all Directors including the Independent Directors of the Company possess requisite qualifications, integrity, expertise and experience in the fields of science and technology, digitalisation, strategy, finance, governance, human resources, safety, sustainability, etc.

The Independent Directors of the Company have confirmed that they have enrolled themselves in the Independent Directors' Databank maintained with the Indian Institute of Corporate Affairs ('IICA') in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.

Details of Familiarisation Programme for the Independent Directors are provided separately in the Corporate Governance Report which forms a part of this Integrated Annual Report.

During the year under review, the Non-Executive Directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board/Committees of the Company.

Key Managerial Personnel ('KMP')

Pursuant to the recommendation of the Nomination & Remuneration Committee ('NRC) and Audit Committee, the Board appointed Mr. Nandakumar S. Tirumalai as the Chief Financial Officer and Key Managerial Personnel of the Company with effect from April 1,2021.

In terms of the provisions of Section 2(51) and Section 203 of the Act, the following are the KMP of the Company:

• Mr. R. Mukundan, Managing Director & CEO

• Mr. Zarir Langrana, Executive Director

• Mr. Nandakumar S. Tirumalai, Chief Financial Officer

• Mr. Rajiv Chandan, General Counsel & Company Secretary

Procedure for Nomination and Appointment of Directors

The NRC is responsible for developing competency requirements for the Board based on the industry and strategy of the Company. The Board composition analysis reflects in-depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.

The Committee is also responsible for reviewing the profiles of potential candidates vis-a-vis the required competencies and meeting the potential candidates prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position including expert knowledge expected is communicated to the appointee.

The list of core skills, expertise and competencies of the Board of Directors as are required in the context of the businesses and sectors applicable to the Company are identified by the Board and are available with the Board. The Director have also reviewed the list of core skills, expertise and competencies which were mapped against them. The same is disclosed in the Corporate Governance Report forming part of this Integrated Annual Report.

Scientific Advisory Board

The Board has constituted a Scientific Advisory Board consisting of scientists with relevant domain expertise under the Chairmanship of Dr. C. V. Natraj, Independent Director of the Company with a view to synergise the Research & Development initiatives at the Company's Innovation Centre and Research & Development Centres of Rallis India Limited (Crop Care and Seeds). Further details in this regard are provided in the Corporate Governance Report.

Criteria for determining Qualifications, Positive Attributes and Independence of a Director

The NRC has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and the SEBI Listing Regulations. The relevant information has been given in Annexure 2 which forms part of this Report.

Board Evaluation

The Board has carried out the annual evaluation of its own performance and that of its Committees and individual Directors for the year pursuant to the provisions of the Act and the SEBI Listing Regulations. The exercise of performance evaluation was carried out electronically through a secure application. This resulted in saving paper, reducing the cycle time to make documents available to the Board/Committee Members and in increasing confidentiality and accuracy.

The performance of the Board and individual Directors was evaluated by the Board after seeking inputs from all the Directors. The criteria for performance evaluation of the Board included aspects such as Board composition and structure, effectiveness of Board processes, contribution in the long-term strategic planning, etc. The performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members. The criteria for performance evaluation are broadly based on the Guidance Note issued by SEBI on Board Evaluation.

The Chairman of the Board had one-on-one meetings with each Independent Director and the Chairman of the NRC had one-on-one meetings with each Executive and Non-Executive, Non-Independent Directors.

In a separate meeting, the Independent Directors evaluated the performance of Non-Independent Directors and performance of the Board as a whole including the Chairman of the Board taking into account the views of Executive Directors and Non-Executive Directors. The NRC reviewed the performance of the Board, its Committees and of the Individual Directors. The same was discussed in the Board Meeting that followed the meeting of the Independent Directors and the NRC, at which the feedback received from the Directors on the performance of the Board and its Committees was also discussed.

The Company follows a practice of addressing each of the observations and suggestions by drawing up an action plan and monitoring its implementation through the Action Taken Report which is reviewed by the Board of Directors from time to time.

24. Remuneration Policy

The Company has in place a Remuneration Policy for the Directors, KMP and other employees pursuant to the provisions of the Act and the SEBI Listing Regulations which is set out in Annexure 3 forming part of this Report.

25. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required to be disclosed pursuant to the provisions of Section 134 of the Act read with the Companies (Accounts) Rules, 2014 are provided in Annexure 4 forming part of this Report.

26. Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ('Rules') are enclosed as Annexure 5 forming part of this Report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Rules forms part of this Report. Further, the Report and the Accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon request by the Members. Any Member interested in obtaining such particulars may write to the Company Secretary at investors@tatachemicals.com.

27. Auditors

I. Statutory Auditors

At the 78th AGM held on August 9, 2017, B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) ['B S R & Co.'] were appointed as Statutory Auditors of the Company for a period of five (5) consecutive years by the Members.

The report of the Statutory Auditors along with notes to Schedules is a part of this Integrated Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Further, in terms of Sections 139 and 142 of the Act, the Board of Directors has, on the recommendation of the Audit Committee, recommended the re-appointment of B S R & Co. as the Statutory Auditors of the Company for a second term of five (5) consecutive years from the conclusion of the 83rd AGM till the conclusion of 88th AGM for the approval of the Members. Accordingly, an ordinary resolution seeking Members' approval for the same forms part of the Notice of the 83rd AGM forming part of this Integrated Annual Report.

The Company has received a written consent and eligibility certificate from B S R & Co., confirming that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder.

II. Cost Auditors

As per Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to prepare, maintain as well as have the audit of its cost records conducted by a Cost Accountant and accordingly, it has made and maintained such cost accounts and records. The Board, on the recommendation of the Audit Committee has appointed D. C. Dave & Co., Cost Accountants (Firm Registration No. 000611) ['D. C. Dave & Co.'] as the Cost Auditors of the Company for FY 2022-23.

D. C. Dave & Co. have confirmed that they are free from disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act and that the appointment meets the requirements of the Act. They have further confirmed their independent status and an arm's length relationship with the Company.

The remuneration payable to the Cost Auditors is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members' ratification for the remuneration payable to D. C. Dave & Co., forms part of the Notice of the 83rd AGM forming part of this Integrated Annual Report.

III. Secretarial Auditors

In terms of Section 204 of the Act and Rules made thereunder, Parikh & Associates, Practicing Company Secretaries (Firm Registration No. P1988MH009800) have been appointed as Secretarial Auditors of the Company to carry out the secretarial audit for FY 2022-23. The report of the Secretarial Auditors for FY 2021-22 is enclosed as Annexure 6 forming part of this Report.

There has been no qualification, reservation, adverse remark or disclaimer given by the Secretarial Auditors in their Report.

28. Reporting of Fraud

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its officers or employees to the Audit Committee under Section 143(12) of the Act, details of which need to be mentioned in this Report.

29. General Disclosures

I. Details of Board Meetings

During the year under review, seven (7) Board Meetings were held, details of which are provided in the Corporate Governance Report.

II. Composition of Audit Committee

The Audit Committee comprised four (4) Members out of which three (3) are Independent Directors and one (1) is a Non-Executive Director. During the year under review, ten (10) Audit Committee Meetings were held, details of which are provided in the Corporate Governance Report. During the year under review, there were no instances when the recommendations of the Audit Committee were not accepted by the Board.

III. Composition of CSR Committee

The CSR Committee comprised three (3) Members out of which one (1) is an Independent Director. During the year under review, four (4) Meetings of the CSR Committee were held, details of which are provided in the Corporate Governance Report. During the year under review, there were no instances when the recommendations of the CSR Committee were not accepted by the Board.

IV. Secretarial Standards

The Directors have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by the Institute of Company Secretaries of India and such systems were adequate and operating effectively.

30. Other disclosures:

(a) No significant and material orders were passed by the regulators or the courts or tribunals impacting the going concern status and the Company's operations in future.

(b) In 2020, Allied Silica Limited (ASL) has filed an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 ('IBC') against the Company and the same is pending before the National Company Law Tribunal, Mumbai Bench as at the end of the year. The Company has contested the proceedings among other things, on the grounds that no operational debt is due and payable, the alleged debt is not an operational debt, the party is not an operational creditor under the IBC and that there is pre-existence of disputes between the parties.

(c) There has been no change in the nature of business of the Company as on the date of this Report.

(d) There were no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this Report.

31. Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return in Form MGT-7 as on March 31, 2022 is available on the Company's website at https://www.tatachemicals.com/MGT72022.pdf.

32. Acknowledgements

The Directors appreciate and value the unstinted support and the contribution made by every employee of the Company including all the workmen at the manufacturing plants in these challenging times.

The Directors acknowledge the support extended by the Company's Unions and would also like to thank the financial institutions, banks, government authorities, customers, vendors and other stakeholders for their continued support and co-operation.