Southern Petrochemicals Industries Corporation Ltd. के निदेशक की रिपोर्ट

Mar 31, 2025

Your Directors present their 54^th Annual Report together with the Audited Financial Statements of the Company for the year ended 31^st March 2025.

FINANCIAL SUMMARY

(Rs. in Crs)
Particulars	31.03.2025	31.03.2024
Revenue from Operations	3086.33	1943.86
Other Income	13.92	18.30
Total Income	3100.25	1962.16
EBITDA	295.33	267.76
Finance Cost	55.04	37.98
Depreciation &	37.63	38.18
amortization
Profit Before Exceptional	202.66	191.60
Items and tax
Exceptional Items	-	(48.61)
Profit Before tax	202.66	142.99
Tax expenses	71.82	55.08
Profit After Tax	130.84	87.91
Net Comprehensive	(2.64)	7.81
Income / (Loss)
Total Comprehensive Income	128.20	95.72

Share Capital

As of 31st March 2025, your Company''s paid-up equity share capital stood at Rs. 2,03,64,03,360. There were no alterations in share capital during the year.

Transfer to Reserves

In accordance with Sections 123 and 134(3)(j) of the Companies Act, 2013, no transfers were made to the General Reserves for the year under review.

Dividend

The Board, in alignment with the Dividend Distribution Policy and financial results, recommended a dividend of Rs. 2 per equity share (20% of face value of Rs. 10) for FY 2024-25 to the Members for their approval at the ensuing 54th Annual General Meeting (AGM) to be held on Tuesday, the 23rd September 2025 and subject to applicable tax deductions. Payment would be made to eligible shareholders as of the Record Date, fixed by the Board of Directors of your Company.

Operational Overview Urea Production

During FY 2024-25, your Company achieved a total production of 721,051 MT of neem-coated urea, surpassing the Reassessed Production Capacity (RAC) of 620,400 MT by 100,651 MT.

Effective May 2024, operations transitioned entirely to natural gas-based processes. There was no scheduled annual shutdown during the year under review. Ammonia output also reached an all-time high of 430,623 MT, reinforcing its critical role in urea manufacturing.

Your Company is executing Urea modernisation project which would enhance the capacity of the plant from the present level of 759200 MTPA to 912500 MTPA. The Engineering activities and equipments ordering have been completed, civil and mechanical erection activities are in process. It is expected to commission the modernized Urea Plant on or before July 2026.

Gas Supply Infrastructure

The Reliquefied Natural Gas (RLNG) pipeline from Ennore, Chennai was successfully commissioned in late 2023, following which Indian Oil Corporation Limited (IOCL) authorized gas intake. Effective May 2024, your Company transitioned to 100% sourcing of its feedstock and fuel requirements from natural gas. Supply channels include:

• Domestic Gas: Procured from the Ramnad Oil & Natural Gas Corporation fields

• Imported Gas: Sourced from the IOCL LNG Terminal located in Ennore, Chennai

Public Deposits

In compliance with Chapter V of the Companies Act, 2013, the Company did not accept any public deposits during FY 2024-25, and therefore no disclosures are required under this provision.

Debentures

In September 2023, your Company successfully raised Rs. 50 crores through a private placement of 5,000 Unlisted, Rated, Senior, Secured, Redeemable, Non-convertible Debentures of Rs. 1,00,000 each, issued to Vivriti Emerging Corporate Bond Fund and Vivriti Alpha Debt Fund -Enhanced. In line with the agreed terms, the Company has complied with the financial obligation and the outstanding amount as on 31st March, 2025 is Rs. 23.59 Crores.

Consolidated Financial Statements

Your Company''s Consolidated Financial Statements for the financial year ended 31^st March, 2025 have been prepared in compliance with Indian Accounting Standards (Ind AS) and forms part of the Annual Report.

Financial Statements of Associates and Joint Ventures

As per Section 129(3) of the Companies Act, 2013, read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement presenting key financial highlights of the Company''s Associate and Joint Venture entities, in Form AOC-1, is appended to the Financial Statements. Your Company does not have any Subsidiary entities.

Tamilnadu Petroproducts Limited (TPL)

During the financial year 2024-25, TPL recorded a revenue from operations of Rs. 1,826.78 crores, marking an increase from Rs. 1,668.57 crores in the previous financial year. Net profit stood at Rs. 51.43 crores for FY 2024-25, as compared to Rs. 42.78 crores in FY 2023-24. An exceptional expense of Rs. 7.55 crores was incurred during 2024-25, primarily related to material damage and plant restoration, following the impact of Cyclone Michaung in December 2023. TPL received an ad-hoc insurance payout of Rs. 26.05 crores, pending the final assessment report from the insurance surveyor.

The fourth quarter of FY 2024-25 witnessed a notable surge in demand for Linear Alkyl Benzene produced by TPL, aided by supply shortages stemming from plant maintenance at other facilities. This contributed to improved net realizations, although domestic pricing remained under pressure from low-cost imports.

Caustic Soda prices were subdued during the first half of FY 2024-25 due to weak demand across certain end-use sectors. On the contrary, prices rebounded significantly in the second half, largely driven by supply disruptions in the Chinese market.

The domestic Propylene Oxide (PO) market faced significant challenges due to the influx of lower-priced imported downstream Polyols. As a result, PO offtake became a major challenge since Q3 of FY24-25. Nonetheless, a recovery in PO demand is expected to commence from Q2 of FY 2025-26, subject to market conditions.

The Board of TPL has recommended a dividend of Rs. 1.20 per equity share of Rs. 10 each fully paid-up for the year 2024-25, subject to the approval of Members at their ensuing AGM scheduled on 17^th September 2025.

Tuticorin Alkali Chemicals and Fertilizers Limited (TFL)

TFL successfully posted profits in all four quarters, breaking a two-decade streak of financial losses. TFL reported strong annual net profits and a noticeable uptick in net worth. Modernization efforts are ongoing, and the carry-forward losses are expected to be fully offset within two years.

TFL is advancing its sustainability agenda by operating exclusively with biomass fuel derived from agricultural residue and Juli flora. TFL was honored as Runner-Up in the Renewable Material Transition category at the inaugural Global Symposium and Awards on Resource Efficiency & Circular Economy held by FICCI in March 2025.

During the Financial Year 2024-25, TFL undertook refurbishment of malfunctioning equipment and installed modern systems, resulting in its highest production levels in the last 14 years. Key upgrades included replacing the

DCS with the Yokogawa Centum VP system in the ACL and soda ash plants.

Salt requirements were met primarily through local procurement, supplemented by a consignment from Gujarat. At the year-end, falling ammonia prices influenced downward revisions in the prices of soda ash and ammonium chloride.

ISO certifications in quality and environmental management were renewed by DNV. TFL also commissioned a CO₂, storage system to harness carbon from external sources, supporting stable productivity and its environmental goals.

Greenam Energy Private Limited ("Greenam")

During the financial year 2024-25, 22.0 MW AC Floating Solar Power Plant was operated seamlessly by Greenam. Your Company fulfilled regulatory Renewable Energy obligations by sourcing renewable power from Greenam and also mitigated evaporation from its water reservoirs.

Greenam reported a net profit of Rs. 2.20 Crores and revenues of Rs. 18.32 Crores for the year. EBITDA reached Rs. 17.00 Crores, representing approximately 92.79% of total revenue. Energy output totalled 36.66 million units.

Changes in Joint Ventures, Associates & Subsidiaries

During FY 2024-25, there were no additions to or removals from the Company''s list of Joint Ventures or Associate entities. The Company does not have any Subsidiaries.

Safety, Health and Environment (SHE)

DNV successfully completed the Re-certification Audit of the Company''s Management Systems, including QMS (ISO 9001:2015), EMS (ISO 14001:2015), and OHS (Occupational Health & Safety) (ISO 45001:2018). All systems were found to be effectively implemented with zero non-conformities. The certifications remain valid until January 2026.

Periodic medical examinations for employees were also reviewed and found to meet requisite standards. Your Company maintained its commitment to environmental stewardship through the planting of approximately 721 tree saplings.

Your Company received operational clearance to run on a mixed feedstock of Natural Gas and Naphtha, until 31^st March 2026. Additionally, permission to commence modernization of the Urea plant has been granted, targeting a capacity of 912,500 MTPA of neem-coated urea, alongside sustainable technologies such as CO₂ capture, utilization and a Zero Liquid Discharge system.

As at the end of the reporting period, your Company had achieved an impressive 1,164 consecutive days without any lost-time accidents, representing 4.05 million man-hours of safe operation. The Health, Safety & Environment (HSE)

policy has been updated to reflect ongoing modernization efforts.

Human Resources and Industrial Relations

Your Company remains unwavering in its dedication to cultivating a supportive, inclusive, and growth-oriented work environment. A diverse portfolio of training programs, upskilling initiatives and career development opportunities have been deployed to ensure employees are equipped with the skills and capabilities aligned to the Company''s strategic vision. This people-first approach fosters individual empowerment and contributes to the long-term sustainability of the organization.

Throughout the year under review, industrial relations have been consistently stable and constructive, underpinned by mutual respect, open communication, and transparent collaboration between management and employees. Your Company continues to champion a culture of engagement, reinforcing a positive and inclusive atmosphere across all levels of the organization.

As of 31st March 2025, the total employees on the rolls of the Company stood at 616 employees. In alignment with its strategic workforce development plan, the ongoing campus recruitment program has remained a cornerstone for sourcing and nurturing emerging talent, positioning them for future leadership roles

In support of employee well-being, your Company continues to offer maternity leave benefits to all eligible women employees, fully compliant with the Maternity Benefit Act, 1961.

Annual Return

In compliance with Section 92 of the Companies Act, 2013, the Annual Return in Form MGT-7 for FY 2023-24 has been uploaded on the Company''s website. The Annual Return for FY 2024-25 will be duly filed with the Registrar of Companies within the statutory timeline, following the conclusion of the 54^th Annual General Meeting, scheduled for 23^rd September 2025. Once filed, it will be accessible at: https://www.spic.in/investors/annual-return.

Change in Business Nature

There has been no changes in the nature of the Company''s business operations during FY 2024-25.

Directors and Key Managerial Personnel

The Board''s composition is in compliance to the provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, including criteria related to Independent Directors, Woman Director and directorship limits across listed entities.

1. Effective 8^th September 2024, the Board appointed Mr. B. S. Purshotham and Ms. Latha Ramanathan as Independent Directors for a five-year term, in the place of Mr. B. Narendran and Ms. Sashikala Srikanth. Members approval for their appointment was obtained by passing a special resolution at the 53^rd Annual General Meeting.

2. At its meeting held on 13^th November 2024, the Board

re-appointed Ms. Rita Chandrasekar as an Independent Director for a second five-year term commencing 14^th November 2024. This

re-appointment was subsequently approved by a special resolution by the Members of the Company passed through Postal Ballot on 8^th January 2025. Your Board confirms that Ms. Rita Chandrasekar continues to demonstrate integrity, relevant expertise, professional acumen, and maintains independence from Management.

3. The Board of Directors at their Meeting held on 8^th May 2025 had appointed Tmt. D Sneha, IAS as an Additional Director on the Company''s Board subject to approval of Members. Pursuant to Regulation 17(1C)(a) of the SEBI (LODR) Regulations, 2015, the Company initiated the process of obtaining Members'' approval for appointment of Tmt. D Sneha, IAS as Nominee Director through Postal Ballot which commenced on 24^th June 2025. During the e-voting period, pursuant to the letter received from TIDCO on 9^th July 2025, informing about the Resignation of Tmt. D Sneha, IAS, the Postal Ballot Notice was withdrawn with immediate effect.

4. Effective 22^nd May 2025, Selvi. Apoorva, IAS resigned as Nominee Director representing TIDCO. Effective 9^th July 2025, Tmt. D. Sneha, IAS Nominee of TIDCO, resigned from Directorship.

5. The Board of Directors at their Meeting held on 14^th August 2025, recorded the resignations, of Selvi. Apoorva, IAS and Tmt. D Sneha, IAS effective 22^nd May 2025 and 9^th July, 2025 respectively.

The Board expresses its sincere gratitude to Mr. B. Narendran, Ms. Sashikala Srikanth. Selvi. Apoorva, IAS and Tmt. D Sneha, IAS for their valuable contributions during their tenure.

6. Effective 14^th August, 2025, the Board appointed Thiru. V Dakshinamoorthy, IAS, representing TIDCO as an Additional Director and his appointment is subject to approval of shareholders of the Company at the ensuing 54^th Annual General Meeting scheduled to be held on 23^rd September 2025.

Mr. E. Balu, Wholetime Director is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible has offered himself for re-appointment.

All current Independent Directors have submitted the requisite disclosures affirming their eligibility under Section 149(6) of the Companies Act, 2013 and in accordance with the applicable SEBI Regulations.

Effective 7^th February 2025, Mr. R. Swaminathan was appointed as Company Secretary and Compliance Officer, in the place of Mr. M. B. Ganesh. The Board places on record its appreciation of the significant contributions by Mr. M. B. Ganesh during his tenure.

Transfer of Unclaimed Shares to IEPF Authority

In line with Section 124(6) of the Companies Act, 2013 and the IEPF Rules, the Company had transferred 1,66,454 equity shares to the Investor Education and Protection Fund (IEPF) covering 1,008 shareholders.

At the year-end, 1,64,754 shares remain unclaimed by 1,003 shareholders.

Escrow Account

A separate suspense escrow demat account has been opened for moving the shares, if any, required to be transferred beyond 120 days from issuing of Letter of Confirmation by the Company as stipulated under SEBI Circular dated 30th December, 2022. As at 31st March, 2024, no shares have been transferred to the said account.

Independent Directors'' Familiarization Programme

Independent Directors are regularly updated through structured familiarization initiatives that cover their roles, responsibilities, business model, market dynamics, strategic direction and risk landscape. These programs include the provision of relevant documentation, policies and informative presentations during Board and Committee meetings.

Details of these familiarization programs can be accessed via: htt ps://www.spic.in/wp-content/uploads/2025/34/ Familiarization-Programmes-2024-25.pdf

Nomination and Remuneration Policy

Pursuant to Section 178(3) of the Companies Act and the Listing Regulations, the Nomination and Remuneration Policy is detailed in Annexure I of this Report.

Remuneration of Directors, KMP & Employees

A comprehensive statement of remuneration for Directors, Key Managerial Personnel (KMP), and other employees has been enclosed in Annexure II, in accordance with Section 197(12) of the Companies Act, 2013 and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Statutory Auditors

M/s. MSKA & Associates, Chartered Accountants, Chennai (Firm Registration No.: 105047W) were appointed as Statutory Auditors for a five-year term commencing from FY 2022-23, holding office from the 51^st to the 56^th AGM. Their annual remuneration is Rs. 24 lakhs plus applicable taxes and out-of-pocket expenses, with authority granted to the Board for revisions during the tenure.

For FY 2024-25, the Auditor''s Report on the Standalone and Consolidated Financial Statements contains no qualifications, reservations, adverse remarks, or disclaimers.

Cost Auditors

M/s. B Y & Associates, Cost Accountants (Firm Registration No. 003498), were appointed to conduct the cost audit of the Company for FY 2024-25. The Company has duly maintained its cost records in compliance with Section 148(1) of the Companies Act, 2013, as prescribed by the Central Government. The Cost Audit Report for the previous fiscal year ended 31st March 2024 was filed within the stipulated timeframe as required under the Act.

In continuation of regulatory compliance, cost accounts and records for FY 2024-25 have also been maintained. Based on the Audit Committee''s recommendation, the Board at its meeting held on 8^th May 2025 re-appointed M/s. B Y & Associates as Cost Auditors for FY 2025-26, at a remuneration of Rs. 1,75,000/- plus actual out-of-pocket expenses. The payment of remuneration is subject to Members approval/ratification at the forthcoming 54^th Annual General Meeting.

Secretarial Auditors

Under Section 204 of the Companies Act, 2013 and Regulation 24A of SEBI Listing Regulations, the Company appointed Ms. B Chandra, Practicing Company Secretary, Chennai, as Secretarial Auditor for FY 2024-25. The Company complied with applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government.

The Secretarial Audit Report for FY 2024-25 is annexed as Annexure III and contains no qualifications, reservations, adverse remarks or disclaimers.

In accordance with the amended Regulation 24A, effective from FY 2025-26, shareholders may approve the appointment or reappointment of Secretarial Audit firms for a maximum of two five-year terms. M/s. B Chandra & Associates, Chennai, has given their consent and eligibility certificate for appointment and holds a valid Peer Review Certificate (No. 1711 dated 28^th February 2022). The Board, at its meeting on 8^th May 2025, has recommended their appointment for a term of 5 years covering FY 2025-26 to FY 2029-30, subject to Members approval at the ensuing AGM.

Directors'' Responsibility Statement

In line with Section 134(3) of the Companies Act, 2013, your Directors affirm that to the best of their knowledge and belief, and based on information provided by Management:

a) The annual financial statements for FY ended 31^st March 2025 were prepared in accordance with Ind AS, with relevant disclosures on material deviations, if any.

b) Accounting policies were applied consistently and judicious estimates made to reflect a true and fair view of the Company''s financial position and performance.

c) Sufficient measures were taken to maintain proper records, safeguard assets, and prevent fraud and irregularities.

d) Financial statements were prepared on a going concern basis.

e) Appropriate internal financial controls were established and found to be adequate and effective.

f) Systems for legal compliance were implemented and operated effectively.

Reporting of Frauds by Auditors

During FY 2024-25, there were no instances of frauds reported by the Statutory Auditors, Cost Auditors and Secretarial Auditors under Section 143(12) of the Companies Act, 2013.

Loans, Guarantees or Investments

No loans or guarantees under Section 186 of the Act were extended by the Company during the year under review.

During the year, the Board of Directors of the Company at their Meeting held on 16^th May 2024, had approved the proposal to invest in the Equity Shares of M/s Green Infra Renewable Energy Generation Private Limited (GIREGPL), M/s Green Infra Renewable Energy Projects Limited (GIREPL) and M/s Green Infra Wind Energy Generation Limited (GIWEGL) ("SEMBCORP Group"), for value not exceeding Rs. 11,25,00,000/- in order to qualify as captive user of power under Electricity Rules, 2005. Pursuant to this arrangement, your Company entered into a Share Subscription cum Shareholders Agreement dated 24^th September 2024. As on the date of this report, pursuant to the Agreement, your Company invested 14,98,447 equity shares of Rs.10 each at par in GIREGPL offered on rights basis on 19^th February, 2025, 16,85,753 equity shares of Rs. 10 each at par in GIREPL offered on Private Placement basis on 5^th May 2025 and 48,03,200 equity shares of Rs. 10 each at par in GIWEGL offered on Private Placement basis on 13^th June 2025.

Corporate Social Responsibility (CSR)

A CSR Committee has been constituted, and the Company has a CSR Policy aligned with the Companies Act. Although there is no mandatory spending obligation due to profit

criteria under Section 198, the Company has voluntarily undertaken initiatives for societal development. These are detailed in Annexure IV. The policy is available at: https://www.spic.in/wp-content/uploads/2021/J2/ Corporate-Social-Responsibilitv-Policv.pdf

Related Party Transactions

All Related Party Transactions for FY 2024-25 were undertaken in the ordinary course of business and at arm''s length. There are no contracts or arrangements requiring disclosure under Sections 188(1) and 134(h) of the Companies Act in Form AOC-2, which is attached as Annexure V.

Details of transactions with any persons or entities belonging in the Promoter/Promoter Group holding 10% or more equity stake in the Company are disclosed in Note No. 38 of the Notes to Accounts in accordance with Ind AS.

Material Changes and Commitments

No material changes or commitments impacting the Company''s financial position occurred between the close of FY 2024-25 (i.e., 31^st March 2025) and the date of this Report.

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

Your Company has instituted a dedicated internal audit team to drive initiatives focused on reducing energy consumption, enhancing operational reliability, and strengthening process safety. Key accomplishments include:

• Replacement of the High Temperature Shift Converter catalyst, resulting in lower CO slippage and improved plant efficiency

• Ongoing steam audits with prompt replacement of faulty steam traps

• Deployment of real-time energy monitoring across critical process parameters

• Implementation of preventive maintenance strategies to mitigate risks of major equipment failures

• Regular inspections to detect and rectify leakages and inefficiencies

• Periodic tuning of fired heaters and furnaces to maintain optimal air-fuel ratios

• Gradual rollout of energy-efficient LED lighting systems across operational zones

Technology Absorption

Nil

Foreign Exchange Earnings and Expenditure

During FY 2024-25, your Company recorded foreign exchange transactions as detailed below:

(Rs. in lakhs)
Particulars FY	2024-25	FY 2023-24
Foreign Exchange Earnings	145.20	20.17
Foreign Exchange Expenditure	432.55	1364.26

Internal Financial Controls and Risk Management

Your Company has instituted a comprehensive framework of internal financial controls designed to oversee operational workflows, ensure precision in financial reporting and maintain compliance with applicable Regulations. These controls undergo regular evaluations by both Internal and Statutory Auditors, with their findings reviewed by the Audit Committee. Any identified gaps are promptly addressed through structured corrective actions and defined timelines. The Committee also assesses the Internal Auditor''s reports covering key business processes and accounting practices.

Risk management remains a core component of the Company''s governance structure. In alignment with SEBI Listing Regulations, a dedicated Risk Management Committee has been constituted and a detailed Risk Management Policy has been adopted. This policy facilitates systematic identification of business risks and prescribes appropriate mitigation strategies. The Board reviews the Risk Management Report at periodic intervals to monitor emerging risks and the effectiveness of ongoing mitigation efforts.

Significant Legal Orders

No significant or material orders were passed by any regulatory authority, court or tribunal that could adversely impact the Company''s going concern status or its future operations.

Insolvency and Bankruptcy Proceedings

As of 31^st March 2025 and through the date of this report, there have been no applications filed or proceedings initiated against the Company under the Insolvency and Bankruptcy Code, 2016.

One-Time Settlement and Loan Valuation Disclosure

No one-time settlements or loan valuations differing in amount were undertaken during the year. Hence, no disclosures are required under this clause.

Corporate Governance

The Corporate Governance Report for FY 2024-25, along with a Compliance Certificate issued by M/s. B Chandra & Associates, Practicing Company Secretaries, certifying adherence to SEBI''s corporate governance norms, forms an integral part of this Annual Report.

Business Responsibility & Sustainability Report

In accordance with Regulation 34 of the SEBI (LODR) Regulations, 2015, the Business Responsibility & Sustainability Report for the Financial year ended 31^st March 2025 forms an integral part of this Annual Report.

Board, Committees & Director Performance Evaluation

The Company follows a structured mechanism for evaluating the effectiveness of its Board, Committees, individual Directors, and the Chairperson.

• Independent Directors'' Meeting (28^th March 2025):

Evaluation of Non-Independent Directors, the Board as a whole and the Chairperson, including an assessment of the quality and timeliness of information shared with the Board.

• Board Meeting (14^th August 2025): Comprehensive review of Independent Directors and performance of the entire Board and its Committees. Evaluation criteria included active involvement, strategic input, understanding of business dynamics, and effectiveness in Committee roles.

Meetings of the Board and Audit Committee

Details regarding the number of meetings held, along with composition of the Board and Audit Committee, are provided within the Corporate Governance Report.

Policy Framework Material Subsidiary Policy

The Policy on Material Subsidiary, approved by the Board in accordance with SEBI Listing Regulations, is accessible at:

https://www.spic.in/wp-content/uploads/2021/J2/

Determining-Material-Subsidiary-Policy.pdf

Related Party Transactions Policy

In compliance with the Companies Act, 2013 and SEBI Listing Regulations, your Company has adopted a Policy on Related Party Transactions. This policy ensures transparency and governance in dealings with related parties. The complete document is accessible at: https:// www.spic.in/wp-content/uploads/2025A)4/Policy-on-Related-Party-Transactions-2.pdf.

Insider Trading Policy

Your Company has implemented a Code of Conduct to prevent Insider Trading, governing the trading of securities by Directors and designated employees. This policy is in line with the SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. Details are available at: https://www.spic.in/wp-content/uploads/2021/32/Code-of-Practices-and-Procedures-for-Fair-Disclosure-of-UPSI1.pdf.

Policy on Prevention of Sexual Harassment (POSH)

Your Company maintains zero tolerance for any form of sexual harassment in the workplace. In line with the POSH Act, 2013, a dedicated Internal Complaints Committee oversees the enforcement of this policy and ensures compliance with relevant rules and procedures.

Status of POSH complaints for FY 2024-25:

• Complaints received: Nil

• Complaints resolved: Nil

• Cases pending over 90 days: Nil

Vigil Mechanism

As per Section 177 of the Companies Act, 2013 and SEBI Listing Regulations, your Company has instituted a Vigil Mechanism and Whistle Blower Policy. This framework enables Directors and employees to report genuine concerns, including unauthorized disclosures of Unpublished Price Sensitive Information (UPSI). Full details are available at: https://www.spic.in/wp-content/uploads/ 2021/32/Whistle-Blower-Policy-and-V igil-Mechanism-24.03.2020.pdf

Dividend Distribution Policy

The Company has framed its Dividend Distribution Policy in accordance with the SEBI (LODR) Regulations, 2015 (Second Amendment dated 5th May 2021). It outlines the principles for declaring dividends, maintaining consistency and transparency. The policy is available at: https:// www.spic.in/wp-content/uploads/2021/08/Dividend-Distribution-Policy.pdf

Management Discussion and Analysis - Industry Overview

India''s 2024 monsoon season concluded with 108% rainfall as compared to the Long Period Average (LPA), marking the highest occurrence of heavy rainfall events in the last five years. These extreme weather patterns have had a pronounced impact on crop productivity, posing significant challenges to agricultural stability.

• Cropped Area Growth (YoY):

Kharif: 14.11%

Rabi: 5.92%

• Production Trends:

Increase:

Food grains: 4.40%

O ilseeds: 8.07%

Decrease:

Sugarcane: -3.99%

Cotton: -9.52%

Jute: -10.20%

Major contributors to the decline in cash crop production include erratic rainfall and shifting crop preferences by farmers. Despite a 2% reduction in domestic production and a 20% drop in imports, Urea availability remained stable, buoyed by carryover stocks from the previous year. Consequently, total sales increased by 8%—from 35.78 million tonnes to 38.79 million tonnes.

Services Extended to Farmers

Your Company continued to actively support farmers by promoting enhanced cultivation methods, soil health management, integrated nutrient and pest management techniques aimed at minimizing residual deposits on soil, crops and harvests.

Key Initiatives Undertaken:

1. Direct Benefit Transfer (DBT) in Fertilizers Serving as the Lead Fertilizer Supplier (LFS) for Tamil Nadu and Puducherry, the Company facilitated the effective implementation of DBT by encouraging consistent usage of ePOS devices at retail outlets.

o Awareness campaigns were conducted for farmers

o Retailers received capacity-building training, in collaboration with Agricultural Department and National Informatics Centre (NIC)

o A total of 12,673 ePOS devices were deployed across both states.

2. Pradhan Mantri Kisan Samridhi Kendra (PMKSK)

Through 2,473 PMKSK centers across Tamil Nadu, Puducherry, Kerala, Karnataka, Andhra Pradesh, Telangana and Maharashtra, the Company provided:

o Soil and irrigation water testing facilities

o Training on soil-based nutrient management and integrated pest control

o Information on welfare schemes of the Government of India and respective State Governments.

3. Mobile Soil Testing Lab Services (MSTL) Extending soil testing services to farmers in Tamil Nadu, Karnataka and Andhra Pradesh, the Company promoted:

o Agronomic practices based on soil health reports

o Emphasis on organic inputs to preserve soil fertility and improve crop yield.

4. Farmer Training Programs Conducted both in-house sessions at the Tuticorin Training Centre and outreach programs across Tamil Nadu, focused on:

o Upskilling progressive farmers

o Demonstrating sustainable farming techniques.

5. Model Integrated Agriculture Farm A fully functional integrated demonstration farm at Tuticorin showcases:

o High-value crops

o Medicinal plants

o Mushroom cultivation

o Livestock management

This initiative illustrates the benefits of integrated farming for maximizing agricultural returns.

6. Pannai Cheythi Malar - Bimonthly Tamil Magazine

Features relevant articles on sustainable farming, new agricultural technologies and farmer success stories across the state. It serves as a valuable knowledge-sharing platform to improve farm productivity.

Outlook for FY 2025-26 Monsoon & Urea Demand Forecast

India is expected to receive 5% above normal rainfall this year (historical average: 87 cm). The Economic Survey 2025 projects a 3.8% growth in the agriculture sector, driven by favorable climatic conditions and increased foodgrain output.

To meet anticipated higher demand, domestic urea production is expected to reach approximately 33 million tonnes, thereby reducing reliance on imports. This will be supported by ongoing greenfield and brownfield projects, and through substitution of 20-25 lakh tonnes of conventional urea with Nano Liquid Urea during top dressing.

Nano Urea - Adoption & Research

Nano Urea, introduced by IFFCO in 2021, is a liquid formulation containing 4-14% nitrogen intended to replace conventional prilled or granular urea. Despite its potential, adoption remains limited due to:

• Nutrient instability

• Compatibility issues with agrochemicals

• Higher application cost

• Inconsistent crop performance

As urea constitutes approximately 82% of nitrogenous fertilizer consumption in India, the Government is encouraging fertilizer producers to transition towards Nano Urea. Accordingly, National Fertilizers Limited (NFL) and Rashtriya Chemicals and Fertilizers Limited (RCF) have entered NDAs and MoUs with IFFCO to adopt Nano Urea manufacturing technologies.

Your Company has partnered with Tamil Nadu Agricultural University to conduct field trials comparing the efficacy and

phytotoxicity of Nano Urea versus SPIC Prilled Urea, specifically in paddy cultivation. These studies will also evaluate economic viability and inform strategies for deploying Nano Technology in nutrient delivery systems.

All-India Urea Production, Imports, Supplies and Sales

A comparative analysis of urea production, imports, distribution and sales across India for the current and previous financial year reflects the evolving dynamics in fertilizer demand and supply. The data underscores industry efforts to improve self-reliance through increased domestic production and better inventory management.

Tissue Culture Business

Your Company continues to expand its tissue culture operations in Coimbatore by cultivating and supplying seven premier banana sapling varieties to farmers in Tamil Nadu, Karnataka and Andhra Pradesh using advanced plant tissue culture techniques.

Highlights include:

• Modernization of the tissue culture facility to enhance operational efficiency

• Accreditation from the Department of Biotechnology with NCS-TCP certification

• Ongoing research into cost-effective propagation protocols for high-value crops, including medicinal and ornamental plant species.

Key Financial Ratios - Year-on-Year Comparison

Significant changes (25% or more) in key financial ratios for FY 2024-25 as compared to the previous year are outlined below:

Ratios*	2024-25	2023-24	Reasons for change
Debt-Equity Ratio	0.32	0.49	Improved profit margins post flood-related disruptions in prior year
Debt Service Coverage	2.51	0.89	Enhanced operating income leading to improved debt servicing capability
Net Capital Turnover	-149.23	-723.06	Better revenue performance coupled with tighter working capital control has improved capital efficiency
* The accounting ratio are given under Note: 51 of the Standalone Financial Statements.

Operational Challenges - Sale of Urea Outside ePOS

Potential Risks:

• Delays in concession bill submissions

• Possibility of stock diversion for non-agricultural usage

• Elevated closing balances in ePOS systems that restrict market supply

Mitigation Measures:

• Deployment of field-level personnel to monitor product movement up to retail counters

• Implementation of tech-enabled real-time inventory tracking across all tiers of the distribution network-institutions, wholesalers, dealers, and retailers

• Adoption of the SUBSIDEX software platform to enable stock correction, streamline supply flow, and drive timely liquidation through promotional initiatives

• Removal of habitual defaulters from the Company''s dealership network

These measures have significantly optimized the subsidy

cycle and ensured more accurate market forecasting.

Acknowledgement

Your Board extends its sincere gratitude to the following

stakeholders for their continued guidance and support:

• Department of Fertilizers

• Ministries of Chemicals and Fertilizers, Petroleum and Natural Gas, Agriculture, Shipping, and Corporate Affairs

• State Governments including Tamil Nadu

• Tamil Nadu Industrial Development Corporation Ltd.

• Tamil Nadu Generation and Distribution Corporation Ltd.

• Indian Oil Corporation Limited

• Oil and Natural Gas Corporation Limited

• Financial institutions, partner banks and other lending institutions.

The Directors thank the shareholders for their continued support.

The Board also acknowledges and deeply appreciates the dedication and commitment of every employee of the Company.

---

Mar 31, 2024

Your Directors present their 53^rd Annual Report together with the Audited Financial Statements of the Company for the year ended 31^st March 2024.

FINANCIAL SUMMARY		('' in Crs)
Particulars 31.03.2024		31.03.2023
Revenue from Operations	1943.86	2,828.82
Add: Other Income	18.30	20.63
Total Income	1962.16	2,849.45
Profit before interest,	267.76	374.42
depreciation and tax
Less: Finance Cost	37.98	30.93
Less: Depreciation &	38.18	43.73
amortization expenses
Profit Before Exceptional Items	191.60	299.76
Less: Exceptional Items	(48.61)	-
Profit Before tax	142.99	299.76
Less: Tax expenses	55.08	15.32
Profit After Tax	87.91	284.44
Add: Net Comprehensive	7.81	(2.67)
Income / (Loss)
Total Comprehensive Income	95.72	281.77

DIVIDEND

Taking into account the financial position of the Company and the norms of your Company''s Dividend Distribution Policy, the Directors have recommended a Dividend of Rs. 1.50 (15% on the face value) per equity share of Rs. 10 each fully paid-up, for the year 2023-24 on the paid-up equity share capital.

STATE OF COMPANY''S AFFAIRS Production

During the financial year 2023-24, the Plants were in operation for about 260 days only and produced neem coated urea of about 5,22,535 MT. Re-assessed Capacity of 6,20,400 MT production could not be achieved due to frequent disturbance in plant machineries and heavy flood because of Michaung cyclone. Plant was operated with mixed feed of Natural gas and Naphtha. Using the opportunity of Flood Maintenance Shutdown 2023 due to Michaung cyclone, Primary reformer catalyst was replaced in Ammonia Plant and the plant was modified to be 100% natural gas based and subsequently it was commissioned during the end of the financial year.

Progress of Natural Gas Supply Pipelines.

Natural Gas (NG) requirement of your Company to produce 2080 MT/Day is about 1.5 MMSCMD out of which 0.9 MMSCMD of Natural gas is supplied from ONGC''s Kanjirangudi fields through (Indian Oil Corporation Limited (IOC) pipeline.

For the balance NG requirement, IOC, an authorized organization for laying the Natural gas pipeline from Ennore to Sayalkudi, has completed the pipeline erection and commissioned during the end of September 2023. Subsequently, IOC made an offer to SPIC for the Reliquefied NG (RLNG) supply and accordingly SPIC was getting prepared for the conversion of Natural gas.

PUBLIC DEPOSITS

There are no deposits covered under Chapter V of the Companies Act, 2013 (the Act) during the year 2023-24, details of which are required to be furnished.

DEBENTURES

The Company has raised funds by way of debt issue of 5,000 Unlisted, Rated, Senior, Secured, Redeemable, Non-convertible Debentures of Rs. 1,00,000/- each on private placement basis during September 2023. aggregating Rs. 50 crores to Vivriti Emerging Corporate Bond Fund and Vivriti Alpha Debt Fund - Enhanced.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared in accordance with Ind AS and forms part of the Annual Report.

FINANCIAL STATEMENTS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, the Statement containing salient features of the Financial Statements of the Company''s Associates and Joint Ventures (in Form AOC-1) is attached to the Financial Statements. Your Company has no Subsidiaries.

TAMILNADU PETROPRODUCTS LIMITED (TPL)

During the financial year 2023-24, revenue from operations was '' 1697 Crore as compared to '' 2170 Crore in previous year 2022-23. Linear Alkyl Benzene (LAB), the major product of TPL continues to be the key contributor for the revenue. The fluctuation in crude oil price, increased cost of raw materials and price pressure caused by cheaper imports are key factors for lower revenue. Additionally, the contribution of Caustic lye declined substantially,

influenced by higher raw material prices and a decline in domestic prices.

During the year, the plant operations were partially affected for about a month on account of flooding caused by Cyclone Michaung. TPL made claim with insurance company for the loss and received an adhoc payment of '' 4.59 Crore and awaiting the final assessment report from insurance company.

The Board of TPL has recommended a dividend of '' 1.20 per equity share of '' 10 each fully paid-up for the year 2023-24 (15% in the previous year) subject to the approval of Members at the ensuing AGM.

TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LIMITED (TFL)

To reduce the carbon footprint of the product, the company has converted both of the boilers to Biomass. The company has also imported Green soda ash and established world''s first Green soda ash production during Nov-2023.

Refurbishment of defective systems and installation of newer ones continued during the year to stabilize and also increase the production. The plant is also replacing the problematic old generation DCS to latest generation DCS in centralized control room. Due to flood in Tuticorin, the plant production was interrupted by late December and has come back again to reach earlier production levels.

Salt was mostly procured locally and used along with Captive and small parcel of Gujarat salt. During the end of the year, the price of ammonia has softened from earlier levels. The selling price of soda ash and ammonium chloride also reduced consequent to raw material prices. The Company has maintained its consistency of profitability in each quarter like previous year after long 20 years of losses. TFL made profit in all the four quarters, registering a significant net profit for the whole year. The company''s networth is improving in positive continuously . The company is also working on its expansion plans. It is expected that the company will continue this trend and the carried over losses will get wiped out in the next 2-3 years.

GREENAM ENERGY PRIVATE LIMITED (GREENAM)

The 22.0 MW AC Floating Solar Project has been operating as planned. Due to heavy rain and flooding in December 2023, the plant was generating power as usual but could not be exported for a period of 7 days on account of failure at the evacuation substation.

Drawing power from Greenam enables your Company to meet the Renewable Power obligations as stipulated by the Government as well as substantially save on quantity of water lost by evaporation from the water reservoirs.

During the year, the GREENAM made a profit of Rs. 2.28 crores with the total revenue of Rs. 18.57 crores. Like any

renewable project, the EBITDA is high at Rs. 17.19 crores, around 92.51% of the Revenue. Energy supplied during the year was 37.17 million units

SAFETY, HEALTH AND ENVIRONMENT

DNV (Det Norske Veritas) conducted the Re-certification Audit for QMS.ISO 9001:2015, EMS - ISO 140001:2015 and certified that all the requirements as per the standards are being practiced and there are no non-conformity points. QMS, EMS systems and OHS system certificates are valid till January 2026. DNV have audited the periodical medical examination report being done by the Company for all employees and found to be in order. Green Belt development is being given utmost importance and is a continuing activity with about 1075 tree saplings planted during this year. Your Company has obtained Consent to Operate with mixed feed stock, viz., Natural Gas and Naphtha, valid up to 31^st March 2026. Your Company has achieved 799 days accident free period with 2.78 million manhours for employees. Your Company has been adjudged for "Award of Honor" Occupational Health Safety and Environment Award 2023 by National Safety council -Tamil Nadu Chapter .

HUMAN RESOURCE AND INDUSTRIAL RELATION

Your Company continues to provide a conducive work environment and opportunities for development of its employees. Industrial Relations in the Company have been cordial during the year under review. The number of employees as on 31^st March 2024 is 535. Your Company continues with the regular campus recruitment programme as a process of building the organization from the bottom.

ANNUAL RETURN

Annual Return in Form MGT-7 for the year 2022-23 as required under Section 92 of the Act has been placed on the website of the Company. The Form MGT-7 for the year 2023-24 shall be filed with Registrar of Companies within the prescribed time after the 53 ^rd Annual General Meeting of your Company to be held on 19^th September 2024. Thereafter it can be accessed using the web link: https:// www. spic.in/investors/annual-return/.

DIRECTORS

Since the date of last Report, the Board of Directors have appointed Mr. Sandeep Nanduri, I.A.S. with effect from 6^th November 2023 and Selvi. Apoorva, I.A.S. with effect from 16^th May 2024 as Nominee Directors of TIDCO. Ms. Jayashree Muralidharan, I.A.S, Mr. C Samayamoorthy,

I.A.S., and Dr. V Jaya Chandra Bhanu Reddy, I.A.S. Nominee Directors of TIDCO resigned with effect from 30^th October 2023, 15^th March 2024 and 20^th March 2024 respectively. The Board of Directors placed on record the invaluable services rendered by Ms. Jayashree Muralidharan, I.A.S., Mr. C Samayamoorthy, I.A.S., and Dr. V Jaya Chandra Bhanu Reddy, I.A.S. during their tenure.

Ms. Devaki Ashwin Muthiah shall retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers herself for re-election.

The Board of Directors at their Meeting held on 27^th March 2024 re-appointed Mr. Debendranath Sarangi, IAS (Retd.), as Independent Director for a second term of 5 years from 23^rd May 2024, and the approval of the shareholders by Special resolution was obtained through Postal Ballot on 8^th May 2024. In the opinion of the Board, Mr. Debendranath Sarangi, IAS (Retd.), re-appointed as Independent Director during the year, is a person of integrity, with expertise, experience & proficiency. He is independent of the Management.

All the Independent Directors of the Company on the date of this Report have duly submitted the disclosures to the Board stating that they have fulfilled the requirements set out in Section 149 (6) of the Act and the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, as amended so as to qualify themselves to act as Independent Directors.

TRANSFER OF SHARES IN RESPECT OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) AUTHORITY

Pursuant to Section 124 (6) of the Companies Act, 2013 read with The Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules 2016, the Company during March 2018 transferred to IEPF Authority, 1,66,454 equity shares in respect of 1008 shareholders.

As per the information provided by the Registrar and Share Transfer Agent, out of the 1,65,254 equity shares, which remained unclaimed by 1006 shareholders at the beginning of the year, 500 shares were released to 3 shareholders during the year. As at the end of the year 1,64,754 shares remained unclaimed by 1003 shareholders.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Independent Directors are familiar with their roles, responsibilities in the Company, nature of the industry, business model etc., through familiarisation programmes. Documents / Brochures, Reports and Internal Policies of your Company are provided to them. Presentations are made at the Board / Committee Meetings, on Company''s Performance, business strategy, risks involved and global business environment. Details of means of familiarization of the business to Independent Directors are disclosed on the Company''s website under the following web link: https://www.spic.in/wp-content/uploads/2024/04/ Familiarization-Programmes-2023-24.pdf

PARTICULARS OF REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES

The statement in terms of Section 197(12) of the Act read

with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed vide Annexure II (Page no. 26) forming part of this Report.

STATUTORY AUDITORS

M/s. MSKA & Associates, Chartered Accountants (Firm Registration No.: 105047W) Chennai, the Statutory Auditors appointed by the shareholders for a period of five years from 2022-23 shall hold office from the conclusion of 51^st AGM till the conclusion of 56^th AGM of the Company on a remuneration of '' 24 lakh plus out of pocket expenses and applicable taxes for audit and related services, for each year and the Board of Directors has been authorized to revise the remuneration during the term. There is no qualification, reservation or adverse remark or disclaimer made by the Statutory Auditors in their Report on the Standalone and Consolidated Financial Statements of your Company for the financial year 2023-24.

COST AUDITOR

M/s. B Y & Associates, Cost Accountant (Firm Registration No. 003498) was appointed as the Cost Auditor of the Company for the year 2023-24 to carry out the audit of your Company''s Cost Accounts and Records of fertilizer business. The Company is required to maintain Cost Records as specified by the Central Government under Section 148 (1) of the Act and that accordingly such accounts and records were made and maintained. The Cost Audit Report for the previous year ended 31^st March 2023 was duly filed within the stipulated time as required under the Act.

In accordance with Section 148(1) of the Act, the Company has maintained the accounts and cost records for

2023- 24, as specified by the Central Government. The Board of Directors at their Meeting held on 16^th May 2024, on the recommendation of the Audit Committee, have re-appointed M/s. B Y & Associates, Cost Accountant (Firm Registration No. 003498) as Cost Auditor for the year

2024- 25 at a remuneration of '' 1,75,000/- plus reimbursement of actual out-of-pocket expenses subject to ratification by Members at the ensuing 53^rd AGM.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Act, Regulation 24A of Listing Regulations, your Company appointed Ms. B Chandra, Practicing Company Secretary, Chennai as Secretarial Auditor for 2023-24. The Company has complied with the requirements of the Secretarial Standards specified by the Institute of Company Secretaries of India constituted under Section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.

The Secretarial Audit Report for the year 2023-24 as furnished is given as Annexure III (Page no. 28) to this Report. There is no qualification, reservation or adverse

remark or disclaimer made by the Secretarial Auditor in their Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 (3) of the Act, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the Management confirm that:

a) In the preparation of the annual financial statements for the year ended 31^st March 2024, the applicable Ind AS had been followed along with proper explanation relating to material departures;

b) They 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 2024 and of the profit of the Company for the year ended on that date;

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) The annual accounts have been prepared on a going concern basis;

e) They have laid down proper internal financial controls to be followed by the Company and such controls are adequate and were operating effectively;

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

REPORTING OF FRAUDS BY AUDITORS

As per Section 143(12) of the Act, 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 formed as per the requirements of Act.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

No loans or guarantees were given by the Company under Section 186 of the Act during the year under review.

RELATED PARTY TRANSACTIONS

The transactions entered into by your Company during the year 2023-24 with Related Parties as defined under the Act

were in the ordinary course of business and at arm''s length basis. There are no arrangements with related parties to be disclosed as required under Section 188 (1) and 134 (h) of the Act. Form AOC-2 attached vide Annexure V (Page no. 31).

The details of transactions with any person or entity belonging to the Promoter/Promoter Group which holds 10% or more shareholding in the Company, in the format prescribed under Ind AS are furnished in Note No.38 of Notes on Accounts

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT HAS OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THIS REPORT.

There has been no material changes or commitments affecting the financial position of your Company that has occurred between the end of the financial year i.e., 31^st March 2024 and the date of this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGOConservation of Energy

Your Company has formed an audit group and identified potential possibilities for energy reduction, reliable measures for continuous operation, process safety improvement etc. Efforts were taken continuously and some of the major activities are

a) Overhauling of less efficient turbine and replacement of necessary spares.

b) Replacement of High Temperature Shift Converter Catalyst as its life was about to end.

c) Regular steam audit inside the plant was carried out and weak links were replaced with upgraded traps for energy savings.

d) Preventive checks were carried out in all the steam flanges, critical process locations and same were attended on requirement during the Flood Maintenance Shutdown.

e) Stoppage of Instrument Air Compressors and supplying required Instrument air to Ammonia and Urea plants through the new Gas Turbine Operated Process Air Compressor.

f) Installation of pneumatic actuated steam let down station against the oil actuated let down station

Technology Absorption - Nil

INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM

Your Company has adequate internal financial control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems were reviewed by Statutory / Internal Auditors and reported to the Audit Committee of the Board, for identification of deficiencies and necessary time bound actions were taken to improve efficiency at all levels. The Committee also reviews the Report of Internal Auditors, key issues, significant processes and accounting policies. Risk Management is an integral part of the business process. Your Company pursuant to Listing Regulations has constituted a Risk Management Committee and has a Policy on Risk Management to identify and draw mitigation plans to manage risk. The Board of Directors reviews the Risk Management Report periodically.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operations in future.

CORPORATE GOVERNANCE

Corporate Governance Report 2023-24 along with the Certificate of the Statutory Auditors, M/s. MSKA & Associates, Chartered Accountants, confirming compliance to conditions of Corporate Governance as stipulated in the Listing Regulations forms part of this Report.

PERFORMANCE EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

Your Company has a structured framework for evaluation of the Individual Directors, Chairperson, the Board as a whole and its Committees. The Independent Directors at their Meeting held on 15^th March 2024 evaluated the performance of Non-Independent Directors, Board as a whole, the Chairperson and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The Board of Directors at their Meeting held on 16^th May 2024 evaluated the performance of all Independent Directors and the Board as a whole and its

Foreign Exchange Earnings and Outgo

The foreign exchange earned in terms of actual inflows and the foreign exchange outgo in terms of actual outflows during the year:

(Rs. in Lakhs)
Particulars	2023-24	2022-23
Foreign Exchange earnings	20.17	54.57
Foreign Exchange expenditure	1364.26	4511.47

Committees. The evaluation criteria was based on the participation, contribution and guidance offered and understanding of the business etc., which are relevant to the Directors in their capacity as Members of the Board/ Committees.

NUMBER OF MEETINGS OF THE BOARD / AUDIT COMMITTEE

The details of the Meetings of Board and Audit Committee held and its composition are provided in the Corporate Governance Report.

POLICIESPOLICY ON MATERIAL SUBSIDIARY

The Company has a Policy on Material Subsidiary approved by the Board of Directors as per the Listing Regulations and is available on the Company''s website under the web link:https://www.spic.in/wp-content/uploads/2021/32/ MATERIAL-SUBSIDIARY-POLICY.pdf

NOMINATION AND REMUNERATION POLICY

Your Company has a Nomination and Remuneration Policy as required under Section 178(3) of the Act and the Listing Regulations. The details of the Policy are available in Annexure I (Page No. 24) to this Report

POLICY ON RELATED PARTY TRANSACTIONS

The Policy on Related Party Transactions as required under the Listing Regulations and the Act, is available on the Company''s website under the web link: https:// www.spic.in/wp-content/uploads/2021/J2/Policv-on-Related-Parties-30th-Mar-2022.pdf

POLICY ON INSIDER TRADING

Your Company has a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company in line with SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. The details of the Policy are available on the website of the Company under weblink: https:// www.spic.in/wp-content/uploads/2021/02/Code-of-Practices-and-Procedures-for-Fair-Disclosure-of-UPSI1.pdf

POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. (POSH)

The Company has zero tolerance for sexual harassment at workplace. A policy is in place and an Internal Complaints Committee has been constituted which is monitoring the prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of POSH and the Rules made thereunder. There were no complaints reported under the POSH during the year under review.

VIGIL MECHANISM

Pursuant to the provisions of Section 177 of the Act and the Listing Regulations, Whistle Blower Policy for Directors

and employees to report genuine concerns or grievances including reporting of instances of leakage of Unpublished Price Sensitive Information (UPSI) is in place and a Vigil Mechanism established, the details of which are available on the website of the Company under weblink: https://www.spic.in/wp-content/uploads/2021/32/ Whistle-Blower-Policy-and-Vigil-Mechanism-24.03.2020.pdf

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has a CSR Policy in line with the provisions of the Act. As a responsible corporate citizen, your Company in its endeavour to contribute for the sustained development and growth of the Society at large has taken several initiatives voluntarily. Your Company is not required to spend towards CSR activities, in view of absence of profits computed under Section 198 of the Act. However, the details of CSR initiatives undertaken voluntarily by your Company are given in Annexure IV (Page no. 30) to this Report. The details of the Policy are available on the website of the Company under weblink: https:// www.spic.in/wp-content/uploads/2021/J2/Corporate-Social-Responsibilitv-Policv.pdf DIVIDEND DISTRIBUTION POLICY

Dividend Distribution Policy has been formulated as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Second Amendment) dated 5^th May 2021. The details of the Policy are available on the website of the Company under weblink: https:// www.spic.in/wp-content/uploads/2021/08/Dividend-Distribution-Policy.pdf MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY OVERVIEW

The 2023 monsoon season in India concluded with a total rainfall of 94.4% to LPA due to the impact of El Nino. The overall sown area was 2.12% above the normal coverage in the country but was less than that of the previous year. As a result, agricultural food grain production decreased by 6.18% during the year compared to last year. The production of Oilseeds, Sugarcane, cotton & pulses decreased by 11.50%, 8.99%, 3.87% & 1.83% respectively over the previous year. The erratic progression and distribution of the monsoon over India was the major reason for the reduced production of major crops.

The overall availability of Urea during the year was satisfactory despite a reduction in the imports (less by 7% YoY). There was an increase in the supplies Urea from the domestic production which is higher by 10% at 34.41 million tonnes from 28.50 million tonnes during the previous year. The sale of Urea during the year stood at 35.78 million tonnes as against 35.73 million tonnes during the previous year.

Services extended to the Farmers (Consumers).

Your Company continued to provide services to the farmers in improved cultivation practices, soil health management,

integrated nutrient, and pest management practices to enhance the returns from farming.

Your Company undertook the following activities during the year.

1. DBT (Direct Benefit Transfer) in Fertilizers:

Your Company is the Lead Fertilizer Supplier (LFS) for Tamil Nadu and Puducherry. As an LFS, we ensured the active usage of ePOS devices at the fertilizer retail points. In order to increase this compliance, we have conducted regular trainings, capacity building programs etc in association with the Agriculture Department and National Informatic Centre (NIC). There are 12,673 numbers of ePOS devices deployed in the states of Tamil Nadu and Puducherry.

2. Pradhan Mantri Kisan Samridhi Kendra (PMKSK):

The Department of Fertilizers, Government of India has introduced a new concept of Pradhan Mantri Kisan Samridhi Kendra (PMKSK) during the year, with an aim to provide quality Agri inputs & services under one roof as an "one stop shop'' for the farming community. As a result, Your Company established 2,473 numbers of PMKSK spread across Tamil Nadu, Puducherry, Kerala, Karnataka, Andhra Pradesh, Telangana & Maharashtra. These Centers provide support facilities for testing soil, irrigation water & agri. inputs like fertilizers & seed apart from educating the farmers to practice soil test based nutrient management, integrated pest management, soil health management, etc. & providing information regarding various Govt. schemes.

3. Mobile Soil Testing Lab Services (MSTL):

Through our Mobile Soil Testing Facility, we have extended the soil testing services to farmers located in the border districts of neighboring states of Karnataka and Andhra Pradesh. Based on soil and irrigation test results, we recommended balanced nutrition to crops while preserving the soil heath for sustainability.

4. Trainings to Farmers.

We are offering In-house training programs to progressive farmers in our training Centre located at Tuticorin. The outreach programs were conducted to groups of farmers from different parts of the state.

5. Model Integrated Agriculture Farm.

We are maintaining the Model Integrated Agriculture Farm to showcase to trainees for adoption of Integrated Agriculture Production system to further increase the returns from the farms. Through this we encourage agriculture related activities like animal husbandry, poultry, mushroom cultivation etc.

6. Pannai Cheythi Malar.

The Bimonthly Tamil Magazine covers relevant

articles related to adoption of improved agricultural practices. The success stories of such adoption are published to popularize fellow farmers. This has become a platform for sharing the success stories as well as a source for new technologies for enhancing the farm income.

PROSPECTS FOR 2024-25:Rainfall forecast and demand estimation of Urea:

India is likely to witness above average rainfall during the monsoon season this year as per IMD 1'' stage long range forecast. 106% rainfall in comparison to the LPA is expected by the country''s weather office this year. Considering this above average forecast, the country will be working towards a targeted food grain production at 332 million tonnes for the year compared to expected production of 309 million tones during 2023-24.

Demand is expected to be higher for urea during 2024-25 which means, the domestic urea production should be around 33 MT to reduce India''s dependence on imports. The promising fact is that the demand can be met by enhanced domestic production of urea through both greenfield & brownfield projects under progress & by replacing the use of 20-25 lakh tonne of conventional urea with Nano liquid urea for top dressing.

Nano Urea:

Nano Urea, a liquid formulation containing 4 ~ 14 % Nitrogen has been introduced by Indian Farmers Fertiliser Cooperative Ltd (IFFCO) during 2021. This is recommended as a substitute product for prilled and granulated Urea. The acceptance of this Nano Urea by the farmer is yet to gain momentum due to the instability of Nutrient content, noncompatibility with other agro chemicals and higher cost of application. As Urea forms 82% of the total nitrogenous fertilisers consumed in India, Government is encouraging fertilizer companies to formulate strategies to replace Urea with Nano-Urea. National Fertilizers Limited (NFL) and Rashtriya Chemicals and Fertilizers Limited (RCF), under administrative control of Department of Fertilizers, has signed Non-Disclosure Agreement (NDA) & Memorandum of Understanding (MoU) with IFFCO to transfer the technology of Nano Urea from IFFCO.

Your Company has entered a research tie up with Tamil Nadu Agriculture University for a detailed study to know the efficacy and phytotoxicity of Nano Urea in comparison to

SPIC Urea (Prilled Urea) in Paddy crop. This study will also reveal the economic benefit of using Nano Urea over SPIC Urea in Paddy cultivation. Once the field trails are completed, more information on the efficacy of the product will be available to devise suitable strategies of employing Nano Technology in Nutrient Delivery Systems for agriculture.

Tissue Culture Business:

Your Company supplies highest quality of Tissue Culture Banana plants to the farmers of Tamil Nadu, Andhra Pradesh and Karnataka. Your Company is offering after sales services to the farmers by providing technical assistance on Banana cultivation. The unit is accredited by the Department of Biotechnology with NCS-TCP certification.

Having got the protocols customized for the production of high value crops like ornamentals, orchids etc., your Company will enter into this ornamental plants segment in the near future.

In order to increase the profitability by optimizing the cost, we are undertaking laboratory modernization activities with induction of higher efficiency - low energy consuming machinery, redesigning the process flow and adoption of new systems to enhance sterility standards in the production laboratories.

It is expected to be completed by August, 2024 to commence the commercial production of high value crop plants by January 2025.

FINANCIAL RATIOS

The significant changes in the financial ratios of the Company, which are 25% or more as compared to the previous year are summarized below:

Ratios	2023-24	2022-23	Reasons for change
Net Profit Ratio (%)	4.55%	10.09%	Due to disruption of operations due to Flood, Profit has decreased in current year.
Debt Service Coverage Ratio (times)	0.89	2.46	Due to decrease in operating profit due to Flood.
Debtors Turnover Ratio (days)	12	4	Due to disruption of business on account of flood, there were fluctuations in the sales.

CHALLENGES

The challenge of preventing the sale of Urea outside ePOS is being controlled by the regular monitoring of stocks available at all levels of the distribution channel like whole sellers and retailers through FMS System. Since the monthly movement order for supply obtained from the State Agrl Department is based the requirement net of stock available at retail counters, we could prevent over supply of Urea to meet the Agrl consumption.

The introduction and promotion of Nano Urea by IFFCO is getting momentum in the market. Since this product is not suitable for soil application and recommended for foliar application, the consumption of Urea (granular and prilled) is increasing due to larger availability as well as increase in area of cultivation of crops. It is expected that Nano Urea will take a small share of urea used for top dressing in upland paddy and summer pulses where water shortage is felt. We are also exploring ways to get into this new segment of Nano Urea by bundling aerial spray support by way of Drones; as this will increase the acceptability of Nano Urea among the dry land farmers.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Shipping, Ministry of Corporate Affairs and other Departments of the Central Government, the Government of Tamil Nadu, Governments of other States, Tamil Nadu Industrial Development Corporation Limited, Tamil Nadu Generation and Distribution Corporation Ltd., Indian Oil Corporation Limited, Oil and Natural Gas Corporation Limited, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all the employees of your Company.

For Southern Petrochemical Industries Corporation Limited

Place: Chennai Ashwin C Muthiah

Date: 8^th August 2024 Chairman

---

Mar 31, 2023

Your Directors present their 52^nd Annual Report together with the Audited Financial Statements of the Company for the year ended 31^st March 2023.

FINANCIAL SUMMARY

(Rs. in Crs)
Particulars	31.03.2023	31.03.2022
Revenue from Operations	2,828.82	1874.92
Add: Other Income	20.63	23.39
Total Income	2,849.45	1898.31
Profit before interest,	374.41	199.03
depreciation and tax
Less: Finance Cost	30.93	14.19
Less: Depreciation &	43.72	44.41
amortisation expenses
Profit Before Tax	299.76	140.43
Less: Tax expenses	15.32	--
Profit After Tax	284.44	140.43
Add: Net Comprehensive	(2.67)	14.06
Income
Total Comprehensive Income	281.77	154.49

DIVIDEND

Taking into account the financial position of the Company and the norms of your Company''s Dividend Distribution Policy, the Directors have recommended a Dividend of Rs. 1.50 (15% on the face value) per equity share of Rs. 10 each fully paid-up, for the year 2022-23 on the paid up equity share capital.

STATE OF COMPANY’S AFFAIRS Production

During the financial year 2022-23 the Plants were in operation for 361 on stream days and produced the highest ever production of 759,199 MT of Urea since the commissioning of the Plant. For the whole year the Company had received

0.9 MMSCMD of Natural Gas (NG). During the year, your Company manufactured 759,199 MT of Neem Coated Urea and sold 757,984 MT. The Plants were operated using Natural Gas (NG), imported Naphtha and Furnace Oil and achieved energy efficiency levels of 6.176 Gcal/MT of Urea.

Handling of Imported Naphtha

Your Company has an arrangement with Indian Oil Corporation (IOC) for using their Tank Farm Facility at Tuticorin Port premises for handling a part of Company''s Imported Naphtha shipments. This has facilitated your

Company for speedy discharge of cargo, thereby minimizing the demurrage to a large extent. This arrangement will be continued until such time a reliable supply of full quantum of NG is assured.

Progress of NG Supply Pipelines

IOC, authorized to lay the Natural Gas Pipeline from Ennore to Tuticorin, has completed the 145 km Natural Gas pipeline in Ramanathapuram - Tuticorin sector in the first phase and laying of the pipeline from Ennore to Ramnad line merging at Sayalkudi is in progress. It is expected to be ready by October 2023. On completion of this pipeline your Company will receive its full requirement of 1.5 MMSCMD of NG. Compressor station at Ramnad is ready for operation and your Company is getting high pressure gas with a quantity of 0.9 MMSCMD. To adhere to the Policy of the Government, various modifications are being carried out in a phased manner to be a Gas based plant, to maintain Urea production level of 2080 MTPD.

PUBLIC DEPOSITS

There are no deposits covered under Chapter V of the Companies Act, 2013 (the Act) during the year 2022-23, which are required to be furnished.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared in accordance with Ind AS and forms part of the Annual Report.

FINANCIAL STATEMENTS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, the Statement containing salient features of the Financial Statements of the Company''s Associates and Joint Ventures (in Form AOC-1) is attached to the Financial Statements. Your Company has no Subsidiaries.

TAMILNADU PETROPRODUCTS LIMITED (TPL)

During the year 2022-23, revenue from operations was ? 2,150.25 crores as compared to ? 1,805.58 crore in 2021-22 up by 19%. The company''s top line increased due to increase in crude price and higher CS (Caustic Soda) Lye price realisation. Linear Alkyl Benzene (LAB) the major product of the company''s contributions reduced substantially due to increase in raw material cost and competition from low-priced imports consequent to expiry of Anti-dumping duty on imports from China, Iran & Qatar in April 2022. However C S Lye product increased its contribution due to better prices.

The Company has received BIS certification for LAB product, first in the Country. The Board of TPL has recommended a dividend of ?1.50 per equity share of ?10 each fully paid-up for the year 2022-23 (15% in the previous year) subject to the approval of Members.

TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LIMITED (TFL)

Refurbishment of defective systems and installation of newer ones continued during the year to stabilize and also increase the production. Salt was procured from Gujarat in addition to what is available in the local salt market. Throughout the year the price of ammonia, a major raw material remained high. The selling price of soda ash and ammonium chloride also remained high. Hence for the first time after 20 years TFL made profit in all the four quarters, registering a significant net profit for the whole year. The company revalued its land and buildings and thus the net worth has become positive. It is expected that the company will continue this trend and the carried over losses will get wiped out in the next 3 years.

GREENAM ENERGY PRIVATE LIMITED (GREENAM)

The 22.0 MW AC Floating Solar Project ever since its commissioning during March 2022 has been operating successfully. During the year 35.53 million units of electricity were supplied to the captive consumers.

Drawing power from GREENAM enables your Company to meet the Renewable Power obligations as stipulated by the Government as well as substantially save on water lost by evaporation from the company''s water reservoirs. During the year, the GREENAM has made a profit of ?2.18 crores with the total revenue of ?18.71 crores. Like any renewable project, the EBITDA is high at ?17.12 crores, around 91.5% of the revenue.

From the beginning of the year 2023-24, the plant is operating to its full capacity and hence is expected to perform better than the last year by atleast 10%.

SAFETY, HEALTH AND ENVIRONMENT

DNV (Det Norske Veritas) conducted the Recertification audit for QMS.ISO 9001:2015, EMS - ISO 140001:2015 and certified that all the requirements as per the standards are being practiced and there is no non-conformity points. QMS, EMS systems and OHS system certificates are valid till January 2026. DNV have audited the periodical medical examination report being done by the Company for all employees and found to be in order. Green Belt development is being given at importance and is a continuing activity with about 1184 tree saplings planted during this year. Your Company has obtained Consent to Operate with mixed feed stock, viz., Natural Gas and Naphtha, valid up to 31 ^st March 2026.

HUMAN RESOURCE AND INDUSTRIAL RELATION

Your Company continues to provide a conducive work environment and opportunities for development of its employees. Industrial Relations in the Company have been cordial during the year under review. The number of employees as on 31^st March 2023 is 580. Your Company continues with the regular campus recruitment programme as a process of building the organization from the bottom.

ANNUAL RETURN

Annual Return in Form MGT-7 for the year 2021-22 as required under Section 92 of the Act has been placed on the website of the Company. The Form MGT-7 for the year 2022-23 shall be filed with Registrar of Companies within the prescribed time after the 52^nd Annual General Meeting of your Company to be held on 27^th September 2023. Thereafter it can be accessed using the web link: https://www. spic.in/ investors/annual-return/.

DIRECTORS

Since the date of last Report, the Board of Directors had appointed Ms. Jayashree Muralidharan, I.A.S, with effect from 3^rd November 2022, Dr. V Jaya Chandra Bhanu Reddy, I.A.S. with effect from 29^th March 2023 and Mr. C Samayamoorthy,

I.A.S. with effect from 11^th August 2023 as Nominee Directors of TIDCO and Ms. Devaki Ashwin Muthiah as Nominee Director of private promoter with effect from 24^th May 2023. Ms. Vandana Garg, I.A.S. and Ms. A R Rajalakshmi, Nominee Directors of TIDCO resigned with effect from 10^th November

2022 and 13^th June 2023 respectively.

The Board of Directors at their Meeting held on 7^th July

2023 accepted the resignation of Mr. S R Ramakrishnan as Director / Whole-time Director to be effective from the end of his tenure on 29^th July 2023. In the same Board Meeting, Mr. E Balu was inducted as Director and appointed as Wholetime Director w.e.f 30^th July 2023 for a period of three years on terms and conditions subject to approval of shareholders of the ensuing 52^nd AGM.

The Board of Directors placed on record the invaluable services rendered by M/s. Vandana Garg, I.A.S, A R Rajalakshmi as Directors and Mr. S R Ramakrishnan as Whole-time Director during their tenure.

Ms. Jayashree Muralidharan, I.A.S. shall retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers herself for re-election.

The Board of Directors vide Resolution dated 17^th January 2023 re-appointed. Mr. S Radhakrishnan as Independent Director for a second term of 5 years from 7^th February 2023, and the approval of the shareholders was obtained through Postal Ballot on 30^th March 2023. In the opinion of the

Board, Mr. S Radhakrishnan, re-appointed as Independent Director during the year, is a person of integrity, with expertise, experience & proficiency. He is independent of the Management.

All the Independent Directors of the Company on the date of this Report have duly submitted the disclosures to the Board stating that they have fulfilled the requirements set out in Section 149 (6) of the Act and the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015, as amended so as to qualify themselves to act as Independent Directors.

TRANSFER OF SHARES IN RESPECT OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) AUTHORITY

Pursuant to Section 124 (6) of the Companies Act, 2013 read with The Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules 2016, the Company during March 2018 transferred to IEPF Authority, 1,66,454 equity shares in respect of 1008 shareholders.

As per the information provided by the Registrars and Transfer Agent, out of the 1,66,454 equity shares, which remained unclaimed by 1008 shareholders at the beginning of the year, 1000 shares were released to 2 shareholders during the year. As at the end of the year 1,65,454 shares remained unclaimed by 1006 shareholders.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Independent Directors are familiar with their roles, responsibilities in the Company, nature of the industry, business model etc., through familiarisation programmes. Documents / Brochures, Reports and Internal Policies of your Company are provided to them. Presentations are made at the Board / Committee Meetings, on Company''s Performance, business strategy, risks involved and global business environment. Details of means of familiarization of the business to Independent Directors are disclosed on the Company''s website under the following web link: https://www.spic.in/wp-content/uploads/2022/07/ Familiarization-Programmes-2022-23.pdf

PARTICULARS OF REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES

The statement in terms of Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed vide Annexure II (Page no. 26) forming part of this Report.

STATUTORY AUDITORS

M/s. MSKA & Associates, Chartered Accountants (Firm Registration No.: 105047W) Chennai, the Statutory Auditors appointed by the shareholders for a period of five years from

2022-23 shall hold office from the conclusion of 51^st AGM till the conclusion of 56^th AGM of the Company on a remuneration of ?24 lakh plus out of pocket expenses and applicable taxes for audit and related services, for each year and the Board of Directors has been authorized to revise the remuneration during the term. There is no qualification, reservation or adverse remark or disclaimer made by the Statutory Auditors in their Report on the Standalone and Consolidated Financial Statements of your Company for 2022-23.

COST AUDITOR

M/s. B Y & Associates, Cost Accountant (Firm Registration No. 003498) was appointed as the Cost Auditor of the Company for the year 2022-23 to carry out the audit of your Company''s Cost Accounts and Records of fertilizer business. The Company is required to maintain Cost Records as specified by the Central Government under Section 148 (1) of the Act and that accordingly such accounts and records were made and maintained. The Cost Audit Report for the previous year ended 31^st March 2022 was duly filed within the time stipulated under the Act.

In accordance with Section 148(1) of the Act, the Company has maintained the accounts and cost records for 202223, as specified by the Central Government. The Board of Directors at their Meeting held on 24^th May 2023, on the recommendation of the Audit Committee, have re-appointed M/s. B Y & Associates, Cost Accountant (Firm Registration No. 003498) as Cost Auditor for the year 2023-24 at a remuneration of ?1,50,000/- plus reimbursement of actual out-of-pocket expenses subject to ratification by Members at the ensuing 52^nd AGM.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Act, Regulation 24A of Listing Regulations, your Company appointed Ms. B Chandra, Practicing Company Secretary, Chennai as Secretarial Auditor for 2022-23. The Company has complied with the requirements of the Secretarial Standards specified by the Institute of Company Secretaries of India constituted under Section 3 of the Company Secretaries Act, 1980, and approved as such by the Central Government.

The Secretarial Audit Report for the year 2022-23 as furnished is given as Annexure III (Page no. 29) to this Report. There is no qualification, reservation or adverse remark or disclaimer made by the Secretarial Auditor in their Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 (3) of the Act, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the Management confirm that:

a) In the preparation of the annual financial statements

for the year ended 31^st March 2023, the applicable Accounting Standard had been followed along with proper explanation relating to material departures;

b) They 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 2023 and of the profit of the Company for the year ended on that date;

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) The annual accounts have been prepared on a going concern basis;

e) They have laid down proper internal financial controls to be followed by the Company and such controls are adequate and were operating effectively;

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

REPORTING OF FRAUDS BY AUDITORS

As per Section 143(12) of the Act, 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 formed as per the requirements of Act.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

No loans or guarantees were given by the Company under Section 186 of the Act during the year under review. Your Company, during May 2022, pledged 34,00,000 equity shares of 10/- each held in Greenam in favour of Indian Renewable Energy Development Agency Limited (IREDA) to secure the term loan of '' 88 and ''70 crores sanctioned to Greenam to meet its capital expenditure for its floating solar power project.

RELATED PARTY TRANSACTIONS

The transactions entered into by your Company during the year 2022-23 with Related Parties as defined under the Act were in the ordinary course of business and at arm''s length basis. Details of contracts / arrangements with related parties as required under Section 188 (1) and 134 (h) of the Act in Form AOC-2 is attached as Annexure V (Page no. 32).

The details of transactions with any person or entity belonging to the Promoter/Promoter Group which holds 10% or more shareholding in the Company, in the format prescribed under Ind AS are furnished in Note No. 38 of Notes on Accounts.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT HAS OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THIS REPORT.

There has been no material changes or commitments affecting the financial position of your Company that has occurred between the end of the financial year i.e., 31^st March 2023 and the date of this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy

Your Company has an Energy Audit group, which identifies potential areas for improvement, scans the environment for innovative and reliable solutions and considers proposal for implementation. Efforts are continuously being taken to reduce energy consumption in the Plants.

Some of the activities implemented during the year:

• Improvement to the efficiency of the Turbo Generator I.

• New boiler at the downstream of ammonia converter, generating 60mTPH of steam from the heat available with the gas, has been installed.

• Heat Recovery & Steam Generation system which recovers the heat from the Gas Turbine flue gas has been installed.

• Critical turbines were overhauled to improve the efficiency.

• Periodical Steam system audit was carried out and the faulty traps and leaks were addressed immediately.

Technology Absorption - Nil Foreign Exchange Earnings and Outgo

The foreign exchange earned in terms of actual inflows and the foreign exchange outgo in terms of actual outflows during the year:

(Rs. in Lakhs)
Particulars	2022-23	2021 - 22
Foreign Exchange earnings	54.57	35.78
Foreign Exchange expenditure	4,511.47	2,119.28

INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM

Your Company has adequate internal financial control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems were reviewed by Statutory / Internal Auditors and reported to the Audit Committee of the Board, for identification of

deficiencies and necessary time bound actions were taken to improve efficiency at all levels. The Committee also reviews the Report of Internal Auditors, key issues, significant processes and accounting policies. Risk Management is an integral part of the business process. Your Company pursuant to Listing Regulations has constituted a Risk Management Committee and has a Policy on Risk Management to identify and draw mitigation plans to manage risk. The Board of Directors reviews the Risk Management Report periodically.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company''s operations in future.

CORPORATE GOVERNANCE

Corporate Governance Report 2022-23 along with the Certificate of the Statutory Auditors, M/s. MSKA & Associates, Chartered Accountants, confirming compliance to conditions of Corporate Governance as stipulated in the Listing Regulations forms part of this Report.

PERFORMANCE EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

Your Company has a structured framework for evaluation of the Individual Directors, Chairperson, the Board as a whole and its Committees. The Independent Directors at their Meeting held on 28^th March 2023 evaluated the performance of Non-Independent Directors, Board as a whole, the Chairperson and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The Board of Directors at their Meeting held on 24^th May 2023 evaluated the performance of all Independent Directors and the Board as a whole and its Committees. The evaluation criteria was based on the participation, contribution and guidance offered and understanding of the business etc., which are relevant to the Directors in their capacity as Members of the Board/ Committees.

NUMBER OF MEETINGS OF THE BOARD / AUDIT COMMITTEE

The details of the Meetings of Board and Audit Committee held and its composition are provided in the Corporate Governance Report.

POLICIES

POLICY ON MATERIAL SUBSIDIARY

Company has a Policy on Material Subsidiary approved by the Board of Directors as per the Listing Regulations and is available on the Company''s website under the web link:https://www.spic.in/wp-content/uploads/2021/02/ MATERIAL-SUBSIDIARY-POLICY.pdf

NOMINATION AND REMUNERATION POLICY

Your Company has a Nomination and Remuneration Policy as required under Section 178(3) of the Act and the Listing Regulations. The details of the Policy are available in Annexure I (Page no. 24) to this Report

POLICY ON RELATED PARTY TRANSACTIONS

The Policy on Related Party Transactions as required under the Listing Regulations and the Act, is available on the Company''s website under the web link: https://www.spic. in/wp-content/uploads/2021/02/Policy-on-Related-Parties-30th-Mar-2022.pdf

POLICY ON INSIDER TRADING

Your Company has a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company in line with SEBI (Prohibition of Insider Trading) Regulations, 2015, as amended. The details of the Policy are available on the website of the Company under weblink: https://www. spic.in/wp-content/uploads/2021/02/Policy-for-Determining Material-Events.pdf

POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 (POSH)

The Company has zero tolerance for sexual harassment at workplace. A policy is in place and an Internal Complaints Committee has been constituted which is monitoring the prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of POSH and the Rules made thereunder. There were no complaints reported under the POSH during the year under review.

VIGIL MECHANISM

Pursuant to the provisions of Section 177 of the Act and the Listing Regulations, Whistle Blower Policy for Directors and employees to report genuine concerns or grievances including reporting of instances of leakage of Unpublished Price Sensitive Information (UPSI) is in place and a Vigil Mechanism established, the details of which are available on the website of the Company under weblink: https://www.spic. in/wp-content/uploads/2021/02/Whistle- Blower-Policy-and-Vigil-Mechanism-24.03.2020.pdf.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has a CSR Policy in line with the provisions of the Act. As a responsible corporate citizen, your Company in its endeavour to contribute for the sustained development and growth of the Society at large has taken several initiatives voluntarily. Your Company is not required to spend towards CSR activities, in view of absence of profits computed under Section 198 of the Act. However, the details of CSR

initiatives undertaken voluntarily by your Company are given in Annexure IV (Page no. 31) to this Report. The details of the Policy are available on the website of the Company under weblink: https://www.spic.in/wp-content/uploads/2021/02/

Corporate-Social-Responsibility-Policy.pdf DIVIDEND DISTRIBUTION POLICY Dividend Distribution Policy has been formulated as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Second Amendment) dated 5^th May 2021. The details of the Policy are available on the website of the Company under weblink: https://www.spic. in/wp-content/uploads/2021/08/Dividend-Distribution-Policy. pdf.

MANAGEMENT DISCUSSION AND ANALYSIS Industry Overview

The year 2022-23 recorded higher agricultural production over the previous year with a marginal increase in the cropped area by 5.96 %. The increase in production of food grain, Oil seeds, Sugarcane and Cotton is 2.5%, 5.4%, 6.7% & 8.4%, respectively over the previous year. The uneven distribution of monsoon during Kharif resulted a reduction in the area under cultivation, while the Rabi crop compensated for this shortfall. The enhancement of support price (9%) by the Government for the produce propelled the area under cultivation during the year.

The overall availability of Urea during the year was satisfactory, inspite of reduction in imports. The supplies from the indigenous production increased by 14% at 28.49 million tonnes, from 25.08 million tonnes, a year ago. The total sales during the year stood at 35.73 million tonnes as against 34.18 million tonnes during the previous year.

Your Company continued to extend service to the farmers for improved cultivation practices, soil health management, integrated nutrient and pest management practices to bring down the cost of cultivation as well as to reduce the deposit of toxic residues in the environment.

Your Company undertook the following activities during the year.

1. DBT (Direct Benefit Transfer) in Fertilizers:

Your Company is the Lead Fertilizer Supplier (LFS) for Tamil Nadu and Puducherry. As an LFS, we ensured the active usage of ePOS devices to conduct Fertilizer Sales at the fertilizer retail points. The repeated conduct of awareness programs among the farmers and capacity building exercise to retailers in association with the officials of Agriculture Department and National Informatics Centre (NIC) ensured 95% adherence of fertilizers sales through ePOS devices. The nonadherence is due to non-functioning of ePOS machines due to network disturbance and power failures. There

are 12,763 ePOS machines have been deployed and monitored by us.

2. Pradhan Mantri Kisan Samridhi Kendra (PMKSK):

The Department of Fertilizers, Government of India has introduced a new concept of Pradhan Mantri Kisan Samridhi Kendra (PMKSK) during the year, with an aim to provide quality agri inputs & required services under one roof as an “one stop shop'' for the farming community to impart the latest technologies in Agriculture for resource optimization and to increase the returns from the farms.

As per the mandate, your Company established 2,473 PMKSKs spread across Tamil Nadu, Puducherry, Kerala, Karnataka, Andhra Pradesh, Telangana & Maharashtra. These Centers provide support facilities for testing of soil, irrigation water & agri inputs like fertilizers & seed apart from educating the farmers to practice soil test based nutrient management, integrated pest management, soil health management, etc.

3. Mobile Soil Testing Lab Services (MSTL):

Through our Mobile Soil Testing Facility, we have extended the soil testing services to farmers located in the State of Tamil Nadu and in the bordering districts of the neighboring states of Karnataka and Andhra Pradesh. Based on the soil fertility reports, we encouraged the farmers to use enough manures for sustaining and improving the soil fertility and productivity levels.

4. Training to Farmers:

We offered In-house training programs to progressive farmers from the State of Tamil Nadu in our training center located at Tuticorin. The outreach programs were also conducted to farmer groups to impart latest agro technologies for enhancing economic returns from farming.

5. Model Integrated Agriculture Farm:

As part of the In-house training programs, we have established and managing a demonstration field of “an integrated agriculture farm” having high value agriculture crops, medicinal plants, mushroom cultivation and animal husbandry in Tuticorin. The trainees are exposed to this concept for quicker adaptation of Integrated Agriculture Practices for enhancing the returns from farming.

6. Pannai Cheythi Malar:

The bimonthly Tamil Magazine covers articles relevant to current challenges in farming with suitable solutions. The success stories of farmers adopting latest technologies are also published to create awareness.

This is becoming a platform for sharing new found knowledge / technologies in improving the productivity of farms.

Prospects for 2023-24

Rainfall forecast and demand estimation of Urea

As per IMD 1^st stage long range forecast for monsoon, India is likely to witness normal rainfall during southwest (SW) monsoon season. However, due to delay in the onset of the SW monsoon, delays and disruption in sowing is witnessed mostly from rain fed areas of southern states.

Considering this IMD forecast of normal annual rainfall, the country will be working towards a targeted food grain production at 332 million tonnes for the year compared to expected production of 328 million tonnes during 2022-23. Demand estimation of Urea for the year 2023-24 based on IMD report is encouraging. The estimated domestic production of Urea is close to 30 Million tonnes, with significant reduction in the imports. The additional quantity is expected from enhancement of production of existing units as well as from the commencement of production from new plants.

Nano Urea

Nano Urea, a liquid formulation containing 4 ~ 14 % Nitrogen has been introduced by Indian Farmers Fertilizer Cooperative Ltd (IFFCO) during 2021. This is recommended as a substitute product for the prilled and granulated Urea. The acceptance of this Nano Urea by the farmer is yet to gain momentum due to the instability of Nutrient content, non-compatibility with other agro chemicals and higher cost of application. As Urea forms 82 % of the total nitrogenous fertilizers consumed in India, Government is encouraging fertilizer companies to formulate strategies to replace Urea with Nano-Urea.

National Fertilizers Limited (NFL) and Rashtriya Chemicals and Fertilizers Limited (RCF), under administrative control of Department of Fertilizers, has signed Non-Disclosure Agreement (NDA) & Memorandum of Understanding (MoU) with IFFCO to transfer the technology of Nano Urea from IFFCO.

Your Company has entered into a research tie up with Tamil Nadu Agriculture University for a detailed field study to know the efficacy and phytotoxicity of Nano Urea in comparison

to SPIC Urea (Prilled Urea). This study will also reveal the economic benefit of using Nano Urea over SPIC Urea in Paddy cultivation. Once the field trails are completed, more information on the efficacy of the product to device suitable strategy of employing Nano Technology in Nutrient Delivery Systems would be available.

All India Urea Production, Import, Supplies and sales with previous year.

Tissue Culture Business:

Your Company supplies highest quality of Tissue Culture Banana plants to the farmers of Tamil Nadu, Andhra Pradesh, Telangana and Karnataka. Your Company is offering after sales services to the farmers by providing technical assistance on Banana cultivation. The unit is accredited by the Department of Biotechnology with NCS-TCP certification. Having got the protocols customized for the production of high value crops like ornamentals, orchids etc., your Company will enter into this ornamental plants segment in the near future. In order to increase the profitability by optimizing the cost, we are undertaking laboratory modernization activities with induction of higher efficiency machines with high energy consuming ones, redesigning the process flow, and adoption of new systems to enhance sterility standards in the production laboratories.

It is expected to be completed by December 2023, to commence the commercial production of high value crop plants by January 2023.

Financial Ratios

The significant changes in the financial ratios of the Company, which are 25% or more as compared to the previous year are summarized below:

Ratios	2022-23	2021-22	Reasons for change
Net Profit Ratio (%)	10.09%	7.53%	Increased Net profit due to economies / benefit of Gas based Plant. Consequently a higher Net Profit ratio in current year.
Debt Service Coverage Ratio (times)	2.46	2.13	a) Increased operating profit due to economies / benefit of Gas based Plant. b) Also the repayment of borrowings had improved the debt coverage ratio in current year. Both contributed to higher Debt Service Coverage Ratio
Debtors Turnover Ratio (days)	4	4	-

CHALLENGES

Enhanced production and supply of Urea to the market: The enhancement in the production and supply is expected to the tune of 150 to 200 Kt per year. This enhancement is less than the imported stocks made available to southern states to meet the demand. With our increased supplies to southern states, it is expected that, the import of Urea will come down to that extend. The additional supply of Urea is in line with the objective of Government of India to be self-reliant in Urea. The current market share for Urea in TN is close to 30% and additional allocation from DoF will increase the share to 45 %.

The instances of sale of Urea without the use of ePOS machine at the retail locations: We have a system by which we can monitor the quantity of stocks available at each of the license holder in the state of TN. This helps us to identify the piling up of stock to undertake physical verification and completion of ePOS sales through the intervention of the State AGrl (Agriculture) Dept. In addition to this, our district

wise supply plan is very much dependent on the stock availability at all stages like Whole sellers'' account and retailers'' account. This enables us to moderate the supplies and to prevent the instances of sale of Urea outside ePOS machines.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Shipping, Ministry of Corporate Affairs and other Departments of the Central Government, the Government of Tamil Nadu, Governments of other States, Tamil Nadu Industrial Development Corporation Limited, Tamil Nadu Generation and Distribution Corporation Ltd., Indian Oil Corporation Limited, Oil and Natural Gas Corporation Limited, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all the employees of your Company.

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Mar 31, 2018

The Directors present their 47th Annual Report together with the Audited Financial Statements of the Company for the year ended 31st March 2018.

FINANCIAL SUMMARY

(Rs. in crores)

Particulars	31.03.2018	31.03.2017
Revenue from Operations	1994.46	1502.43
Add: Other Income	4.92	13.79
Total Income	1999.38	1516.22
Profit before interest, depreciation and tax	115.77	67.75
Less: Finance Cost	40.88	10.57
Less: Depreciation & amortisation expenses	40.11	30.83
Add: Exceptional Items	2.44	-
Profit Before Tax	37.22	26.35
Less: Tax Expenses	-	-
Profit After Tax	37.22	26.35
Add : Net Comprehensive Income/(loss)	0.24	2.08
Total Comprehensive Income	36.98	28.43

DIVIDEND

In view of the accumulated losses, the Board of Directors are unable to recommend dividend on the Preference Share Capital and Equity Share Capital of the Company.

STATE OF COMPANY’S AFFAIRS

Production

During the year under review, the plants were in operation between 1st April ''17 to 11th January ‘18 and from 11th February ‘18 onwards. The shutdown of plants for 31 days during January and February ‘18 was for Annual Turnaround Maintenance, undertaking repairs of essential equipments and maintenance activities to improve the reliability and energy efficiency levels for sustained production. Your Company produced 100% neem coated Urea and achieved 6,58,892 MTs during 2017-18 compared to 5,62,670 MTs in the previous year. During the year, sale of Manufactured Urea was 6,62,074 MTs and sale of Imported Urea was 79,189 MTs.

Your Company has achieved the energy efficiency levels of 6.834 GCal/MT of Urea as against 6.664 GCal/MT. The plants were operated using mainly imported Naphtha and Furnace Oil.

Handling of Imported Urea:

Government of India allotted SPIC, two coastal ports namely Karaikal and Tuticorin for handling Imported Urea in the previous year. Your Company has handled 50,800 MTs of Imported Urea during the financial year 2017-18.

Working Capital :

During the year under review, Rupee denominated (unsecured) Masala Bonds as per RBI Guidelines were subscribed for an aggregate value of Rs. 128.66 crores carrying 9% interest p.a. by one of the Related Parties. This was pursuant to a Program Agreement dated 10 November 2016. This facility helped achieve the targeted production.

Progress in conversion of ammonia plant from naphtha to gas:

Good progress has been made by Indian Oil Corporation, authorized to lay the Natural Gas Pipeline from Ennore to Tuticorin, in terms of engineering, procurement and necessary approvals for laying the first stage of the gas pipeline from Ramnad to Tuticorin. Your Company continues to be in the state of readiness to complete the process as and when gas connectivity is established.

With the New Urea Policy 2015, revised target energy norm was set to become 6.5 Gcal/MT from 1st April 2018. To adhere to the policy, various energy saving measures are being designed, engineered and implemented with Natural Gas and dual feedstock option.

The Cabinet Committee on Economic Affairs chaired by the Prime Minister Shri Narendra Modi, in late March 2018 has accorded the following approval to the proposal of Department of Fertilizers:

a) The Target Energy Norms under New Urea Policy-2015(NUP-2015) for 11 urea units to be implemented w.e.f. 1st April, 2018.

b) The extension of present energy norms with token penalties, under the New Urea Policy-2015 for a further period of two years for 14 urea manufacturing units which failed to achieve the Target Energy Norms.

c) Three Naphtha based urea units of which your Company is one, are also allowed the existing energy norms for another two years/till gas pipeline connectivity.

d) The target energy norms as per NUP-2015 will be continued for 5 years w.e.f. 1st April, 2020.

The extension of present energy norms for further period of 2 years will ensure easy availability of urea to farmers throughout the country. It will also help to maximize the indigenous urea production and will lessen the import of urea.

Handling of Imported Naphtha Shipments

SPIC has signed a Hospitality Agreement with IOC for a period of two years for using their Tank farm facility at Tuticorin Port premises for handling a part of SPIC''s Imported Naphtha shipments. This has facilitated SPIC for faster discharge of cargo and thereby minimizing the ship demurrage to a large extent.

SPIC PROJECTS STATUS

AMMONIA PLANT DCS UPGRADATION:

Conversion of Ammonia plant Centum XL DCS to latest state of art technology Centum VP DCS and August PLC system to Pro safe PLC system has been completed. New DCS will also accommodate NG usage as and when gas is made available.

AMMONIA PLANT ENERGY REDUCTION PROJECT

Detailed engineering is being carried by M/s. TECHNIMONT. Procurement is being carried out for the project activities.

Erection of NG lines to reformer, boiler & dual burner for auxiliary boiler north has been completed.

LNG FACILITY: Supply of 200 MTPD LNG TO SPIC Plant.

Land Soil Testing has been completed and civil construction is being started.

UREA PLANT REACTOR

Replacement of Urea reactor with new reactor with improved material of construction and high efficiency trays is in progress. The new reactor, ordered on M/s. STaMi CARBON, is expected to arrive at site by November 2018.

PUBLIC DEPOSITS

There are no deposits covered under Chapter V of the Companies Act, 2013 (the Act) during the year 2017-18 the details of which are required to be furnished.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared in accordance with Ind AS and forms part of the Annual Report.

FINANCIAL STATEMENTS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company''s subsidiaries, associates and joint ventures (in Form AOC-1) is attached to the Financial Statements. During the year under review, M/s Greenam Energy Private Limited became an Associate Company.

Tamilnadu Petroproducts Limited (TPL)

During the year under review, revenue from operations was Rs.1081.83 crores compared to Rs.1007.58 crores in 2016-17. The Net profit for the year was Rs.46.71 crores against Rs.9.30 crores in the previous year. Though TPL is facing stiff competition from imports, various steps have been taken to improve the performance which have started showing results. The significant improvement in profitability was on account of the improved productivity and realizations from both LAB and Heavy Chemicals Division.

Tuticorin Alkali Chemicals And Fertilizers Limited (TFL)

The turn over continued to be low for the financial year 201718 at Rs.138 crores due to low CO₂ internal generation from the newly installed CO₂ recovery unit and non availability of CO₂ gas from SPIC. The problems for the low CO₂ recovery from the flue gas were identified and are being attended continuously and it is expected that the production will be improved to the required level by end of the Q1 of 2018-19.

The loss for the year hence is high at Rs.45 crores. The water shortage has been brought under control by recovering water from the sea water pumped to the salt fields of the company which also improved the salt production. The Draft Rehabilitation Scheme earlier submitted to BIFR is currently under the consideration of National Company Law Tribunal. As per their direction the issue has been referred to SEBI for exemptions for the conversion of the assistance received from the promoters into equity capital and an EGM was held in this regard on 10th April, 2018.

Greenam Energy Private Limited (GREENAM)

Greenam Energy Private Limited (Greenam) which is setting up a Floating Solar Power Project of capacity 24.7 MW DC in the water reservoirs of the Company at Tuticorin, has been sanctioned a term loan Rs.88 crores by M/s Indian Renewable Energy Development Agency Limited (IREDA) for the Project. Infusion of Promoters'' contribution is one of the conditions precedent for disbursement of loan by IREDA. An agreement will be entered into by the Company with Greenam, permitting them to use the Company''s reservoir for the Project and for usage of certain portion of land for installing inverters, transformers and Power evacuation systems. The Project activities are progressing and the commissioning is expected by May 2019.

SAFETY, HEALTH AND ENVIRONMENT

Adequate care and attention have been bestowed on matters relating to safety, health and environment in the plant. Your Company is certified with the latest version of QMS - ISO 9001:2015 and EMS - ISO 14001:2015 Standards and has received two safety awards from the Government of Tamilnadu.

Your Company continues to conduct health camps as an ongoing activity to create awareness on critical health related matters viz., eye camps and cancer / diabetes awareness. Similarly, Green Belt development is also a continuing activity with tree planting given top most importance. Your company has installed online continuous emission monitoring for Urea Prilling tower and complied with the guidelines of CPCB.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Your Company continues to provide a conducive work environment and opportunities for development of its employees. Industrial Relations in the Company have been cordial during the year under review. The number of employees as on 31st March, 2018 is 647. In addition, 90 candidates were selected during the year in Campus Hiring program.

EXTRACT OF ANNUAL RETURN

Form MGT-9 as on 31st March 2018 as required under Section 92 of the Act is given in Annexure I to this Report.

DIRECTORS

Mr. M S Shanmugam, IAS, TIDCO Nominee, ceased to be a Director under Section 167 (1) (b) of the Companies Act, 2013 with effect from 30th November 2017. Mr. T K Arun, TIDCO Nominee, resigned from the Board with effect from 16th November 2017 consequent to his attaining superannuation.

At the Board Meeting held on 7th February 2018, with a view to broad base the Board it was decided to induct professionals with expertise in the field of Fertilizers and having vast experience in various disciplines of Corporate Management / Governance. Mr. T K Arun was inducted as Non Executive / Non Independent Director and Mr. S Radhakrishnan was inducted as an Independent Director of the Company based on the recommendation of the Nomination and Remuneration Committee. The appointment of Mr. S Radhakrishnan is for a period of 5 years from 7th February 2018. Approval of the shareholders is being sought at this Annual General Meeting for the appointment of Mr. T K Arun as Director liable to retire by rotation and Mr. S Radhakrishnan as Independent Director. The Board of Directors had appointed Mr. S Visakan IAS, Nominee of TIDCO as Additional Director of the Company effective 13 June 2018.

Mr. S R Ramakrishnan as Director, shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election.

All the Independent Directors of the Company on the date of this Report have duly submitted the disclosures to the Board stating that they have fulfilled the requirements set out in Section 149 (6) of the Act and the Listing Regulations, so as to qualify themselves to act as Independent Directors.

TRANSFER OF SHARES IN RESPECT OF UNCLAIMED DIVIDENDTOINVESTOREDUCATIONANDPROTECTION FUND (IEPF) AUTHORITY

Section 124 (6) of the Companies Act 2013 read with The Investor Education and Protection fund (Awareness and Protection of Investor) Rules 2001 the Company after giving due notice in writing to the shareholders, whose shares remained unclaimed were transferred to IEPF Authority. 1,66,454 equity shares in respect of 1008 shareholders were transferred and Corporate action taken in this regard has been informed through CDSL.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Independent Directors are familiar with their roles, responsibilities in the Company, nature of the industry, business model etc., through familiarisation programmes, Documents / Brochures, Reports and Internal Policies of your Company provided to them. Presentations are made at the Board / Committee Meetings, on Company''s Performance, business strategy, risks involved and global business environment. Details of means of familiarization of the business to Independent Directors are disclosed on the Company''s website under the following web link: http://spic.in/wp-content/uploads/policies/Familiarisation-Program-for-Independent Directors.pdf

KEY MANAGERIAL PERSONNEL

Mr. S R Ramakrishnan was re appointed as Whole-time Director for a period of 3 years with effect from 30th July 2017 and approval of shareholders was obtained for reappointment at the 46th Annual General Meeting held on 26th July 2017.

PARTICULARS OF REMUNERATION OF DIRECTORS, KMP AND EMPLOYEES

The information required under section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ended 31st March, 2018 and forming part of this Report is given in Annexure III to this Report.

STATUTORY AUDITORS

In line with the policy on rotation of Auditors introduced in the Companies Act, 2013 (Act), the Shareholders at the 46th AgM held on 26th July 2017 approved the appointment of MZSK & Associates (presently known as M/s. MSKA & Associates), Chartered Accountants, Chennai as Statutory Auditors of the Company for a period of 5 years from 201718 and to hold office until the conclusion of 51st AGM of the Company subject to ratification at every AGM on such remuneration as may be decided by the Board of Directors. The Act has been amended effective 7th May 2018 deleting the provision relating to ratification of appointment by shareholders at every subsequent AGMs. Hence, seeking ratification of shareholders would not arise.

COST AUDITOR

Mr. P R Tantri, Cost Accountant (M. No. 2403) was appointed as the Cost Auditor of the Company for 2017-18 to carry out the audit of your Company''s Cost Accounts and Records of fertilizer business. The Cost Audit Report for the year ended 31st March 2017 was filed within the time stipulated under the Act. The Board of Directors at their meeting held on 17th May 2018, on the recommendation of the Audit Committee, have re-appointed Mr. P R Tantri, Cost Accountant as Cost Auditor for 2018-19 at a remuneration of Rs.1,00,000/- plus reimbursement of actual out-of-pocket expenses . As required under Section 148 of the Act and Rule 14 of the Companies (Audit & Auditors) Rules, 2014, ratification by Members is sought for the payment of remuneration to the Cost Auditor.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Act, and the Rules made thereunder, your Company has appointed Ms. B Chandra, Practicing Company Secretary, Chennai as Secretarial Auditor. The Secretarial Audit Report as furnished is given as Annexure IV to this Report. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in the Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 (3) of the Act, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the management confirm that:

(a) in the preparation of the annual financial statements for the year ended March 31, 2018, the applicable IND AS had been followed along with proper explanation relating to material departures;

(b) they 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 March 31, 2018 and of the profit of the Company for the year ended on that date;

(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) the annual accounts have been prepared on a going concern basis;

(e) they have laid down proper internal financial controls to be followed by the Company and such controls are adequate and operating effectively;

(f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

No loans or guarantees were given by the Company under Section 186 of the Act during the year under review. Your Company invested in 1,86,000 equity shares of Rs.10/- each of OPG Power Generation Pvt Ltd @ Rs.11.50 /- per share in order to qualify as captive user under Group Captive Scheme of the Electricity Rules, 2005. Further 2 equity shares of Rs.10/- each at par were invested in M/s. Greenam Energy Private Limited, which is setting up a 24.7 MW DC solar project at an estimated cost of Rs.136 Crores.

RELATED PARTY TRANSACTIONS

The transactions entered into during the financial year with Related Parties as defined under the Act were in the ordinary course of business and at arm''s length basis. Details of contracts / arrangements with related parties as required under Section 188 (1) and 134 (h) of the Act have been disclosed in Form AOC-2 and is attached as Annexure VI. As required under Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, approval of the Members is being sought at this Annual General Meeting for the transactions with Related Parties considered material in nature.

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

There were no material changes or commitments affecting the financial position of your Company that has occurred between the end of the financial year i.e., 31st March 2018 and the date of this Report.

ENERGY CONSERVATION, TECHNOLOGYABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy

Your Company has an Energy Audit group, which identifies potential areas for improvement, scans the environment for innovative and reliable solutions and considers proposal for implementation. Efforts are continuously being taken to reduce energy consumption in the plants.

Some of the activities implemented during the year:

- As energy conservation activity, Primary Reformer and High Temperature Shift I bed catalyst were completely renewed with new catalyst in Ammonia plant.

- To avoid energy loss through the heat exchangers, several exchangers re-tubed / replaced.

- Boiler (North) Burners was replaced with Dual fired burners as part of NG conversion.

- To reduce the energy loss and improve the performance, Cold Air heater tubes in Boiler (North) & (South) were renewed. Additional Steam Generation Unit Air Preheater tubes were renewed.

- Performance of all pumps and compressors were studied with our energy Audit group. Various energy saving technologies like provision of VFD, speed reduction, impeller trimming and smoothening the fluid passage with special coatings were implemented.

- Steam system audit were carried out periodically and the faulty traps and leaks has been addressed immediately.

Technology Absorption - Nil

Foreign Exchange Earnings and Outgo:

The foreign exchange earned in terms of actual inflows and the foreign exchange outgo in terms of actual outflows during the year:

(Rs.in Lakhs)

Particulars	2017-18	2016-17
Foreign Exchange earnings	16.14	153.84
Foreign Exchange	1,38,551.44	1,14,864.79
expenditure

INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM

Your Company has adequate internal financial control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems were reviewed by Internal Auditors and reported to the Audit Committee of the Board, for identification of deficiencies and necessary time bound actions were taken to improve efficiency at all levels. The Committee also reviews the internal auditors'' report, key issues, significant processes and accounting policies.

Risk Management is an integral part of the business process. The Company has a Risk Management Committee and a Policy on Risk Management to identify and draw mitigation plans to manage risk. The Audit Committee of the Board reviews the risk management report periodically.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

Corporate Governance Report 2017-18 along with the Certificate of the Statutory Auditors, M/s. MSKA & Associates, Chartered Accountants, confirming compliance to conditions of Corporate Governance as stipulated in the Listing Regulations forms part of this Report.

PERFORMANCE EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

Your Company has a structured framework for evaluation of the Individual Directors, Chairperson, Board as a whole and its Committees. The Independent Directors at their Meeting held on 7th February 2018 evaluated the performance of Non-Independent Directors, Board as a whole, Chairperson and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties. The Board of Directors at their Meeting held on 17th May 2018 evaluated the performance of all Directors and the Board as a whole and its Committees through circulation of questionnaires, to assess the performance on select parameters relating to roles, responsibilities and obligations of the Board and functioning of the Committees. The evaluation criteria was based on the participation, contribution and guidance offered and understanding of the areas which are relevant to the Directors in their capacity as Members of the Board/ Committees.

NUMBER OF MEETINGS OF THE BOARD

During the year under review, four Board Meetings were held on 18th May 2017, 7th September 2017, 4th December 2017 and 7th February 2018, the details of which are provided in the Corporate Governance Report.

AUDIT COMMITTEE

The details of the composition and meetings of the Audit Committee held are provided in the Corporate Governance Report.

POLICIES

POLICY ON MATERIAL SUBSIDIARY

The Board had approved the Policy on Material Subsidiary as per the Listing Regulations and is available on the Company''s website under the web link: http://spic.in/wp-content/uploads/ policies/Determining-Material-Subsidiary-Policy.pdf.

NOMINATION AND REMUNERATION POLICY

Your Company has a Nomination and Remuneration Policy as required under Section 178(3) of the Act and the Listing Regulations. The details of the Policy are given in Annexure II to this Report.

POLICY ON RELATED PARTY TRANSACTIONS

The Policy on Related Party Transaction as required under the Listing Regulations is available on the Company''s website under the weblink: http://spic.in/wp-content/ uploads/policies/ Policy-on-Related-Parties.pdf.

POLICY ON INSIDER TRADING

Your Company has a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company in line with SEBI (Prohibition of Insider Trading) Regulations, 2015.

POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. (POSH)

The Company has zero tolerance for sexual harassment at workplace. A policy is in place and an Internal Complaints Committee has been constituted which is monitoring the prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of POSH and the Rules made there under. There were no complaints reported under the POSH during the year under review.

VIGIL MECHANISM:

Pursuant to the provisions of Section 177 of the Act and the Listing Regulations, Whistle Blower Policy for Directors and employees to report genuine concerns or grievances has been put in place and a Vigil Mechanism established, the details of which are available on the website of the Company under weblink: http://spic.in/wp-content / uploads / policies/Whistle- Blower-Policy-and-Vigil-Mechanism.pdf.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has a CSR Policy in line with the provisions of the Act. As a responsible corporate citizen, your Company in its endeavour to contribute for the sustained development and growth of the Society has taken several initiatives. Your Company is not required to spend towards CSR activities, in view of absence of profits computed under Section 198 of the Act. However, the details of CSR initiatives undertaken voluntarily by your Company are given in Annexure V to this Report.

MANAGEMENT DISCUSSION AND ANALYSIS

Industry Overview

The year 2017-18 witnessed normal to excess monsoon all over the country which resulted in good crop coverage. The rainfall received in June-July was around 65-80% only and the distribution of rainfall was not uniform which has resulted in crop failures in some areas in Karnataka, Andhra Pradesh and Tamil Nadu.

During the fiscal year 2017-18, the indigenous production, imports, and sale of Urea was marginally higher than that of the previous year. India produced a total of 24.024 million ton of Urea, which is 0.7% lesser than the production recorded during the previous year. The import of Urea under Government of India account during the year stood at 5.975 million ton which is 9% higher than the last year. The total supplies to the market stood at 30.08 million ton which is more or less equal to the previous year. The sale of urea during the year recorded 30.311 million ton which is 2.4 % higher than that of the previous year. (Source: Ministry of Chemicals and Fertilizers, Government of India).

The capacity utilization of Urea has declined marginally from 103% to 102% during the year under review. As a result, the stocks available in the market had decreased to 1.026 million tonnes, which is 23.25% lesser than that of the previous year.

Comparison of All India Urea Production, Import, Supplies and Sales with previous year.

As per Government of India directives, we have started packing Indigenous Neem Coated Urea in 45 kg bags with effect from 16th March 2018.

DBT In Fertilizers:

The objective of Direct Benefit Transfer (DBT) by Govt. of India is an initiative to avoid diversion of subsidized fertilizers to non-agricultural purposes and also to identify the end user which will enable smooth transfer of concession/benefits directly to consumer as in cooking gas concessions.

The GOI has successfully completed the implementation of Pan-India rollout of Phase-1 of DBT in Fertilizers on 1st March 2018. In Southern States their roll out happened from 1st January 2018.

SPIC, being LFS for Tamilnadu and Pondicherry States has successfully deployed 11,524 devices across the State along with 11 Fertilizer companies and State Agriculture Department officials.

Based on this, all Fertilizer Companies will get the concession for subsidized Fertilizers when sold and recorded through the POS Devices. As a result, the receipt of concession will happen as and when the sale of Fertilizer happen to the consumer. Since Fertilizer business being seasonal and closely associated with monsoon showers, sale of fertilizers and receipt of concession will not be uniform over the months, which will necessitate enhanced requirement of funds as working capital to sustain the operations.

Challenges in the new situation

Aadhar identification is the basis of sale process through Point of Sales (PoS). In most of the rural locations, this process fails or delays due to network and power issues. Any sale which happens without involving POS devices will not be recorded to permit the concession of a particular company. In this situation, all fertilizer companies are employing additional manpower at District and Taluk levels to monitor the physical stock and PoS device stock to ensure 100% sale happening through PoS Device.

We are also in the process of identifying resources to be deployed in rural locations to follow up the stock positions and sales at the retail centers to ensure the generation of subsidy bills in time.

Tissue Culture Business:

The turnover for the financial year 2017-18 was Rs.817 Lacs. The unit recorded the highest number, i.e., 36.59 lakh banana Plant sales during 2017-18 after an achievement of 29.74 plants in 2005-06.

For the first time, explored export opportunities and exported 42,500 nos. hardened Gerbera plants to Nepal. Trial shipments of Ex-Agar Gerbera plants to Netherlands and Dubai are on the cards.

New Business Development:

SPIC ABC has signed MOU with ICAR-CPCRI, Kasargod, Kerala for technology transfer and started production of the following business:

- Tissue Culture Arecanut Production - Production of Arecanut plants through Tissue Culture Technology.

- Vermi Compost Production from fallen coconut leaves.

- Production of Vermi Compost from waste coir pith.

CHALLENGES

As mentioned in the last year''s report, the completion of gas pipeline infrastructure by IOC and steady supply of gas are important requirements for stable operation of your Company. The working capital pressures will continue to be a challenge till the GST refund from both the Center and the State is streamlined and the DBT scheme gets fully stabilized in the market place.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Shipping, Ministry of Corporate Affairs and other Departments of the Central Government, the Government of Tamilnadu, Governments of other States, Tamilnadu Industrial Development Corporation Limited, Tamilnadu Generation and Distribution Corporation Ltd, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all the employees of your Company.

For and on behalf of the Board of Directors

ASHWIN C MUTHIAH

Place : Chennai (DIN:00255679)

Date : 14 June 2018 Chairman

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Mar 31, 2016

The Directors present their 45th Annual Report together with the Audited Financial Statements of the Company for the year ended 31 March 2016.

FINANCIAL SUMMARY

(Rs. in Crores)

Particulars	31.03.2016	31.03.2015
Revenue from Operations	1837.91	2094.16
Add: Other Income	17.94	8.64
Total Income	1855.85	2102.80
Profit before interest, depreciation and tax	57.01	76.23
Less: Finance Cost	12.05	28.26
Less: Depreciation & amortization expenses	29.36	30.39
Add: Exceptional Items	9.17	-
Profit Before Tax	24.77	17.59
Less: Tax Expenses	-	-
Profit After Tax	24.77	17.59

DIVIDEND

In view of the accumulated losses, the Board of Directors are not in a position to recommend dividend on the Preference Share Capital and Equity Share Capital of the Company.

RESERVES

Since all the Debentures have been redeemed in earlier years, a sum of Rs.38 crores available in Debenture Redemption Reserve was transferred to Profit and Loss.

STATE OF COMPANY’S AFFAIR Production

During the year under review, the plant had a steady run between 1 April 2015 to 19 April 2015 and again between

20 May 2015 to 27 March 2016. The stoppage of plant for

30 days during April - May 2015 was due to delay in Government according approval for continuation of subsidy for Naphtha based Urea Plants. During this period of shutdown, the Company undertook repairs and maintenance activities to improve reliability, energy efficiency levels and increase production. Also Government has made it mandatory to produce only neem coated Urea from June 2015 onwards. Your Company had installed neem coating facility and produced 100% neem coated urea since June 2015. Urea production achieved during the year 2015-16 was 620,426 MTs compared to 491,905 MTs in the previous year. During the year, sale of Manufactured Urea was 623,475.20 MTs and sale of Imported Urea was 146,700.35 MTs

Your Company during this year, has also achieved the best ever energy efficiency levels of 6.8484 GCal/PMT of Urea since commissioning.

Efforts are continuously being made to augment working capital to enable sustained operations of your Ammonia and Urea Plants. The plant operations were carried out by mainly importing Naphtha and Furnace Oil.

The Naphtha handling facility in the Tuticorin port premises was commissioned during July 2015 and taken on lease by your Company.

Handling of Imported Urea:

Government of India allotted SPIC, two coastal ports for handling imported urea in Karaikal and Tuticorin. Your Company has handled Imported Urea which are 100% neem coated.

Progress in conversion of ammonia plant from naphtha to gas:

The contract for laying pipeline from Ennore to Tuticorin has been given to IOC and they have completed the reconnaissance studies. Government of India has permitted your Company to continue producing Urea using naphtha as feed stock and hence was able to sustain its operation during the year. In respect of conversion of the existing facility from naphtha based to natural gas, your Company is in the state of readiness to complete the process as and when gas connectivity is established. During the Global Investor Meet, Tamilnadu in September 2015, your Company entered into a Memorandum of Understanding with Government of Tamil Nadu for gas conversion, modernization and capacity enhancement.

PUBLIC DEPOSITS

There are no deposits covered under Chapter V of the Companies Act, 2013 (the Act) during the year 2015-16, the details of which are required to be furnished.

FINANCIAL STATEMENTS OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company''s subsidiaries, associates and joint ventures (in Form AOC-1) is attached to the Financial Statements. As regards the annual accounts of subsidiaries and their contribution to the overall performance is given therein, refer Notes to the Form AOC-1. During the year under review, no Company has become or ceased to be its subsidiaries, associates and joint venture companies.

During the year under review, the Board of Directors of your Company had approved in principle to wind up the subsidiary, SPIC Fertilizers and Chemicals, Mauritius and its step down subsidiary SPIC Fertilizers and Chemicals FZE (SFC FZE), Dubai, subject to requisite statutory approvals. The Company''s investment in SPIC Fertilizers and Chemicals, Mauritius, which has invested in a wholly owned subsidiary Company SFC FZE, Dubai, whose objective was production of ammonia and urea in Jebel Ali Free Zone Dubai, did not materialize due to non allocation of gas. The Board of Directors & shareholders of SFC FZE, Dubai have approved the commencement of winding up.

TAMILNADU PETROPRODUCTS LIMITED (TPL)

During the year under review, revenue from operations was Rs. 700.63 crores as against Rs. 949.87 crores in 2014-15. The profit was Rs. 38.15 crores after exceptional item of Rs.57.71 crores against a loss of Rs.53.07 crores in the previous year. TPL had achieved an operating profit of Rs. 12.77 crores with a overall cash profit of Rs. 55.73 crores. The finance cost was lower at Rs. 14.74 crores against Rs. 19.57 crores during the previous year. This was made possible through lower borrowings and repayment of long term loans out of the proceeds from sale of property.

The Plant which was under shutdown for a period of 55 days from 2nd December 2015 due to unprecedented rainfall and flooding resumed operations on 26th January 2016. In spite of this, production was maintained at normal levels of 255-260 MTD.

TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LIMITED (TFL)

During the year 2015-16, TFL operated comparatively better than last year and achieved a turnover of Rs.156.54 crores. Efforts were made to complete the settlement offered by the Asset Reconstruction Company and the consequent reduced interest write backs resulted in a net profit of Rs.33.64 crores. The Company is implementing its own CO₂ facility, recovering it from the boiler flue gases. The Plant is expected to be ready by August 2016. The Company has submitted a revised Draft Rehabilitation Scheme with the above changes.

POLICY ON MATERIAL SUBSIDIARY

The Board had approved the Policy on Material Subsidiary as per the Listing Regulations and is available on the Company''s website under the web link: http://spic.in/wp-content/ uploads/2016/01/Determining-Material-Subsidiary-Policy.pdf

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements of the Company are prepared in accordance with Section 129 (3) of the Act and relevant Accounting Standards Viz., AS-21 (Consolidated Financial Statements), AS-23 (Accounting for Investment in Associates in Consolidated Financial Statements) and AS-27 (Financial Reporting of Interests in Joint Ventures) issued by the Institute of Chartered Accountants of India and forms part of the Annual Report.

SAFETY, HEALTH AND ENVIRONMENT

Adequate care and attention have been bestowed on matters relating to safety, health and environment in the plant. Your Company is certified with ISO 9001 and ISO 14001 by External Auditors M/s. Det Norske Veritas (DNV).

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

Your Company has taken several initiatives to ensure that the knowledge gained over decades is shifted down to the next generation of employees. The Company has conducted Management Development and Supervisory Development Programmes as well as put in place “Succession Plan and Long term career growth plans”. Your Company continues to provide a conducive work environment and opportunities for development of its employees. Industrial Relations in the Company have been cordial during the year under review. The number of employees as on 31st March, 2016 is 657.

EXTRACT OF ANNUAL RETURN

Form MGT-9 as on 31st March 2016 as required under Section 92 of the Act is given in Annexure-I to this Report.

DIRECTORS

Consequent to the resignation of Ms. G Latha, I.A.S with effect from 15th December 2015, the Board of Directors at their Meeting held on 4th February 2016, pursuant to Sec 161(4) of the Act and on the recommendation of Nomination and Remuneration Committee appointed Mr. M S Shanmugam,

I.A.S as Director representing Tamilnadu Industrial Development Corporation Limited (TIDCO) in the place of Ms. G Latha I.A.S. The Board of Directors placed on record the invaluable services rendered by Ms. G Latha I.A.S during her tenure as Director of the Company.

Mr. B Elangovan, TIDCO Nominee shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election.

All the Independent Directors of the Company on the date of this Report have duly submitted the disclosures to the Board stating that they have fulfilled the requirements set out in Section 149 (6) of the Act and the Listing Regulations, so as to qualify themselves to act as Independent Directors.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

The Company has familiarized the Independent Directors with their roles, responsibilities in the Company, nature of the industry, business model etc., through a familiarization programme. Documents / Brochures, Reports and Internal Policies of your Company are provided to the Directors to familiarize with the Company''s procedures and practices. Presentations are made at the Board / Committee Meetings, on Company''s Performance, business strategy, risks involved and global business environment. Presentations are also made to the Independent Directors separately on the Company''s business segments. Site visits to plant location to help the Independent Directors to enhance their understanding of the plant operations of the Company.

Details of the familiarization programme imparted to the Independent Directors have been disclosed on the Company''s website under the following web link: http://spic.in/wp-content/ uploads/2015/12/Familiarization-Programmes-Imparted-to-Independent-Directors.pdf

KEY MANAGERIAL PERSONNEL

During the year under review, there were no changes in the Key Managerial Personnel (KMP) of your Company. The Board of Directors at their Meeting held on 26th May 2016 decided to relieve Mr. A V Kumar, Chief Financial Officer from service on his attaining superannuation w.e.f. 30th June 2016. In his place Mr. K R Anandan was appointed as Chief Financial Officer of the Company w.e.f. 1st July 2016.

NOMINATION AND REMUNERATION POLICY

Your Company has a Nomination and Remuneration Policy as required under Section 178(3) of the Act and the Listing Regulations. The details of the Policy are given in Annexure-II to this Report.

PARTICULARS OF REMUNERATION OF DIRECTORS, KMP AND EMPLOYEES

The information required under section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year ended March 31, 2016 and forming part of this Report is given in Annexure-III to this Report.

STATUTORY AUDITORS

At the 44th Annual General Meeting held on 21st September

2015, the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company to hold office until the conclusion of the 45th AGM was ratified by the Members. The Company has received a certificate from the Auditors to the effect that it would be in accordance with the provisions of Section 141 of the Act, if they are appointed at the 45th AGM. In terms of Section 139 of the Companies Act, 2013, the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company for 2016-17, to hold office from the conclusion of the 45th AGM to the conclusion of the 46th AGM is being proposed.

board’s reply to audit qualification Audit Qualification

We refer to Note No 2(b)(i) of the consolidated financial statements relating to non-consolidation of the financial statements of a subsidiary to reflect the adjustments relating to the period 1 April 2011 to 31 March 2016 due to the following reasons:

a) The proposed voluntary winding up of the step down subsidiary Company effective February 29, 2016 has been approved by their Shareholders and the Board of Directors of the subsidiary. The Board of Directors of the Holding

Company have also approved the commencement of the winding up of the subsidiary Company.

b) The preparation of the financial statements of the subsidiary Company on a going concern basis despite the intention of the ultimate holding Company to wind up the operations of the subsidiary Company. The independent auditor of the subsidiary Company has qualified his report for preparation of the accounts on a going concern basis for the years ended 31 March 2010 to 31 March 2015 and has also stated that there may be material adjustments required to the reclassification and carrying amount of assets and liabilities as disclosed in these consolidated financial statements. The impact of such adjustments, if any, is currently not ascertainable.

c) The Financial statements of the subsidiary for the year ended 31 March 2016 have not been prepared by the management for the reasons mentioned in the Note.

We are unable to determine the impact of the above matters on the consolidated financial statements for the year ended 31 March 2016

Our report on consolidated financial statements for the year ended 31 March 2015 was similarly qualified.

Reply:

The Company''s investments included Rs. 18453.62 lac (Previous Year Rs. 18453.62 lac) in equity share capital of SPIC Fertilizer and Chemicals Limited, Mauritius (SFCL Mauritius), which had invested in a wholly owned subsidiary Company viz, SPIC Fertilizer and Chemicals FZE, Dubai (SFC FZE, Dubai) in the earlier years, whose objective was production of ammonia and urea in Jebel Ali free zone, Dubai. Since the project did not materialize due to non allocation of gas, the said subsidiary Company had decided to be wound up as on 29 February 2016. SFCL Mauritius has approved the decision of SFC FZE, Dubai to effect winding up. The Board of Directors of Holding Company have also approved the commencement of winding up.

The independent auditor of SFCL Mauritius, in his audit report has expressed a qualified opinion regarding the preparation of financial statements on going concern basis for the years ended March 31, 2010 to March 31, 2015 and has stated that there may be material adjustment to the reclassification and carrying amount of assets and liabilities as disclosed in these consolidated financial statements, the impact of which cannot be assessed currently. The financial statements of SFC FZE, Dubai as on the date of winding up is under finalization and therefore the financial statements of SFCL Mauritius for the year ended March 31, 2016 are also under preparation.

In view of above matters, the accounts relating to subsidiary Company SFCL Mauritius included in the consolidated financial statements is as at March 31, 2011 which is based on management accounts and do not include the adjustments relating to the period April 1, 2011 to March 31, 2016. Necessary adjustments would be effected on completion of the winding up proceedings.

The Board of Directors of the Company at their Meeting held on 6th November 2015, had decided to wind up SFCL Mauritius and write off the investments subject to getting the approval of the Regulatory Authorities concerned.

Hence, the consolidated financial statements for the year ended 31st March 2016 do not include the consolidated accounts of the subsidiary Company - SFCL Mauritius as the control is intended to be temporary because the subsidiary is held with a view to its winding-up in near future.

COST AUDITOR

Mr. P R Tantri, Cost Accountant (M. No. 2403) was appointed as the Cost Auditor of the Company for 2015-16 to carry out the audit of your Company''s cost accounts and records. The Cost Audit Report for the year ended 31st March 2015 was filed within the time stipulated under the Act. The Board of Directors at their meeting held on 26th May 2016, on the recommendation of the Audit Committee, have appointed Mr. P R Tantri, Cost Accountant as Cost Auditor to audit the Cost Accounts and Records of the fertilizer business of your Company for the Financial Year 201617 at a remuneration of Rs.1,00,000/- plus reimbursement of actual out-of-pocket expenses for travelling and other expenses. As required under Section 148 of the Act and Rule 14 of the Companies (Audit & Auditors) Rules, 2014, ratification by Members is sought for the payment of remuneration to the Cost Auditor.

SECRETARIAL AUDIT REPORT

In terms of Section 204 of the Act, and the Rules made there under, your Company has appointed Ms. B Chandra, Practicing Company Secretary, Chennai as Secretarial Auditor. The Secretarial Audit Report as furnished is given as Annexure-IV to this Report. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in the Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 (3) of the Act, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the management confirm that:

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

(b) they 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 March 31, 2016 and of the profit of the Company for the year ended on that date;

(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) the annual accounts have been prepared on a going concern basis;

(e) they have laid down proper internal financial controls to be followed by the Company and such controls are adequate and operating effectively;

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

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

There were no loans, guarantees given or investments made by the Company under Section 186 of the Act during the year under review.

RELATED PARTY TRANSACTIONS

The transactions entered into during the financial year with related parties as defined under the Act were in the ordinary course of business and at arm''s length basis. There are no material contracts / arrangements / transactions to be disclosed. Hence the provisions of Section 188 of the Act would not apply and disclosure in form AOC-2 is not required.

The Policy on Related Party Transaction as required under the Listing Regulations is available on the Company''s website under the we blink : http://spic.in/wp-content/uploads/2016/01/ Policy-on-Related-Parties.pdf

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

There were no material changes or commitments affecting the financial position of your Company that has occurred between the end of the financial year i.e., 31st March 2016 and the date of this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Conservation of Energy

An Energy Audit group, consisting of senior executives and certified energy auditors, is focusing on various energy saving measures. This group identifies potential areas for improvement, scans the environment for innovative and reliable solutions and considers proposal for implementation. Efforts are continuously being taken to reduce energy consumption in the plants

Some of the activities implemented during the year are:

-To avoid the energy loss through the exchangers, the coolers of loop refrigeration condenser (Top), the material of construction has been upgraded with Duplex Stainless steel make. Similarly, Degasser cooler, the material of construction has been upgraded with Austenitic Stainless steel make in the Ammonia plant.

- As energy conservation activity, Dissociate B inner shell was painted with 2 layers of ceramic coating in the Ammonia plant.

- Performance of all pumps and compressors were studied with our energy Audit group. Various energy saving technologies like provision of VFD, speed reduction, impeller trimming and smoothening the fluid passage with special coatings were implemented.

- Steam system audit were carried out periodically and the faulty traps and leaks has been addressed immediately.

Technology Absorption - Nil

Foreign Exchange Earnings and Outgo:

The foreign exchange earned in terms of actual inflows and the foreign exchange outgo in terms of actual outflows during the year:

(Rs.in Lakhs)

Particulars	2015-16	2014-15
Foreign Exchange earned	85.37	35.87
Foreign Exchange outgo	1,25,377.23	1,44,982.17

INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM

The Company has adequate internal financial control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are reviewed by Internal Auditors and reported to the Audit Committee of the Board, for identification of deficiencies and necessary time bound actions are taken to improve efficiency at all the levels. The Committee also reviews the internal auditors'' report, key issues, significant processes and accounting policies.

Risk Management is an integral part of the business process. The Company has constituted a Risk Management Committee and adopted a policy on risk management, identified and drawn mitigation plans to manage risk. The Audit Committee of the Board reviews the risk management report periodically.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

CORPORATE GOVERNANCE

Corporate Governance Report 2015-16 along with the Certificate of the Auditors M/s. Deloitte Haskins & Sells, Chartered Accountants, confirming compliance of conditions of

Corporate Governance as stipulated in the Listing Regulations forms part of this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

As a responsible corporate citizen, your Company in its Endeavour to contribute for the sustained development and growth of the Society has set out in its CSR Policy, plans in line with the provisions of the Act and the Rules there under. Your Company is not required to spend towards CSR activities, in view of absence of profits computed under Section 198 of the Act. However, the details of CSR initiatives undertaken by your Company voluntarily are given in Annexure-V to this Report.

PERFORMANCE EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

Your Company has a structured framework for evaluation of the Individual Directors, Chairperson, Board as a whole and its Committees.

The Independent Directors at their Meeting held on 4th February 2016 evaluated the performance of Non Independent Directors, Board as a whole, Chairperson and assessing the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Board of Directors evaluated the performance of all Directors and the Board as a whole and its Committees were done through circulation of questionnaires, to assess the performance on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees. The evaluation criteria was based on the participation, contribution and offering guidance to and understanding of the areas which are relevant to the Directors in their capacity as Members of the Board/Committees.

NUMBER OF MEETINGS OF THE BOARD

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

AUDIT COMMITTEE

The details of the Composition and Meetings of the Audit Committee held are provided in the Corporate Governance Report.

VIGIL MECHANISM

Pursuant to the provisions of Section 177 of the Act and the Listing Regulations, Whistle Blower Policy for Directors and employees to report genuine concerns or grievances has been put in place and a Vigil Mechanism established, the details of which are available on the website of the Company under we blink: http://spic.in/wp-content/uploads/2016/01/Whistle-Blower-Policy-and-Vigil-Mechanism.pdf

POLICY ON INSIDER TRADING

Your Company has a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company in line with SEBI (Prohibition of Insider Trading) Regulations, 2015.

POLICY ON SEXUAL HARASSMENT OF WOMEN (POSH) AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace. A policy is in place and an Internal Complaints Committee has been constituted which is monitoring the prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women (POSH) at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. There were no complaints reported under the POSH during the year under review.

MANAGEMENT DISCUSSION AND ANALYSIS Industry Overview

Indian Fertilizer Industry has been the backbone of Indian agriculture since the era of green revolution in 1960s. It has emerged as a world class industry in terms of state-of-the-art production technologies, high energy efficiency with excellent record in the areas of safety and environment; supporting the ever growing demand for Indian Agriculture, producing food grains, pulses, oil seeds, sugar, cotton, fruits, vegetables and plantation crops like rubber, tea, coffee, cardamom, etc. Currently, India is the second largest consumer of fertilizers and third largest producer of nitrogenous and phosphate fertilizers in the world.

During the fiscal year 2015-16, India produced a total Urea of 24.465 million ton which is 8.3% higher than the production recorded during the previous year. With the import of 8.474 million ton, which is less by 3.1% over the previous year; the total supplies to the market stood at 32.772 million ton which is higher by 6.24% higher than that of the previous year. The sale of urea during the year recorded 31.974 million ton which is 3.5 % higher than that of the previous year. (Source: Ministry of Chemicals and Fertilizers, Government of India).

Despite a significant increase in production and sales of Urea, the food grain production enhancement is only marginal for the year due to erratic and deficient monsoon.

Based on the third crop cutting survey for the year 2015-16 crop year (July - June) the total food grain production is estimated to 252.23 million ton, which is marginally higher by 0.21 million ton over the production of 252.02 million ton recorded during 2014-15.

Production of rice, coarse cereals, pulses, oilseeds, sugarcane, cotton and jute was lower than that of the previous year. However, the wheat crop recorded a higher harvest by 7.51 million ton over the previous year; compensating the reduction in the yields of other food crops during the crop year.

CHALLENGES

The completion of gas pipeline infrastructure by IOC and steady supply of gas are important requirements for stable operation of your Company. It is also proposed to undertake modernization of the Ammonia/Urea Plants to achieve lower energy consumption, to improve reliability and cost effective capacity expansion with Natural Gas as feedstock. This investment will have to be in line with the gas availability so that we are ready in time.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Corporate Affairs and other Departments of the Central Government, the Government of Tamilnadu, Governments of other States, Tamilnadu Industrial Development Corporation Limited,

Tamilnadu Generation and Distribution Corporation Ltd, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all the employees of your Company.

For and on behalf of the Board of Directors

ASHWIN C MUTHIAH

Place : Chennai (DIN:00255679)

Date : 1 August, 2016 ^Chairman

---

Mar 31, 2015

Dear Members,

The Directors present their 44th Annual Report together with the Audited Financial Statement of the Company for the year ended 31 March 2015.

FINANCIAL SUMMARY (Rs. in Crores) Particulars 31.03.2015 31.03.2014

Revenue from operations 2094.16 1345.47

Add: Other income 8.64 8.48

Total Income 2102.80 1353.95

Profit before interest, depreciation 76.23 45.74 and tax

Less: Finance cost 28.26 20.92

Less: Depreciation and 30.39 43.67 amortisation expense

Add: Exceptional items - 84.71

Profit Before Tax 17.59 65.86

Less: Tax expenses - -

Profit After Tax 17.59 65.86

DIVIDEND

In view of the accumulated losses, the Board of Directors are not in a position to recommend dividend on the Preference Share Capital and Equity Share Capital of the Company.

RESERVES

There is no transfer of profits to the reserves.

STATE OF COMPANY'S AFFAIR Production

During the year under review, the plant had a steady run between 1 April 2014 to 30 September 2014 and again between 11 January 2015 to 31 March 2015. The stoppage of plant for 102 days was mainly due to delay in Government according approval for continuation of subsidy for Naphtha based Urea Plants. Urea production achieved during the year 2014-15 was 491,405 MTs compared to 285,923 MTs in the previous year.

Your Company earned a profit before tax of Rs.17.59 crores during the year under review and the performance would have been much better but for the stoppage of plant. Efforts are continuously being made to augment working capital to enable sustained operations of your Ammonia and Urea Plants. The plant operations were carried out mainly by importing Naphtha and Furnace Oil. The reliability of plant operation is expected to improve with the commissioning of a Naphtha Handling Facility in the Tuticorin Port premises which will be taken on lease by your Company. During the shutdown of Ammonia and Urea plants in the third quarter of 2014-15, your Company undertook repairs and maintenance activities to improve reliability, energy efficiency levels and increase production.

Progress in conversion of ammonia plant from naphtha to gas:

Government is in the process of identifying the party to lay the gas pipe line from Ennore to Tuticorin. Meanwhile, the Department of Fertilizers has permitted the Naphtha based Urea plants to run on Naphtha till such time the gas connectivity is established; but with a cap on the Naphtha price which is linked to the average delivered RLNG (Re-gasified Liquefied Natural Gas) price to the recently converted plants. Your Company is in a state of readiness to complete the process of conversion activities to use natural gas / mixed feedstock as and when gas connectivity / availability is established.

PUBLIC DEPOSITS

There are no deposits covered under Chapter V of the Companies Act, 2013 ("the Act") during the year 2014-15, the details of which are required to be furnished.

FINANCIAL STATEMENT OF SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

Pursuant to Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, the statement containing salient features of the financial statements of the Company's subsidiaries', associates' and joint ventures' (in Form AOC-1) is attached to the Financial Statement. As regards the annual accounts of subsidiaries, refer Notes to the Form AOC-1. During the year under review, no company has become or ceased to be subsidiaries, associates and joint ventures companies.

The Board had approved the policy on Material Subsidiary as per the Listing Agreement and is available on the Company's website under the web link:

http://www.spic.in/Determining%20Material%20Subsidiary%20 Policy.pdf

CONSOLIDATED FINANCIAL STATEMENT

The Consolidated Financial Statements of the Company are prepared in accordance with Section 129 (3) of the Act and relevant Accounting Standards Viz., AS-21 (Consolidated Financial Statements), AS-23 (Accounting for Investment in Associates in Consolidated Financial Statements) and AS-27 (Financial Reporting of Interests in Joint Ventures) issued by the Institute of Chartered Accountants of India and forms part of the Annual Report.

SAFETY, HEALTH AND ENVIRONMENT

Adequate care and attention have been bestowed on matters relating to safety, health and environment in the plant. Your Company has bagged 4 safety awards from Director of Industrial Safety and Health at a function held in Chennai in November 2014, for the lowest accident days during the previous years. Certification of ISO 9001 and ISO 14001 stage audit by External Auditors M/s. Det Norske Veritas (DNV) have been completed and your Company is certified for ISO 9001 and ISO 14001.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

The Company considers its human resources as important asset and endeavours to nurture, groom and retain talent to meet the current and future needs of its business. The Company continues to provide a conducive work environment and opportunities for professional development of its employees through training and development. Industrial Relations in the Company have been cordial during the year under review. The number of employees as on 31st March, 2015 is 517.

EXTRACT OF ANNUAL RETURN

Form MGT-9 as on 31st March 2015 as required under Section 92 of the Act is given in Annexure - I to this Report.

DIRECTORS

The Board of Directors, pursuant to Section 149 of the Act and on the recommendation of the Nomination and Remuneration Committee appointed Tmt Sashikala Srikanth and Brig (Retd) Harish Chandra Chawla as Independent Directors on 8th September 2014 and Mr. Sumanjit Chaudhry on 10th February 2015 for a period of five years subject to the approval of the Members. The Board of Directors at their Meeting held on 14th November 2014 appointed Tmt G Latha I.A.S, Nominee of TIDCO as an Additional Director of the Company. Thiru S R Ramakrishnan, Whole-time Director is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-election. Thiru K K Rajagopalan, Whole-time Director resigned from the services of the Company and also as a Director with effect from 30th September 2014. The Directors placed on record the appreciation for the invaluable services rendered by Thiru K K Rajagopalan during his tenure as Whole-time Director of the Company.

Particulars relating to the appointment of Thiru S R Ramakrishnan, Tmt Sashikala Srikanth, Brig (Retd) Harish Chandra Chawla, Thiru Sumanjit Chaudhry and Tmt G Latha I.A.S are given in the annexure to the Notice.

All the Independent Directors of the Company on the date of this Report have duly submitted the disclosures to the Board stating that they fulfil the requirements enumerated under Section 149 (6) of the Act and Listing Agreement, so as to qualify themselves to be appointed as Independent Directors.

FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS

Documents/Brochures, Reports and Internal Policies of your Company are provided to the Directors to familiarise with the Company's procedures and practices. Presentations are made at the Board/Committee Meetings, on Company's performance, business strategy, risks involved and global business environment. Presentations are also made to the Independent Directors separately on the Company's business segments. Site visits to plant location were organized to help the Independent Directors to enhance their understanding of the operations of the Company. The details of such familiarization programmes for Independent Directors are available on the Company's website under weblink:

http://www.spic.in/Familiarisation%20Program%20for%20

Independent%20Directors.pdf

KEY MANAGERIAL PERSONNEL

During the year under review, the following changes took place in the appointment / resignation of the Key Managerial Personnel (KMP) of your Company:

Sl. Name of the KMP Designation No Appointed as Whole-time 1 S R Ramakrishnan Director w.e.f 30 July 2014

Ceased to be Whole-time 2 K K Rajagopalan Director and Director from 30th September 2014

Appointed as Chief Financial Officer w.e.f. 1st 3 A V Kumar June 2014 in the place of Mr. M S Sridhar, CFO



NOMINATION AND REMUNERATION POLICY

Your Company has a Nomination and Remuneration Policy for appointment and remuneration of the Directors, Key Managerial Personnel and Senior Executives of the Company including criteria for determining qualifications, positive attributes, independence of a Director and other related matters as required under Section 178(3) of the Act and the Listing Agreement. The details of the Policy are given in Annexure - II to this Report.

PARTICULARS OF REMUNERATION OF DIRECTORS, KMP AND EMPLOYEES

The information required under section 197(12) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Board's Report for the year ended March 31,2015 is given in Annexure - III to this Report.

STATUTORY AUDITORS

At the 43rd Annual General Meeting (AGM) held on 8th September 2014, M/s. Deloitte Haskins & Sells, Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office until the conclusion of the 45th AGM of the Company. The Company has received a certificate from the Auditors to the effect that it would be in accordance with the provisions of Section 141 of the Act if they are re-appointed at the 44th AGM. In terms of Section 139 of the Companies Act, 2013, the appointment of M/s. Deloitte Haskins & Sells, Chartered Accountants, as Statutory Auditors of the Company shall be ratified by the Members at every AGM and the resolution seeking ratification is being proposed.

DIRECTOR'S REPLY TO AUDIT QUALIFICATION Audit Qualification-I

Attention is invited to Note 2(b)(i) to the consolidated financial statements describing non consolidation of the financial statements of a subsidiary to reflect the adjustments relating to the period 1 April 2011 to 31 March 2015, as the said financial statements are not available to the Company for the reasons explained in the said Note. Our audit report for the previous year was also similarly qualified.

Reply

As Jebel Ali Free Zone Authorities (JAFZA) had taken over the assets of SPIC Fertilizers and Chemicals (SFC) FZE, Dubai, the holding Company SFCL Mauritius lost control over the subsidiary. Full provision has been made for these investments in earlier years. The Company is considering writing off the investments in SFCL Mauritius and is in the process of getting the approval of the Regulatory Authorities concerned, to write off the aforesaid investment in the books of account. The accounts relating to the subsidiary company, SFCL Mauritius included, in the consolidated financial statement is as at 31 March 2011 which are based on Management accounts and since the financial statements from 1 April 2011 to 31 March 2015 are under preparation, adjustments, if any, to liabilities, in the consolidated financial statement for the said period has not been made in respect of these two subsidiaries.

For the reasons mentioned in Note 2(b)(i) of the Notes to the Consolidated Financial Statements since the Company has already made provision in full for the said investment, the proposal to write off, subject to requisite approval of Regulatory Authorities concerned is not likely to affect the financial statements of your Company. Subsequent to the date of the Statutory Auditors' Report, the annual accounts of SFCL, Mauritius for the year ended 31 March 2010, 31 March 2011, 31 March 2012 and 31 March 2013 were approved by the Directors of SFCL Mauritius on 29th May 2015 and also adopted by their Shareholders on 2nd June, 2015.

Audit Qualification-II

With respect to a jointly controlled entity, the consolidated financial statements carry long term loans and advances amounting to Rs. 211.59 lac, short term loans and advances of Rs.578.93 lac and current liabilities of Rs. 160.86 lac relating to the consolidated financial statements of the subsidiary company - Certus Investment & Trading Limited, Mauritius and its two subsidiaries.

Based on the disclaimer of opinion given by the independent auditors of the subsidiary of the jointly controlled entity, Certus Investment & Trading Limited, Mauritius, we are unable to express our opinion on the long term loans and advances amounting to Rs. 211.59 lac, short term loans and advances of Rs.578.93 lacs and current liabilities amounting to Rs. 160.86 lac included in the consolidated financial statements.

Reply

The Board of Directors of Tamilnadu Petroproducts Limited, a jointly controlled entity have given the following reply with reference to the qualification made by their Statutory Auditors:

"As regards the short term advance of Rs.3419.54 lakhs (proportionate share of Rs.578.93 lakhs) carried in the Consolidated Financial Statement (CFS), it has been confirmed that as on date the subsidiary has recovered the entire dues. As regards the long term loans and advances of Rs.1249.80 lakhs (proportionate share of Rs.211.59 lakhs) in the CFS, which represent the advance paid to the technology partner for knowhow, there is time till December 2016 to avail the same. It is also being explored if the rights can be transferred to other interested parties and hence at present no adjustment is deemed necessary.

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

COST AUDITOR

Thiru P R Tantri, Cost Accountant was appointed as the Cost Auditor of the Company for 2014-15 to carry out the audit of your Company's cost accounts and records. The Cost Audit Report for the year ended 31st March 2014 was filed within the time stipulated under the Act. The Board of Directors, on the recommendation of the Audit Committee, have appointed Thiru P R Tantri, Cost Accountant as Cost Auditor to audit the cost accounts and records of the fertilizer business of your Company for the Financial Year 2015-16 at a remuneration of Rs.1,00,000/- plus reimbursement of actual out-of-pocket expenses for travelling and other expenses. As required under Rule 14 of the Companies (Audit & Auditors) Rules, 2014, approval of Members is sought for the payment of remuneration to the Cost Auditor.

SECRETARIAL AUDIT REPORT

Secretarial Audit under Section 204 of the Act, for financial year 2014-15 was conducted by Ms. B Chandra, Practicing Company Secretary, Chennai. The Secretarial Audit Report as furnished is given as Annexure - IV to this Report. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in the Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions contained in Section 134 (3) of the Act, your Directors to the best of their knowledge and belief and according to information and explanations obtained from the management, confirm that:

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

(b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the profit 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 on a going concern basis;

(e) the Directors have laid down proper internal financial controls to be followed by the Company and such controls are adequate and operating effectively;

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

PARTICULARS OF LOAN, GUARANTEES OR INVESTMENTS

There were no loans, guarantees or investments made by the Company under Section 186 of the Act during the year under review.

RELATED PARTY TRANSACTIONS

The transactions entered into during the financial year with related parties as defined under the Act were in the ordinary course of business and at arm's length basis. There are no material contracts / arrangements / transactions to be disclosed. Hence the provisions of Section 188 of the Act would not apply and disclosure in form AOC-2 is not required.

The approval of the Members is being sought at the 44th AGM for the transactions considered material as per Clause 49 of the Listing Agreement. The policy on Related Party Transaction as required under the Listing Agreement is available on the Company's website under the weblink: http://www.spic.in/Policy%20on%20Related%20Parties.pdf.

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

There are no material changes or commitments affecting the financial position of your Company that has occurred between the end of the financial year i.e., 31st March 2015 and the date of this Report.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Conservation of Energy

An Energy Audit group, consisting of senior executives and certified energy auditors, is focusing on various energy saving measures. This group identifies potential areas for improvement, scans the environment for innovative and reliable solutions and considers proposal for implementation. Efforts are continuously being taken to reduce energy consumption in the plants.

Some of the activities implemented during the year are:

- To avoid the energy loss through the exchangers, the coolers of loop refrigeration condenser (bottom), the material of construction has been upgraded with Duplex Stainless steel make. Similarly, syn gas coolers (I/II Stage) & PAC intercooler (III Stage), the material of construction has been upgraded with Austenitic Stainless steel make in the Ammonia plant.

- To prepare the plant towards natural gas operation, all the reformer and fired heater - burners were replaced with dual fuel fired burners. These burners were designed for higher efficiency and lowest emission.

- To reduce the stack temperature and to conserve energy, tubes of the leaky cold air heater bundles of Ammonia plant boilers (3 boilers) were replaced.

- As energy conservation activity, two of the old generation cooling tower cells have been replaced in the Ammonia plant.

- Performance of all pumps and compressors were studied with our energy Audit group. Various energy saving technologies like provision of VFD, speed reduction, impeller trimming and smoothening the fluid passage with special coatings were implemented.

Technology Absorption - Nil

Foreign Exchange Earnings and Outgo:

The foreign exchange earned in terms of actual inflows and the foreign exchange outgo in terms of actual outflows during the year: Rs.in Lakhs Particulars 2014-15 2013-14

Foreign Exchange earned 35.87 66.67

Foreign Exchange outgo 1,44,982.17 80,920.17

INTERNAL FINANCIAL CONTROL & RISK MANAGEMENT SYSTEM

The Company has adequate internal control systems to monitor business processes, financial reporting and compliance with applicable regulations. The systems are periodically reviewed by the Audit Committee of the Board, for identification of deficiencies and necessary time bound actions are taken to improve efficiency at all the levels.

The Committee also reviews the internal auditors' report, key issues, significant processes and accounting policies.

Risk Management is an integral part of the business process. The Company has constituted a Risk Management Committee and adopted a policy on risk management, identified and drawn mitigation plans to manage risk. The Audit Committee of the Board reviews the risk management report periodically.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

CORPORATE SOCIAL RESPONSIBILITY

As a responsible corporate citizen, your Company in its endeavour to contribute for the sustained development and growth of the Society has set out in its Corporate Social Responsibility (CSR) Policy, plans in line with the provisions of the Act and the Rules thereon. The details of CSR initiatives undertaken by your Company is given in Annexure - V to this Report

PERFORMANCE EVALUATION OF THE BOARD, COMMITTEES AND DIRECTORS

The Board on recommendation of the Nomination and Remuneration Committee has structured a framework for evaluation of the Individual Directors, Chairperson, Board as a whole and its Committees.

The Independent Directors at their Meeting held during March 2015 evaluated the performance of Non Executive Directors, Chairperson and assessing the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The evaluation of the Directors and the Board as a whole and its Committees were done through circulation of questionnaires, which assessed the performance on select parameters related to roles, responsibilities and obligations of the Board and functioning of the Committees. The evaluation criterion was based on the participation, contribution and offering guidance to and understanding of the areas which are relevant to the Directors in their capacity as Members of the Board/Committees.

NUMBER OF MEETINGS OF THE BOARD

During the year under review, six Board Meetings were held on 28th May 2014, 30th July 2014, 8th September 2014, 14th November 2014, 10th February 2015 and 24th March 2015.

AUDIT COMMITTEE

The Audit Committee comprises of 4 Members with 3 Independent Directors and 1 Non-Executive Director viz.,

Name of the Director Designation Category

Thiruvalargal S Shankar Chairman Independent

B Narendran Member Independent

Tmt Sashikala Srikanth Member Independent (w.e.f. 8th Sept 2014)

T K Arun Member Non-Executive

VIGIL MECHANISM

Pursuant to the provisions of Section 177 (9) and (10) of the Act and the Listing Agreement, Whistle Blower Policy for Directors and employees to report genuine concerns or grievances is put in place and a Vigil Mechanism established, the details of which are available on the website of the Company under weblink: http://www.spic.in/Whistle%20Blower%20 Policy%20and%20Vigil%20Mechanism.pdf.

POLICY ON INSIDER TRADING

Your Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company in line with SEBI (Prohibition of Insider Trading) Regulations, 2015.

POLICY ON SEXUAL HARASSMENT OF WOMEN (POSH) AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed thereunder. An Internal Complaints Committee has been constituted and Orientation Programmes were conducted in the Registered Office and the Plant site at Tuticorin, for all female employees. The Members of the committee also attended a Workshop conducted by CII's Women Network to familiarize themselves with practices and procedures. There were no complaints reported under the POSH.

MANAGEMENT DISCUSSION AND ANALYSIS Industry Overview

Indian Fertilizer Industry has been the backbone of Indian agriculture since the era of green revolution in 1960s. It has emerged as a world class industry in terms of state-of-the-art production technologies, high energy efficiency with excellent record in the areas of safety and environment supporting the ever growing demand for food grain.Currently, India is the second largest consumer of fertilisers and third largest producer of nitrogenous and phosphatic fertilisers in the world.

For the year 2014-15 crop year (July - June period), India is expected to record a decline in food-grain production of 3% at 257.07 MT, compared to the highest ever food-grain production of 265.57 MT in 2013-14. The decline is due to lower production of rice, coarse cereals and pulses on account of erratic rainfall conditions during the monsoon season in 2014. Despite the indigenous production and import of fertilisers which is on the rise, there is still a huge deficit in indigenous production of fertilisers to meet the agricultural needs of Indian farmers. The urea production for 2014-15 was 225.85 lakh MT as compared to 227.15 lakh MT in the previous year while the GoI has imported 72.89 lakh MT during 2014-15 compared to 70.88 lakh MT in 2013-14. (Source - Press Information Bureau, Ministry of Chemicals and Fertilizers, GoI).

Globally, the nitrogenous fertiliser raw material prices have been on a declining trend over the last one year. A comparison with the margins of 2013-14 fiscal year shows that Indian fertilisers companies have started reflecting the comfort of lower crude oil prices. Also, the volatility in INR against USD throughout the year enabled the companies to insulate from facing large fluctuations in the forex market. With falling crude oil and natural gas prices, the quantum of subsidy will come down. This factor along with growing demand for fertilisers might benefit the fertiliser companies.

Challenges

During the year under review, your company did face some uncertainties/challenges in the policy front due to delays in the notification of subsidy continuation resulting in the stoppage of the plants for 102 days. In the coming years Naphtha based Urea units, would continue to face uncertainties for continuous operation; especially in the procurement of Naphtha and Furnace Oil since the price of gas to be considered for eligible subsidy would not be known in advance. The frequent start- stop of an Ammonia/Urea complex due to uneconomical price of Naphtha/Furnace Oil can be a deterrent in addition to detrimental effects on the catalysts and equipment operating at high temperatures and pressures. This would disrupt the availability of much needed fertilizers. Hence your Company has flagged the above issues to the GoI.

Regarding gas connectivity to your plant, Indian Oil Corporation has been short listed by PNGRB (Petroleum and Natural Gas Regulatory Board) to lay the Gas pipeline from Ennore to Tuticorin via Ramnad. Once the contract is formally awarded, the Tuticorin - Ramnad section is likely to be completed on priority in about 15 months time. This would help your company to source about 0.6 - 0.9 MMSCMD of gas from ONGC, ahead of the completion of IOC LNG Terminal at Ennore in mid 2018.

Since the Government has proposed to reduce the pre-set energy norm to 6.5 G Cal/MT of urea by 2018 from the present norm of 7.382 G Cal/MT, your Company on a priority basis, has already initiated corrective action to bring down the energy consumption.

During the current year (201 5-1 6) the budget allocation for subsidy for indigenous urea is only Rs.34000 crore against Rs.36200 crore allocated last year. If we factor in the carry over liability of last year, increase in domestic gas price and the exchange rate fluctuations, there could be an adverse impact on the disbursement of Urea subsidy and consequently managing the working capital needs would be a challenge.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Corporate Affairs and other Departments of the Central Government, the Government of Tamilnadu, Governments of other States, Tamilnadu Industrial Development Corporation Limited, Tamilnadu Generation and Distribution Corporation Ltd, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all the employees of your Company. For and on behalf of the Board of Directors ASHWIN C MUTHIAH Place : Chennai (DIN:00255679) Date : 4 August, 2015 Chairman

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Mar 31, 2014

The Directors present their 43rd Annual Report together with the audited statement of accounts of the Company for the financial year ended 31 March 2014.

OPERATING RESULTS (Rs. in Crore)

2013-14 2012-13

Income from Operations 1345.47 2076.08

Other Income 8.48 15.44

Total Income 1353.95 2091.52

Profit before interest, depreciation and tax 45.74 34.83

Finance Cost 20.92 44.00

Depreciation 43.67 43.45

Exceptional items 84.71 1157.75

Profit before tax 65.86 1105.13

Provision for tax – –

Profit/ (Loss) after tax 65.86 1105.13

In terms of the Company''s Scheme of Compromise and Arrangement with Creditors under Sec. 391 and other relevant provisions of the Companies Act, 1956 approved by the Hon''ble Hight Court of Madras by its Order dated 16 August 2012, the Creditors under the Scheme as of 1 April 2013 were to be paid over a period of 46 quarterly instalments from 6 Jan 2013 with an option to prepay the settlement amount at any time after the expiry of two years from the date of commencement.The Hon''ble High Court of Madras vide its Orders dated 26 Aug 2013 and 6 Dec 2013 permitted the Company to exercise pre-payment option even before the expiry of two years.The Company thereafter effected fi nal payments by March 2014 to all the remaining Creditors in accordance with the approved Scheme, leaving no further liability. Arising out of the above settlement, a sum of Rs.9158.61 lakhs was settled to the Creditors in line with the Scheme. Consequently, a sum of Rs.11692.51 lakhs being the excess liability has been written back during the current year as an exceptional item. The Trust Deed dated 2 Jan 2013 executed by the Company to create charge in favour of such remaining Creditors on the Specified Assets through the Trust was terminated effective 27 March 2014, consequent to payment to Creditors in full as per the Scheme.

Production

During the year under review, the plant could not be run continuously on account of working capital constraints and raw-material shortage. The plant was shutdown from the beginning of the financial year for a period of 106 days till 15 July 2013 and from 30 October 2013 to 8 February 2014. Working Capital constraints caused by delayed subsidy disbursement issues affected raw materials supply. These factors affected the production performance of your Company. Urea production achieved during the year 2013-14 was 2,85,923 MTs compared to 4,81,920 MTs in the previous year. Efforts are being made to augment working capital to enable sustained operations of your Company''s Ammonia and Urea plants.

The previous year''s profits included a write-back of excess liability of an exceptional nature of Rs.1157.75 Crores to the Statement of Profi t & Loss and a corresponding write-back of Rs.116.92 Crores to the Statement of Profit & Loss has been made on account of full and fi nal settlement with Creditors under the Scheme. Hence, the comparable profi t before tax for the current year would be Rs.65.86 Crores as against Rs.1105.13 Crores for the previous year.

Promoters'' contribution:

During the year, the Promoters have brought in Rs.28.35 Crores by way of loan for meeting re-payment obligations to the Creditors as per the Scheme.

Conversion of Ammonia plant from Naphtha to Gas:

Study for converting the Feedstock of Ammonia plant from Naphtha to Mixed Feedstock (Natural Gas/Naphtha with any combination) and the basic engineering have been completed with the detailed engineering nearing completion. Procurement activity for long lead items is in progress. Civil Foundation for long lead items has been completed. However, in the absence of fi rm allocation of gas, carriers are averse to commit huge capital in laying pipeline for transporting gas to your Plant. The Department of Fertilizers is also seized of the matter.

As per the New Pricing Scheme III introduced by Dept. of Fertilizers, all Naphtha based urea producing fertilizer plants are required to switch over to gas to avail any subsidy beyond 30 June 2014. Representations have been made to Government of India to continue disbursing subsidies till such time Government of India allocates gas on assured basis to the plant and switch over to gas based production. The representation is under consideration of the Government of India.

Agri-business Division

The performance of the Division which was affected by acute power shortage achieved a turnover of Rs.5.58 Crores as against Rs.13.85 Crores in the previous year.

SUBSIDIARIES / JOINT VENTURES / INVESTMENTS

SPEL Semiconductor Limited (SPEL)

SPEL accounted sales of Rs.63.39 Crores with a profit of Rs.0.32 Crores for the year 2013-14.

Subsequent to the approval of the shareholders in the Extra Ordinary General Meeting on 30 Dec 2013, and as approved by SEBI, the entire equity shares of SPEL held by the Company were sold to M/s Natronix Semiconductor Technology Private Limited, Singapore at Rs.7.62 per share for a total consideration of Rs.1966.81 lakhs.

Tamilnadu Petroproducts Limited (TPL)

During the year 2013-14 TPL''s revenue from operations was Rs.1051.82 crore against Rs.1281.42 crore in the previous year. TPL incurred a net loss of Rs.37.30 crore vis-a-vis the net loss of Rs. 50.56 crore during the year 2012-13. The Company made an operating profit of Rs. 5 crore against operating loss of Rs. 34 lakh in FY 2012-13. TPL''s operations continued to be affected due to large scale import of Linear Alkyl Benzene and Caustic soda into India. In spite of this TPL could bring down the losses through concerted efforts to cut the cost and also ensure the best possible market realization.

Tuticorin Alkali Chemicals and Fertilisers Limited

Due to non-availability of raw material and labour unrest, its Plant could be operated for only 62 days during the financial year, when 9775 MT of Soda Ash and 7672 MT of Ammonium Chloride were produced. Measures were taken to reduce the overheads and sales of only Rs.27 Crores could be achieved.

SPIC FERTILIZERS AND CHEMICALS LTD., MAURITIUS (SFCL, MAURITIUS) AND SPIC FERTILIZERS AND CHEMICALS FZE, DUBAI (SFC FZE)

The Company had invested in the equity share capital of SPIC Fertilizers and Chemicals Limited, Mauritius which in turn invested in its wholly owned subsidiary, SPIC Fertilizers and Chemicals (SFC) FZE, Dubai for putting up a fertiliser complex. As the Project did not materialise, Jebel Ali Free Zone Authority (JAFZA) in Dubai, had taken over the land, plant & machinery of SFC FZE and the company did not have any other option in the matter. The Promoters viz., SPIC and the Emirates Trading Agency, Dubai have jointly decided to close the operations of SFC FZE, Dubai.

SPIC Petrochemicals Limited (SPIC Petro)

The assets and effects of SPIC Petro were taken over by the Offi cial Liquidator (OL) during May 2010. Pursuant to Order dated 20 December 2010 passed by the Hon''ble High Court of Madras, ARCIL [Asset Reconstruction Company (India) Limited] took possession of the assets and effects of SPIC Petro during January 2011. On the application fi led by Chennai Petroleum Corporation Limited to set aside the above said Order, an interim stay was granted by the Hon''ble High Court of Madras restraining ARCIL from selling the land belonging to SPIC Petro. ARCIL had fi led its counter and the case is still pending in the Court.

General exemption under Section 212 of the Companies Act, 1956:

Pursuant to the general exemption granted to companies in the General Circular No.51/12/2007 dated 8 February, 2011 issued by the Ministry of Corporate Affairs, Government of India and the resolution passed by the Board of Directors at its meeting held on 28 May, 2014, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Company''s Annual Report. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the above said circular. The Company will make available the said documents to any Member of the Company, who may be interested in obtaining the same. The said documents will also be kept open for inspection by any Member of the Company / its subsidiary(ies), at the Registered Office of the Company and that of the respective subsidiary companies.

DIVIDEND

In view of the accumulated losses, the Board of Directors are not in a position to recommend dividend on the Preference Share Capital and Equity Share Capital of the Company.

SAFETY, HEALTH AND ENVIRONMENT

There have been no safety, health and environment issues in the plant. The Company was awarded fi rst prize in Group A (belongs to Industries working for more than 5 lakh man- hours in a year) by the State for the year 2010 and State Safety Award for 2012.

ISO 9001 and ISO 14001 stage audit by External Auditors have been completed and we await their certifi cation.

PUBLIC DEPOSITS

As on 31 March 2014, there were no outstanding public deposits.

HUMAN RESOURCE DEVELOPMENT

The Company considers its human resources as important asset and endeavours to nurture, groom and retain talent to meet the current and future needs of its business. The Company continues to provide a conducive work environment and opportunities for professional development of its employees through training and development.

INDUSTRIAL RELATIONS

Industrial Relations in the Company has been cordial during the year under review.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors of the Company declare that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation 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 31 March 2014.

(iii) the Directors have taken proper and suffi cient 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 on a ''going concern'' basis.

AUDITORS

Your Company''s Auditors, Deloitte Haskins & Sells, Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

DIRECTORS

Since the date of the last Directors'' Report, Thiru M S Shanmugam, IAS, Nominee of TIDCO resigned as Director of the Company. The Board of Directors at their meeting held on 28 May 2014 accepted the resignation of Thiru M S Shanmugam, IAS. The Board of Directors placed on record the invaluable services rendered by Thiru M S Shanmugam, IAS during his tenure as Director of the Company.

Thiru B Elangovan, Nominee Director of TIDCO shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-election. Particulars relating to the appointment of Thiru B Elangovan seeking re-election at the ensuing Annual General Meeting are furnished in the annexure to the Notice. As required under the provisions of Companies Act, 2013, Thiru B Narendran and Thiru S Shankar have been proposed for appointment as Independent Directors for a period of 5 years from the date of 43rd Annual General Meeting.

The Board of Directors at their meeting held on 30 July 2014 co-opted Thiru S R Ramakrishnan as Additional Director and appointed him as Whole-time Director of the Company for a period of three years from 30 July 2014 on certain terms and conditions, subject to the approval of the shareholders and such other approval as may be required. Pursuant to Sec. 161 of the Companies Act, 2013, the term of his Office as Additional Director will be upto the ensuing 43rd AGM. It is therefore proposed to appoint him as Director, liable to retire by rotation and seek approval of the shareholders.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS21 on Consolidated Financial Statements read with Accounting Standard AS23 on Accounting for investments in associates in Consolidated Financial Statements and AS27 on Financial reporting of interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report. Jebel Ali Free Zone Authorities (JAFZA) had taken over the assets

of SFC FZE, Dubai. SPIC Petro is under liquidation as per Order dated 17 April 2009 passed by the Hon''ble High Court of Madras. Subsequently, ARCIL took possession of the assets from the Offi cial Liquidator on 4 January 2011. Therefore the financial statements of subsidiary companies, SFCL, Mauritius and SPIC Petro have not been considered for consolidation. However, full provision had already been made in the earlier years. The Consolidated Financial Statements include financial results of other subsidiary companies.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In terms of Section 217(1)(e) of the Companies Act, 1956, read with Rule-2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, information relating to conservation of energy is set out in the annexure forming part of this Report. There is no information to provide in respect of technology absorption, foreign exchange earnings and outgo and research and development.

PARTICULARS OF EMPLOYEES

Statement giving details of Employees of the Company in receipt of remuneration in excess of the amount prescribed by Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended is enclosed.

COST AUDITOR

Thiru P R Tantri, Cost Accountant, Bengaluru was appointed as the Cost Auditor of the Company for the financial year 2013- 14 pursuant to Section 233B of the Companies Act, 1956 to carry out the audit of your Company''s cost records. The Cost Audit report for the year ended 31 March 2013 certifi ed by Thiru P R Tantri was fi led on 30 September 2013 with the Ministry of Corporate Affairs.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Corporate Affairs and other Departments of the Central Government, the Government of Tamilnadu, other State Governments, Tamilnadu Industrial Development Corporation Limited, Tamilnadu Generation and Distribution Corporation Ltd (formerly Tamilnadu Electricity Board), ARCIL, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all the employees of your Company.

For and on behalf of the Board of Directors

Place : Chennai ASHWIN C MUTHIAH

Date : 30 July, 2014 Chairman

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Mar 31, 2013

The Directors present their 42nd Annual Report together with the audited statement of accounts of the Company for the financial year ended 31 March 2013.

OPERATING RESULTS

(Rs. in crore) 2012-13 2011-12 Income from Operations 2076.08 3308.91

Other Income 15.44 13.79

Total Income 2091.52 3322.70

Profit before interest, depreciation and tax 34.83 161.06

Finance Cost 44.00 80.24

Depreciation 43.45 61.21

Excess Liability Written back 1157.75

Profit before tax 1105.13 19.61

Provision for tax 25.92

Profit/ (Loss) after tax 1105.13 (6.31)

To revive your Company which was affected over the years by under-performance of various investments and considering the need to protect the interest of the stakeholders and employees, a Scheme of Compromise and Arrangement was filed under Section 391 of the Companies Act, 1956 (SCHEME). The SCHEME was approved by the Hon''ble Madras High Court vide its Order dated 16 August 2012. Based on the options exercised by the creditors under the SCHEME, your Company has commenced payment of dues as per the settlement terms of the SCHEME. As of 31 March 2013 an amount Rs.132.76 crore has been paid to the creditors.

During the year under review, the plant could not be run continuously on account of working capital constraints, water and raw-material shortage. The plant was shutdown for a period of 53 days from August to October 2012, due to water shortage arising out of failure of monsoon and stoppage of water supply by Tamil Nadu Water Supply and Drainage Board. Working Capital constraints caused by subsidy disbursement issues affected raw materials supply and led to stoppage of plants from 2 March 2013 onwards to date. These factors affected the production performance of your Company. Urea production achieved during the year 2012-13 was 4,81,820 MTs only compared to 6,20,407 MTs in the previous year. Efforts are being made to augment working capital to enable commencement of operations of your Company''s Ammonia and Urea plants.

Your Company recorded a revenue of Rs.2076.08 crore and profit before tax of Rs. 1105.13 crore for the current year as against previous year''s revenue of Rs.3308.91 crore and profit before tax of Rs.19.61 crore. Previous year''s revenue also included revenue from operations of SPIC Maintenance Organisation and Phosphatics Division which were hived off during that year. Hence, the comparable numbers for the previous year would be a revenue of Rs.2455.15 crore and a loss before tax of Rs. 13.24 crore. During the year, there was a write back of excess liability of exceptional nature of Rs. 1157.75 crore to the Profit and Loss Account, on account of the settlement with creditors under the SCHEME. Your Company therefore posted a profit after tax of Rs. 1105.13 crore in comparison to a loss after tax of Rs.6.31 crore in the previous year.

Promoters'' contribution :

During the year, the Promoters brought in Rs.65.23 crore by subscribing to Warrants convertible into equity shares, issued on preferential basis and Rs.71.48 crore by way of loans for meeting the Working Capital requirement and payment obligations to the Creditors as per the SCHEME.

Fertilizer Policy - Conversion of Ammonia plant from Naptha to Gas:

As per the proposed "Modified NPS III Policy" for Urea, all Naptha / Fuel Oil based plants producing Urea will be given time till March 2014 to convert to Gas based plants. Your Company has therefore approached the Department of Fertilizers (DoF) for firm allocation of gas to the Unit and to get gas connectivity to the factory in Tuticorin by creating necessary infrastructure. The process involves modification of desulphurising and reforming sections of your Company''s Ammonia Plant, besides changing fuel burners to dual burners. To equip itself to receive the gas as and when the pipe line connectivity is established, land has been acquired and the basic engineering completed. Detailed Engineering is nearing completion and the procurement activity for long lead items has been initiated.

Pharmaceuticals Division

After acquisition of the Pen-G Unit by M/s Asset Reconstruction Company (India) Ltd and closure of the API Unit due to restrictions imposed by Pollution Control Board, the Pharmaceuticals Division had in its fold only the Formulations and Enzymes Units. However, due to low demand for Formulation products and uncertain power situation, the Formulations operations were discontinued from 2 April 2012. The Enzymes Unit was sold in December 2012 in view of the business becoming unviable.

Agri-business Division

The performance of the Division which was affected by acute power shortage achieved a turnover of Rs. 13.85 crore as against Rs. 15.21 crore in the previous year,

SUBSIDIARIES / JOINT VENTURES / INVESTMENTS

SPEL Semiconductor Limited (SPEL)

SPEL accounted sales of Rs.80.77 crore with a loss of Rs.4.55 crore for the year 2012-13. This was owing to global semiconductor sales for 2012 decreasing by 2.6% to US$ 299.9 Billion (according to Gartner Inc), due to poor market condition.

Tamilnadu Petroproducts Limited (TPL)

During the year 2012-13 TPUs revenue from operations was Rs.1281.42 crore against Rs. 1248.19 crore in the previous year. TPL incurred a net toss of Rs.50.56 crore vis-a-vis the net profit of Rs.5.94 crore during 2011-12. The company''s operations were affected mainly due to crude price increase, escalations in other input costs, dumping, higher cost of alternate power to meet energy shortage, exchange losses, etc. which could not be passed on to the customers on account of competition from overseas suppliers.

Tuticorin Alkali Chemicals and Fertilisers Limited (TAC)

During the year 2012-13, their Plant could be operated only for 235 days, primarily due to non-availability of Carbon-di- oxide from SPIC. The company produced 56,750 MTs of Soda Ash and 50,226 MTs of Ammonium Chloride, representing 49% capacity utilization. The turnover was Rs.155.91 crore with a net loss Rs.21.77 crore. BIFR (Board for Industrial and Financial Reconstruction) proceedings are in progress.

SPIC Fertilizers And Chemicals FZE, Dubai (SFC FZE) and SPIC Fertilizers And Chemicals Ltd., Mauritius (SFCL, Mauritius)

During the first quarter of the financial year 2010-11, as part of recovery process, the Jebel Ali Free Zone Authority (JAFZA) in Dubai, had taken over the land, plant & machinery of SFC FZE and the company did not have any other option in the matter. The Promoters, viz., SPIC and the Emirates Trading Agency, Dubai have jointly decided to close the operations of SFC FZE, Dubai.

SPIC Petrochemicals Limited (SPIC Petro)

The assets and effects of SPIC Petro were taken over by the Official Liquidator (OL) during May 2010, Pursuant to Order dated 20 December 2010 passed by the Hon''ble High Court of Madras. ARCIL [Asset Reconstruction Company (India) Limited] took possession of the assets and effects of SPIC Petro during January 2011. On the application filed by Chennai Petroleum Corporation Limited to set aside the above said Order, an interim stay was granted by the Hon''ble High Court of Madras restraining ARCIL from selling the land belonging to SPIC Petro. ARCIL has filed its counter and the case is still pending in the Court.

General exemption under Section 212 of the Companies Act, 1956:

Pursuant to the general exemption granted to companies in the General Circular No. 51/12/2007 dated 8 February 2011 issued by the Ministry of Corporate Affairs, Government of India and the resolution passed by the Board of Directors at its meeting held on 29 May 2013, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Company''s Annual Report. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the above said Circular. The Company will make available the said documents to any Member of the Company, who may be interested in obtaining the same. The said documents will also be kept open for inspection by any Member of the Company / its subsidiary(ies), at the Registered Office of the Company and that of the respective subsidiary companies.

PREFERENTIAL ALLOTMENT OF SECURITIES

1. During the year under review, in line with the rework package approved by Corporate Debt Restructuring Empowered Group,

- On 27 April 2012, 12,631 Equity Shares of Rs.10/- each at a premium of Rs.9/- per share, fully paid up were allotted to Industrial Investment Bank of India (IIBI) pursuant to the approval of the shareholders at the Annual General Meeting held on 16 November 2011, by way of conversion of debt of Rs.2.40 lac into equity. IIBI later assigned its financial exposure in the Company to M/s Edelweiss Asset Reconstruction Company Limited during July 2012.

- On 9 November 2012, 72,631 Equity Shares of Rs.10/- each at a premium of Rs.9/- per share, fully paid up were allotted to United India Insurance Company Limited pursuant to the approval of the shareholders at the Annual General Meeting held on 26 September 2012 by way of conversion of debt of Rs.13.80 lac into equity.

2. Your Company allotted equity shares to a company belonging to Promoters'' group, on preferential basis, pursuant to the approval of the shareholders at the Annual General Meeting held on 26 September 2012 as detailed below:

- On 10 January 2013, 74,55,350 Equity Shares of Rs.10/- each were allotted by way of part conversion of 1,49,10,700 Warrants that were issued on 11 October 2012;

- On 13 March 2013, 74,55,350 Equity Shares of Rs.10/- each were allotted by way of conversion of the balance 74,55,350 Warrants issued under (a) above; and

- On 13 March 2013, 2,23,66,000 Equity Shares of Rs.10/- each were allotted by way of full conversion of 2,23,66,000 Warrants that were issued on 7 March 2013 on receipt of requisite Exemption Order from SEBI.

DIVIDEND

In view of the accumulated losses, the Board of Directors are not in a position to recommend dividend on the Preference Share capital and Equity Share capital of the Company.

SAFETY, HEALTH AND ENVIRONMENT

Won Award for "Longest accident free man-hours worked for the year 2008", from National Safety Council, Tamilnadu Chapter. The online Ambient air quality monitoring system was erected and uploaded to Care Air Centre - Tamil Nadu Pollution Control Board.

DISCONTINUED OPERATIONS

Discontinuance of Formulations and Enzymes'' operations of Pharma Division are covered under ''Pharmaceuticals Division''.

PUBLIC DEPOSITS

As on 31 March 2013, there were no outstanding public deposits and the overdue unclaimed deposits covering 6 depositors, amounted to Rs. 0.52 lac.

HUMAN RESOURCE DEVELOPMENT

The Company considers its human resources as important assets and endeavours to nurture, groom and retain talent to meet the current and future needs of its business. The Company provides a conducive and challenging work environment and opportunities for professional development of its employees through training and development.

INDUSTRIAL RELATIONS

Industrial Relations in the Company has been cordial during the year under review.

DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors of the Company declare that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation 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 31 March 2013.

(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 on a ''going concern'' basis.

AUDITORS

Your Company''s Auditors, Deloitte Haskins & Sells , Chartered Accountants, retire at the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment.

DIRECTORS

Since the date of the last Directors'' Report, Thiru M Jayasankar resigned as Director of the Company. The Board of Directors at their meeting held on 29 May 2013 accepted the resignation of Thiru M Jayasankar and in his place Thiru S Shankar was appointed as an Independent Director in the casual vacancy caused by the resignation. The Board of Directors placed on record the invaluable services rendered by Thiru M Jayasankar during his tenure as Director of the Company.

Thiruvalargal B Narendran and M S Shanmugam, IAS, Directors shall retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-election. In accordance with Clause 49 of the Listing Agreement, Particulars relating to the appointment of Thiruvalargal Narendran and Shanmugam, IAS seeking re-election at the ensuing Annual General Meeting are furnished in the annexure to the Notice.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the National Stock Exchange of India Limited is presented in a separate section forming part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS21 on Consolidated Financial Statements read with Accounting Standard AS23 on Accounting for investments in associates in Consolidated Financial Statements and AS27 on Financial reporting of interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report. Jebel AN Free Zone Authorities (JAFZA) had taken over the assets of SFC FZE, Dubai. SPIC Petro is under liquidation as per Order dated 17 April 2009 passed by the Hon''ble Madras High Court. Subsequently, ARCIL took possession of the assets from the Official Liquidator on 4 January 2011. Therefore the financial statements of subsidiary companies, SFCL, Mauritius and SPIC Petro have not been considered for consolidation. However, full provision had already been made in the earlier years. The Consolidated Financial Statements include financial results of other subsidiary companies.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In terms of Section 217(1)(e) of the Companies Act, 1956, read with Rule-2 of the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988, information relating to conservation of energy is set out in the annexure forming part of this Report. There is no information to provide in respect of technology absorption, foreign exchange earnings and outgo and research and development.

PARTICULARS OF EMPLOYEES

No employee of the Company was in receipt of remuneration in excess of the amount prescribed by Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,1975, as amended.

COST AUDITOR

Thiru P R Tantri, Cost Accountant, Bengaluru was appointed as the Cost Auditor of the Company for the financial year 2012-13 pursuant to Section 233B of the Companies Act, 1956 to carry out the audit of your Company''s cost records. The Cost Audit report for the year ended 31 March 2012 certified by Thiru P R Tantri was filed on 31 January 2013 with the Ministry of Corporate Affairs.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Corporate Affairs and other departments of the Central Government, the Government of Tamilnadu, other State Governments, Tamilnadu Industrial Development .Corporation Limited, Tamilnadu Electricity Board, ARCIL, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all employees of your Company.

For and on behalf of the Board of Directors

Place : Chennai ASHWIN C MUTHIAH

Date :29May2013 Chairman

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Mar 31, 2012

The Directors present their 41st Annual Report together with the audited statement of accounts of the Company for the financial year ended 31 March 2012.

OPERATING RESULTS

(Rs. in Crore)

2011-12 2010-11

Income from Operations 3308.91 1743.39

Other income 13.79 14.46

Total income 3322.70 1757.85

Profit before interest, depreciation 161.06 197.91 and tax

Finance Cost 80.24 26.98

Depreciation 61.21 88.95

Profit before tax 19.61 81.98

Provision for tax 25.92 -

Profit/(loss) after tax (6.31) 81.98

FINANCE

The Company recorded a revenue of Rs.3308.91 Crore and profit before tax of Rs.19.61 Crore as against previous year revenue of Rs.1743.39 Crore and profit before tax of Rs.81.98 Crore respectively. The Company's profit from ordinary activities before finance cost and exceptional items is Rs.71.59 Crore as against Rs.3.11 Crore in the previous year. The improvement in the profit is mainly due to Urea Plant operating at its full capacity coupled with energy efficiency measures undertaken by the Company. The Company incurred a loss of Rs.6.31 Crore in comparison to Profit after tax of Rs.81.98 Crore in the previous year. The loss is mainly due to provision for exchange currency fluctuation of Rs.61.75 Crore, Interest of Rs.34.46 Crore on delayed payment to secured lenders (included in the Finance Cost) and provision for MAT pertaining to earlier periods amounting Rs.25.92 Crore. The above results include both continuing and discontinuing operations.

The Company fi led a Scheme of Compromise and Arrangement with certain creditors u/s 391 of the Companies Act, 1956 during December 2011 before the Hon'ble High Court, Madras and pursuant to the directions of the Hon'ble High Court, the meeting of the creditors of the Company was held on 24 February 2012 at Chennai. The Scheme was approved by the requisite majority of creditors and thereafter the Company has fi led a Petition before the Hon'ble High Court, Madras for the sanction of the Scheme and the Order is awaited.

OPERATIONS:

Fertilizer Division

The Nitrogenous Plants which recommenced its operations during October 2010 achieved a production of 6.204 Lac MT (recording 100% of its re-assessed capacity). The Fertilizer division achieved a turnover of Rs.3096.96 Crore.(including other income) earning an operational profit (before exceptional items) of Rs.137.96 Crore. The results of the Phosphatic division, till divestment during October 2011, are included in the above results.

The production and sales performance of the Fertilizer Division are as follows:

Qty in MT

Product Category 2011-12 2010-11

Production 620407 #297650 Urea Sales 627442 290529

Production 106521* **31116

DAP Sales 106579* 30974

Complex Production 124377* 175566 Fertilizer Sales 127903* 171294

Production 490* 14528 SSP Sales 8751* 5074

Alf Production 2248* 3388 3 Sales 2228* 4656

Gypsum Sales 85667* 205371

*Until divestment # Production recommenced during October 2010 ** Production recommenced during November 2010 Fertilizer Policy

The Government is proposing to implement "Modified NPS III Policy" for Urea shortly and it is expected that all Naphtha and Fuel Oil based plants producing Urea will be granted time till March 2014 to convert to Natural Gas. Your Company has taken up with Department of Fertilizers (DoF) for firm allocation of gas to your Company and also for creating necessary gas transportation infrastructure in the State of Tamil Nadu to facilitate gas connectivity to your Company. The Company has engaged a leading Process Engineering Company to carryout basic engineering for gas conversion, to make your Company ready to receive the gas as and when the pipe line connectivity is established.

Pharmaceuticals Division

SPIC's Pharmaceuticals Division comprises of Penicillin-G (Pen-G), Active Pharmaceutical Ingredients (APIs), Formulations and Industrial Enzymes. Pen-G: The plant could not be restarted and the operations were discontinued due to competition from cheap Chinese imports, low market prices, high cost of inputs and non-imposition of anti-dumping duty. The assets of the division at Cuddalore were taken over by Asset Reconstruction Company (India) Limited (ARCIL) during the year. API: The operations have not been carried out during the year owing to environmental constraints and restrictions imposed by Pollution Control Board. Formulations: Due to low demand for its products and uncertain power situation, the operations have been discontinued. Enzymes: The operations are being discontinued in view of uneconomical business size and constraints of fund infusion for revival/restart-up of the operations.

Agri-business Division

The Division achieved higher turnover of Rs.15.21 Crore as against Rs.12.36 Crore in the previous year, due to increase in volume of high breed seed business.

SUBSIDIARIES/JOINT VENTURES/INVESTMENTS SPEL Semiconductor Limited (SPEL)

SPEL had accounted sales of Rs.80 Crore (excluding other income) with a PAT of Rs.0.57 Crore for the financial year 2011- 12. According to the Semiconductor Industry Association forecast, the year 2012 looks promising with a 10% growth. Global semiconductor revenues are expected to reach US$323.2 Billion up from US$302.2 Billion. SPEL is taking steps to enhance its sales for the financial year 2012-13 by exploiting the potential of the industry.

Tamilnadu Petroproducts Limited (TPL)

During the year, the Company achieved a turnover and a net profit of Rs.1309 Crore and Rs.5.94 Crore as compared to Rs.1066 Crore and a profit of Rs.29.47 Crore respectively during the previous year. The Company declared a dividend of 5% during the year. LAB production was maintained at high levels due to the installation of new molecular sieves in 2010. Despite unstable crude prices and power shortage, the reduction in energy consumption (due to energy audit, advance process control, etc.) and optimal use of raw materials helped in controlling the cost of production. The first phase of Prefrac revamp was completed during March 2012 and the benefi t will be realised from the second quarter of 2012-13. TPL continues to meet sizeable demand of the domestic market for LAB and supplies to major international detergent manufacturers. Epichlorohydrin (ECH) Unit performed reasonably well with a capacity utilisation of about 85%. The increase in the crude price was offset by increase in the sales realisation. TPL continues to supply a substantial portion of its production to the joint venture Company M/s Petro Araldite Private Limited. The imports of ECH and Epoxy Resin from European markets add to the competition in the market. Chlor Alkali Unit performed better with the capacity utilisation exceeding 90%. The power shortage, increase in power cost, high crude prices and fuel oil prices, adversely impacted the business.

Tuticorin Alkali Chemicals and Fertilisers Limited (TAC)

Since the restart of the plants last year, TAC continued the production and fine tuned the operational parameters to bring down the production cost. The Company produced 86,855 MT of Soda Ash and 78,350 MT of Ammonium Chloride representing 75.7% capacity utilization. The Company recorded a total income of Rs.217.49 Crore with a net loss of Rs.12.79 Crore. Competition from import touching an all time high has affected the market. BIFR proceedings are in progress and a Draft Rehabilitation Scheme (DRS) is under process.

SPIC Fertilizers And Chemicals FZE, Dubai (SFC FZE) and SPIC Fertilizers and Chemicals Ltd., Mauritius (SFCL, Mauritius)

During the fi rst quarter of the Financial Year 2010-11, as part of recovery process, the Jebel Ali Free Zone Authority (JAFZA) in Dubai, had taken over the land, Plant & Machinery of SFC FZE and the Company did not have any other option in the matter. Simultaneously, the Plant & Machinery stored in the Ras Al Khaimah Port (RAK) were auctioned to realise the storage charges payable to the RAK Port Authorities. The Promoters viz., SPIC and the Emirates Trading Agency, Dubai have jointly decided to close the operations of SFC FZE, Dubai.

SPIC PETROCHEMICALS LIMITED (SPIC Petro)

Consequent to the takeover of the assets and effects of SPIC Petro by the Official Liquidator (OL) during May 2010, the Company ceased to be a subsidiary of SPIC. On the basis of the Petition filed by ARCIL u/s 13(4) of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act 2002 (SARFAESI ACT), the Hon'ble High Court of Madras, vide its Order dated 20 December 2010 directed the OL to handover the possession of the assets and effects of SPIC Petro to ARCIL. ArCIL took possession of the same during January 2011. Meanwhile, Chennai Petroleum Corporation Limited (CPCL) has fi led an application to set aside the above Order and in the meanwhile an interim stay has been granted by the Hon'ble High Court of Madras restraining ARCIL from selling the land belonging to SPIC Petro. ARCIL filed a Counter against the Order.

PREFERENTIAL ALLOTMENT OF SECURITIES

During the year under review, at the request of Secured Lenders and in line with the rework package approved by Corporate Debt Restructuring Empowered Group, three Secured Lenders were cumulatively allotted 2,03,175 (14%) Secured Non-Convertible Debentures of the face value of Rs.100/- each, amounting to Rs.2.03 Crore by conversion of part of their secured debt. These debentures are redeemable in seven equal quarterly instalments commencing from 31 March 12.

GOING CONCERN

The financial statements of the Company have been prepared on a going concern basis, despite the erosion of net worth due to the reasons as explained in Note 30 of Notes on Accounts.

DIVIDEND

In view of the accumulated losses, the Board of Directors is not in a position to recommend dividend on the Preference and Equity Share capital of the Company.

SUBSIDIARY COMPANIES

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with this Annual Report. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said Circular. The Company will make available the said documents to any member of the Company, who may be interested in obtaining the same. The said documents will also be kept open for inspection by any member of the Company / its Subsidiary(ies) at the Office of the Company, SPIC House, 88 Mount Road, Guindy, Chennai - 600 032. and that of the respective subsidiary Companies. The consolidated financial statements include the financial results of its Subsidiary Companies.

DISCONTINUED OPERATIONS

The operations of Pen-G Unit was discontinued due to low sales realisation, increased cost of inputs, rejection of anti-dumping duty and the eventual take over of its assets at Cuddalore by ARCIL. The operations of Active Pharmaceutical Ingredients Unit have not been carried out due to reasons, inter alia, including environmental constraints, the restrictions imposed by Pollution Control Board and the uneconomical business size. Consequently, the operations of the connected Research & Development was also closed. The Formulations Unit discontinued its operations due to low demand in the market and uncertain power situation. The SMO Division and the Phosphatics Business of the Company were divested, pursuant to the approval of CDR-EG (Empowered Group) and the consent of the shareholders obtained through postal ballot.

PUBLIC DEPOSITS

As on 31 March 2012, there were no outstanding public deposits and the overdue unclaimed deposits covering 15 depositors, amounted to Rs 3.33 lac.

HUMAN RESOURCE DEVELOPMENT

The Company, as always, places great emphasis on its human capital, and the need to retain and develop talent in realising Corporate objectives. The Company provides a conducive and challenging work environment and opportunities for professional development of its employees.

INDUSTRIAL RELATIONS

Industrial Relations in the Company has been cordial during the year under review. A memorandum of settlement u/s 12 (3 ) of the Industrial Disputes Act, 1947, has been entered into with SPIC Employees Union in September 2011 .

DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the requirements of Section 217(2AA) of the Companies Act, 1956, the Directors of the Company declare that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation 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 31 March 2012.

(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 on a going concern basis for the reasons stated in Note 30 of the Notes on Accounts.

DIRECTORS

Dr A C Muthiah resigned as Chairman and Managing Director of the Company with effect from 16 November 2011. The Board places on record the guidance, advice and valuable contribution made by Dr A C Muthiah during the long tenure of his association with the Company. The Board of Directors at its Meeting held on 16 November 2011, elected Thiru Ashwin C Muthiah as the Chairman of the Company.

Thiru M Jayasankar, Director who retires by rotation at this Annual General Meeting, being eligible, offers himself for reappointment. In accordance with Clause 49 of the Listing Agreement, particulars relating to the appointment of Thiru M Jayasankar, seeking re-election/appointment at the ensuing Annual General Meeting are furnished in the annexure to the Notice.

Thiru K K Rajagopalan was co-opted as Additional Director and designated as Whole-time Director of the Company with effect from 16 November 2011 and a resolution seeking his appointment as the Whole-time Director is being placed before the shareholders in this Annual General Meeting of the Company.

During April 2012, ARCIL withdrew the nomination of Thirumathi Neeta Mukerji from the Board and the Board places on record its appreciation for the contribution made by Thirumathi Neeta Mukerji during her tenure.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the Accounting Standard AS21 on Consolidated financial statements read with Accounting Standard AS23 on Accounting for investments in associates in Consolidated Financial Statements and AS27 on Financial reporting of interests in Joint Ventures, the audited Consolidated Financial Statements are provided in the Annual Report. As Jebel Ali Free Zone Authorities (JAFZA) had taken over the assets of SFC FZE, Dubai, SFCL Mauritius lost control over its subsidiary SFC FZE Dubai. Therefore financial statements of SPIC's Subsidiary Company, SFCL, Mauritius have not been considered for consolidation. However, full provision has already been made in the earlier years.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

In terms of Section 217(1)(e) of the Companies Act, 1956, read with Rule-2 of the Companies (Disclosure of Particulars in the report of Board of Directors) Rules 1988, information relating to conservation of energy is set out in the annexure forming part of this Report. The Company has no information to provide in respect of technology absorption, foreign exchange earnings and outgo and research and development.

PARTICULARS OF EMPLOYEES

None of the employees of the Company was in receipt of remuneration in excess of the amount prescribed by Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules,1975, as amended.

COST AUDITOR

Thiru P R Tantri, Cost Accountant, Bengaluru was appointed as the Cost Auditor of the Company for the financial year 2011-12 pursuant to Section 233B of the Companies Act, 1956 to carry out the audit of your Company's cost records. The Cost Audit report for the year ended 31 March 2011 certified by Thiru P R Tantri was filed on 29 September 2011 with the Ministry of Corporate Affairs.

ACKNOWLEDGEMENT

Your Company is grateful for the co-operation and continued support extended by the Department of Fertilizers, Ministry of Chemicals and Fertilizers, Ministry of Petroleum and Natural Gas, Ministry of Agriculture, Ministry of Corporate Affairs and other departments in the Central Government, the Government of Tamilnadu, other State Governments, Tamilnadu Industrial Development Corporation Limited, Tamil Nadu Electricity Board, ARCIL, Financial Institutions and Banks. The Directors appreciate the dedicated and sincere services rendered by all employees of your Company.

On behalf of the Board

Place: Chennai ASHWIN C MUTHIAH

Date 30 May 2012 Chairman