2.4 Provisions (other than employee benefits)

A provision is recognised when as a result of past event, the Company has a present legal or constructive obligation which can be reliably estimated and it is probable that an outflow of economic benefit will be required to settle the obligation.

Provisions (excluding retirement benefits) are determined based on the best estimate required to settle the obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. These are reviewed at each balance sheet date and adjusted to reflect the current best estimates.

Contingent liabilities are not recognised but disclosed in the Notes to the Financial Statements.

Contingent assets are not recognised but disclosed in the Notes to the Financial Statements, where an inflow of economic benefits is probable.

2.5 Financial instruments

2.5.1 Initial recognition & measurement

Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instruments.

At initial recognition, financial assets and financial liabilities are initially measured at fair value, except for trade receivables and payables which are measured at their transaction price. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised in profit or loss.

2.5.2 Subsequent measurement of financial assets

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Interest income is recognised in profit or loss and is included in the “Other income” line item.

2.5.3 Impairment of financial assets

For Trade receivables, the Company measures loss allowance at an amount equal to lifetime expected credit losses. The Company computes expected credit loss allowance based on a provision matrix which takes into account historical credit loss experience and adjusted for forward-looking information.

2.5.4 Financial Liabilities

All financial liabilities (other than derivative financial instruments) are classified as subsequently measured at amortised cost using effective interest method where applicable. Interest expense is included in the "Finance costs" line item.

2.5.5 Derecognition of financial assets and liabilities

The Company derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or when the Company transfers the contractual rights to receive the cash flows of the financial asset in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Company neither transfers nor retains substantially all the risks and rewards of ownership of the financial asset and does not retain control of the financial asset.

The Company derecognises a financial liability (or a part of financial liability) when the contractual obligation is discharged, cancelled or expires.

2.5.6 Derivative financial instruments

The Company holds derivative financial instruments such as currency options or foreign exchange forward contracts to hedge its exposure to foreign currency exchange rate risks.

Derivatives are initially recognised at fair value at the date the contracts are entered into. Subsequent to initial recognition, these contracts are measured at fair value and changes are recognised in profit or loss.

2.6 Cash Flow Statement

Cash flows are reported using the indirect method, whereby profit/loss before extraordinary items and tax for the period is adjusted for the effects of transactions of non-cash nature, any deferrals or accruals of past or future operating cash receipts or payments. Cash flows from operating, investing and financing activities of the Company are segregated.

Cash and cash equivalents for the purpose of cash flow statement comprise of cash at bank and cash in hand, as reduced by bank overdrafts (if any).

2.7 Employee benefits

Employee benefits include Provident Fund, Superannuation Fund, Employee State Insurance Scheme, Gratuity Fund, Compensated Absences, Anniversary Awards, Premature Death Pension Scheme and Total Disability Pension Scheme.

2.7.1 Defined contribution plans

The Company’s contribution to Provident Fund, Superannuation Fund and Employee State Insurance Scheme are considered as defined contribution plans and are charged as an expense based on the amount of contribution required to be made and when services are rendered by the employees.

2.7.2 Defined benefit plans

For Defined Benefit Plans in the form of Gratuity Fund, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each balance sheet date. Remeasurement, comprising actuarial gains and losses and the return on plan assets (excluding net interest) is reflected immediately in the Balance Sheet with a charge or credit recognised in other comprehensive income in the period in which they occur. Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised immediately for both vested and the non-vested portion. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited taking into account the present value of available refunds and reductions in future contributions to the schemes.

2.7.3 Short term and other long term employee benefits

A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick leave in the period in which the related service is rendered, at the undiscounted amount of the benefits expected to be paid in exchange for that service.

Liabilities recognised in respect of short-term employee benefits are measured at the undiscounted amount of the benefits expected to be paid in exchange for the related service.

Liabilities recognised in respect of other long-term employee benefits are measured at the present value of the estimated future cash outflows expected to be made by the Company in respect of services provided by employees up to the reporting date.

2.8. Taxation

i. Current tax: The tax currently payable is based on taxable profit for the year. Taxable profit differs from ‘profit before tax’ as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in other years and items that are never taxable or deductible. The Company’s current tax is calculated using applicable tax rates that have been enacted or substantively enacted by the end of the reporting period and the provisions of the Income Tax Act, 1961 and other tax laws, as applicable.

ii. Deferred tax: Deferred tax is recognised on temporary differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Company expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

iii. Current & Deferred tax for the year: Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.

2.9. Revenue Recognition

Revenue is recognised at a point in time when the performance obligation is satisfied and control of promised goods is transferred to customers, for an amount that reflects the consideration which the Company expects to receive in exchange for those goods.

Revenue is based on the transaction price which is the consideration taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government, except otherwise mentioned. Thus, it excludes Goods and Services Tax (GST). It is measured at transaction price, net of returns, rebates and discounts.

Claims which are not of material nature/insurance claims etc. are accounted for when no significant uncertainties are attached to their eventual receipt. Negotiated price reduction obtained from supplier is accounted for as a part of 'Other operating revenue'.

2.10 Foreign currency

At the end of each reporting period, monetary items (including financial assets and liabilities) denominated in foreign currencies are re-translated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not re-translated. Gains or losses arising from these translations are recognised in the Statement of Profit and Loss.

2.11 Earnings Per Share

In determining the earnings per share, the Company considers the net profit after tax and post tax effect of any extra-ordinary/exceptional item is shown separately. The number of shares considered in computing basic earnings per share is the number of shares outstanding at the end of the year.

2.12 Critical accounting judgements and key sources of estimation of uncertainty

The preparation of the Company’s financial statements requires Management i.e. the Directors of the Company to make judgements, estimates and assumptions that affect the application of accounting policies, reported amounts of assets, liabilities, income and expenses and accompanying disclosures and the disclosure of contingent liabilities. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

iii. Financial risk management objectives

The Company's Corporate Treasury function provides services to the business, co-ordinates access to domestic and international financial markets, monitors and manages the financial risks relating to the operations of the Company through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market risk, credit risk and liquidity risk.

The Company seeks to minimise the effects of these risks by using derivative financial instruments to hedge risk exposures. The use of financial derivatives is governed by the Company's policies approved by the Board of Directors, which provide written principles on foreign exchange risk, credit risk, the use of financial derivatives and non-derivative financial instruments and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the internal auditors on a continuous basis. The Company does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

iv. Market risk

The Company's activities expose it primarily to the financial risk of changes in foreign currency exchange rates (see note below). The Company enters into vanilla currency options or forward foreign exchange contracts to manage its exposure to foreign currency risk of imports.

v. Foreign currency sensitivity analysis

The Company undertakes transactions denominated in foreign currencies. Consequently, exposures to exchange rate fluctuations arise. Exchange rate exposures are managed within approved policy parameters.

The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:

vi Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Company.

Trade receivables consist of customers spread across diverse industries and geographical areas.

Apart from Pidilite Industries Ltd., the largest customer of the Company, the Company does not have significant credit risk exposure to any single counterparty.

The credit risk on liquid plus funds and derivative financial instruments is limited because the counterparties are fund houses and banks with high credit-ratings assigned by international credit-rating agencies.

In addition, the Company is exposed to credit risk in relation to guarantees given by banks on behalf of the Company. The Company’s maximum exposure in this respect is the maximum amount the Company could have to pay if the guarantee is called on and the bank recovers the amount from the Company [see Note 27(2)].

These financial guarantees have been issued by banks on behalf of the Company to Sales Tax Department.

vii Liquidity risk management

As the Company is engaged in trading of chemicals, it enjoys a higher credit period from its suppliers as compared to the credit period extended to its customers. Consequently, the Company's liquidity position is normally strong thereby substantially reducing the requirement of obtaining external finances.

Ultimate responsibility for liquidity risk management rests with the Board of Directors, which has established an appropriate liquidity risk management framework for the management of the Company's short-term, medium-term and long-term funding and liquidity management requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities. Note below sets out details of additional undrawn facilities that the Company has at its disposal to further reduce liquidity risk:

Note 47

Events after the reporting period

There was no significant event after the end of the reporting period which requires any adjustment or disclosure in the financial statement other than the proposed dividend of ' 6.75 per equity share of ' 1 each recommended by Board of Directors at its meeting held on 3^rd May, 2024. The proposed dividend amounting to ' 1237.75 Lakhs is subject to approval of Members at the ensuing Annual General Meeting of the Company and hence, is not recognised as a liability.

Note 48

There are no cases of any undisclosed income in the financial statements.

Note 49

The Company has not advanced or loaned or invested funds (either borrowed funds or share premium or any other sources or kind of funds) to any other person(s) or entity(ies), including foreign entities (Intermediaries) with the understanding (whether recorded in writing or otherwise) that the Intermediary

- directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company (Ultimate Beneficiaries) or

- provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

Note 50

The Company has not received any funds from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall

- directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or

- provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

Note 51

There are no registrations of any charges or satisfactions pending with Registrar of Companies.

Note 52

The Company has not traded or invested in crypto currency or virtual currency during the current year and Previous year.

Note 53

The Company has not entered any transactions in companies that were struck off under the relevant sections of the Companies Act 2013.

Note 54

The Company has utilized borrowings from Banks for the specific purpose for which it was taken. There are no borrowings from financial institutions. Quarterly returns or statements of current assets filed by the Company with Banks are in agreement with the books of accounts.

Note 55

The Company has not given any loans and advance to Promoters, Directors, KMPs or Related parties.

Note 56

No proceedings have been initiated or pending against the Company for holding any benami property under the Benami Transactions Act, 1988 & the Rules made thereunder.

Note 57

The Company is not declared wilful defaulter by any bank or financial institution or other lender.

Note 58

These financial statements have been approved by the Board of Directors of the Company at their meeting held on 3^rd May, 2024.

Note 59

In the opinion of the Management, all assets other than Fixed Assets and Non-Current investments have a realisable value in the ordinary course of business, at least equal to the amount at which they are stated in the Balance Sheet.

Note 60

Previous year's figures have been regrouped to make them comparable with those of current year, wherever necessary.

1. Company’s Philosophy on Code of Governance:

The Company is committed to adopting good corporate governance practices and has complied in all material respects with the requirements specified in the Listing Regulations. The Company endeavors to ensure that highest standards of ethical and responsible conduct are met.

2. Board of Directors:

During the Financial Year 2023-2024, five Board Meetings were held on 4^th May, 2023, 8^th August, 2023, 3^rd November, 2023, 22^nd January, 2024 and 6^th March, 2024.

The composition of the Board is in conformity with the provisions of the Companies Act, 2013 read with the Rules framed thereunder and Regulation 17 of the Listing Regulations. The Independent Directors constitute 50% of the Board’s strength.

The details of composition of the Board, category, attendance of Directors at Board Meetings and at the last Annual General Meeting (AGM), details of other Directorships and Committee positions as on 31^st March, 2024 are given below:

3. Independent Directors’ Meeting:

In accordance with the provisions of Schedule IV (Code for Independent Directors) of the Companies Act, 2013 and Regulation 25(3) of the Listing Regulations, a meeting of the Independent Directors of the Company was held on 1^st March, 2024.

In the opinion of the Board, the Independent Directors fulfill the conditions specified in the Listing Regulations and are Independent of the management of the Company. The Company has received declarations from Independent Directors that they meet the criteria of independence laid down under the Companies Act, 2013 and the Listing Regulations. The draft letter of appointment/re-appointment containing the terms and conditions issued to the Independent Directors is uploaded on the Company’s website www.vinylchemicals.com.

4. Audit Committee:

The composition of the Committee, its powers and terms of reference are in conformity with the provisions of Section 177 of the Companies Act, 2013 read with the Rules framed thereunder and Regulation 18 of the Listing Regulations. The terms of the Committee, inter alia, includes review of financial statements of the Company and Auditors Report thereon, to recommend appointment, remuneration and terms of appointment of Statutory Auditors and Internal Auditors, review the performance of Statutory Auditors and Internal Auditors, review and approve related party transactions entered into by the Company (including modifications) and evaluation of internal financial controls and risk management systems, review of management discussion and analysis and internal audit report. The Members of the Audit Committee are financially literate and have experience in financial management. All recommendations made by the Audit Committee were accepted by the Board.

During the Financial Year 2023-2024, four meetings of the Committee were held on 4^th May, 2023, 8^th August, 2023, 3^rd November, 2023 and 22^nd January, 2024.

5. Nomination & Remuneration Committee:

The constitution of the Committee and its terms of reference are in compliance with the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 and Part D of Schedule II of the Listing Regulations. The terms of reference of the Committee, inter alia, includes identification of persons who are qualified to become Directors and appointment at Senior Management Level and to recommend to the Board their appointment and removal, evaluate the balance of skills, knowledge and experience required for Independent Directors, specify the manner for evaluation of performance of the Board, its Committees and Individual Directors, recommend to the Board remuneration policy and devise a policy on diversity of Board. The Remuneration Policy for Directors, Key Managerial Personnel (KMPs) and all Senior Management Personnel is available on the website of the Company at www.vinylchemicals.com. The Remuneration Policy of the Company is directed towards time commitment and responsibilities of the Directors, desirability of performance-based remuneration and salaries paid by comparable companies. During the Financial Year 2023-2024, two meetings of the Committee were held on 4^th May, 2023 and 6^th March, 2024.

Procedure for Postal Ballot:

In compliance with Regulation 44 of the Listing Regulations, Section 108, 110 and other applicable provisions of the Act read with Rules framed thereunder and the General Circulars issued in this regard by the Ministry of Corporate Affairs (“MCA”), the Company provided electronic voting facility to all its Members.

The Company engaged the services of National Securities Depository Limited (“NSDL”) for the purpose of providing e-voting facility to all its Members. The Postal Ballot Notice were sent to Members in electronic form at their email addresses registered with the Depositories/Link Intime India Private Limited, the Company’s R &T Agents. The Company also published Notice in the newspapers giving the details of completion of despatch, e-voting details and other requirements in terms of the Act and Rules framed thereunder and the Secretarial Standard issued by the Institute of Company Secretaries of India. Voting rights were reckoned on the paid up value of the shares of the Company registered in the names of the shareholders as on the cut-off date.

10. Means of Communication:

The extracts of quarterly financial results of the Company are normally published in Business Standard (English) and Tarun Bharat (Marathi) newspapers. The results are also displayed on the Company’s website at www.vinylchemicals.com.

The Company makes timely disclosures of necessary information to the Stock Exchanges in terms of Listing Regulations and other SEBI Regulations.

The Annual Report alongwith Audited Financial Statements of the Company are available on the Company’s website at www.vinylchemicals.com. The Annual Report with Audited Financial Statements of the Company are also available on the website of the Stock Exchanges.

11. Information for Shareholders:

Detailed information in this regard is provided in the “Information for Shareholders” section, appearing in this Annual Report.

12. Disclosures:

During the Financial Year 2023-2024:

• The Company has entered into material Related Party Transactions with Pidilite Industries Limited (its Promoter Company). There were no materially significant Related Party Transactions which had potential conflict with the interest of the Company at large. The details of Related Party Transactions are set out in the Note No. 35 to Financial Statements which forms part of this Annual Report.

• The Company has complied with all requirements of the Listing Regulations as well as the Regulations/ Guidelines of SEBI. Consequently, no penalties were imposed or strictures were passed against the Company by SEBI, Stock Exchanges or any other statutory authority on any matter related to capital markets during the last 3 years.

• The Company has a Vigil Mechanism and Whistle Blower Policy for Directors and employees to report violations of applicable laws and regulations and Code of Conduct. During the year, no employee was denied access to the Chairman of the Audit Committee.

• The Company has paid total fees of ' 7,54,000 to the Statutory Auditors for all the services rendered by them to the Company.

• The Company has complied with all the applicable mandatory requirements of the Listing Regulations.

• There are no instance of non-compliance of any requirement of the Corporate Governance Report as per Sub-Paras (2) to (10) of Schedule V Part C of the Listing Regulations.

• The Company’s Policy on Related Party Transactions is uploaded on its website www.vinylchemicals.com.

• The Company has not given any loans or advances in the nature of loans to firms/Companies in which the Directors of the Company are interested.

• The Company does not have any Subsidairy.

• The Company has complied with all the requirements of Corporate Governance as specified in Regulations 17 to 27 (whenever applicable) and Clauses (b) to (i) and (t) of Regulation 46(2) and Para C, D and E of Schedule V of the Listing Regulations.

• The Company has not made any preferential allotment or qualified institutional placement of shares.

• No complaints were received under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 during the Financial Year 2023-2024.

• There are no instances wherein the Board has not accepted recommendations made by any Committee of the Board.

13. Compliance of discretionary requirements under Regulation 27 of the Listing Regulations:

(a) The Chairman of the Company is an Executive Chairman.

(b) As the financial results of the Company are published in the newspapers and also uploaded on the website of the Company, the same are not being sent to the shareholders.

(c) The Company’s financial statements for the Financial Year ended 31^st March, 2024 does not contain any modified audit opinion.

(d) Shri M.B. Parekh is the Chairman and Managing Director of the Company.

(e) The Internal Auditor reports directly to the Audit Committee of the Company.

14. Information relating to Directors:

Information relating to Directors seeking re-appointment as required under Regulation 36(3) of the Listing Regulations, is given in the Notice of the 38^th AGM.

15. Certificate from Practicing Company Secretary:

Certificate as required under Part C of Schedule V of Listing Regulations from M/s Parikh & Associates , Practicing Companies Secretaries that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of the Company by the SEBI/Ministry of Corporate Affairs or any such statutory authority was received by the Company which is annexed an Annexure to this Report.

16. Declaration by the Managing Director under Schedule V(D):

“Pursuant to Schedule V(D) of the Listing Regulations, I hereby declare that all Board Members and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct of Board of Directors and Senior Management for the year ended 31^st March, 2024.”