Equity Analysis

Dear Shareholder's

The Directors of Haryana Leather Chemicals Ltd. are pleased to present the 39th Annual Report and Audited Statement of the Company's accounts for the year ended on 31st March, 2024.

A summary of the financial results for the year 2023-24 is given below:

During the year, there is an increase in sales turnover which stands at Rs.4442.19 lakhs against Rs. 4247.89 lakhs of the previous year. The year profit is Rs.461.82 lakhs out of Rs. 461.82 lakhs profit on sale of assets is Rs. 215.68 lakhs. The company is able to post better operating profit than last year due to increase in sales, tight costing and favorable market conditions.

There has been no change in the nature of business of the Company.

The Company has been able to register the good profit for the last years. The Company expresses its gratitude's to all shareholders for supporting the Company in these difficult periods. This year Board of Directors is glad to recommend 10% dividend to the shareholders for the year 2023-24.

If approved by the Shareholders at the ensuing Annual General Meeting, the above equity dividend will be paid to those shareholders whose names shall appear in the Register of Members as on the Book Closure date. The total equity dividend outgo for the financial year 2023-24 will absorb a sum of Rs. 49,08,470/-. Further, the Board of your Company has decided to transfer amount to the General Reserves for the year under review.

The composition of the Board of Directors of the Company is furnished in the Corporate Governance Report annexed to this report. Pursuant to the provisions of the Articles of Association of the Company, the Directors- Dr. K.S.V. Menon (DIN: 00920088), Dr. Massimo Medini (DIN: 00926147), Mr. Pradeep Behl (DIN: 00703855), Mr. Marco Medini (DIN: 03709885) and Mr. Kanishk Gupta (DIN: 02243899) are the Directors who are Non-Executive and Independent and are not eligible to retire by rotation. Mr. Vijay Kumar Garg (DIN:

00236460) is the Non-Independent Director on the Board. However, Mr. N.K. Jain (DIN: 00486730) is liable to be retire by rotation at the forthcoming Annual General Meeting of the Company to be held on 28th September, 2024 and thus being eligible offers himself for reappointment. Mr. Pankaj Jain (DIN: 00206564) is the Managing Director cum Chairman of the Company and Mr. N.K. Jain (DIN: 00486730) is the Director cum Vice Chairman of the Company and Mrs. Sippy Jain (DIN: 03189151) is the Director in the Company. Mr. Sukanto Choudhury is CFO of the Company. Dr. K.S.V. Menon (DIN: 00920088) was expired on 05.04.2024. Mr. Chinar Goel (DIN: 07610985) has been appointed as the Additional Independent Non-Executive Directors in the Company in the Board meeting held on 09.08.2024, Mrs. Ritu Atri (DIN:09596000) and Mr. Pradeep Kumar Verma (DIN:10749814) have been appointed as the Additional Independent Non-Executive Directors in the Company in the Board meeting held on 28.08.2024

The members had at the 37th AGM of the Company appointed S. C. Dewan & Co., Chartered Accountants, (Firm Registration No. 000934N) Panchkula as Statutory Auditors of the Company to hold the office from the close of the 37th AGM till the conclusion of the 42nd AGM, not subject to their appointment being ratified by the members in every AGM has been appointed for a further term of five years. The members of the Company approved deletion of the requirement of seeking ratification of appointment of Statutory Auditors at every AGM pursuant to amendment brought by the Companies Amendment Act, 2017. The Auditors Report for FY 2023-24 forms part of this Annual Report and does not contain any qualification, reservation or adverse remark. Auditor s report does not need any comments for the Directors.

There were no instances of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and/or the Board under Section 143( 12) of the Companies Act, 2013 and the rules made thereunder.

The Company followed the guidelines as laid down in the IND-AS, prescribed by the Institute of Chartered Accountants of India, for the preparation of the financial statements.

The Institute of Company Secretaries of India has issued secretarial standards on board meetings & general meetings and also issued draft secretarial standards for payment of dividend, maintenance of register and records, minutes of meetings, transmission of shares and debentures, passing of resolution by circulation, if required

The Company has received necessary declaration from the Independent Directors confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Independent Directors are in compliance with the Code of Conduct prescribed under Schedule IV of the Companies Act, 2013.

The Board meets at regular intervals, with gap between two meetings not exceeding 120 days. During the year under review, the Board met Four times. The Board has three Committees namely Audit Committee (AC), Nomination and Remuneration Committee (NRC) and Stake holders Relationship Committee (SRC). A detailed note on the composition of the Board and its Committees (AC, NRC and SRC) is provided in the Corporate Governance Report included in this Annual Report. The minutes of the meetings are reviewed at every Board meeting. During the year under the review, the Company has complied with the provisions of Secretarial Standard 1 (relating to meeting of the Board of Directors) and Secretarial Standard 2 (relating to General meeting).

The Company did not have any of the above issues during the year under review.

The information required pursuant to Section 134 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors, Key Managerial Personnel (KMP) and Employees of the Company are proved as follows: The Company did not employ any person drawing a remuneration of Rs. 8,50,000.00 or above for one month or part of the month or Rs. 1,02,00,000.00 or above for one year, whose particulars are required to be mentioned u/s 197 of the Companies Act, 2013.

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Neeraj Gupta & Associates, a firm of Company Secretaries in Practice (C.P. No. 4006) to undertake the Secretarial Audit of the Company for the financial year ended 2023-24. The report on the Secretarial Audit carried out for the year 2023-24 is annexed herewith as Annexure-B in the specified form MR-3.

Pursuant to the Listing Regulations, a certificate has been received from M/s Neeraj Gupta & Associates, a firm of Company Secretaries in Practice (C.P. No. 4006), that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any such statutory authority.

M/s Manoj Gupta & Associates, Company Secretaries, carried out a share capital audit to reconcile the total admitted equity share capital with the NSDL and the CDSL and the total issued and listed equity share capital. The audit report confirms that the total issued/paid-up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with the NSDL and the CDSL

The Company is not required to consolidate its financial statements for the year ended 31st March, 2024 as the Company doesn't have any Subsidiary and Joint Ventures Companies.

The Central Government has directed that a cost audit of the Company should be conducted in the manner specified in MCA order 52/26/CAB-201 Dt. 24-01-2012, or any amendment thereof, by a Cost Accountant within the meaning of the Cost and Works Accountants Act, 1959 as amended thereof. However, as per Companies (cost record and audit) Rules, 2014 notified by Ministry of Corporate Affairs, cost audit is not applicable to the Company by virtue of its turnover being less than the prescribed limits. Therefore, the Board did not proceed with the appointment of cost auditor and cost audit for the year 2023-24. The Company is properly maintaining its cost record internally.

With the enactment of the Companies Act, 2013, India has become the forerunner to mandate spend on Corporate Social Responsibility (CSR) activities through a statutory provision.

The new CSR provisions put format and greater responsibility on Companies in India to set out clear framework and processes to ensure strict compliance. However, what the Companies Act does is bring more Companies into the fold and increase the total CSR spend.

Section 135 (1) of Company act 2013 mandates the CSR expenditure/CSR Applicability only for the Companies into the fold and increase the total CSR spend. Section 135 (1) of Company Act 2013 mandates the CSR expenditure/CSR Applicability only for the Companies having following: a) Net worth of Rs. 500 crore. b) Turnover of Rs. 1000 crore. c) or net profit of Rs. 5.00 crore where net profit excludes income from overseas branch & divided distribution by Company on which section apply.

As the Company, Haryana Leather Chemicals Limited doesn't fall under any of the categories as mentioned above, the Company was not required to constitute any CSR policy or to make any expenditure towards CSR funds.

There is no such material changes and commitments that effects the financial position of the Company between the end of the F.Y. 2023-24 and the date of the report. There was no one time settlement entered into with the Banks or Financial Institutions.

In terms of section 149 of the Act 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors, Rules, 2014 and SEBI Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to have a woman Director on its Board. Mrs. Sippy Jain is already appointed as the Woman Director of the Company.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redresser) Act, 2013 [14 of 2013]

The Company is distributing dividend to its shareholders since 2006 on recommendation of the shareholders of the Company. And pursuant to the provisions of sections 124 and 135 of the Companies Act, 2013 and Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time, for the unclaimed dividend for the year 2015-16 amounting to Rs. 3,91,347.00 the Board has taken necessary steps to transfer the unpaid/unclaimed dividend of Equity Shareholders for the year 2015-16 to the Investor Education and Protection fund (IEPF) of the Central Government established under section 124 and 125 of the Companies Act, 2013.

Pursuant to Regulation 43A and recent amendments to SEBI (LODR) Regulations, 2015 and on the basis of market capitalization your Company has formulated a "Dividend Distribution Policy". The said policy is available on the website of the Company at www.leatherchem.com

The Nomination and Remuneration Committee of Directors (NRC) reviews the composition of the Board of Directors of the Company, to ensure that there is an appropriate mix of abilities, qualifications, experience and diversity to serve the interest of all shareholders and the Company. During the year, in accordance with the requirements under Section 178 of the Companies Act 2013 and relevant clause of Listing Agreement, the NRC formulated a Nomination and Remuneration Policy to govern the terms of nomination/appointment and remuneration of i) Directors, ii) Key Managerial Personnel (KMPs) and iii) Senior Management Personnel (SMPs) of the Company iv) The NRC also reviews succession planning of both SMPs and Board. The Company's approach in recent years is to have a greater component of performance linked remuneration for SMSPs. The process of appointing a Director/KMPs/SMPs is, that when a vacancy arises, or is expected, the NRC will identify, ascertain the integrity, qualification, appropriate expertise and experience, having regard to the skills that the candidate will bring to the Board/Company, and the balance of skills added to that of which the existing members hold.

The NRC will review the profile of persons and the most suitable person is either recommended for appointment by the Board or is recommended to shareholders for their election. The NRC has discretion of decide whether qualification, expertise and experience possessed by a person are sufficient/satisfactory for the concerned position.

NRC will ensure that any person(s) who is/are appointed or continues in the employment of the company as its Executive Chairman, Managing Director, whole-time Director shall company with the conditions as laid out under schedule v to the Act 2013.

NRC will ensure that any appointment of a person as an independent Director of the company will be made in accordance will the provisions of section 149 read with Schedule V of the Act 2013 along with any other applicable provisions and SEBI (listing Obligations and Disclosure Requirements) Regulations. 2015

While every employee's contract of employment stipulates that he/she will not disclose confidential information about the employer's affairs in order to bring about accountability and transparency there should be a mechanism to enable employees to voice their concerns where they discover information which they believe shows serious malpractice impropriety abuse or wrong doing within the organization. Which they believe shows serious assisted to raise concerns without any fear of victimization subsequent discrimination or disadvantage if the employee has acted in good faith it does not matter if one is mistaken and the company shall ensure protection from any harassment or victimization of/against the disclosing the disclosing employee The company has adopted a whistle blower policy which applies to all permanent employees of the company including those who are on probation and comes in to effect from April 1, 2014 to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior accrual or suspected fraud or violation of the company's code of conduct or ethics policy the policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the chairman of the Audit committee. It is affirmed that no personnel of the company has been denied access to the Audit committee.

1. Policy and procedure for disclosure. Enquiry and disciplinary action 1.1 Concerns which may be raised

A whole variety of issues could fall under malpractice impropriety abuse and wrong doing some of which are listed below? Breach of any policy or Manual or cord adopted by the company ? Fraud and corruption (e.g. Receiving bribes). ? Health and safety risks. Including risks to the public as well as other employees e.g. faulty electrical equipment). ? Any sort of financial malpractice ? Abuse of power (e.g. Bullying/harassment)? Any unlawful act. Including failure to comply with legal or statutory obligation for and on behalf of the company ? Any other unethical or improper conduct. 1.2 concerns-how to raise/whom to disclose The concern should be disclosed through letter. E-mail telephone fax or any other method to any of the following persons who shall comprise the corporate compliance committee headed by the managing director & Chairman reporting directly to the Audit Committee of the Board. The Corporate Compliance Committee comprises the Managing Director & Chairman the Executive Director & company secretary the CEO and the HR. All relevant information regarding the concern should be disclosed not later than 1 year from the date on which the employee came to know of the concern up on receipt of the disclosure the member of the compliance committee receiving the same shell furnish a copy to the Managing director& chairman who shall decide which member shall be responsible for the investigation. 1.3 procedure for investigation Obtain full details and clarifications of the complaint. Consider the involvement of the company s Auditors of any other external investigation agency or person. Fully investigate into the allegation with the assistance where appropriate of other individuals/bodies. Prepare a detailed written report and submit the same to the Compliance Committee not later than 30 days from the date of disclosure of the concern Based on the findings in the written report and after conduct of such further investigation as it may deem fit, the Compliance Committee shall take a decision in the matter not later than 30 days from the date of the written report. If the complaint is shown to be justified then they shall invoke disciplinary or other appropriate action against the defaulting employee. A copy of all decisions of the Compliance Committee shall be placed before the Audit Committee at the meeting held immediately after such final decision

The employee making the disclosure as well as all other persons involved in the investigation and the members of the Compliance Committee shall not make public the Concern disclosed except with the prior written permission of the Audit Committee, except where the employee is called up on to disclose this by any judicial process.

The Company has not accepted/renewed any fixed deposits during the period under review. The Company has taken the requisite steps to comply with the recommendations concerning Corporate Governance. A separate statement on Corporate Governance together with a certificate on the compliance of conditions of corporate governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been obtained from the Statutory Auditors of the Company and the same has been given below as Annexure.

The Board of Director's acknowledges the responsibility for ensuring compliances with the provisions of section 134 (5) of the Companies Act, 2013 in the preparation of Annual Accounts for the financial year ended on 31st March, 2024.

The Board of Directors of the Company confirms that a. During the preparing of the annual accounts, the applicable accounting standards have been material departure has taken place. b. The Selected accounting policies were applied consistently and the Director's made judgments and estimates that are reasonable and prudent so as to give an accurate view of the state of affairs of the Company as on March 31, 2024 and of the profit of the Company for the year ended on that date. c Proper and sufficient care has been taken 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. Annual accounts have been prepared on an ongoing concern basis. e. The Directors have devised proper systems to ensure compliance with the provision following applicable laws and that such systems were adequate and operating effectively.

The Company has neither given any loans or guarantees nor made any investment during the year under review. The overall limit is within the powers of the Board as applicable to the Company in terms of the applicable provisions of the Companies Act, 2013.

The particulars of loans, guarantees and investment have been disclosed in the notes of the Financial Statements for the year ended 31st March, 2024 and form a part of this Annual Report.

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Related Parties which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee as also the Board for approval.

There have been no significant and material orders passed by the regulations or courts or tribunals impacting the going concern status and company's operations in future. There was no application made or proceeding pending under the Insolvency and Bankruptcy Code, 2016.

The company has not received any notice from BSE or other authority for non-compliance.

The Company has in place adequate internal financial controls with reference to Financial Statements. During the year under review, such controls were retested by the Auditors and no reportable material weakness was observed.

The details forming part of the extract of the Annual Return in form MGT-9 is annexed here with in the Annual Report.

The website of your Company, www.leatherchem.com has been designed to present the Company's business up-front on the home page. The site carries a comprehensive database of information including the Financial Results of your Company, Shareholding pattern, Director's & Corporate Profile, details of Board Committees, Corporate Policies and business activities of your Company. All the mandatory information and disclosures as per the requirements of the Companies Act, 2013 and Companies Rules 2014 and as per the SEBI LODR Regulations, 2015 (erstwhile Listing Agreement) has been uploaded.

Leather Industry worldwide is undergoing a huge transformation. The focus of leather chemical quality is now intermeshed with environmental concerns, sustainability and safety during process and use of leather product by the end user. The most important quality guidelines and regulatory measures are now controlled by the agency ZDHC (Zero Discharge of Hazardous Substance).

The ZDHC Wastewater Guidelines set a single, globally unified expectation across the textile, leather and footwear industry for industrial wastewater and sludge. The ZDHC Manufacturing Restricted Substances List (ZDHC MRSL) is a list of chemical substances banned for the processing of leather and footwear industry. The ZDHC MRSL goes beyond the traditional approaches and addresses consumer safety as well. The MRSL approach also helps protect workers, local communities, and the environment from the possible impacts of harmful chemicals.

The company has ensured strict compliance with ZDHC norms, undertaken product testing internally and through international labs for registration and qualifications at different levels. As on the date of publishing this report, the ZDHC audit has been conducted by InterTech. In our endeavor to comply with the ZDHC requirement, the company has successfully achieved Level 1 version 3.1 for most of our fast-moving products. The list keeps growing continuously with further steps taken for compliance with Level 2 & 3 as well. The company looks forward to another year of growth and development within ZDHC and greater investment in that direction to achieve our long-term objective.

The company continues to align its "GREEN TREK" safety and environmental ethos with ZDHC and REACH guidelines. So far, no incidence of detection of any restricted substances has been reported. Overall product quality, consistency, application, quality, shelf-life stability remains highly satisfactory.

The company has been able to achieve export growth of around 15% as compared to FY 22-23: thanks to persistent effort, follow-up and application support by export team. The company has successfully retained its customer base in Russia, Uzbekistan, Turkey, China, Kenya, Bangladesh and Vietnam. Inspite of a very aggressive pricing from European competitors, who are facing a squeeze due to Russia sanctions, the company has been able to win orders consistently from old customers.

The openings made in Latin America in previous years have been consolidated further, but due to disturbances in global container trade due to the Red Sea shipping crises, there is a sudden increase in shipping costs. This is causing some unforeseen disruptions.

The company has still not been able to regain China business to pre covid levels. But the travel restrictions to China have been eased off: company has revived the customer contacts by sending export teams to Shanghai and Hong Kong leather fairs. The company is positive that export targets for China can be realized.

For the year 23-24, the company undertook the following technology development projects to address new market trends and diversify in non-leather product portfolio.

High Performance Pigment Dispersions: The Company completed the development of high-performance pigment dispersions. The series is branded as NANOLUX and 19 products have been launched while focusing on widening the range of black and white shades that constitutes 80% of the market size. The performance of these products has been extensively benchmarked, with top European brands on tinting strength, particle size, coverage, high temperature resistance and rheological properties using most advanced analytical techniques. Some unique products like Inorganic Black and high solid Ultra White, aimed for automotive upholstery, are being produced for the first time in India and will be import substitutes.

Acrylic Processing Aids and Impact Modifier for PVC: This project has been one of the most intensive and challenging R & D projects ever undertaken by the company. The company has successfully updated its previous range of PVC products. The PARACRYL series products have now been replaced with the most advanced product range and rebranded to be AKRELON. The new series has been thoroughly tested in a new in-house PVC application lab supported with Torque Rheometer, Impact tester, "Time to Stick" analyses and spectrometry. A new particle size analyzer - MALVERN ZETASIZER has been installed to evaluate Nano level polymer core- shell structure during Acrylic Liquid production.

The AKRELON series product testing was conducted over an extensive 8-month period during with external application experts from around the world were brought to validate our findings. The results were also verified with external labs to ensure they compete with the top European and Japanese brands.

The evaluation data is being presented to some leading customers in window profiles, PVC pipes and fittings who have shown very encouraging interest in the AKRELON series.

The company's employees have demonstrated continued commitment towards revenue growth, product development and expansion of our B2B network of sales.

A thorough personnel review revealed some rising stars, who were duly promoted to support the business priorities. In addition, a rigorous HR hiring process was involved to hire additional staff needed to support AKRELON products focusing on building sales and technical expertise as well as customer support.

Similar to prior years, there is no incidence of any unresolved Employee Relations issue across all teams, and a clear, well-defined routine exists to continue collaboration across senior management, department heads, full-time workers and casual labor.

The company's sustainability goals relating to wastewater recovery, reduction in ground water usage, cleaner fuel and improved energy efficiency will continue to remain at the core of environment and pollution control measures and will outperform the statutory regulations.

Water conservation and wastewater recovery goals during FY 23-24 have been fully met with. The company has been able reduce dependency on internal ground water resource and has switched 80% requirement from external sources. The wastewater treatment has been modified to use the treated ETP water up to 50% in some of the water intensive products. The RO waste stream is also 100% utilized for personal hygiene and for makeup water in hydrant system. All these steps are reinforcing the "Zero Discharge' paradigm that the company has been practicing.

The company further expanded its LPG infrastructure to adopt clean fuel for one of the heavy-duty burners. During the year, the company switched to LPG for the thermic fluid heater burner of PVC spray dryer yielding nearly 90% reductions HSD. The use of HSD is now reduced to stand - by generators and material handling equipment. The company invited proposals for rooftop solar energy generation and these proposals are currently under evaluation.

The Directors extend their most sincere thanks to all employees for their continued commitment and sincerity in supporting various new ideas towards business growth, safety and sustainability. The company's suppliers, dealers, service providers, and technical consultants have continued their wholehearted support and the Directors deeply appreciate their role. The Directors extend their most sincere thanks to the esteemed shareholders for their continued confidence in the Company's management.