Directors' Report

To,

The Members,

Alkali Metals Limited

Your Directors have pleasure in presenting the 50th Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2018.

1. Financial Summary or Highlights / Performance of the Company

The performance of the Company for the financial year ended 31st March, 2018 is summarized as below:

2. Dividend

Dividend of INR 1/- per equity share of INR 10/- each has been recommended by the Board of Directors forthe financial year ended 31st March, 2018 subject to approval of the shareholders at the ensuing Annual General Meeting. Dividend if approved will be paid within 30 days of the Annual General Meeting.

3. Reserves

During the year under review, Company has not transferred any amount to General Reserves.

4. Brief description of the Company's performance during the year

During the financial year 2017-18, the Company recorded a turnover of INR 657.80 Million compared to the turnover of INR 611.24 Million during 2016-17. Net Profit during the financial year 2017-18 is INR 14.70 Million compared to Net Profit of INR 3.68 Million achieved during 2016-17.

The Company achieved 8% growth in turnover and 3 times gain in net profit.

Your Directors are confident that Company will be able to achieve better turnover and margins in the coming year.

SIGNIFICANT ACHIEVEMENT

Company is a regular foreign exchange earner; following are the details of Net foreign exchange earnings in the last 3 years.

5. Future outlook

Your Company continues to focus on campaign products in addition to increasing the sales volume of newly commercialized products. Company expects to commercialize three to four products in the current financial year. Efforts of the Company will help to improve the profitability in the current financial year. Further, the Company plans to implement various marketing strategies to counter the competition from other manufacturers and boost the regular products to increase the turnover as well as margins.

6. Research & Development

Company has spent INR 15.84 Million towards Research and Development during the financial year and is putting continuous efforts in R&D to develop new products and process for optimum material consumptions by effective yield.

The revenues generated by the R&D products in the last 3 years are

7. Change in the nature of business, if any

Company had not changed its nature of business during the financial year under review.

8. Material changes and commitments after the closure of financial year

Company had not faced any material changes subsequent to the closure of the financial year, which will affect the financial position or operations of the Company.

9. Significant and Material Orders

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

10. Internal Financial Controls

Your Company has adequate internal controls and such procedures are adopted by the Company for ensuring orderly and efficient conduct of its business, including safeguarding of all its assets and prevention /detection of frauds and errors, accuracy and completeness of accounting records.

Auditors have verified the internal financial controls and tested the adequacy and procedures adopted by the Company and confirm that the controls are adequate to the size of the transactions. The management reviews and monitors the controls and process on a regular basis.

11. Risk Management

Management of the Company will take adequate steps in identifying, assessing, controlling and mitigating the risks associated with different areas of its business operations.

12. Details of Subsidiaries / Joint Ventures / Associate Companies

Your Company had no Subsidiaries, Joint Ventures and Associate companies during the financial year under review.

13. Deposits

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 during the financial year under review and also has no outstanding deposits at the beginning of the financial year.

14. Auditors

Statutory Auditors

M/s. C K S Associates, Chartered Accountants were appointed as Statutory Auditors of the Company at the Annual General Meeting held on 21st August 2014 for a period of 5 years i.e uptoyear 2019, subject to ratification of their appointment at every annual general meeting in terms of the provisions of Companies Act, 2013. However as per the amended provisions of the Companies Act, 2017 notified on 07.05.2018 Company is not required to ratify the appointment of auditors at every annual general meeting, therefore, it is not proposed to ratify the appointment of auditors at the ensuing Annual General Meeting.

Auditors have observed that an amount of INR 14,34,921 has not been paid towards income tax dues for the assessment year 2002-03. Company confirms that provision has been made for the said amount but due to non receipt of consequential order from the department amount is not paid by the Company.

Internal Auditors

Board of directors of the Company has appointed M/s. Ramakrishna & Associates, Chartered Accountants as Internal Auditors to conduct Internal Audit of the Company for the financial year ended 31st March, 2018.

Secretarial Auditors

Board of directors of the Company has appointed CS B. Venkatesh Babu, Practicing Company Secretary as Secretarial Auditor to conduct Secretarial Audit of the Company for the financial year ended 31st March, 2018.

15. Share Capital

Your Company had not issued and raised any share capital including sweat equity, employee stock options during the financial year under review. Your Company had also not provided any money for purchase of its own shares by employees or for the benefit of employees.

16. Extract of the Annual Return

Extract of the annual return in Form MGT- 9 is enclosed as Annexure -1 and shall form part of the Board's report.

17. Conservation of energy, technology absorption and foreign exchange earnings and outgo

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo have been provided in Annexure - 2 and shall form part of this report.

18. Corporate Social Responsibility (CSR)

Your Company is not covered under the provisions of Corporate Social Responsibility. However, the Company realizes its Social Responsibility and, therefore, providing free medical help to the poor people and financial assistance to the poor students through a Charitable Trust run by the promoters.

19. Directors

Since the last annual general meeting there is no change in the Board of Directors of the Company.

During the year under review, Mr. YV. Prashanth, Executive Director and Sri. YS.R.Venkata Rao, Managing Director are re-appointed and both the re-appointments will be placed at the ensuing Annual General Meeting for approval of the members.

Smt. YLalithya Poorna, Director will retire by rotation at the ensuring annual general meeting and, being eligible, offers herself for reappointment.

Details of no. of Board meetings are covered under the Corporate Governance section. Declaration by an Independent Director

Company had received the declaration by Independent Director(s) that he / they meet the criteria of independence as per the provisions of Section 149 of Companies Act, 2013.

Formal Annual Evaluation

Pursuant to provisions of the Companies Act, 2013 the Board has devised a policy on evaluation of performance of Board of Directors, Committees and Individual Directors. Accordingly, Chairman of the Nomination and Remuneration Committee obtained from all the board members duly filled in evaluation templates for evaluation of the Board as a whole, evaluation of the committees and peer evaluation. The summary of the evaluation reports were presented to the respective Committees and the Board for their consideration.

20. Key Managerial Persons

During the year under review Ms. M. Neeharika was appointed as Company Secretary and Compliance officer to fill the casual vacancy, in compliance with the provisions of the Companies Act, 2013.

21. Director's Responsibility Statement

As per the provisions of clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors shall state that

(a) in preparation of the annual accounts, the applicable accounting standards have 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 at the end of the financial year and of the profit or loss of the Company for that period;

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

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

(e) the directors, have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

22. Committees

Your Company has Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee and the details are provided in the Corporate Governance section.

23. Vigil mechanism for Directors and Employees

The Company believes in the standard of conduct which all employees are expected to observe in their business endeavours. The Code (Vigil Mechanism) reflects the Company's commitment to principles of integrity, transparency and fairness. The copy of the Code of Vigil Mechanism is available on the Company website www.alkalimetals.com under Investors tab.

The Company has adopted a Whistle Blower Policy, as part of vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of management any issue which is perceived to be in violation of or in conflict with the fundamental business principles of the Company. The employees are encouraged to voice their concerns by way of whistle blowing and all the employees have been given access to the Audit Committee.

The Executive Director Mr. Y.V.PRASHANTH is designated as ombudsperson to deal with all the complaints registered under the policy.

24. Policy on Sexual Harassment

Company had adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year there were no complaints / incident of harassment.

25. Particulars of loans, guarantees or investments

Company had not given any loans, guarantees or made investments as per the provisions of Section 186 of the Companies Act, 2013 during the financial year under review and also there are no outstanding amounts of loans given, guarantees provided and / or investments made at the beginning of the year.

26. Particulars of contracts or arrangements with related parties

The Company had not entered into any contract or arrangements with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms lengthtransactions under third proviso thereto.

The Company has formulated a policy on materiality of Related Party Transactions and dealing with Related Party Transactions which can be accessed at the Company website www.alkalimetals.com under Investors tab.

27. Managerial Remuneration / Employee Details

The Details required to be provided pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure-3 and the same form part of the Directors Report.

There are no employees in the Company in receipt of amounts covered in rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

28. Secretarial Audit Report

Secretarial Audit Report given by CS B. Venkatesh Babu, Company Secretary in Practice is enclosed as Annexure - 4 and the same forms part of this report.

29. Corporate Governance / Management Discussion and Analysis

In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Report on Corporate Governance along with Compliance Certificate issued by Statutory Auditors of the Company and also the Management Discussion and Analysis report is annexed to this Annual Report and forms integral part of this Report.

30. Insurance

All the properties and insurable interests of the Company including building, plant and machinery and stocks have been adequately insured.

31. Listing on Stock Exchanges

The securities of the Company are continued to be listed on BSE and NSE. The listing fees for these stock exchanges are paid for the current financial year.

32. Cost Audit

Pursuant to provisions of section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014 cost audit is not applicable for the financial year 2017-18 to the Company.

33. Acknowledgements

Your Directors express their gratitude to all stakeholders, bankers, Regulatory Authorities, Government, customers, suppliers, business associates, from India and abroad, staff and workers for their continued support at all times and look forward to have the same in our future endeavours. Directors are pleased to record their appreciation of the sincere and dedicated services of the employees and workmen at all levels.

Your Directors look forward to the long term future with confidence.

ANNEXURE -1

EXTRACT OF ANNUAL RETURN as on the financial year ended on 31/03/2018

[Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies Management and Administration) Rules, 2014]]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY:

All the business activities contributing 10% or more of the total turnover of the Company shall be stated:

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES:

IV. SHARE HOLDING PATTERN

(Equity Share Capital Breakup as percentage of Total Equity):

i) Category-wise Share Holding: Equity

(ii) Shareholding of Promoters:

(Hi) Change in Promoters' Shareholding (please specify, if there is no change): no changes

(iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

* Ceased to be in the list of Top 10 shareholders as on 31/03/2018. The same has been reflected above since the shareholder was one of the Top 10 shareholders as on 01/04/2017.

# Not in the list of Top 10 shareholders as on 01/04/2017. The same has been reflected above since the shareholder was one of the Top 10 shareholders as on 31/03/2018.