Aarti Industries Ltd
Directors Reports
DIRECTOR'S REPORT
To
The Members of
AARTI INDUSTRIES LIMITED
Your Directors present this Fortieth Annual Report of your Company ("the
Company" or "Aarti Industries Limited") together with the Audited Financial
Statements of the Company for the Financial Year ended March 31, 2023.
1. Financial Highlights & Summary Financial Highlights
|
|
|
|
(Rs. Crs) |
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Total Income from Operations (Gross) |
7,226 |
6,820 |
7,283 |
6,871 |
EBITDA |
1,088 |
1,711 |
1,089 |
1,720 |
Depreciation & Amortisation |
310 |
244 |
310 |
246 |
Profit from Operations before Other Income, Finance Costs and
Exceptional Items |
778 |
1,467 |
779 |
1,474 |
Other Income |
0 |
1 |
1 |
1 |
Profit before Finance Costs |
778 |
1,468 |
780 |
1,475 |
Finance Costs |
166 |
102 |
168 |
102 |
Profit before Tax |
613 |
1,366 |
611 |
1,372 |
Total Tax Expenses |
67 |
184 |
66 |
186 |
Non-controlling Interest |
- |
- |
- |
- |
Net Profit for the period |
546 |
1,182 |
545 |
1186 |
Other Comprehensive Income (net of taxes) |
(35) |
18 |
(50) |
15 |
Total Comprehensive income for the year |
511 |
1,200 |
495 |
1,201 |
Earnings Per Share ( Rs.) (Basic & Diluted) |
15.06 |
32.61 |
15.04 |
32.71 |
Book Value Per Share ( Rs.) |
136 |
124 |
136 |
125 |
Summary
Your Company reported Gross Total Income at Rs. 7,226 Crores for FY 2022-23 as against
Rs. 6,820 Crores for FY 2021-22. Similarly, the exports for the year were at Rs. 3,517
Crores for FY 2022-23 as against Rs. 2,950 Crores for FY 2021-22.
Likewise, the Consolidated Total income from operations for FY 2022-23 was at Rs. 7,283
Crores as compared to Rs. 6,871 Crores for FY 2021- 22 and exports for FY 2022-23 was Rs.
3,573 Crores v/s '3,007 Crores for FY 2021-22.
Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013, Regulation 33 of the Listing
Regulations, and applicable Accounting Standards, the Audited Consolidated Financial
Statements of the Company for the FY 2022-23, together with the Auditors' Report, form
part of this Annual Report.
2. Transfer to Reserves
Your Company has transferred '55 Crores to the General Reserve (Previous Year: Rs.129
Crores).
3. Subsidiary Companies
As on March 31, 2023, the Company has 6 (Six) direct subsidiaries, namely, Aarti
Corporate Services Limited, Innovative Envirocare Jhagadia Limited, Aarti Polychem Private
Limited, Aarti Bharuch Limited, Aarti Spechem Limited and Alchemie (Europe) Limited, and 2
(Two) indirect subsidiaries namely Shanti Intermediates Private
Limited and Nascent Chemical Industries Limited both hold through Aarti Corporate
Services Limited.
During the year, the Hon'ble National Company Law Tribunal (NCLT), Ahmedabad Bench vide
its order dated September21,2022approved the Scheme of Arrangement ("Scheme")
between Aarti Industries Limited and Aarti Pharmalabs Limited and their respective
shareholders under the provisions of Section 230-232 of Companies Act, 2013. Pursuant to
the Scheme, Aarti Pharmachem Limited and Aarti USA Inc. ceased to be subsidiaries of your
Company.
Further, the Ministry of Corporate Affairs has approved incorporation of Wholly Owned
Subsidiary (WOS) of your Company, Augene Chemical Private Limited, bearing
CIN:U20299GJ2023PTC141303 on May 18, 2023. The Registered Office of the Company is
situated at Gujarat.
The Company does not have any material subsidiary whose net worth exceeds 10% of the
consolidated net worth of the Company in the immediately preceding accounting year or has
generated 10% of the consolidated income of the Company during the previous Financial
Year. A policy on material subsidiaries had been formulated and is available on the
website of the Company and the web link thereto is:
https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=A8DuSuG1AT8OIQL33MM
During the year, the Board of Directors reviewed the affairs of the subsidiaries. In
accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated
financial statements of the Company and all its subsidiaries, which form part of the
Annual Report.
Further a statement containing salient features of the financial statement of our
Subsidiaries/Jointly controlled entity in the prescribed format AOC-1 is included in the
Report as Annexure-A and forms an integral part of this Report.
4. Share Capital
Your Company's Equity Share Capital as on March 31, 2023 was as follows:
Particulars |
No. of Shares |
Face Value Per Share (in Rs.) |
Total Amount (in Rs.) |
Authorized Share Capital |
60,00,00,000 |
5 |
3,00,00,00,000 |
Issued, Subscribed & Paid-up Share Capital |
36,25,04,035 |
5 |
1,81,25,20,175 |
During the year 2022-23, there was no change in the authorized and paid up share
capital of the Company.
5. State of Affairs
The State of your Company's affairs is given in the Management Discussion and Analysis,
which forms part of this Annual Report.
6. Directors and Key Managerial Personnel (KMP)
I n accordance with the prevailing provisions of the Section 149 of the Companies Act,
2013 read with Regulation 17 of the Listing Regulations, as amended from time to time, as
on March 31, 2023, the Board of Directors, comprises Sixteen Directors (with Six Executive
Directors, Two Non-Executive NonIndependent and Eight Independent Directors).
At the 39th AGM held on September 26, 2022, Shri Rajendra V. Gogri (DIN: 00061003) was
re-appointed
as the Managing Director of the Company for a period of five years w.e.f. July 1, 2023.
During the year, Smt. Hetal Gogri Gala (DIN: 00005499) had conveyed her intention to
step down as an Executive Director since she had taken up executive role as 'Vice
Chairperson and Managing Director of 'Aarti Pharmalabs Limited' effective from October 17,
2022, however, she continues to be a 'Non-Executive Director' of the Company.
Shri Narendra Jagannath Salvi (DIN: 00299202) had conveyed his intention to step down
as an Executive Director since he had taken up executive role as the 'Managing Director'
of 'Aarti Pharmalabs Limited' effective from October 17, 2022, however, he continues to be
a 'Non-Executive Director' of the Company.
In accordance with the regulatory requirements Shri Narendra J. Salvi retires by
rotation in ensuing 40th Annual General Meeting. However, vide his letter dated June 21,
2023, he conveyed his intention to retire and requested the Board not to consider his
re-appointment stating the reason 'Preoccupation'. The Board of Directors in its meeting
held on June 28, 2023, took it on record and considered as 'not to fill up' the vacancy
thereby caused.
In accordance with the regulatory requirements Shri Kirit R. Mehta (DIN: 00051703) also
retires by rotation in the ensuing 40th Annual General Meeting. However vide letter dated
June 21,2023 he conveyed his intention to retire due to health related reasons and
requested the Board not to consider his re-appointment. The Board of Directors in its
meeting held on June 28, 2023, took it on record and considered to 'fill up' the vacancy
thereby caused.
Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard-2
on General Meetings, a brief profile of the Directors proposed to be appointed
/re-appointed is made available, as an Annexure to the Notice of the Annual General
Meeting.
Further, based on recommendation of Nomination and Remuneration Committee, the Board of
Directors in its meeting held on June 28, 2023, appointed Prof. Aniruddha B. Pandit (DIN:
02471158) and Shri Shekhar S. Khanolkar (DIN: 02202839) as Additional Directors in the
category of Independent Directors and Shri Ajay Kumar Gupta (DIN: 08619902) as Additional
Director in the category of Executive Director, all with effect from June 29, 2023. Their
appointments are subject to approval of the Members at the ensuing AGM of the Company. The
brief resume regarding their appointment is given in the Notice.
Pursuant to the provisions of Regulation 34(3) read with Schedule V to the Listing
Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia (COP No.
2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial
Auditor of the Company, certifying that none of the Directors of the Company have been
debarred or disqualified from being appointed or continuing as Directors of companies by
the Securities and Exchange Board of India or by the Ministry of Corporate Affairs or by
any such statutory authority. The said Certificate is annexed to the Corporate Governance
Report of the Company for the Financial Year 2022-23.
Key Managerial Personnel
During the year under review, there was no change in the Key Managerial Personnel of
the Company.
Independent Directors
Statement on declaration given by Independent Directors under sub-section (6) of
section 149
In accordance with Section 149(7) of the Companies Act, 2013, all Independent Directors
have given declarations that they meet the criteria of independence as laid down under
Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.
In the opinion of the Board of Directors, the Independent Directors fulfil the
conditions specified in the Companies Act, 2013 read with the rules made thereunder as
well as Listing Regulations and are independent from Management, hold the highest degree
of integrity and possess expertise in their respective fields with enormous experience.
All the Independent Directors have complied with the Code for Independent Directors
prescribed in Schedule IV to the Companies Act, 2013.
All the Independent Directors of the Company have enrolled their names in the
'Independent Directors Data Bank' maintained by Indian Institute of Corporate Affairs
("IICA").
Familiarisation Programme for Independent Directors
The Company has a Familiarisation programme for its Independent Director which is
imparted at the time of appointment of an Independent Director on Board as well as
annually. During the year, the Independent Directors of the Company were familiarised and
the details of familiarisation programmes imparted to them are placed on the website of
the Company and the web link thereto is: https://www.aarti-industries.
com/Upload/PDF/Familiarisation-Programme- FY-2022-23.pdf
7. Directors' Responsibility Statement
To the best of their knowledge and belief and according to the information and
explanations obtained by them, your Directors make the following statements in terms of
Section 134(3)(c) of the Companies Act, 2013:
a. That in the preparation of the annual financial statements for the year ended March
31, 2023, the applicable accounting standards have been followed along with proper
explanation relating to material departures, if any;
b. That the Directors had 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 and loss of the company for that period;
c. That the Directors had 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. That Directors have prepared the annual accounts on a going concern basis;
e. The Directors had laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating
effectively;
f. The Directors had devised proper systems to ensure compliance with the provisions of
all applicable laws and that such systems were adequate and operating effectively.
8. Meetings
The Board of Directors met eight (8) times during the Financial Year under review. The
details of the number of meetings of the Board and its Committees held during the
Financial Year 2022-23 and the attendance of each Director/Member at these meetings are
provided in the Corporate Governance Report forming part of the Annual Report. The
intervening gap between the Board meetings was within the period prescribed under the
Companies Act, 2013 and the Listing Regulations.
9. Dividend
During the year, the Company has declared an Interim Dividend of '1/- (@ 20%) each per
share.
Your Board of Directors recommend a Final Dividend of '1.50 (@ 30%) per share subject
to approval of the Shareholders at the ensuing 40th AGM, aggregating to a total Dividend
of Rs.2.50 (@ 50%) per share (of Rs.5 each) for the financial year 2022-23, resulting in a
total payout Rs.90.63 Crores (Previous Year: Rs.126.88 Crores).
The Dividend payout is in accordance with the Dividend Distribution Policy which is
available on the website of the Company.
Dividend Distribution Policy
As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations"), the top 1000 listed companies shall
formulate a Dividend Distribution Policy. Accordingly, the policy was adopted to set out
the parameters and circumstances that will be taken into account by the Board in
determining the distribution of dividend to its shareholders and/or retaining profits
earned by the company. A policy is available on the website of the Company and the web
link thereto is: https://www.aarti-industries.com/investors/ GetReport Rs.strcont
id=b22bcY6v1CAOIQL33MM
10. Corporate Social Responsibility
Your Company through, Aarti Foundation and Dhanvallabh Charitable Trust - Our CSR arms
undertake community interventions to enhance the lives of the communities. Besides our
direct involvement, we partner with numerous implementing agencies to carry out need
assessment and make impactful interventions. Our Focus areas during the year has been;
• Education & Skill Development
• Childcare & Healthcare Facilities
• Women Empowerment & Livelihood Opportunities
• Cluster & Rural Development
• Disaster Relief & Rehabilitation
• Eradication of Hunger & Poverty
• Water Conservation & Environment
• Research & Development work for upliftment of Society
The detailed policy on Corporate Social Responsibility is available on the website of
the Company on the web link thereto is:
https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=rOxVNykXxlkOIOL33MM
A brief note on various CSR initiatives undertaken during the year including the
composition of the CSR Committee is presented in this Annual report. The CSR annual report
is annexed as Annexure-B and forms an integral part of the Report.
11. Audit Committee
The details of the composition of the Audit Committee, terms of reference, meetings
held, etc. are provided in the Corporate Governance Report, which forms part of this
Report. During the year there were no cases where the Board had not accepted any
recommendation of the Audit Committee.
12. Vigil Mechanism/Whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy for its
Directors and Employees to report concerns about unethical behaviour, actual or suspected
fraud, actual or suspected leak of UPSI or violation of Company's Code of Conduct. It also
provides for adequate safeguards against the victimisation of employees and allows direct
access to the chairperson of the audit committee in exceptional cases The said policy has
been posted on the website of the Company and the web link thereto is:
https://www.aarti-industries.com/investors/ GetReport Rs.strcont
id=ZMPluse33MMnrACtosYOIOL33MM
The Company affirms that no person has been denied access to the Audit Committee
Chairman.
13. Related Party Transactions
The Company has a Policy on Materiality of Related Party Transaction and dealing with
Related Party Transaction which is uploaded on the Company's website at the web- link
given below:
https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=TNJu6Gnbr7sOIQL33MM
All related party transactions that were entered into during the FY 2022-23 were on
arm's length basis and were carried out in the ordinary course of the business.
There are no materially significant related party transactions made by the Company with
Promoters, Key Managerial Personnel or other Designated Persons which may have potential
conflict with interest of the Company at large.
The related party transactions are approved by the Audit Committee. Omnibus approval is
obtained for the transactions which are foreseen and repetitive in nature. A statement of
related party transactions is presented before the Audit Committee on a quarterly basis,
specifying the nature, value and terms and conditions of transactions. A report of factual
findings arising out of the accepted procedures carried out in regard to transactions with
Related Parties is given by the Statutory Auditors on quarterly basis and the same is
placed before the Audit Committee.
The details of related party transactions are provided in the accompanying financial
statements.
Particulars of contracts or arrangements made with related parties
Since all related party transactions entered into by the Company were in ordinary
course of business and were on an arm's length's basis, Form AOC-2 is not applicable to
Company.
14. Commercial Paper
Your Company continues to manage its treasury operations efficiently and has been able
to borrow funds for its operations at competitive rates. During the Financial Year, your
Company had dual rating for its Commercial Papers (CPs) Programme of Rs.400 Crores, which
are revalidated from time to time:
Rating Agency |
CRISIL Rating Limited |
India Ratings and Research Private Limited |
Rating |
CRISIL A1 + |
IND A1 + |
During the Financial Year, the Company has issued CPs amounting to '875 Crores in
various tranches, out of which CPs amounting to '475 Crores were listed on BSE Limited.
Further, CPs amounting to '800 Crores were redeemed during the Financial Year and the
Company has not defaulted on payment of any dues to the Investors.
15. Deposits
Your Company has not accepted any deposits covered under Chapter V of the Companies
Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the Companies (Acceptance
of Deposits) Rules, 2014)], during the Financial Year 2022-23.
16. Particulars of Loans, Guarantees, Investments and Securities
Particulars of loans given, investments made, guarantees given and securities provided
during the year under review and as covered under the provisions of Section 186 of the
Companies Act, 2013 have been disclosed in the notes to the standalone financial
statements forming part of the Annual Report.
17. Particulars of Employees
The statement containing particulars of employees as required under Section 197(12) of
the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this
report.
I n terms of Section 136(1) of the Companies Act, 2013, the Report and the Accounts are
being sent to the Members excluding the aforesaid Annexure. Any Member interested in
obtaining a copy of the Annexure may write to the Company Secretary at the Registered
Office of the Company for a copy of it.
Material Developments in Human Resources/ Industrial Relations Front, including number
of people Employed
Employees being our key stakeholders, the HR initiatives and policies revolve around
garnering the opportunities to serve our employees better. In an attempt to devise a
seamless succession planning process through VTS (Vertical Talent Strategy), we developed
VTS for 23 Verticals, identifying high-potential employees and successors for critical
roles. Our Talent Management team worked along with the verticals to create action plans
for building a talent growth pipeline. Moving ahead in our journey of being a 'Preferred
employer of Choice', we received 100% participation in Voice 3.0-our employee engagement
survey.
Following the excellent execution of Vertical Action Plans, Voice 3.0 also saw positive
scores in many areas of employee engagement. The phenomenal scores in Voice 3.0 are also
accredited to Metamorphosis sessions. These sessions have empowered employees by fostering
a belief in long-term goals, belongingness, and leadership among executives and thus
driving engagement.
In FY 23 we onboarded 1921 bright minds. Towards our strategy to groom internal talent
and ensure career growth opportunities for them, we drove internal growth from 23% to 44%
in FY 22-23 through Navodaya and Talent Spotting and we target 70% growth in FY 23-24. A
state-of-the-art infrastructure has been developed in Mumbai and Vadodara to ensure
employee comfort.
To further upskill and train employees in different areas of effectiveness, a robust
training calendar and upskilling programs have been implemented (Eklavya, Kshitij,
Utkarsh, Nipun, New FTM, GTD, NICMAR, ME, SKV, etc.). We have also developed a long-term
incentive plan (PSOP) for employees
18. Aarti Industries Limited Performance Stock Option Plan 2022
Aarti Industries Limited Performance Stock Option Plan 2022 ("PSOP 2022") was
approved by the shareholders through Postal Ballot on October 29, 2022, under which stock
options would be granted to the eligible employees, in compliance with the provisions of
the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.
Further, pursuant to the PSOP 2022, the Company has granted 80,142 options to eligible
employees as per the recommendation of the Nomination and Remuneration Committee, at its
meeting held on May 6, 2023.
Your Company has received a certificate from CS Sunil M. Dedhia (COP No. 2031), of
Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the
Company that PSOP 2022 has been implemented in accordance with the provisions of the SEBI
(Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolution
passed by the shareholders. Any request for inspection of the said Certificate may please
be sent to investorrelations@ aarti-industries.com
19. Material changes and commitment if any affecting the financial position of the
company occurred between the end of the Financial Year to which this financial statements
relate and the date of the report
There are no other material changes and commitments affecting the financial position of
the Company occurred between the end of the Financial Year to which these financial
statements relate and the date of the report.
20. Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF
Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('the Rules') all unpaid or
unclaimed dividends are required to be transferred by the Company to the IEPF established
by the Government of India, after the completion of seven years. Further, according to the
rules, the shares on which Dividend has not been paid and claimed by the Shareholders for
seven consecutive years or more shall be transferred to the Demat account of the IEPF
Authority. Accordingly, the Company has transferred the unclaimed and unpaid dividends of
'46,80,672/-. Further, 48,654 corresponding shares were transferred as per the requirement
of the IEPF Rules.
21. Annual Return
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the
Annual Return as on March 31,2023 is available in prescribed format on the Company's
website on www.aarti-industries.com
22. Corporate Governance
Corporate Governance essentially involves balancing the interests of a Company's
stakeholders. The Company continues to nurture a culture of good governance practices
across functions, offices and manufacturing facilities.
Your Company has complied with the mandatory Corporate Governance requirements
stipulated under the Listing Regulations. The separate Report on Corporate Governance is
annexed hereto forming part of this report. The requisite certificate from Gokhale &
Sathe, Chartered Accountants is attached to the Report on Corporate Governance.
23. Management's Discussion and Analysis Report
Pursuant to Regulation 34 read with Schedule V to the Listing Regulations, Management's
Discussion and Analysis for the year under review is presented in a separate section
forming part of the Annual Report.
24. Business Responsibility & Sustainability Reporting (BRSR)
The Listing Regulations mandate the inclusion of the Business Responsibility &
Sustainability Reporting as part of the Annual Report for top 1000 listed entities based
on market capitalisation. BRSR for the year under review, as stipulated under Regulation
34 (f) of Listing Regulations read with SEBI Circular No. SEBI/HO/CFD/
CMD-2/P/CIR/2021/562 dated May 10, 2021 is in a separate section forming part of the
Annual Report. The non-financial sustainability disclosures have been independently
assured by TUV Nord.
25. Annual Board Evaluation
Pursuant to the provisions of Companies Act, 2013 and the Listing Regulations, a
structured questionnaire was prepared after taking into consideration various aspects of
the Board's functioning, composition of the Board and its Committees, culture, execution
and performance of specific duties, obligations and governance.
The performance of the Committees and Independent Directors were evaluated by the
entire Board of Directors except for the Director being evaluated. The performance
evaluation of the Chairman, NonIndependent Directors and Board as a whole was carried out
by the Independent Directors. The Board of Directors expressed their satisfaction with the
outcome of evaluation and the process followed thereof.
26. Nomination and Remuneration Policy
Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing
Regulations, your Company has in place a Nomination and Remuneration Policy which lays
down a framework in relation to remuneration of Directors, Key Managerial Personnel and
Senior Management of the Company. The policy also lays down criteria for selection and
appointment of Board Members. The said policy has been posted on the website of the
Company and the web link thereto is: https://www.aarti-industries.com/investors/ GetReport
Rs.strcont id=pTvbr0JryL0OIQL33MM
The details of this policy are given in the Corporate Governance Report.
27. Risk Management
Your Company recognises that risk is an integral and unavoidable component of business
and is committed to managing the risk in a proactive and effective manner. The Company
aims to use risk management to take better informed decisions and improve the probability
of achieving its strategic and operational objectives.
In compliance with Regulation 21 of Listing Regulations, your Company has a Risk
Management Committee consisting of Shri Rajendra Gogri (Chairman), Shri Rashesh Gogri,
Shri Bhavesh R. Vora, Smt. Hetal Gogri Gala, Shri Renil Gogri, Shri Narendra J. Salvi,
Shri Chetan Gandhi and Shri Ajaykumar Gupta. The Committee through its risk management
framework continuously identifies, evaluates and takes appropriate measures to mitigate/
minimise various elements of risks. The Risk Management Committee meets periodically to
ensure that appropriate methodologies, processes and systems are in place to monitor and
evaluate risks associated with the business of the Company and also to monitor and oversee
the implementation of the Risk Management Policy.
The said policy has been posted on the website of the Company and the web link thereto
is: https://www.aarti-industries.com/investors/ GetReport Rs.strcont
id=dCIEPn8aX6wOIQL33MM
28. Compliance Management System
The Company with its sheer focus committed to achieve 100% compliance. We have adopted
a third-party managed IT-based Compliance Management System. It has a repository of all
applicable regulations and requisite compliances. It has an in-built alert system that
sends alerts to the users and intimates concerned personnel about upcoming compliances.
Last year, we added a module on 'License Management' into our compliance management
system. Newly added licence management system helps us in tracking the validity and
renewal process of all applicable licences. We initiate the licence renewal process well
in advance to avoid any delays.
29. Health and Safety:
Sustainability & Safety is very important for Chemical Industry in general and very
critical for Aarti Industries in particular, that is the reason our strategic statement is
'Sustainability for Sustainable Growth'. We at Aarti Industries Limited (AIL), are
committed to maintain the world-class standards of health, safety, environment protection,
security, human rights, product safety & quality and processes while conducting all
our business operations, services, and expansion activities.
We believe that Safety is not one person's job but it is for all the employees of the
company from operators to Directors. In the Chemical Industry the most important thing for
safety is the 'Operational Discipline'.
To enable the Best Safety culture, ALL has created an unique concept of Aarti Engaging
Leaders, committed to live by Aarti Values of Care, Integrity and Excellence and enabling
everyone to listen and speak powerfully.
Health and Safety at ALL has been enhanced through following interventions:
• Several Process Initiative Common (PICs) with specific objectives to enhance
safety and sustainability across the organisation
• Robust Management governance through Apex sustainability council and sub
councils for ensuring progress in various domains of sustainability
• Safety audit framework
•
Dedicated Process safety teams from R&D (Molecule development) to
pilot to operation and at corporate level.
•
Aarti Logistics ControlCenter for ensuring Safe transport of chemicals.
•
To ensure consistent high performance of the people, a competency
enhancement framework is established.
•
Proactive compliance to legal and statutory requirement through digitised
platform and
• Trained and competent Fire and Emergency responders team.
We have unique initiatives like Daily BESAFE Huddles, Monthly LFI sessions for 360
degree action implementation from external incident and internal experiences, Tacit
knowledge sessions, Subject matter experts platform, Medical board of FMOs, knowledge
capsules, Listening tours to interact with plant shop floor team.
We have established world class infrastructure in terms of High tech OHCs &
Emergency Control Centers (ECCs) at each factory, State of art Fire Tenders and ambulances
at each location, Digital platform for HSE indicators governance and management.
Our efforts in every dimension of Sustainability have yielded success in terms of
improved scores in TfS (Together for Sustainability) assessment at various divisions. All
our divisions have achieved IMS (Integrated Management Systems) certifications i.e.
ISO9001, ISO 14001 & ISO45001.
During FY-2022-23, we initiated a Safety perception survey called "Aarti Suraksha
Survey", the response to the Aarti Suraksha Survey was overwhelming. The Survey
Participation was more than 9000+ people including contractors and other business
partners. The result from the Safety perception survey was very encouraging.
Process Safety:
We have established a dedicated Process Safety team at our corporate and manufacturing
locations, and have also set up a world-class infrastructure and research facility - Aarti
Research and Technology Center. We have strengthened the Hazards & Operability study
procedure by introducing different guidewords. The concept of TACIT Knowledge for learning
and development is introduced which enables Process safety capability building.
To have high vigilance on plant operations and processes, process Engineers monitor
daily process parameters. We maintain high safety standards for Chlorine Handling System
across ALL through on the job training, mock drills. We have a robust Hazard
Identification and Risk Assessment procedure (HIRA) in place, which is done for each
individual activity/step involved in Standard Operating Procedures (SOPs). To ensure
inherent safe design and operation, we conduct process safety studies for existing and new
projects, including Thermal Safety Studies (DSC, TSu, RC1e) and Powder Safety studies. To
ensure continual Risk reduction, process parameters validation, Criticality Class Study,
SIL, QRA, and HAC studies are conducted.
30. Environment
As a responsible organisation, we are committed to protect and prevent the
environmental Damages. Efficient usage of water is of high priority to us, making it a
high material topic for us and our delighted stakeholders. ALL has published and
implemented comprehensive guidelines for the Waste management and Environmental Management
system. A considerable number of Environmental Projects have been Successfully
implemented, and we are beginning to see the benefits, such as effluent reduction, waste
reduction, waste conversion into valuable products , Cost Reduction, CO2 Emission
Reduction and space available for new effluent which will be generated from new
expansion/products.
ALL has been recognized and acknowledged by various organisation by prestigious awards
as ICC award for Excellence in Management of Environment, Golden Peacock Award for
Environment Management, Platinum Award of 12th Exceed Environment Awards in the Category
of Environment Preservation in Chemical & Fertilisers sector, Envirocare Green Award,
CII National Award for Environmental Best Practices- "Waste and Resource
Conservation" & Environment Friendly Company of the year by FICCI etc.
Environment - Water Management
Towards reducing our water footprint, we are focussing on 3R (Reduce, Reuse &
Recycle) and strategizing to achieve zero-liquid discharge (ZLD) for our facilities.
During FY 2022-23, ALL has taken various initiatives for Water conservation by
introduction of water harvesting system, increased steam condensate recovery, increased
MEE condensate recovery, STP treated water recycling and RO permeate recycling etc.
Currently, 10 nos of our manufacturing sites have ZLD facilities. About 85% effluent
quantity is being recycled back into process and 15% treated effluent quantity is being
sent to CETP for further treatment and sent to deep sea. As part of water conservation ,
ALL has recycled steam condensate about 50% in the Boiler. Overall water withdrawal
reduced about 40% due to ZLD units, steam condensate recycling in Boilers, Water
Harvesting initiatives,STP treated water recycling etc. Further we have planned to achieve
100% ZLD ready status within the next 2 years. We have adopted a proactive approach for
ZLD and incorporated it in the conceptualisation & designing phase of new projects.
Environment - Air Management
All has provided adequate Air pollution control measures to control process and flue
gas emissions like wet scrubbers, Dust collectors, Bag filters ESP etc. ALL has
implemented a dry scrubber concept (lime dosing along with solid fuel) to control SO2
emissions significantly. All have implemented LDAR programs to detect and control fugitive
emissions, vocs etc. ALL has provided online sensors for Hazardous gases. We have provided
an effective emission monitoring and selection of continuous on-line stack monitors and
Ambient Air Quality Monitoring system (AAQMS). ALL water and emission online monitoring
parameters (OCEMS) has been connected to CPCB and GPCB portal.
Environment - Waste Management
Our waste management approach is systematically divided into three priorities depending
upon the various operating conditions and type of waste generated. First priority is to
produce less waste, second priority is 4Rs (Reuse, Recover, Recycle, Reprocess), third
priority is treatment and disposal.
All being a responsible organisation ensures utilisation of the hazardous waste in a
safe and environmentally sound manner and with comprehensive legal compliance by
conducting audits of the vendors responsible for reusing processing and disposal of waste.
During FY 2022-23, We have Improved Hazardous waste management by taking many initiatives
like Waste management guideline were implemented, introduction of compressive checklist
for all HW vehicles, all the HW vehicles are connected to ALC and monitoring for 24 hrs *7
days, introduction of end users audits and approvals system, completed Rule 9 trials runs
and obtained CPCB SOP for HCL conversion into CaCl2. ALL has started value added
initiatives i.e Landfilling and Incinerable waste sending to cement industries for
co-processing .
31. Sustainability
Aarti industries has integrated sustainability into its business strategy through its 4
strategic dimensions: Sustainability, People Well being, Partner delight and Prosperity.
Every dimension has its goals and objectives. These are accomplished through a well
devised implementation strategy of Aarti Management System. The Goals and objectives are
reviewed in well established councils which are chaired by the CEO.
The following accomplishments endorse our progress in the sustainability journey.
Responsible Care
Our robust performance on EH&S has led to our success in getting a Responsible Care
(RC) logo. RC is a global chemical manufacturing industry's environmental, health, safety
and security performance initiative. RC logo is not only an endorsement of our exemplary
EH&S practices but also it shall help us in improving our environmental, health,
safety and security (EHS&S) performance for facilities, processes and products
throughout the entire operating system through its guiding principles.
While we care for our employees, 'Care' towards the surrounding community is also a
prime focus at All. Various initiatives such as Tanker Drivers' health and eye checkups,
community education program for Fire fighting and emergency preparedness, Infrastructure
development for schools, scholarship and grants to needy students for their higher
education, mobile dental vans, rural infrastructure development etc. have yielded
significant benefits to the community.
EcoVadis
Our significant efforts in improving our ESG performance has led to achieving a gold
medal in EcoVadis CSR assessment, placing ALL among the top 5 percentile of companies
assessed by EcoVadis.
CDP Rating
ALL has received Management band "B" for the second consecutive year in CDP
Climate Change, indicating coordinated actions on climate issues by AIL. The B rating is
higher than the world average for the chemical sector.
ALL has also received "A-" on CDP Supplier Engagement, in the leadership
band. Our rating has improved from B- in 2021 to A-, this indicates implementation of best
practice by ALL during supplier engagement.
Sustainalytics Rating
Sustainalytic has improved ESG risk rating of Aarti industries for Year 2022. Aarti
industries has been rated medium risk for 2022 with the ESG risk score of 24.5 (Lower
rating demonstrates lower risk). Our risk rating has been improved compared to 2021 where
ALL was rated High risk with the ESG risk score of 35.3.
32. Reliability
We have initiated an Operational Excellence journey with focus to improve reliability.
Initiatives like OEE (Overall Equipment Effectiveness) improvement, Quality Circles,
Autonomous maintenance and through investigation of T-IHC (Throughput Incident of High
Consequence) deviation have resulted in improvement in reliability through involvement of
the associate family and in turn benefited in achieving our safety and sustainability
objectives. Implementing Model Plant Initiative to improve plant infrastructure and so to
improve safety and reliability. While doing this engagement of all employees at all levels
is under focus to focus on ownership and sustenance.
33. Statutory Auditors & Auditors' Report
In accordance with the provisions of Section 139 of the Companies Act, 2013, Gokhale
& Sathe, Chartered Accountants (Firm Registration No.: 103264W) were appointed as
Statutory Auditor of your Company at the 39th Annual General Meeting for a term of 5
years, to hold office from that meeting till the conclusion of 44th Annual General Meeting
to be held in 2027.
There are no qualifications, reservations or adverse remarks or disclaimer made by the
Auditor in their report. The Auditors of the Company have not reported any instances of
fraud committed against the Company by its officers or employees as specified under
Section 143(12) of the Companies Act, 2013.
34. Cost Auditors & Records
In terms of the Section 148 of the Companies Act, 2013 read with the Companies (Cost
Record and Audit) Rules, 2014, the Company is required to maintain cost accounting records
and have them audited every year.
The Board accordingly, has appointed Ketaki D. Visariya, Cost Accountants, (Membership
No.16028) as the "Cost Auditors" of the Company for FY 2023-24. The remuneration
payable to the Cost Auditor is required to be placed before the Members in a General
Meeting for their approval. Accordingly, a resolution for seeking Member's approval for
the remuneration payable to Ketaki D. Visariya, Cost Accountants, is included at Item No.
15 of the Notice convening the Annual General Meeting in terms of Rule 14 of the Companies
(Audit & Auditors) Rules, 2014.
The Company has maintained cost records as specified under section 148(1) of the Act.
35. Secretarial Auditor & Report
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made
thereunder, the Company had appointed CS Sunil M. Dedhia (COP No. 2031), Proprietor of
Sunil M. Dedhia & Co., Company Secretary in Practice to undertake the Secretarial
Audit of the Company.
Pursuant to provisions of Section 204(1) of the Companies Act, 2013 and Regulation 24A
of the Listing Regulations, the Secretarial Audit Report for the Financial Year ended
March 31, 2023 issued by CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co.
Company Secretary in Practice and the Secretarial Auditor of the Company is annexed as
Annexure-C and forms an integral part of this Report. During the year under review, the
Secretarial Auditor had not reported any fraud under Section 143(12) of the Act.
There is no qualification, reservation or adverse remark or disclaimer made by the
Auditor in their report. As regards the observations of the Secretarial Auditor in their
Report, the same is self explanatory and need no further clarifications.
36. Internal Control Systems and their adequacy
Your Company has clearly laid down policies, guidelines and procedures that form part
of internal control systems, which provide for automatic checks and balances. Your Company
has maintained a proper and adequate system of internal controls. The Company has
appointed Shri Rakesh Pandey as an Internal Auditor who periodically audits the adequacy
and effectiveness of the internal controls laid down by the Management and suggests
improvements. This ensures that all Assets are safeguarded and protected against loss from
unauthorised use or disposition and that the transactions are authorised, recorded and
reported diligently. Your Company's internal control systems commensurate with the nature
and size of its business operations. Internal Financial Controls are evaluated and
Internal Auditors' Reports are regularly reviewed by the Audit Committee of the Board.
Statutory Auditors Report on Internal Financial Controls as required under Clause (i)
of sub-section 3 of Section 143 of the Companies Act, 2013 is annexed with the Independent
Auditors' Report.
37. Secretarial Standards Compliance
During the year under review, the Company has complied with all the applicable
Secretarial Standards issued by the Institute of Company Secretaries of India and approved
by the Central Government pursuant to Section 118 of the Companies Act, 2013.
38. Number of cases filed, if any, and their disposal under section 22 of the Sexual
Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company is fully committed to uphold and maintain the dignity of every woman
working with the Company. The Company has Zero tolerance towards any action on the part of
any one which may fall under the ambit of 'Sexual Harassment at workplace'. The Policy
framed by the Company in this regard provides for protection against sexual harassment of
women at workplace and for prevention and redressal of such complaints.
The Company has complied with the provisions relating to the constitution of Internal
Complaints Committee ("ICC") under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013. ICC have been set up to redress
complaints received regarding sexual harassment.
The status of the Complaints during the FY 2022-23 is as follows:
Particulars |
No. of Complaints |
Number of Complaints pending as on beginning of the Financial Year |
0 |
Number of Complaints filed and resolved during the Financial Year |
0 |
Number of Complaints pending as on the end of the Financial Year |
0 |
39 Conservation of energy, technology absorption, foreign exchange earnings and outgo
Particulars relating to conservation of energy, technology absorption, foreign exchange
earnings and outgo required under Section 134(3)(m) of the Companies Act, 2013, read with
Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to time, are
provided in Annexure-D to this report.
40. Significant and material orders passed by the regulators or courts
During the year, the Hon'ble National Company Law Tribunal (NCLT), Ahmedabad Bench vide
its order dated September 21, 2022 approved the Scheme of Arrangement (Scheme) between
Aarti Industries Limited (Demerged Company) and Aarti Pharmalabs Limited (Resulting
Company) and their respective shareholders under the provisions of Section 230-232 of
Companies Act, 2013.
41. Details of application made or any proceeding pending under the Insolvency and
Bankruptcy Code, 2016 during the Financial Year alongwith their status as at the end of
the Financial Year
During the Financial Year 2022-23, there was no application made and proceeding
initiated / pending by any Financial and/or Operational Creditors against your Company
under the Insolvency and Bankruptcy Code, 2016 ("the Code").
Further, there is no application or proceeding pending against your Company under the
Code.
42. Details of difference between the amount of valuation at the time of one time
settlement and the valuation done at the time of taking a loan from the Banks or Financial
Institutions along with the reasons thereof
During the Financial Year 2022-23, the Company has not made any settlement with its
bankers for any loan/ facility availed or/and still in existence.
Acknowledgement
The Board of Directors places on record its sincere appreciation for the dedicated
services rendered by the employees of the Company at all levels and the constructive
cooperation extended by them. Your Directors would like to express their grateful
appreciation for the assistance and support by all Shareholders, Government Authorities,
Auditors, Financial Institutions, Customers, Employees, Suppliers, other business
associates and various other stakeholders.
For and on behalf of the Board
Rajendra V. Gogri
Chairman and Managing Director
DIN: 00061003
Mumbai / June 28, 2023
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