Directors Report of Atul Ltd.
Mar 31, 2023
The Board of Directors (Board) presents the annual report of Atul Ltd together with the audited Financial Statements for the year ended on March 31, 2023.
|
('' cr) |
||
|
2022-23 |
2021-22 |
|
|
Sales |
5,002 |
4,929 |
|
Revenue from operations |
5,062 |
4,993 |
|
Other income |
199 |
90 |
|
Total revenue |
5,261 |
5,083 |
|
Profit before tax |
730 |
804 |
|
Tax expenses |
(178) |
(196) |
|
Profit for the year |
552 |
608 |
|
Balance in retained earnings at the beginning of the year |
3,664 |
3,143 |
|
Transfer from comprehensive income |
5 |
(28) |
|
Buy-back of equity shares (net of amount adjusted from general reserve) |
(18) |
- |
|
Dividend |
(96) |
(59) |
|
Balance in retained earnings at the end of the year |
4,107 |
3,664 |
Sales during the year remained almost the same as last year, registering 1% increase from '' 4,929 cr to '' 5,002 cr. This was mainly due to subdued demand in the Performance and Other Chemicals (POC) segment, which was marginally offset by better volumes in the Life Science Chemicals (LSC) segment; the non-availability of one of the plants due to fire had impacted sales of the LSC segment.
Sales in India as well as outside India witnessed no major growth and reported about 1% increase from '' 2,479 cr to '' 2,505 cr within India and about 2% increase from '' 2,450 cr to '' 2,497 cr outside India. Profit before tax decreased by 9% from '' 804 cr to '' 730 cr, mainly due to lower sales volumes on account of muted demand and very thin margins due to the higher raw material and energy prices.
Sales of the LSC segment increased by 19% from '' 1,445 cr to '' 1,715 cr because of higher sales prices and volumes in the Crop Protection sub-segment; the EBIT increased by about 67% from '' 191 cr to '' 319 cr. Sales of the POC segment decreased by about 6% from '' 3,484 cr to '' 3,287 cr, mainly because of lower sales volumes in two sub-segments; the EBIT decreased by about 48% from '' 586 cr to '' 302 cr. More details are given in the Management Discussion and Analysis.
03. Dividend and buy-back of equity shares
During 2022-23 the Board declared a special interim dividend of '' 7.50 per equity share of '' 10 each fully paid up to commemorate the 75th anniversary of the incorporation of the Company. The Board also recommended payment of a final dividend of '' 25 per equity share of '' 10 each fully paid up.
During 2021-22, the Board approved '' 70 cr for the buy-back of equity shares through the open market stock exchange route to return surplus funds to the members of the Company and to improve earnings per share by a decrease in the equity base, thereby leading to a long-term increase in value for the members. The Company bought back 73,296 equity shares at an aggregate consideration of '' 69.90 cr. The buy-back was closed on May 09, 2022.
04. Energy conservation, technology absorption and foreign exchange earnings and outgo
I nformation required under Section 134 (3)(m) of the Companies Act, 2013 (the Act) read with Rule 8(3) of the Companies (Accounts) Rules, 2014 as amended from time to time, forms a part of this report, which is given on page number 28.
The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.
Risk management is an integral part of the business practice of the Company. The framework of risk management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following:
i) Risk identification and definition - Focuses on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors.
ii) Risk classification - Focuses on understanding the various impacts of risks and the level of influence on their root causes. This involves identifying various processes, generating the root causes and a clear understanding of risk inter-relationships.
iii) Risk assessment and prioritisation -Focuses on determining risk priority and risk ownership for critical risks. This involves the assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls.
iv) Risk mitigation - Focuses on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v) Risk reporting and monitoring - Focuses on providing to the Audit Committee and Board periodic information on risk profile evolution and mitigation plans.
Governance
The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) listed above. The Audit Committee | Risk
Management Committee periodically reviews the risk management system and gives its recommendations, if any, to the Board.
The Board reviews and guides the Risk Management Policy.
Implementation
I mplementation of the Risk Management Policy is the responsibility of the Management. It ensures the functioning of the risk management system as per the guidance of the Audit Committee | Risk Management Committee. The Company has a risk management oversight structure in which each sub-segment has a Chief Risk and Compliance Officer.
The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as the adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and Board.
07. Internal financial controls
The internal financial controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements. These include policies and procedures that:
i) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,
ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and Directors of the Company,
iii) provide reasonable assurance regarding the prevention or timely detection of unauthorised acquisition, use, or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the internal financial controls with respect to the Financial Statements.
The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2023, and the Board believes that the controls are adequate.
During 2022-23, the Company did not accept any fixed deposits.
09. Loans, guarantees, investments and security
Particulars of loans, guarantees, investments and security provided are given on page numbers 146 and 148.
10. Subsidiary, joint venture and associate companies | entities and joint operation
During 2022-23:
i) Atul Healthcare Ltd, a wholly-owned subsidiary of the Company formed a joint venture entity by acquiring 50% stake of Valsad Institute of Medical Sciences Ltd in accordance with the Shareholders'' Agreement.
ii) Atul Aarogya Ltd, Atul Ayurveda Ltd, Atul Clean Energy Ltd, Atul Consumer Products Ltd, Atul Crop Care Ltd, Atul Entertainment Ltd, Atul Hospitality Ltd, Atul (Retail) Brands Ltd, Atul Seeds Ltd, Jayati Infrastructure Ltd and Osia Dairy Ltd became wholly-owned subsidiary companies of the Company.
There were no other changes in the subsidiary, joint venture and associate companies | entities, and joint operation which were reported earlier.
11. Related party transactions
All the transactions entered into with the related parties were in the ordinary course of business and on an arm''s length basis. Details of such transactions are given on page number 160. No transactions were entered into by the Company that required disclosure in Form AOC-2.
12. Corporate social responsibility
The Corporate Social Responsibility (CSR) Policy, the CSR Report and the composition of the CSR Committee are given on page number 32.
Annual return for 2022-23 is available on the website of the Company at:
www.atul.co.in/investors/annual-general-meetings/
14. Auditors Statutory Auditors
Deloitte Haskins & Sells LLP, Chartered Accountants (DHS) were reappointed as the Statutory Auditors of the Company at the 45th Annual General Meeting (AGM) held on July 29, 2022, until the conclusion of the 50th AGM.
The Auditor''s Report for the financial year ended on March 31, 2023, does not contain any qualification, reservation or adverse remark. The report is
enclosed with the Financial Statements in this annual report.
The Company has maintained cost records as required under the Act and the Companies (Cost Records and Audit) Rules, 2014. The members ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2022-23 on July 29, 2022.
SPANJ & Associates, Company Secretaries, continue to be the Secretarial Auditors for 2022-23 and their report is given on page number 35.
15. Directorsâ responsibility statement
15.1. In preparation of the annual accounts for the financial year that ended on March 31, 2023, the applicable accounting standards have been followed and there are no material departures.
15.2. The accounting policies were selected and applied consistently and judgements and estimates thus made were 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.
15.3. Proper and sufficient care was taken 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.
15.4. The attached annual accounts for the year ended on March 31, 2023, were prepared on a going concern basis.
15.5. Adequate internal financial controls to be followed by the Company were laid down and they were adequate and operating effectively. This is given under para number 07.
15.6. Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.
16.1. Appointments | Reappointments | Cessations
i) Mr Bansi Mehta, Independent Director is retiring on May 31, 2023. The Company immensely benefited from his knowledge, experience and expertise in the last 31 years.
ii) According to Article 86 of the Articles of Association of the Company, Mr Rajendra Shah retires by rotation. Although eligible, he desires not to be reappointed in the ensuing AGM. Accordingly, he will cease to hold office as a Non-executive Director of the Company in the ensuing AGM. The Company
immensely benefited from his knowledge, experience and expertise in the last 41 years.
The Board places on record its deep appreciation for their valuable contribution through sustained involvement, critical analysis and valuable guidance.
iii) Subject to the approval of the members in the AGM:
a) Mr Sunil Lalbhai was reappointed by the Board as the Chairman and Managing Director effective July 01, 2024, for a period of five years.
b) Mr Rangaswamy Iyer was appointed as an Independent Director effective May 01, 2023, for a period of five years.
In the opinion of the Board, Mr Iyer possesses knowledge, experience and expertise relevant to the Company.
16.2. Policy on appointment and remuneration is displayed on the website of the Company at www.atul.co.in/investors/policies
The salient features of the Policy are as under:
16.2.1. Appointment
While recommending the appointment of Directors, the Nomination and Remuneration Committee
considers the following factors:
i) Qualification: well-educated and
experienced in senior leadership positions in industry | profession
ii) Trait: positive attributes and qualities
iii) Independence: criteria prescribed in Section
149(6) of the Act for the Independent Directors, including no pecuniary interest and conflict of interest
16.2.2. Remuneration of the Non-executive Directors
i) Sitting fees: up to '' 35,000 for attending a Board, Committee and any other meeting
ii) Commission: up to 1% of net profit as may
be decided by the Board based on the
following factors:
a) Membership of committee(s)
b) Profit
c) Attendance
d) Category (Independent or Non-executive)
16.2.3. Remuneration of the Executive Directors This is given under para number 17.2.
16.3. Criteria and method of the annual evaluation
16.3.1. The criteria for evaluation of the performance of
i) the Executive Directors, ii) the Non-executive Director (other than Independent Directors), iii) the Independent Directors, iv) the Chairman, v) the Committees of the Board and vi) the Board as a whole are summarised in the table at the end of the Directors'' Report on page number 27.
16.3.2. The Independent Directors have carried out annual:
i) review of the performance of the
Executive Directors
ii) review of the performance of the
Non-executive Director (other than Independent Directors)
iii) review of the performance of the Chairman and assessment of quality, quantity and timeliness of the flow of information to the Board
iv) review of the performance of the Board as a whole
16.3.3. The Board has carried out an annual evaluation of the performance of:
i) its committees, namely, Audit, Corporate
Social Responsibility, Investment, Nomination and Remuneration, Risk Management and Stakeholders Relationship
ii) the Independent Directors
The templates for the above purpose were circulated in advance for feedback from the Directors.
16.4. Familiarisation programs for the Independent Directors
The Company has familiarisation programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on the nature of the industries in which it operates, its vision and strategy, its organisation structure, and relevant regulatory changes. A visit is organised to one or more of its manufacturing sites. Details of the familiarisation programs are also available at www.atul.co.in/about/directors/
17. Key managerial personnel and other employees
17.1. Appointments and cessations of the Key Managerial Personnel
There were no appointments | cessations of the Key Managerial Personnel during 2022-23.
17.2. Remuneration
The Remuneration Policy of the Key Managerial Personnel and other employees consists of the following:
17.2.1. Components:
i) Fixed pay
a) Basic salary
b) Allowances
c) Perquisites
d) Retirals
ii) Variable pay
17.2.2. Factors for determining and changing fixed pay:
i) Existing compensation
ii) Education
iii) Experience
iv) Salary bands
v) Performance
vi) Market benchmark
17.2.3. Factors for determining and changing variable pay:
i) Business performance
ii) Individual performance
iii) Work level
The information required pursuant to Sections 134 (3)(q) and 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms a part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the members and others entitled thereto excluding the information on particulars of employees, which are available for inspection by the members.
Any member interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company.
19. Management Discussion and Analysis
The Management Discussion and Analysis covering the performance of the two reporting segments, namely, LSC and POC, is given on page number 39.
20. Corporate Governance Report
20.1. Declaration by the Independent Directors
The Independent Directors have given declarations under Section 149(6) of the Act.
20.2. Report
The Corporate Governance Report along with the certificate from the Practicing Company Secretary regarding the compliance of the conditions of Corporate Governance pursuant to Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015 is given on page number 46. Details about the number of meetings of the Board held during 2022-23 are given on page number 51. The composition of the Audit Committee is given on page number 54.
All the recommendations given by the Audit Committee were accepted by the Board.
20.3. Whistleblowing Policy
The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistleblowing Policy). The Policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the code of conduct of the Company and is displayed on the website of the Company at www.atul.co.in/investors/policies
No person has been denied access to the Audit Committee.
20.4. Secretarial standards
Secretarial standards as applicable to the Company were followed and complied with during 2022-23.
20.5. Prevention, prohibition and redressal of sexual harassment
Details required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder are given on page number 59.
21. Business Responsibility and Sustainability Report
As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility and Sustainability Report is given on page number 66.
22. Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is displayed on the website of the Company at www.atul.co.in/investors/policies
The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and government authorities, stock exchanges and investors for their support.
For and on behalf of the Board of Directors
(Sunil Lalbhai)
Mumbai Chairman and Managing Director
April 28, 2023 DIN: 00045590
Mar 31, 2022
The Board of Directors (Board) presents the annual report of Atul Ltd together with the audited Financial Statements for the year ended March 31, 2022.
|
('' cr) |
||
|
2021-22 |
2020-21 |
|
|
Sales |
4,929 |
3,460 |
|
Revenue from operations |
4,993 |
3,512 |
|
Other income |
90 |
104 |
|
Total revenue |
5,083 |
3,616 |
|
Profit before tax |
804 |
828 |
|
Tax expenses |
(196) |
(197) |
|
Profit for the year |
608 |
631 |
|
3,143 |
2,513 |
|
|
Transfer from comprehensive income |
(28) |
(1) |
|
Dividend |
(59) |
- |
|
Balance in retained earnings at the end of the year |
3,664 |
3,143 |
Sales increased by about 42% from '' 3,460 cr to '' 4,929 cr mainly due to higher price levels (of both inputs and finished goods) in 2021-22 and also because of the low sales in Q1 of 2020-21 on account of the COVID-19 pandemic. Sales in India increased by about 32% from '' 1,885 cr to '' 2,479 cr. Sales outside India increased by about 56% from '' 1,575 cr to '' 2,450 cr. Profit before tax decreased by 3% from '' 828 cr to '' 804 cr, mainly due to non-recurring dividend income of '' 55 cr received in 2020-21.
Sales of Life Science Chemicals (LSC) segment increased by 29% from '' 1,124 cr to '' 1,445 cr, mainly because of higher sales prices and volume in the sub-segments Crop Protection and Pharmaceuticals; the EBIT decreased by about 4% from '' 199 cr to '' 191 cr. Sales of Performance and Other Chemicals (POC) segment increased by about 49% from '' 2,336 cr to '' 3,484 cr, mainly because of higher sales volume in three sub-segments; the EBIT increased by about 2% from '' 574 cr to '' 586 cr. More details are given in the Management Discussion and Analysis.
03. Dividend and buy-back of equity shares
The Board recommends payment of dividend of '' 25 per equity share of '' 10 each fully paid-up.
During 2021-22, the Board approved '' 70 cr for buy-back of equity shares through the open market stock exchange route to return surplus funds to the members of the Company and to improve earnings per share by a decrease in the equity base, thereby leading to an long-term increase in value for the members. Till date 53,748 equity shares are bought back at an aggregate consideration of '' 52.72 cr. The buy-back is still in process.
04. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Information required under Section 134 (3)(m) of the Companies Act, 2013 (the Act) read with Rule 8 (3) of the Companies (Accounts) Rules 2014 as amended from time to time, forms a part of this report, which is given at page number 30.
05. Insurance
The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.
06. Risk management
Risk management is an integral part of business practice of the Company. The framework of risk management concentrates on formalising a system to
deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following:
i) Risk identification and definition - Focuses on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors.
ii) Risk classification - Focuses on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes, generating the root causes and a clear understanding of risk inter-relationships.
iii) Risk assessment and prioritisation - Focuses on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls.
iv) Risk mitigation - Focuses on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v) Risk reporting and monitoring - Focuses on providing to the Audit Committee and Board periodic information on risk profile evolution and mitigation plans.
Roles and responsibilities
Governance
The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) listed above. The Audit Committee | Risk Management Committee periodically reviews the risk management system and gives its recommendations, if any, to the Board.
The Board reviews and guides the Risk Management Policy.
Implementation
Implementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the risk management system as per the guidance of the Audit Committee | Risk Management Committee. The Company has a risk management
oversight structure in which each sub-segment has a Chief Risk and Compliance Officer.
The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and Board.
07. Internal financial controls
The internal financial controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements. These include policies and procedures that:
i) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,
ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and Directors of the Company,
iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the internal financial controls with respect to the Financial Statements.
The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2022, and the Board believes that the controls are adequate.
During 2021-22, the Company did not accept any fixed deposits.
09. Loans, guarantees, investments and security
Particulars of loans, guarantees, investments and security provided are given at page numbers 142 and 144.
10. Subsidiary, associate and joint ventureentities
During 2021-22, Atul Healthcare Ltd, Atul Paints Ltd and Sehat Foods Ltd were incorporated as wholly-owned subsidiary companies of the
Company. Osia Infrastructure Ltd became
a wholly-owned subsidiary of the Company. There were no other changes in the subsidiary, associate
15. Directorsâ responsibility statement
Pursuant to Section 134(5) of the Act, the Directors confirm that, to the best of their knowledge and belief:
15.1. In preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures.
15.2. The accounting policies were selected and applied consistently and judgements and estimates thus made were 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.
15.3. Proper and sufficient care was taken 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.
15.4. The attached annual accounts for the year ended March 31, 2022, were prepared on a going concern basis.
15.5. Adequate internal financial controls to be followed by the Company were laid down and they were adequate and operating effectively.
15.6. Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.
16. Directors
16.1. Appointments | Reappointments | Cessations
i) According to Article 86 of the Articles of Association of the Company, Mr T R Gopi Kannan retires by rotation and being eligible, offers himself for reappointment at the AGM scheduled on July 29, 2022.
ii) Subject to the approval of the members in the AGM:
a) Mr B N Mohanan was reappointed as a Whole-time Director from January 01, 2023 till May 25, 2025.
b) Mr P J Banerjee was appointed as an Independent Director effective May 01, 2022, for a period of five years.
In the opinion of the Board, the Independent Directors possess integrity, rich experience and expertise relevant to the Company.
16.2. Policy on appointment and remuneration is displayed on the website of the Company at www.atul.co.in/investors/policies
The salient features of the Policy are as under:
and joint venture entities which were reported earlier.
11. Related party transactions
All the transactions entered into with the related parties were in ordinary course of business and on arm''s length basis. Details of such transactions are given at page number 156. No transactions were entered into by the Company that required disclosure in Form AOC-2.
12. Corporate social responsibility
Composition of the Corporate Social Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 34.
Annual return for 2021-22 is available on the website of the Company at:
www.atul.co.in/investors/annual-general-meetings/
14. Auditors Statutory Auditors
Deloitte Haskins & Sells LLP, Chartered Accountants (DHS) were appointed as the Statutory Auditors of the Company at the 40th Annual General Meeting (AGM) held on July 28, 2017, until the conclusion of the 45th AGM. The first term of five years of DHS is expiring at the ensuing AGM. Pursuant to Section 139 of the Companies Act, 2013 and Rules made thereunder, the Company can reappoint DHS for a second term of five years. Accordingly, based on the recommendation of the Audit Committee, the Board at its meeting held on April 26, 2022, recommended the reappointment of DHS, as the Statutory Auditors of the Company for second term of five years. DHS will hold the office for a period of five consecutive years from the conclusion of the 45th AGM of the Company till the conclusion of the 50th AGM to be held in the year 2027, subject to the approval of the members of the Company at the ensuing AGM. DHS have given their consent to act as the Auditors and confirmed their eligibility for reappointment.
The Auditor''s Report for the financial year ended March 31, 2022, does not contain any qualification, reservation or adverse remark. The report is enclosed with the Financial Statements in this annual report.
The Company has maintained cost records as required under the Act. The members ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2021-22 on July 31, 2021.
SPANJ & Associates, Company Secretaries, continue to be the Secretarial Auditors for 2021-22 and their report is given at page number 40.
16.2.1. Appointment
While recommending appointment of Directors, the Nomination and Remuneration Committee considers the following factors:
i) Qualification: well-educated and experienced in senior leadership positions in industry | profession
ii) Trait: positive attributes and qualities
iii) Independence: criteria prescribed in Section 149(6) of the Act for the Independent Directors, including no pecuniary interest and conflict of interest
16.2.2. Remuneration of the Non-executive Directors
i) Sitting fees: up to '' 35,000 for attending a Board, Committee and any other meeting
ii) Commission: up to 1% of net profit as may be decided by the Board based on the following factors:
a) Membership of committee(s)
b) Profit
c) Attendance
d) Category (Independent or Non-executive)
16.2.3. Remuneration of the Executive Directors This is given under para number 17.2.
16.3. Criteria and method of annual evaluation
16.3.1. The criteria for evaluation of performance of
i) the Executive Directors, ii) the Non-executive Director (other than Independent Directors),
iii) the Independent Directors, iv) the Chairman, v) the Committees of the Board and vi) the Board as a whole are summarised in the table at the end of the Directors'' Report at page number 29.
16.3.2. The Independent Directors have carried out annual:
i) review of performance of the Executive Directors
ii) review of performance of the Non-executive Director (other than Independent Directors)
iii) review of performance of the Chairman and assessment of quality, quantity and timeliness of the flow of information to the Board
iv) review of performance of the Board as a whole
16.3.3. The Board has carried out annual evaluation of performance of:
i) its committees, namely, Audit, Corporate Social Responsibility, Investment, Nomination and Remuneration, Risk Management and Stakeholders Relationship
ii) the Independent Directors
The templates for the above purpose were circulated in advance for feedback of the Directors.
16.4. Familiarisation programs for the Independent Directors
The Company has familiarisation programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on the nature of the industries in which it operates, its vision and strategy, its organisation structure and relevant regulatory changes. A visit is organised to one or more of its manufacturing sites. Details of the familiarisation programs are also available at www.atul.co.in/about/directors/
17. Key Managerial Personnel and otheremployees
17.1. Appointments and cessations of the Key Managerial Personnel
There were no appointments | cessations of the Key Managerial Personnel during 2021-22.
17.2. Remuneration
The Remuneration Policy of the Key Managerial Personnel and other employees consists of the following:
17.2.1. Components:
i) Fixed pay
a) Basic salary
b) Allowances
c) Perquisites
d) Retirals
ii) Variable pay
17.2.2. Factors for determining and changing fixed pay:
i) Existing compensation
ii) Education
iii) Experience
iv) Salary bands
v) Performance
vi) Market benchmark
17.2.3. Factors for determining and changing variable pay:
i) Business performance
ii) Individual performance
iii) Grade
The information required pursuant to Sections 134 (3)(q) and 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms a part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the members and others entitled thereto excluding the information on particulars of employees, which are available for inspection by the members.
Any members interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company.
19. Management Discussion and Analysis
The Management Discussion and Analysis covering performance of the two reporting segments, namely, LSC and POC, is given at page number 44.
20. Corporate Governance Report
20.1. Declaration by the Independent Directors
The Independent Directors have given declarations under Section 149(6) of the Act.
20.2. Report
The Corporate Governance Report along with the certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given at page number 51. Details about the number of meetings of the Board held during 2021-22 are given at page number 56. The composition of the Audit Committee is given at page number 59.
All the recommendations given by the Audit Committee were accepted by the Board.
20.3. Whistleblowing Policy
The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistleblowing Policy). The Policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the Code of Conduct of the Company and is displayed on the website of the Company at www.atul.co.in/investors/policies
No personnel have been denied access to the Audit Committee.
20.4. Secretarial standards
Secretarial standards as applicable to the Company were followed and complied with during 2021-22.
20.5. Prevention, prohibition and redressal of sexual harassment
Details required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder are given at page number 64.
21. Business Responsibility and Sustainability Report
As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility and Sustainability Report is given at page number 71.
22. Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is displayed on the website of the Company at www.atul.co.in/investors/policies
An incident of fire occurred on April 20, 2022 in one of the plants at Atul, Gujarat. There was no fatality or injury to any person, and damage was restricted to the affected plant. The Company is in the process of assessing the impact of the fire on the plant and related operations and filing necessary claims with the insurance company.
The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and government authorities, stock exchanges and investors for their support.
For and on behalf of the Board of Directors
(Sunil Siddharth Lalbhai) Mumbai Chairman and Managing Director
April 26, 2022 DIN: 00045590
Mar 31, 2021
The Board of Directors (Board) presents the annual report of Atul Ltd together with the audited Financial Statements for the year ended March 31, 2021.
|
('' cr) |
||
|
2020-21 |
2019-20 |
|
|
Sales |
3,460 |
3,824 |
|
Revenue from operations |
3,512 |
3,906 |
|
Other income |
104 |
77 |
|
Total revenue |
3,616 |
3,983 |
|
Profit before tax |
828 |
803 |
|
Provision for tax |
197 |
163 |
|
Profit for the year |
631 |
640 |
|
Balance brought forward |
2,513 |
2,026 |
|
Transfer from comprehensive income |
(1) |
(2) |
|
Disposable surplus |
3,143 |
2,664 |
|
Less: |
||
|
Dividend paid |
- |
126 |
|
Dividend distribution tax (net) |
- |
25 |
|
Balance carried forward |
3,143 |
2,513 |
Sales decreased by 10% from '' 3,824 cr to '' 3,460 cr mainly due to lower volumes sold, primarily on account of the outbreak of the COVID-19 pandemic across the world. Sales in India decreased by about 5% from '' 1,985 cr to '' 1,885 cr. Sales outside India decreased by about 14% from '' 1,839 cr to '' 1,575 cr. The PBT increased by 3% from '' 803 cr to '' 828 cr inspite of the adverse impact of the pandemic mainly due to favourable input prices and higher dividend income.
Sales of Life Science Chemicals (LSC) segment decreased by 4% from '' 1,174 cr to '' 1,124 cr, mainly because of lower sales volume in the sub-segments Crop Protection and Floras; the EBIT decreased by about 7% from '' 213 cr to '' 199 cr. Sales of Performance and Other Chemicals (POC) segment decreased by about 12% from '' 2,650 cr to '' 2,336 cr, mainly because of lower sales volume in three sub-segments; the EBIT decreased by about 1% from '' 579 cr to '' 574 cr. More details are given in the Management Discussion and Analysis (MDA).
03. Dividend and buy-back of equity shares
The Board recommends payment of dividend of '' 20 per share on 2,95,87,051 equity shares of '' 10 each fully paid-up. The dividend will entail an outflow
of '' 59.17 cr on the paid-up equity share capital of '' 29.59 cr.
During 2020-21, the Board approved '' 50 cr for buy-back of equity shares through the open market stock exchange route to return surplus funds to the shareholders of the Company and to improve earnings per share by a decrease in the equity base, thereby leading to a long-term increase in value for the shareholders. The buy-back of equity shares was completed as per details given below:
|
Buy-back opening date |
February 10, 2021 |
|
Buy-back closure date |
February 19, 2021 |
|
Average price per equity shares bought back |
'' 6,678.58 |
|
Aggregate consideration |
'' 49.88 cr |
|
No. of equity shares bought back |
74,682 |
|
Date of extinguishment of equity shares |
February 25, 2021 |
|
Total no. of equity shares of '' 10 each, pre-buy-back |
2,96,61,733 |
|
Total no. of equity shares of '' 10 each, post-buy-back |
2,95,87,051 |
04. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Information required under Section 134 (3)(m) of the Companies Act, 2013, (the Act) read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, as amended from time to time, forms a part of this report, which is given at page number 28.
The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.
Risk management is an integral part of business practice of the Company. The framework of risk management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following:
i) Risk identification and definition - Focuses on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors.
ii) Risk classification - Focuses on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes, generating the root causes and a clear understanding of risk inter-relationships.
iii) Risk assessment and prioritisation - Focuses on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls.
iv) Risk mitigation - Focuses on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v) Risk reporting and monitoring - Focuses on providing to the Audit Committee and Board periodic information on risk profile evolution and mitigation plans.
Governance
The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) listed above. The Audit Committee | Risk Management Committee periodically reviews the risk management system and gives its recommendations, if any, to the Board.
The Board reviews and guides the Risk Management Policy.
Implementation
I mplementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the risk management system as per the guidance of the Audit Committee | Risk Management Committee. The Company has a risk management oversight structure in which each sub-segment has a Chief Risk and Compliance Officer.
The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and Board.
07. Internal financial controls
The internal financial controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements. These include policies and procedures that:
i) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,
ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and Directors of the Company,
iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the internal financial controls with respect to the Financial Statements.
The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2021, and the Board believes that the controls are adequate.
During 2020-21, the Company did not accept any fixed deposits.
09. Loans, guarantees, investments and security
Particulars of loans, guarantees, investments and security provided are given at page numbers 116 and 118.
10. Subsidiary, associate and joint venture entities
During 2020-21, Atul Lifescience Ltd, Atul Natural Dyes Ltd, Atul Natural Foods Ltd, Atul Products Ltd and Atul Renewable Energy Ltd were incorporated as wholly-owned subsidiary companies of the Company and Amal Speciality Chemicals Ltd, was incorporated as its wholly-owned subsidiary by Amal Ltd, an associate company of the Company. There were no other changes in the subsidiary, associate and joint venture entities, which were reported earlier.
11. Related party transactions
All the transactions entered into with the related parties were in ordinary course of business and on arm''s length basis. Details of such transactions are given at page number 128. No transactions were entered into by the Company that required disclosure in Form AOC-2.
12. Corporate social responsibility
Composition of the Corporate Social Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 32.
Annual return for 2020-21 is available on the website of the Company at:
www.atul.co.in/investors/annual-general-meetings/
14. Auditors Statutory Auditors
Deloitte Haskins & Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company at the 40th Annual General Meeting (AGM) held on July 28, 2017, until the conclusion of the 45th AGM.
The Auditor''s Report for the financial year ended March 31, 2021, does not contain any qualification, reservation or adverse remark. The report is enclosed with the financial statements in this annual report.
The Company has maintained cost records as required under the Act. The shareholders ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2020-21 on July 31, 2020.
The Board appointed SPANJ & Associates, Company Secretaries, as the Secretarial Auditors for 2020-21 on March 23, 2018, and their report is given at page number 37.
L5. Directorsâ responsibility statement
Pursuant to Section 134(5) of the Act, the Directors confirm that, to the best of their knowledge and belief:
.5.1 In preparation of the annual accounts for the financial year ended March 31,2021, the applicable accounting standards have been followed and there are no material departures.
5.2 The accounting policies were selected and applied consistently and judgements and estimates thus made were 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.
.5.3 Proper and sufficient care was taken 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.
5.4 The attached annual accounts for the year ended March 31, 2021, were prepared on a going concern basis.
5.5 Adequate internal financial controls to be followed by the Company were laid down and they were adequate and operating effectively.
5.6 Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.
6.1 Appointments | Reappointments | Cessations
i) Subject to the approval of the Members in the AGM, Mr S A Lalbhai was reappointed as a Managing Director effective December 15, 2021, for a period of five years.
ii) According to Article 86 of the Articles of Association of the Company, Mr B N Mohanan retires by rotation and being eligible, offers himself for reappointment at the AGM scheduled on July 30, 2021.
iii) I n the opinion of the Board, the Independent Directors reappointed during the year possess integrity, rich experience and expertise relevant to the Company.
16.2 Policy on appointment and remuneration is displayed on the website of the Company at www.atul.co.in/investors/policies
The salient features of the Policy are as under:
16.2.1 Appointment
While recommending appointment of Directors, the Nomination and Remuneration Committee considers the following factors:
i) Qualification: well-educated and experienced in senior leadership positions in industry | profession
ii) Trait: positive attributes and qualities
iii) Independence: criteria prescribed in Section 149(6) of the Act for the Independent Directors, including no pecuniary interest and conflict of interest
16.2.2 Remuneration of the Non-executive Directors
i) Sitting fees: up to '' 35,000 for attending a Board, Committee and any other meeting
ii) Commission: up to 1% of net profit as may be decided by the Board based on the following factors:
a) Membership of committee(s)
b) Profit
c) Attendance
d) Category (Independent or Non-independent)
16.2.3 Remuneration of the Executive Directors This is given under para number 17.2.
16.3 Criteria and method of annual evaluation
16.3.1 The criteria for evaluation of performance of
i) The Non-independent Directors (Executive),
ii) the Non-independent Director (Non-executive),
iii) the Independent Directors, iv) the Chairman, v) the Committee of the Board and vi) the Board as a whole are summarised in the table at the end of the Directors'' Report at page number 27.
16.3.2 The Independent Directors have carried out annual:
i) review of performance of the Non-independent Directors - Executive
ii) review of performance of the Non-independent Director - Non-executive
iii) review of performance of the Chairman and assessment of quality, quantity and timeliness of the flow of information to the Board
iv) review of performance of the Board as a whole
16.3.3 The Board has carried out annual evaluation of performance of:
i) its committees, namely, Audit, Corporate Social Responsibility, Investment, Nomination and Remuneration, Risk Management and Stakeholders Relationship
ii) the Independent Directors
The templates for the above purpose were circulated in advance for feedback of the Directors.
16.4 Familiarisation programs for the Independent Directors
The Company has familiarisation programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on the nature of the industries in which it operates, its vision and strategy, its organisation structure and relevant regulatory changes. A visit is organised to one or more of its manufacturing sites. Details of the familiarisation programs are also available at www.atul.co.in/about/directors/
17. Key Managerial Personnel and other employees
17.1 Appointments and cessations of the Key Managerial Personnel
There were no appointments | cessations of the Key Managerial Personnel during 2020-21.
17.2 Remuneration
The Remuneration Policy of the Key Managerial Personnel and other employees consists of the following:
17.2.1 Components:
i) Fixed pay
a) Basic salary
b) Allowances
c) Perquisites
d) Retirals
ii) Variable pay
17.2.2 Factors for determining and changing fixed pay:
i) Existing compensation
ii) Education
iii) Experience
iv) Salary bands
v) Performance
vi) Market benchmark
17.2.3 Factors for determining and changing variable pay:
i) Business performance
ii) Individual performance
iii) Grade
The information required pursuant to Sections 134 (3)(q) and 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms a part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the Members and others entitled thereto excluding the information on particulars of employees, which are available for inspection by the Members.
Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company.
19. Management Discussion and Analysis
The Management Discussion and Analysis covering performance of the two reporting segments, namely, LSC and POC, is given at page number 41.
20. Corporate Governance Report
20.1 Statement of declaration given by the Independent Directors.
The Independent Directors have given declarations under Section 149(6) of the Act.
20.2 Report
The Corporate Governance Report along with the certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given at page number 48. Details about the number of meetings of the Board held during 2020-21 are given at page number 53. The composition of the Audit Committee is given at page number 56.
All the recommendations given by the Audit Committee were accepted by the Board.
20.3 Whistleblowing Policy
The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistleblowing Policy). The Policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the Code of Conduct of the Company and is displayed on the website of the Company at www.atul.co.in/investors/policies
No personnel have been denied access to the Audit Committee.
20.4 Secretarial standards
Secretarial standards as applicable to the Company were followed and complied with during 2020-21.
20.5 Prevention, prohibition and redressal of sexual harassment
Details required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder are given at page number 60.
21. Business Responsibility Report
As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is given at page number 68.
22. Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is given at page number 74.
The COVID-19 pandemic is a worldwide crisis and has meant that the economies will have to operate alongside the disease.
The Company strictly followed the guidelines issued by the local, state and central governments and also went beyond to protect the health and well-being of its workforce and ensured minimum disruption to its customers. Despite this, the sales of the Company in the first quarter were affected due to the pandemic.
The Company provided support to its employees and their families to undergo vaccination.
The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and government authorities, stock exchanges and investors for their support.
For and on behalf of the Board of Directors
Atul (Sunil Siddharth Lalbhai)
April 30, 2021 Chairman and Managing Director
Mar 31, 2019
Dear Members,
The Board of Directors (Board) presents the Annual Report of Atul Ltd together with the audited Financial Statements for the year ended March 31, 2019.
01. Financial results
(Rs. cr)
|
2018-19 |
2017-18 |
|
|
Sales |
3,845 |
3,052 |
|
Revenue from operations |
3,916 |
3,148 |
|
Other income |
31 |
38 |
|
Total revenue |
3,947 |
3,186 |
|
Profit before tax |
652 |
397 |
|
Provision for tax |
223 |
127 |
|
Profit for the year |
429 |
270 |
|
Balance brought forward |
1,637 |
1,397 |
|
Transfer from comprehensive income |
- |
3 |
|
Disposable surplus |
2,066 |
1,670 |
|
Less: |
||
|
Dividend paid |
36 |
30 |
|
Dividend distribution tax (net) |
4 |
3 |
|
Balance carried forward |
2,026 |
1,637 |
02. Performance
Sales increased by 26% from Rs. 3,052 cr to Rs. 3,845 cr mainly due to better price realisation. Sales in India increased by 26% from Rs. 1,538 cr to Rs. 1,937 cr. Sales outside India increased by 26% from Rs. 1,514 cr to Rs. 1,908 cr. The earnings per share increased from Rs. 91.16 to Rs. 144.51. Cash flow from operating activities before working capital changes increased by 60% from Rs. 480 cr to Rs. 770 cr and the net cash flow from operating activities increased by 22% from Rs. 325 cr to Rs. 397 cr.
Sales of Life Science Chemicals (LSC) segment increased by 26% from Rs. 1,027 cr to Rs. 1,289 cr, mainly because of higher sales in sub-segments Aromatics-I, Crop Protection and Pharmaceuticals; its EBIT increased by 81% from Rs. 120 cr to Rs. 217 cr. Sales of Performance and Other Chemicals (POC) segment increased by 26% from Rs. 2,025 cr to Rs. 2,556 cr mainly because of higher sales in sub-segments Aromatics - II and Polymers; its EBIT increased by 61% from Rs. 281 cr to Rs. 453 cr. More details are given in the Management Discussion and Analysis (MDA) Report.
03. Dividend
The Board recommends payment of dividend of Rs. 15 per share on 2,96,61,733 equity shares of Rs. 10 each fully paid-up. The dividend will entail an outflow of Rs. 53.64 cr {including dividend distribution tax (net)} on the paid-up equity share capital of Rs. 29.66 cr.
04. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Information required under Section 134 (3)(m) of the Companies Act, 2013, (the Act) read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to time, forms a part of this Report which is given at page number 29.
05. Insurance
The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.
06. Risk management
The Board has constituted Risk Management Committee effective April 01, 2019.
Risk management is an integral part of business practices of the Company. The framework of risk management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following:
i) Risk identification and definition - Focused on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes contributing factors.
ii) Risk classification - Focused on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes generating the root causes and a clear understanding of risk interrelationships.
iii) Risk assessment and prioritisation - Focused on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls.
iv) Risk mitigation - Focused on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v) Risk reporting and monitoring - Focused on providing to the Board and the Audit Committee periodic information on risk profile evolution and mitigation plans.
Roles and responsibilities
Governance
The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) above. The Audit Committee the Risk Management Committee periodically reviews the risk management system and gives its recommendations, if any, to the Board.
The Board reviews and guides the Risk Management Policy.
Implementation
Implementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the risk management system as per the guidance of the Audit Committee the Risk Management Committee. The Company has a risk management oversight structure in which each sub-segment has a Chief Risk and Compliance Officer.
The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and the Board.
07. Internal financial controls
The internal financial controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements.
These include those policies and procedures that:
i) pertain to the maintenance of records which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,
ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and the Directors of the Company,
iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the internal financial controls with respect to the Financial Statements.
The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2019, and the Board believes that the controls are adequate.
08. Fixed deposits
During 2018-19, the Company did not accept any fixed deposits.
09. Loans, guarantees, investments and security
Particulars of loans, guarantees, investments and security provided are given at page numbers 135 and 137.
10. Subsidiary, associate and joint venture companies
During April 2019, Atul Ireland Ltd was incorporated as a wholly-owned subsidiary company in Ireland. There were no other changes in the subsidiary, associate and joint venture companies which were reported earlier.
11. Related party transactions
All the transactions entered into with the related parties were in ordinary course of business and on arm''s length basis. Details of such transactions are given at page number 148. No transactions were entered into by the Company which required disclosure in Form AOC-2.
12. Corporate Social Responsibility
Composition of the Corporate Social Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 33.
13. Extract of the Annual Return
This is given at page number 39.
14. Auditors Statutory Auditors
Deloitte Haskins & Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company at the 40th Annual General Meeting (AGM) held on July 28, 2017 until the conclusion of the 45th AGM.
The relevant Notes forming part of the accounts are self-explanatory and give full information and explanation in respect of the observations made by the Auditors in their report.
Cost Auditors
The Company has maintained cost records as required under the Act. The shareholders ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2018-19 on July 27, 2018.
Secretarial Auditors
The Board appointed SPANJ & Associates, Company Secretaries, as the Secretarial Auditors for 2018-19 on March 23, 2018, and their report is given at page number 52.
15. Directors'' responsibility statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:
15.1 The applicable accounting standards were followed along with proper explanations relating to material departures in the preparation of the annual accounts.
15.2 The accounting policies were selected and applied consistently and judgements and estimates were made that were 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.
15.3 Proper and sufficient care was taken 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.
15.4 The attached annual accounts for the year ended March 31, 2019 were prepared on a going concern basis.
15.5 Adequate internal financial controls to be followed by the Company were laid down and they were adequate and operating effectively.
15.6 Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.
16. Directors
16.1 Appointments Reappointments Cessations
16.1.1 According to Article 86 of the Articles of Association of the Company, Mr T R Gopi Kannan retires by rotation and being eligible, offers himself for reappointment at the forthcoming AGM scheduled on July 31, 2019.
16.1.2 Subject to the approval of the Members in the AGM:
i) Mr T R Gopi Kannan was reappointed as a Whole-time Director effective October 17, 2019 for a period of 5 years.
ii) Mr M M Chitale was reappointed as an Independent Director effective October 17, 2019 for a second term of 5 consecutive years.
iii) Mr B N Mohanan was reappointed as a Whole-time Director effective January 01, 2020 for a period of 3 years.
iv) Ms S A Panse was reappointed as an Independent Director effective March 27, 2020 for a second term of 5 consecutive years.
v) Mr B R Arora was reappointed as an Independent Director effective April 01, 2020 for a second term of 5 consecutive years.
16.1.3 Dr S S Baijal and Mr H S Shah ceased to be Independent Directors of the Company effective March 31, 2019 on expiry of their term. The Board places on record its deep appreciation for their immense contribution through sustained involvement sustained involvement, critical analysis and valuable guidance.
16.2 Policy on appointment and remuneration is displayed on the website of the Company at https://www.atul.co.in/investors/policies
The salient features of the Policy are as under:
16.2.1 Appointment
While recommending appointment of the Directors, the Nomination and Remuneration Committee considers the following factors:
i) Qualification: well-educated and experienced in senior leadership positions in industry | profession
ii) Traits: positive attributes and qualities
iii) Independence: criteria prescribed in Section 149(6) of the Companies Act, 2013 for the Independent Directors, including no pecuniary interest and conflict of interest
16.2.2 Remuneration of the Non-executive Directors
i) Sitting fees: up to Rs. 35,000 for attending a Board, Committee and any other meeting
ii) Commission: up to 1% of net profit as may be decided by the Board based on the following factors:
a. Membership of Committee(s)
b. Profit
c. Attendance
d. Category (Independent or Non-independent)
16.2.3 Remuneration of the Executive Directors This is given under para number 17.2.
16.3 Criteria and method of annual evaluation
16.3.1 The criteria for evaluation of performance of a) the Non-independent Directors (Executive) b) the Non-independent Directors (Non-executive) c) the Independent Directors d) the Chairman e) the Committees of the Board and f) the Board as a whole are summarised in the table at the end of the Directors'' Report at page number 28.
16.3.2 The Independent Directors have carried out annual:
i) review of performance of the Non-independent Directors - Executive,
ii) review of performance of the Non-independent Director - Non-executive,
iii) review of performance of the Chairman,
iv) assessment of quality, quantity and timeliness of the flow of information to the Board,
v) review of performance of the Board as a whole.
16.3.3 The Board has carried out annual evaluation of performance of:
i) its Committees namely Audit, Nomination and Remuneration, Stakeholders Relationship, Corporate Social Responsibility and Investment,
ii) the Independent Directors.
The templates for the above purpose were circulated in advance for feedback of the Directors.
16.4 Familiarisation Programs for the Independent Directors
The Company has Familiarisation Programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on the nature of the industries in which it operates, its vision and strategy, its organisation structure and relevant regulatory changes. A visit is organised to one or more of its manufacturing sites. Details of the Familiarisation Programs are also available at https://www.atul.co.in/ about/directors/
17. Key Managerial Personnel and other employees
17.1 Appointments and cessations of the Key Managerial Personnel
There were no appointments | cessations of the Key Managerial Personnel during 2018-19.
17.2 Remuneration
The Remuneration Policy of the Key Managerial Personnel and other employees consists the following:
17.2.1 Components:
i) Fixed pay
a. Basic salary
b. Allowances
c. Perquisites
d. Retirals
ii) Variable pay
17.2.2 Factors for determining and changing fixed pay:
i) Existing compensation
ii) Education
iii) Experience
iv) Salary bands
v) Performance
vi) Market benchmark
17.2.3 Factors for determining and changing variable pay:
i) Business performance
ii) Individual performance
iii) Grade
18. Analysis of remuneration
The information required pursuant to Sections 134 (3)(q) and 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the Members and others entitled thereto excluding the information on employees'' particulars which are available for inspection by the Members at the registered office of the Company during business hours on working days of the Company up to the date of ensuing AGM.
Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company.
19. Management Discussion and Analysis
The Management Discussion and Analysis Report covering performance of the 2 reporting segments, namely, LSC and POC, is given at page number 56.
20. Corporate Governance Report
20.1 Statement of declaration given by the Independent Directors.
The Independent Directors have given declarations under Section 149(6) of the Companies Act, 2013.
20.2 Report
The Corporate Governance Report along with the certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given at page number 62. Details about the number of meetings of the Board held during 2018-19 are given at page number 68. The composition of the Audit Committee is given at page number 71.
All the recommendations given by the Audit Committee were accepted by the Board.
20.3 Whistle-blowing Policy
The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistle-blowing Policy). The policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the Code of Conduct of the Company and is displayed on the website (of the Company) at https://www.atul.co.in/ investors/policies
No personnel has been denied access to the Audit Committee.
20.4 Secretarial standards
Secretarial standards as applicable to the Company were followed and complied with during 2018-19.
20.5 Prevention, prohibition and redressal of sexual harassment
Details required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder are given at page number 75.
21. Business Responsibility Report
As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is given at page number 83.
22. Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is given at page number 89.
23. Acknowledgements
The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and government authorities, Stock Exchanges and investors for their support.
For and on behalf of the Board of Directors
Mumbai (Sunil Siddharth Lalbhai)
April 26, 2019 Chairman and Managing Director
Mar 31, 2018
Directors'' Report
Dear Members,
The Board of Directors (Board) presents the Annual Report of Atul Ltd together with the audited Financial Statements for the year ended March 31, 2018.
01. Financial results
(Rs, cr)
|
2017-18 |
2016-17 |
|
|
Sales |
3,050 |
2,639 |
|
Revenue from operations |
3,148 |
2,848 |
|
Other income |
38 |
43 |
|
Total revenue |
3,186 |
2,891 |
|
Profit before tax |
397 |
400 |
|
Provision for tax |
127 |
115 |
|
Profit for the year |
270 |
285 |
|
Balance brought forward |
1,397 |
1,145 |
|
Transfer from Comprehensive Income |
3 |
3 |
|
Disposable surplus |
1,670 |
1,433 |
|
Less: |
||
|
Dividend paid |
30 |
30 |
|
Dividend distribution tax (net) |
3 |
6 |
|
Balance carried forward |
1,637 |
1,397 |
02. Performance
Sales increased by 16% from Rs, 2,639 cr to Rs, 3,050 cr mainly due to higher volumes (12%) and prices (4%). Sales in India increased by 24% from Rs, 1,239 cr to Rs, 1,536 cr. Sales outside India increased by 8% from Rs, 1,400 cr to Rs, 1,514 cr. The Earnings per share decreased from Rs, 96.18 to Rs, 91.16. Cash flow from operating activities before working capital changes marginally decreased by 1% from Rs, 485 cr to Rs, 480 cr and the net cash flow from operating activities decreased by 12% from Rs, 370 cr to Rs, 325 cr.
Sales of Life Science Chemicals (LSC) Segment increased by 27% from Rs, 807 cr to Rs, 1,026 cr, mainly because of higher sales in Sub-segments Crop Protection and Pharmaceuticals; its EBIT decreased by 8% from Rs, 130 cr to Rs, 120 cr. Sales of Performance and Other Chemicals (POC) Segment increased by 10% from Rs, 1,832 cr to Rs, 2,024 cr mainly because of higher sales in Sub-segments Aromatics - II and Polymers; its EBIT decreased by 3% from Rs, 290 cr to Rs, 281 cr. More details are given in the Management Discussion and Analysis (MDA) Report.
The Company fully repaid entire borrowings of Rs, 155 cr despite payment towards capital expenditure of Rs, 114 cr during the year.
Credit Analysis and Research Ltd (CARE) maintained its credit rating at AA Rs, (double A plus) for long-term borrowings of the Company. Its rating for short-term borrowings and commercial paper remained at A1 '' (A1 plus), the highest possible awarded by CARE.
03. Dividend
The Board recommends payment of dividend of Rs, 12 per share on 2,96,61,733 equity shares of Rs, 10 each fully paid up. The dividend will entail an outflow of Rs, 42.91 cr {including dividend distribution tax (net)} on the paid-up Equity share capital of Rs, 29.66 cr.
04. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Information 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, forms a part of this Report which is given at page number 24.
05. Insurance
The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.
06. Risk Management
Risk Management is an integral part of business practices of the Company. The framework of Risk Management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive Risk Management System to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised Risk Management System, leading standards and practices have been considered. The Risk Management System is relevant to business reality, pragmatic and simple and involves the following:
i) Risk identification and definition - Focused on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors.
ii) Risk classification - Focused on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes generating the root causes and a clear understanding of risk interrelationships.
iii) Risk assessment and prioritisation - Focused on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls.
iv) Risk mitigation - Focused on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v) Risk reporting and monitoring - Focused on providing to the Board and the Audit Committee periodic information on risk profile evolution and mitigation plans.
Roles and responsibilities
Governance
The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) above. The Audit Committee periodically reviews the Risk Management System and gives its recommendations, if any, to the Board. The Board reviews and guides the Risk Management Policy.
Implementation
Implementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the Risk Management System as per the guidance of the Audit Committee. The Company has Risk Management Oversight Structure in which each Sub-segment has a Chief Risk and Compliance Officer.
The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and the Board.
07. Internal Financial Controls
The Internal Financial Controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements.
These include those policies and procedures that:
i) pertain to the maintenance of records which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,
ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and the Directors of the Company,
iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the Internal Financial Controls with respect to the Financial Statements.
The Management assessed the effectiveness of the Internal Financial Controls over financial reporting as of March 31, 2018, and the Board believes that the controls are adequate.
08. Fixed deposits
During 2017-18, the Company did not accept any fixed deposits.
09. Loans, guarantees, investments and security
Particulars of loans, guarantees, investments and security provided are given at page numbers 114 and 116.
10. Subsidiary, associate and joint venture companies
During 2017-18, Aaranyak Urmi Ltd was incorporated as a wholly-owned subsidiary company, Amal Ltd became a subsidiary company and Anaven LLP, a 50:50 partnership with AkzoNobel BV, was incorporated. There were no other changes in the subsidiary, associate and joint venture companies which were reported earlier.
11. Related Party Transactions
All the transactions entered into with the Related Parties were in ordinary course of business and on arm''s length basis. Details of such transactions are given at page number 125. No transactions were entered into by the Company which required disclosure in Form AOC-2.
12. Corporate Social Responsibility
Composition of the Corporate Social Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 27.
13. Extract of the Annual Return
This is given at page number 31.
14. Auditors Statutory Auditors
Deloitte Haskins & Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company at the 40th Annual General Meeting (AGM) held on July 28, 2017 until the conclusion of the 45th AGM subject to ratification by the Members at every AGM. The recent amendments in law have dispensed with the requirement of ratification of the Statutory Auditors in AGM subsequent to their appointment. Considering the change in law, it is proposed to ratify the appointment of Deloitte Haskins & Sells LLP for the year ending on March 31, 2019 and pass appropriate resolution in the ensuing AGM for dispensing with the requirement for such ratification from the next year onwards.
The relevant Notes forming part of the accounts are self-explanatory and give full information and explanation in respect of the observations made by the Auditors in their report.
Cost Auditors
The Shareholders ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2017-18 on July 28, 2017.
Secretarial Auditors
Mr A C Doshi, Practicing Company Secretary was appointed as the Secretarial Auditor on April 29, 2015. Mr A C Doshi along with 3 other partners formed a partnership firm SPANJ & Associates, Company Secretaries. The Board appointed SPANJ & Associates, Company Secretaries, as the Secretarial Auditors for 2017-18 on March 23, 2018, and their report is given at page number 42.
15. Directors'' responsibility statement
Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:
15.1 The applicable Accounting Standards were followed along with proper explanations relating to material departures in the preparation of the annual accounts.
15.2 The Accounting Policies were selected and applied consistently and judgments and estimates were made that were 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.
15.3 Proper and sufficient care was taken 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.
15.4 The attached annual accounts for the year ended March 31, 2018 were prepared on a going concern basis.
15.5 Adequate Internal Financial Controls to be followed by the Company were laid down; and they were adequate and operating effectively.
15.6 Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.
16. Directors
16.1 Appointments | Reappointments | Cessations
16.1.1 According to Article 86 of the Articles of Association of the Company, Mr B N Mohanan retires by rotation and being eligible, offers himself for reappointment at the forthcoming AGM scheduled on July 27, 2018.
16.1.2 Subject to the approval of the Members in the AGM:
i) Mr S S Lalbhai was reappointed as the Chairman and Managing Director effective July 01, 2019 for a period of 5 years.
ii) Mr B S Mehta was appointed as an Independent Director effective June 01, 2018 for a period of 5 consecutive years.
iii) Mr S M Datta was reappointed as an Independent Director effective April 01, 2019 for a second term of 5 consecutive years.
iv) Mr V S Rangan was reappointed as an Independent Director effective April 01, 2019 for a second term of 5 consecutive years.
16.1.3 Approval of the Members in the AGM is being sought for continuance of Mr R A Shah as a Non-executive Director and Mr B R Arora as an Independent Director.
16.2 Policies on appointment and remuneration
16.2.1 Appointment
While recommending appointment of the Directors, the Nomination and Remuneration Committee considers the following factors:
i) Qualification: well-educated and experienced in senior leadership positions in industry | profession
ii) Traits: positive attributes and qualities
iii) Independence: criteria prescribed in Section 149 (6) of the Companies Act, 2013 for the Independent Directors, including no pecuniary interest and conflict of interest
16.2.2 Remuneration of the Non-executive Directors
i) Sitting fees: up to Rs, 35,000 for attending a Board, Committee and any other meeting
ii) Commission: up to 1% of net profit as may be decided by the Board based on the following factors:
a. Membership of Committee(s)
b. Profit
c. Attendance
d. Category (Independent or Non-independent)
16.2.3 Remuneration of the Executive Directors This is given under para number 17.2.
16.3 Criteria and method of annual evaluation
16.3.1 The criteria for evaluation of performance of a) the Non-independent Directors (Executive) b) the Non-independent Directors (Non-executive) c) the Independent Directors d) the Chairman e) the Committees of the Board and f) the Board as a whole are summarised in the table at the end of the Directors'' Report at page number 22.
16.3.2 The Independent Directors have carried out annual:
i) review of performance of the Non-independent Directors - Executive,
ii) review of performance of the Non-independent Directors - Non-executive,
iii) review of performance of the Chairman,
iv) assessment of quality, quantity and timeliness of the flow of information to the Board,
v) review of performance of the Board as a whole.
16.3.3 The Board has carried out annual evaluation of performance of:
i) its Committees namely Audit, Nomination and Remuneration, Stakeholders Relationship, Corporate Social Responsibility and Investment,
ii) the Independent Directors.
The templates for the above purpose were circulated in advance for feedback of the Directors.
16.4 Familiarization Program for the Independent Directors The Company has Familiarization Programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the senior Management on the nature of the industries in which it operates, its vision and strategy and its organization structure. A visit is organized to one or more of its manufacturing sites. Details of the program are also available at https://www.atul.co.in/about/directors/
17. Key Managerial Personnel and other employees
17.1 Appointments and cessations of the Key Managerial Personnel
There were no appointments | cessations of the Key Managerial Personnel during 2017-18.
17.2 Remuneration
The Remuneration Policy of the Key Managerial Personnel and other employees consists the following:
17.2.1 Components:
i) Fixed pay
a. Basic salary
b. Allowances
c. Perquisites
d. Retirals
ii) Variable pay
17.2.2 Factors for determining and changing fixed pay:
i) Existing compensation
ii) Education
iii) Experience
iv) Salary bands
v) Performance
vi) Market benchmark
17.2.3 Factors for determining and changing variable pay:
i) Business performance
ii) Individual performance
iii) Grade
18. Analysis of remuneration
The information required pursuant to Sections 134 (3)(q) and 197 (12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the Members and others entitled thereto excluding the information on employees'' particulars which are available for inspection by the Members at the registered office of the Company during business hours on working days of the Company up to the date of ensuing AGM.
Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company.
19. Management Discussion and Analysis
The Management Discussion and Analysis Report covering performance of the 2 reporting Segments, namely, LSC and POC, is given at page number 46.
20. Corporate Governance Report
20.1 Statement of declaration given by the Independent Directors.
The Independent Directors have given declarations under Section 149 (6) of the Companies Act, 2013.
20.2 Report
The Corporate Governance Report along with the certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34 (3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given at page number 53. Details about the number of meetings of the Board held during 2017-18 are given at page number 56. The composition of the Audit Committee is given at page number 59.
All the recommendations given by the Audit Committee were accepted by the Board.
20.3 Whistle-blowing Policy
The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistle-blowing Policy). The policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behavior, actual or suspected fraud and violation of the Code of Conduct of the Company and is displayed on the website (of the Company) at https://www.atul.co.in/ investors/policies
No personnel has been denied access to the Audi t Committee.
20.4 Secretarial Standards
Secretarial Standards as applicable to the Company were followed and complied with during 2017-18.
21. Business Responsibility Report
As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is given at page number 68.
22. Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is given at page number 74.
23. Acknowledgements
The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and Government authorities, Stock Exchanges and investors for their support.
For and on behalf of the Board of Directors
Mumbai (Sunil Siddharth Lalbhai)
June 01, 2018 Chairman and Managing Director
Mar 31, 2017
Dear Members,
The Board of Directors (Board) presents the Annual Report of Atul Ltd together with the audited Financial Statements for the year ended March 31, 2017.
01. Financial results
(Rs. Cr)
|
2016-17 |
2015-16 |
|
|
Sales |
2,639 |
2,403 |
|
Revenue from operations |
2,848 |
2,609 |
|
Other income |
43 |
43 |
|
Total revenue |
2,891 |
2,652 |
|
Profit before tax |
400 |
400 |
|
Provision for tax |
115 |
126 |
|
Profit for the year |
285 |
274 |
|
Balance brought forward |
1,145 |
900 |
|
Transfer from comprehensive income |
3 |
(2) |
|
Disposable surplus |
1,433 |
1,172 |
|
Less: |
||
|
Dividend paid |
30 |
25 |
|
Dividend distribution tax (net) |
6 |
2 |
|
Balance carried forward |
1,397 |
1,145 |
02. Performance
Sales increased by 10% from Rs.2,403 cr to Rs.2,639 cr mainly due to higher volumes (16%), partly offset by lower prices (6%). Sales in India increased by 3% from Rs.1,198 cr to Rs.1,239 cr. Sales outside India increased by 16% from Rs.1,205 cr to Rs.1,400 cr. The Earning per share increased from Rs.92.53 to Rs.96.18. While the operating profit before working capital changes increased by 1% from Rs.478 cr to Rs.485 cr, the net cash flow from operating activities decreased by 3% from Rs.375 cr to Rs.364 cr.
Sales of Life Science Chemicals (LSC) Segment increased by 10% from Rs.737 cr to Rs.807 cr, mainly because of higher sales in Sub-segments Crop Protection and Aromatics - I; its EBIT decreased by 19% from Rs.161 cr to Rs.130 cr. Sales of Performance and Other Chemicals (POC) Segment increased by 10% from Rs.1,666 cr to Rs.1,832 cr mainly because of higher sales in Sub-segments Aromatics - II and Polymers; its EBIT increased by 16% from Rs.249 cr stagnant at Rs.290 cr. More details are given in the Management Discussion and Analysis (MDA) Report. The borrowings of the Company decreased (including current maturities of long-term borrowings) by 49% from Rs.302 cr to Rs.1 55 cr despite payments towards capital expenditure of Rs.176 cr.
Credit Analysis and Research Ltd (CARE) maintained its credit rating at âAA â (double A plus) for long-term borrowings of the Company. Its rating for short-term borrowings and commercial paper remained at âA1 â (A1 plus), the highest possible awarded by CARE.
The Company completed 3 expansion projects with an investment of Rs.117 cr which are expected to generate sales of Rs.220 cr at full capacity utilisation.
03. Dividend
The Board recommends payment of dividend of Rs.10 per share on 2,96,61,733 Equity shares of Rs.10 each fully paid up. The dividend will entail an outflow of Rs.35.70 cr {including dividend distribution tax (net)} on the paid-up Equity share capital of Rs.29.66 cr.
04. Conservation of energy, technology absorption, foreign exchange earnings and outgo
Information 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, forms a part of this Report which is given at page number 24.
05. Insurance
The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.
06. Risk Management
Risk Management is an integral part of the business practices of the Company. The framework of Risk Management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive Risk Management System to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised Risk Management System, leading standards and practices have been considered. The Risk Management System is relevant to business reality, pragmatic and simple and involves the following:
i) Risk identification and definition - Focused on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors.
ii) Risk classification - Focused on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes generating the root causes and clear understanding of risk interrelationships.
iii) Risk assessment and prioritisation - Focused on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and existing mitigation controls.
iv) Risk mitigation - Focused on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.
v) Risk reporting and monitoring - Focused on providing to the Board and the Audit Committee periodic information on risk profile evolution and mitigation plans.
Roles and responsibilities
Governance
The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) above. The Audit Committee periodically reviews the Risk Management System and gives its recommendations, if any, to the Board. The Board reviews and guides the Risk Policy.
Implementation
Implementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the Risk Management System as per the guidance of the Audit Committee. The Company has Risk Management Oversight Structure in which each Sub-segment has Chief Risk and Compliance Officer.
The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and the Board.
07. Internal Financial Controls
The Internal Financial Controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements.
These include those policies and procedures that:
i) pertain to the maintenance of records which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,
ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and the Directors of the Company and
iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the Internal Financial Controls with respect to the Financial Statements.
The Management assessed the effectiveness of the Internal Financial Controls over financial reporting as of March 31, 2017, and the Board believes that the controls are adequate.
08. Fixed deposits
During 2016-17, the Company did not accept any fixed deposits.
09. Loans, guarantees, investments and security
Particulars of loans, guarantees, investments and security provided are given at page numbers 108 and 110.
10. Subsidiary, associate and joint venture companies
During 2016-17, Atul Finserv Ltd, a wholly-owned subsidiary of the Company formed two wholly-owned subsidiary companies, Atul Fin Resources Ltd and Atul Nivesh Ltd. There were no other changes in the subsidiary, associate and joint venture companies which were reported earlier. Performance and financial position of such companies are given at page number 26.
11. Related Party Transactions
All the transactions entered into with the related parties were in ordinary course of business and on armâs length basis. Details of such transactions are given at page number 120. No transactions were entered into by the Company which required disclosure in Form AOC-2.
12. Corporate Social Responsibility
Composition of the Corporate Social Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 28.
13. Extract of the Annual Return
This is given at page number 31.
14. Auditors Statutory Auditors
Dalal & Shah Chartered Accountants LLP, the Statutory Auditors of the Company, will retire at the conclusion of the ensuing Annual General Meeting (AGM).
Pursuant to Section 139 of the Companies Act, 2013 and Rules made thereunder, it is mandatory for the Company to rotate the current Statutory Auditors on completion of a maximum term permitted under the said Section. Accordingly, based on the recommendation of the Audit Committee, the Board at its meeting held on May 05, 2017, recommended the appointment of Deloitte Haskins & Sells LLP, Chartered Accountants as the Statutory Auditors of the Company. Deloitte Haskins & Sells LLP will hold the office for a period of 5 consecutive years from the conclusion of the 40th AGM of the Company till the conclusion of the 45th AGM to be held in the year 2022, subject to the approval of the Shareholder(s) of the Company at the ensuing AGM and ratification at subsequent AGMs. Deloitte Haskins & Sells LLP have given their consent to act as the Auditors and confirmed their eligibility for appointment.
The relevant Notes forming part of the accounts are self-explanatory and give full information and explanation in respect of the observations made by the Auditors in their report.
Cost Auditors
The Shareholders ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2016-17 on July 29, 2016.
Secretarial Auditors
The Board appointed Mr A C Doshi, Practising Company Secretary, as the Secretarial Auditor for 2016-17 on April 29, 2015, and his report is given at page number 42.
15. Directorsâ responsibility statement
Pursuant to Section 134 (5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief:
15.1 The applicable Accounting Standards were followed along with proper explanations relating to material departures in the preparation of the annual accounts.
15.2 The Accounting Policies were selected and applied consistently and judgements and estimates were made that were 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.
15.3 Proper and sufficient care was taken 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.
15.4 The attached annual accounts for the year ended March 31, 2017 were prepared on a going concern basis.
15.5 Adequate Internal Financial Controls to be followed by the Company were laid down; and they were adequate and operating effectively.
15.6 Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.
16. Directors
16.1 Appointments | Reappointments | Cessations
16.1.1 Subject to the approval of the Members in the AGM, Mr S A Lalbhai was reappointed as a Managing Director effective December 15, 2016 for a period of 5 years.
16.1.2 According to Article 86 of the Articles of Association of the Company, Mr R A Shah and Mr T R Gopi Kannan retire by rotation and being eligible, offer themselves for reappointment at the forthcoming AGM scheduled on July 28, 2017.
16.2 Policies on appointment and remuneration
16.2.1 Appointment
While recommending appointment of the Directors, the Nomination and Remuneration Committee considers the following factors:
i) Qualification: well-educated and experienced in senior leadership positions in industry | profession
ii) Traits: positive attributes and qualities
iii) Independence: criteria prescribed in Section 149 (6) of the Companies Act, 2013 for the Independent Directors, including no pecuniary interest and conflict of interest
16.2.2 Remuneration of the Non-executive Directors
i) Sitting fees: up to Rs.20,000 for attending a Board, Committee and any other meeting
ii) Commission: up to 1% of net profit as may be decided by the Board based on the following factors:
a. Membership of Committee(s)
b. Profit
c. Attendance
d. Category (Independent or Non-independent)
16.2.3 Remuneration of the Executive Directors This is given under para number 17.2.
16.3 Criteria and method of annual evaluation
16.3.1 The criteria for evaluation of performance of
a) the Non-independent Directors (Executive)
b) the Non-independent Directors (Non-executive)
c) the Independent Directors d) the Chairman
e) the Committees of the Board and f) the Board as a whole are summarised in the table at the end of the Directorsâ Report at page number 22.
16.3.2 The Independent Directors have carried out annual:
i) Review of performance of the Non-independent Directors - Executive
ii) Review of performance of the Non-independent Directors - Non-executive
iii) Review of performance of the Chairman
iv) Assessment of quality, quantity and timeliness of the flow of information to the Board
v) Review of performance of the Board as a whole
16.3.3 The Board has carried out annual evaluation of performance of:
i) Its Committees namely Audit, Nomination and Remuneration, Stakeholders Relationship, Corporate Social Responsibility and Investment
ii) The Independent Directors
The templates for the above purpose were circulated in advance for feedback of the Directors.
16.4 Familiarisation Program for the Independent Directors The Company has Familiarisation Programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the senior Management on the nature of the industries in which it operates, its vision and strategy and its organisation structure. A visit is organised to one or more of its manufacturing sites. Details of the program are also available at http://www.atul.co.in/investors/ familiarisation_program.html
17. Key Managerial Personnel and other employees
17.1 Appointments and cessations of the Key Managerial Personnel
There were no appointments | cessation of the Key Managerial Personnel during 2016-17.
17.2 Remuneration
The Remuneration Policy of the Key Managerial Personnel and other employees consists of the following:
17.2.1 Components:
i) Fixed pay
a. Basic salary
b. Allowances
c. Perquisites
d. Retirals
ii) Variable pay
17.2.2 Factors for determining and changing fixed pay
i) Existing compensation
ii) Education
iii) Experience
iv) Salary bands
v) Performance
vi) Market benchmark
17.2.3 Factors for determining and changing variable pay
i) Business performance
ii) Individual performance
iii) Grade
18. Analysis of remuneration
The information required pursuant to Sections 134 (3)(q) and 197 (12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the Members and others entitled thereto excluding the information on employeesâ particulars which are available for inspection by the Members at the registered office of the Company during business hours on working days of the Company up to the date of ensuing AGM.
Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the Registered office of the Company.
19. Management Discussion and Analysis
The Management Discussion and Analysis Report covering performance of the two reporting segments, namely, LSC and POC, is given at page number 46.
20. Corporate Governance Report
20.1 Statement of declaration given by the Independent Directors.
The Independent Directors have given declarations under Section 149 (6) of the Companies Act, 2013.
20.2 Report
The Corporate Governance Report along with the certificate from the Statutory Auditors regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34 (3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given at page number 53. Details about the number of meetings of the Board held during 2016-17 are given at page number 56. The composition of the Audit Committee is given at page number 59.
All the recommendations given by the Audit Committee were accepted by the Board.
20.3 Whistle-blowing Policy
The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistle-blowing Policy). The policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the Code of Conduct of the Company and is displayed on the website (of the Company) at http://www.atul.co.in/ investors/pdf/Whistle_Blowing_Policy.pdf No personnel has been denied access to the Audit Committee.
21. Business Responsibility Report
As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is given at page number 68.
22. Dividend Distribution Policy
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is given at page number 74.
23. Acknowledgements
The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and Government authorities, Stock Exchanges, investors for their support.
For and on behalf of the Board of Directors
Mumbai (Sunil Siddharth Lalbhai)
May 05, 2017 Chairman and Managing Director
Mar 31, 2013
Dear Members,
The Board of Directors presents the Annual Report of Atul together with
the audited statement of accounts for the year ended March 31, 2013.
Financial Results
(Rs. cr)
2012-13 2011-12
Revenue from operations 2,001 1,778
Other income 19 14
Total revenues 2,020 1,792
Profit before tax and exchange rate difference 189 134
Exchange rate difference - expense /(income) (3) 12
Profit before tax 192 122
Provision for tax 56 34
Profit for the year 136 88
Tax adjustments for the earlier years - -
Profit available for appropriation 136 88
Balance brought forward 397 334
Disposable surplus 533 422
Appropriations
General reserve 14 9
Proposed dividend 18 14
Dividend distribution tax 3 2
Balance carried forward 498 397
Financial Performance
Net sales increased by 12% to Rs. 1,964 cr. Net sales in India
increased by 5% to Rs. 986 cr. Export sales increased by 21% to Rs. 977
cr. PBT increased by 57% from Rs. 122 cr to Rs. 192 cr. During the
year, CARE upgraded credit rating to CARE AA- (from CARE A in the
Previous year) for long-term debts, while maintaining top notch CARE A1
for short-term debts.
In September 2012, the Company was directed by Gujarat Pollution
Control Board to close down manufacturing at its Valsad Complex and
take measures to dismantle the old pipelines used for carrying liquid
effluents; accordingly, manufacturing activity at the complex remained
closed for most of October 2012 with its consequential decrease in
sales and profit in the second half of the year. However, the Company
does not expect significant long-term adverse impact.
Moreover, the Company undertook 25 projects to further enhance its
performance in the area of environment protection with an investment of
Rs. 71 cr and expects to emerge stronger to face the future.
Dividend
The Board recommends payment of dividend of Rs. 6 per share on
2,96,61,733 Equity Shares of Rs.10 each fully paid-up. The dividend
will entail an outflow of Rs. 20.82 cr (including dividend distribution
tax) on the paid-up Equity Share capital of Rs. 29.66 cr.
Management Discussion and Analysis
Management Discussion and Analysis covering performance of the two
Reporting Segments, namely, Life Science Chemicals and Performance &
Other Chemicals, is given at page no 25 to 31 .
Corporate Governance
A Report on Corporate Governance along with the certificate from the
Statutory Auditors regarding compliance of the conditions of Corporate
Governance pursuant to Clause 49 of the Listing Agreements is given at
page no 32 to 44.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings & Outgo and Employees
Information required under Section 217(1)(e) of the Companies Act,
1956, read with Rule 2 of the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 and information as
per Section 217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules,1975, as amended from time to time,
forms a part of this Report. However, as per the provisions of Section
219(1) (b)(iv), the Report and Accounts are being sent to all the
Members excluding the information relating to conservation of energy,
technology absorption, foreign exchange earnings & outgo and the
statement of particulars of employees. Any Member interested in
obtaining such particulars may inspect the same at the Registered
Office of the Company or write to the Company Secretary for a copy.
Insurance
The Company has taken adequate insurance to cover the risks to its
people, plant and machineries, buildings and other assets, profits and
third parties.
Fixed Deposits
Fixed deposits amounting to Rs. 0.06 cr as on March 31, 2013 were not
claimed by the depositors. The fixed deposits which matured on or
before March 31, 2006, but remained outstanding since then were
transferred to the Investor Education and Protection Fund as required
under Section 205 C of the Companies Act, 1956.
Subsidiary Companies
The Company has nine subsidiary companies namely, Atul Bioscience Ltd,
Atul Rajasthan Date Palms Ltd, DPD Ltd, Atul USA Inc, Atul Europe Ltd,
Atul Deutschland GmbH, Atul China Ltd, Atul Brasil Quimicos Ltda and
Ameer Trading Corporation Ltd.
Pursuant to the general exemption granted by the Central Government,
details as provided under Section 212(1) of the Companies Act, 1956 in
respect of the subsidiary companies are not attached. However, the
Investors may seek the copies of the Annual Reports and related
detailed information of the subsidiary companies by writing to the
Company Secretary at the Registered Office.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that to the best of their knowledge and belief:
(i) In the preparation of the annual accounts, the applicable
Accounting Standards were followed
(ii) Such Accounting Policies were selected and applied consistently
and such judgements and estimates were made that were reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as on March 31, 2013 and of the profit of the Company for
the year ended on that date
(iii) Proper and sufficient care was taken to maintain adequate
accounting records in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities
(iv) The attached annual accounts for the year ended March 31, 2013
were prepared on a going concern basis.
Directors
Dr K Aparajithan resigned from the Board with effect from January 18,
2013. The Board places on record its appreciation for his valuable
contribution as a Director.
According to Article 134 of the Articles of Association of the Company,
Dr S S Baijal, Mr S M Datta and Mr V S Rangan retire by rotation and
being eligible offer themselves for reappointment at the forthcoming
Annual General Meeting (AGM) scheduled on July 26, 2013.
Mr R A Shah joined the Board as an Additional Director (Non- executive,
Independent) with effect from January 18, 2013. Prior to this, he was
Alternate Director to Dr Aparajithan. The term of Mr Shah as an
Additional Director ceases in the ensuing AGM. Accordingly, his
reappointment as a Director is proposed in the AGM Notice.
The current five year term of Mr S S Lalbhai, Chairman and Managing
Director, expires on June 30, 2014. The reappointment of Mr Lalbhai for
another term of five years is proposed in the AGM Notice.
Auditors
Dalal & Shah, the Statutory Auditors of the Company, will retire at the
conclusion of the ensuing AGM. They have given their consent to
continue to act as the Auditors for 2013-14, if reappointed.
The relevant notes forming a part of the accounts are self explanatory
and give full information and explanation in respect of the
observations made by the Auditors in their Report.
The Board appointed R Nanabhoy & Co as the Cost Auditors for 2013-14 on
May 07, 2013.
Acknowledgements
The Board expresses its sincere thanks to all the customers, employees,
investors, lenders, suppliers, regulatory and Government authorities
and the Stock Exchanges for their continuing support.
For and on behalf of
the Board of Directors
Mumbai Sunil S Lalbhai
May 07, 2013 Chairman and Managing Director
Mar 31, 2011
The Board of Directors presents the Annual Report of Atul together with
the audited statement of accounts for the year ended March 31, 2011.
Financial results
(Rs. crores)
2010-11 2009-10
Net sales and operating income 1548 1198
Other income 6 6
Total revenues 1554 1204
Profit before tax and exchange rate difference 148 89
Exchange rate difference income (expense) (9) (9)
Profit before tax 139 80
Provision for tax 43 27
Profit for the year 96 53
Tax adjustments for the earlier years (6) 4
Profit available for appropriation 90 57
Balance brought forward 265 227
Disposable surplus 355 284
Appropriations
General reserve 5 5
Proposed dividend 14 12
Dividend distribution tax on above 2 2
Balance carried forward 334 265
Dividend
The Board recommends payment of dividend of Rs. 4.5 per share on
2,96,61,733 equity shares of Rs. 10 each fully paid up. The dividend
will entail an outflow of Rs. 15.51 crores (including dividend
distribution tax) on the paid-up equity share capital of Rs. 29.66
crores.
Financial Performance
Net sales increased by 29% to Rs. 1508 crores. While Life Science
Chemicals segment grew by 28% to Rs. 492 crores, Performance & Other
Chemicals segment grew by 30% to Rs. 1016 crores. Profit after tax
increased from Rs. 53 crores to Rs. 96 crores. Higher profit was mainly on
account of higher sales resulting from volume growth of around 16%.
The return on average capital employed improved from 13% to 18%.
Interest to sales ratio reduced from 2.2% in the previous year to 1.7%.
Borrowings increased by Rs. 33 crores as a result of higher working
capital employed due to growth in sales and also payments towards
capital expenditure of Rs. 47 crores. During the year, CARE upgraded
credit rating to PR1+ (from PR1 in the previous year) for short-term
debts and to A (from A- in the previous year) for long-term debts of
the Company.
Insurance
The Company has taken adequate insurance to cover the risks to its
people, plant and machineries, buildings and other assets, profits and
third parties.
Directors
According to Article 134 of the Articles of Association of the Company,
Mr H S Shah, Dr S S Baijal and Dr K Aparajithan retire by rotation and
being eligible offer themselves for reappointment at the forthcoming
Annual General Meeting scheduled on August 4, 2011.
Corporate Governance
A Report on Corporate Governance along with a certificate from the
Statutory Auditors regarding compliance of the conditions of Corporate
Governance pursuant to Clause 49 of the Listing Agreement is annexed.
Listing
The Company has paid the annual listing fees for the year 2011-2012 to
Bombay Stock Exchange Ltd and National Stock Exchange of India Ltd.
Fixed Deposits
Fixed deposits amounting to Rs. 0.20 crore as on March 31, 2011 were not
claimed by the depositors. The fixed deposits which matured on or
before March 31, 2004, but remained outstanding since then were
transferred to the Investor Education and Protection Fund as required
under Section 205 C of the Companies Act, 1956.
Information regarding conservation of energy, technology absorption,
foreign exchange earnings and outgo, employees, etc.
Information required under Section 217(1)(e) of the Companies Act,
1956, read with Rule 2 of the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 and information as
per Section 217(2A) of the Companies Act, 1956, read with the Companies
(Particulars of Employees) Rules,1975, as amended from time to time,
forms a part of this Report. However, as per the provisions Section
219(1) (b)(iv), the Report and Accounts are being sent to all the
Members excluding the information relating to conservation of energy,
technology absorption, foreign exchange earnings and outgo and the
statement of particulars of employees. Any Member interested in
obtaining such particulars may inspect the same at the registered
office of the Company or write to the Company Secretary for a copy.
Subsidiary Companies
The Company has six subsidiary companies namely, Ameer Trading
Corporation Ltd, Atul Americas Inc, Atul Deutschland GmbH, Atul Europe
Ltd, Atul Rajasthan Date Palms Ltd and Atul International Trading
(Shanghai) Co Ltd. It has got exemption from attaching the details as
provided under Section 212(1) of the Companies Act, 1956 in respect of
the subsidiary companies. However, the Investors may seek the copies of
the Annual Reports and related detailed information of the subsidiary
companies by writing to the Company Secretary at the registered office.
Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that to the best of their knowledge and belief:
(i) In the preparation of the annual accounts, the applicable
accounting standards were followed
(ii) Such accounting policies were selected and applied consistently
and such judgements and estimates were made that were reasonable and
prudent so as to give a true and fair view of the state of affairs of
the Company as on March 31, 2011 and of the profit of the Company for
the year ended on that date
(iii) Proper and sufficient care was taken to maintain adequate
accounting records in accordance with the provisions of the Companies
Act, 1956 for safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities
(iv) The attached annual accounts for the year ended March 31, 2011
were prepared on a going concern basis.
Auditors
Dalal & Shah, the Auditors of the Company, will retire at the
conclusion of the ensuing AGM. They have given their consent to
continue to act as the Auditors for 2011-12, if reappointed.
The relevant notes forming a part of the accounts are self explanatory
and give full information and explanation in respect of the
observations made by the Auditors in their Report.
Acknowledgements
The Board of Directors expresses its sincere thanks to all the
customers, employees, investors, lenders, suppliers, regulatory and
government authorities and the Stock Exchanges for their continuing
support.
For and on behalf of the
Board of Directors
Mumbai Sunil S Lalbhai
May 13, 2011 Chairman & Managing Director
Mar 31, 2010
The Board of Directors of Atul Ltd presents the Annual Report of the
Company together with the audited statement of accounts for the year
ended March 31, 2010.
Financial results
(Rs Crores)
2009-10 2008-09
Sales and operating income 1198 1191
Other income 6 5
Total revenues 1204 1196
Profit before tax and exchange rate
difference 89 90
Exchange rate difference income
(expense) (9) (44)
Profit before tax 80 46
Provision for tax 27 10
Profit for the year 53 35
Tax adjustments relating to earlier years 4 2
Profit available for appropriation 57 38
Balance brought forward 227 204
Disposable surplus 284 242
Appropriation
General reserve 5 4
Proposed dividend 12 9
Dividend tax on above 2 2
Balance carried forward 265 227
Dividend
The Board of Directors of the Company recommend payment of dividend of
Rs 4 per share on 2,96,61,733 equity shares of Rs 10 each fully paid
up. The dividend will entail an outflow of Rs 13.84 crores on the
paid-up equity share capital of Rs 29,66,17,330.
Profitability
Sales in terms of volume on an average increased by 18%; however due to
steep reduction in prices of raw materials and the consequent fall in
selling prices, sales at Rs 1168 crores (including exports of Rs 513
crores) registered only a negligible growth of less than 1%. Mainly
because of a lower loss on account of exchange rate differences, the
PBT grew by 75%, from Rs 46 crores to Rs 80 crores. The business
Divisions mainly consolidated the spurt in profitability achieved
during the previous year with the exception of Polymers which
experienced a strong rebound and Colors which grew by about 10% and cut
losses. Though lower than the previous year, the Company achieved
reasonable cash flow from operations and reduced its borrowings by Rs
73 crores to Rs 295 crores which has substantially improved its
leverage ratios and its capacity to raise finance for expansion and
acquisitions. The Company improved its efficiencies through yields and
de-bottlenecking, and focused on obtaining better realizations for its
products.
Finance
The interest and finance charges for the year was Rs 26 crores compared
to Rs 41 crores during the previous year - a decrease of 38% as
compared to stagnant sales growth. The net interest to sales ratio, as
a result decreased to 2.13% from 3.44% last year. In the current year,
the benchmark PLR & LIBOR interest rates showed downward bias for most
part of the year. LIBOR rates were at historical low levels during the
year. The Company took benefit of lower LIBOR rates by increasing
utilisation of Buyers credit to reduce the interest cost. Efforts are
on to reduce the interest cost as a % of sales through better working
capital norms and utilization of assets.
The Company follows a prudent financial policy and aims to maintain
optimum financial gearing at all times. The I Company has repaid loans
of Rs 66 crores during the year and the Debt to Equity ratio was 0.56 as
on March 31, i 2010. During the year CARE reaffirmed the rating of PR1
for short term debt and A- for long term debts of the Company.
The Company takes forward contracts and uses other basic derivative
products from time to time as permitted by the RBI to cover its net
exports.These are purely based on the actual exposure or likely future
anticipated export receivables, but never in the nature of speculation.
The Company does not hold or issue derivative financial ; instruments for
trading or speculative purposes and all ! the derivative transactions
entered into by the Company i are to mitigate or offset the risks that
arise from its normal business activities only. Loans taken were used for
the purpose that they were sanctioned for by the respective banks or
financial institutions.
Projects
During 2010-11 the Company acquired Rubber and Polyurethane Adhesives
business and brand Polygrip. The acquired business recorded a sale of
Rs 28 crores in 2009-10 prior to acquisition. The Company is in the
process of integrating the acquired business with that of Polymers
Division. It will also commission p-Cresol project of 8000 mt, which on
full capacity basis will generate revenue of Rs 120 crores.
Insurance
The Company has taken adequate insurance to cover the risks to its
people, plant & machineries, buildings and ; other assets, profits and
third parties.
Directors
Mr N N Wadia resigned from the Board with effect from June 1, 2009 due
to preoccupation. The Board places on record its appreciation for his
invaluable contribution as a Director for more than three decades.i
According to Article 134 of the Articles of Association of the Company,
Mr B S Mehta and Mr S M Datta retire by rotation and being eligible
offer themselves for reappointment at the forthcoming Annual General
Meeting (AGM) scheduled on August 31, 2010.
Mr V S Rangan joined the Board as a Non-executive Independent Director
with effect irom July 19, 2010. His term as Additional Director ceases
in the ensuing AGM. Accordingly, his reappointment as a Director is
proposed in the AGM Notice.
Corporate Governance
A Report on Corporate Governance along with a certificate from the
Auditors of the Company regarding compliance of the conditions of
Corporate Governance pursuant to Clause 49 of the Listing Agreement is
annexed.
Listing
As approved by the Board of Directors and pursuant to the Securities &
Exchange Board of India (Delisting of Equity Shares) Regulations, 2009
the Company has got its equity shares de-listed from Ahmedabad Stock
Exchange Ltd, Ahmedabad effective March 31, 2010. The equity shares
will continue to remain listed on the Bombay Stock Exchange (BSE) and
the National Stock Exchange (NSE).
Fixed Deposits
As on March 31, 2010, fixed deposits amounting to Rs 0.19 crores were
not claimed by the depositors from the Company. The fixed deposits
which matured on or before March 31, 2003, but remained outstanding
since then were transferred to the Investor Education & Protection Fund
as required under Section 205 C of the Companies Act, 1956.
Information regarding conservation of energy, technology absorption,
foreign exchange earnings and outgo, employees and subsidiary companies
Information required under Section 217(1 )(e) of the Companies Act,
1956, read with Rule 2 of the Companies (Disclosure of Particulars in
the Report of the Board of Directors) Rules, 1988 and information as
per Section 217(2A) of the Companies Act, 1956, read with the Companies
(Particulars Employees) Rules, 1975, as amended from time to time,
forms a part of this Report.
However, as per the provisions Section 219(1)(b)(iv), the Report and
Accounts are being sent to all the Members of the Company excluding the
information relating to conservation of energy, technology absorption,
foreign exchange earnings and outgo and the statement of particulars of
employees. Any Member interested in obtaining such particulars may
inspect the same at the registered office of the Company or write to
the Company Secretary for a copy.
Subsidiary Companies
The Company has six wholly-owned subsidiary companies namely, Ameer
Trading Corporation Ltd, Atul Americas Inc, Atul Deutschland GmbH, Atul
Europe Ltd, Atul Rajasthan Date Palms Ltd and Atul International
Trading (Shanghai) Co Ltd. The Company has got exemption from attaching
the details as provided under Section 212(1) of the Companies Act, 1956
in respect of the subsidiary companies.
However, the investors may seek the copies of the Annual Reports and
related detailed information of the subsidiary companies by writing to
the Company Secretary at the registered office of the Company.
Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that to the best of their knowledge and belief;
i) In the preparation of the annual accounts, the applicable accounting
standards were followed
ii) Such accounting policies were selected and applied consistently and
such judgments and estimates were made that were reasonable and prudent
so as to give a true and fair view of the state of affairs of the
Company as on March 31, 2010 and of the profit of the Company for the
year ended on that date
iii) Proper and sufficient care was taken to maintain adequate
accounting records in accordance with the
provisions of the Companies Act, 1956forsafeguarding the assets of the
Company and for preventing and detecting fraud and other irregularities
iv) The attached annual accounts for the year ended March 31, 2010 were
prepared on a going concern basis.
Auditors
Dalai & Shah, the Auditors of the Company, will retire at the
conclusion of the ensuing AGM. They have given their consent to
continue to act as the Auditors of the Company for 2010-11, if
reappointed.
The relevant notes forming a part of the accounts are self- explanatory
and give full information and explanation in respect of the
observations made by the Auditors in their Report.
Acknowledgements
The Board of Directors expresses its sincere thanks to all the
customers, employees, investors, lenders, suppliers regulatory and
government authorities and stock exchanges for their continuing
support.
For and on behalf of the Board of Directors
Sunil S Lalbhai
Chairman & Managing Director
Mumbai
July 19, 2010
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