To
The Members of Aarti Surfactants Limited
Your Directors have pleasure in presenting this Fifth Annual Report of
Aarti Surfactants Limited ("the Company") together with the Audited Financial
Statements of the Company for the Financial Year ended March 31, 2023.
1. Financial Performance & Summary
Financial Performance
The Company's financial performance during the year ended March 31,
2023 compared to the previous financial year is summarised below:
(Rs. in Lakhs)
Particulars |
|
Standalone |
|
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Revenue from Operation (Net) |
60,129.32 |
57,551.70 |
60,129.32 |
57,551.70 |
EBITDA |
4,807.97 |
3,243.63 |
4,807.37 |
3,243.14 |
Depreciation &
Amortisation |
1,548.69 |
1,244.57 |
1,548.69 |
1,244.57 |
Profit from Operations before
Other Income, Finance Costs and Exceptional Items |
3,225.87 |
1,970.01 |
3,225.27 |
1,969.52 |
Other Income |
33.41 |
29.05 |
33.41 |
29.05 |
Profit before Finance Costs |
3,259.28 |
1,999.06 |
3,258.68 |
1,998.57 |
Finance Costs |
1,478.62 |
1,066.60 |
1,478.62 |
1,066.68 |
Profit before Tax |
1,780.66 |
932.46 |
1,780.06 |
931.89 |
Total Tax Expenses |
509.61 |
382.41 |
509.61 |
382.41 |
Non-controlling Interest |
- |
- |
- |
- |
Net Profit for the period |
1,271.05 |
550.05 |
1,270.45 |
549.48 |
Other Comprehensive Income
(net of taxes) |
6.00 |
4.80 |
6.00 |
4.80 |
Total Comprehensive income for
the year |
1,277.05 |
554.85 |
1,276.45 |
554.28 |
Earnings Per Share (Rs.) |
|
|
|
|
Basic |
16.64 |
7.25 |
16.64 |
7.25 |
Diluted |
16.48 |
7.25 |
16.47 |
7.25 |
Book Value Per Share (Rs.) |
198.33 |
179.23 |
198.22 |
179.21 |
Summary
During the year under review, your Company reported revenue of '
60,129.32 lakhs for FY 2022-23 as against ' 57,551.70 lakhs for FY 2021-22.
Similarly, the exports for the year were at ' 16,319.54 lakhs for FY 2022-23 as
against ' 15,888.27 lakhs for FY 2021-22.
There was no change in nature of business of the Company, during the
year under review.
2. Consolidated Financial Statements
In compliance with the applicable provisions of the Companies Act, 2013
including the relevant Indian Accounting Standards (Ind AS) as issued by the Institute of
Chartered Accountants of India and notified under Section 133 of the Companies Act, 2013,
this Annual Report includes Consolidated Financial Statements for the financial year
2022-23.
3. Transfer to Reserves
The Board of Directors has decided to retain the entire amount of
profits for FY 2022-2023 in P&L account.
4. Subsidiaries, Associates and Joint Venture Companies
As on March 31, 2023, the Company has 1 direct subsidiary, namely,
Aarti HPC Limited.
The Company does not have any Joint Venture or Associate Company within
the meaning of Section 2(6) of the Companies Act, 2013. The Company does not have any
material subsidiary as per the relevant provisions of Companies Act, 2013 and Listing
Regulations.
Pursuant to the first proviso to Section 129(3) of the Companies Act,
2013 read with Rule 5 and 8 of the Companies (Accounts) Rules, 2014, the salient features
of the financial statement and performance of subsidiary Company in Form AOC-1 is
disclosed under Annexure A and forms part of this Report.
Pursuant to the provisions of Section 136 of the Companies Act, 2013,
the financial statement of the Company, consolidated financial statements and separate
audited financial statement in respect of subsidiary company are available on the website
of the Company.
The Company has formulated a Policy for determining material
subsidiaries. The said policy is available on the website of the Company at https://www.aarti-surfactants.
com/assets/investors/policy-for-determination-of- materiai-subsidiarv.pdf
5. Share Capital
As on March 31, 2023, the Authorised Share Capital of the Company stood
at ' 40,00,00,000 (Rupees Forty Crores only) consisting of 3,18,70,000 (Three Crore
Eighteen Lakh Seventy Thousand) equity shares of ' 10/- (Rupees Ten) each and 81,30,000
(Eighty-One Lakh Thirty Thousand) Preference Shares of ' 10/- (Rupees Ten) each.
Pursuant to Right's Issue, the Company allotted 8,92,291 Partly paid up
equity shares of ' 10/- each at an issue price of ' 555 /- (including premium of ' 545/-)
per equity share aggregating to an amount of ' 49,52,21,505/- to all the eligible equity
shareholders of the Company on February 09, 2023. The terms of payment include 40% on
application and remaining 60% on final call
as may be decided by the Committee of the Board from time to time.
Consequently, the paid - up share capital of the Company as on March
31, 2023 stands as follows: -
Particulars |
No. of Shares |
Face Value Per Share (in ') |
Total Amount (in ') |
Fully paid up equity shares |
75,84,477 |
' 10 each |
7,58,44,770 |
Partly paid up equity shares |
8,92,291 |
' 10 each (' 4 paid on
application) |
35,69,164 |
Non - Convertible Redeemable
Preference Shares |
10,82,387 |
' 10 each |
1,08,23,870 |
Total |
95,59,155 |
|
9,02,37,804 |
During FY 2022-23 there was no change in the authorised share capital
of the Company.
The Company has neither issued any shares with differential rights as
to dividend, voting or otherwise, nor issued any sweat equity shares during the year under
review.
6. Utilisation of Issue Proceeds
The proceeds of funds raised by the Company through Right's Issue, has
been utilised for the objects as stated in the Letter of Offer dated January 18, 2023. The
disclosure in compliance with the Regulation 32 of the SEBI (Listing Obligation and
Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is as under:
-
Particulars |
No. of Equity shares |
Price (in ') |
Amount (Rs. in Lakhs) |
Funds
Utilised |
Total Issue Size |
8,92,291 |
555.00 |
4952.22 |
' 1980.89 lakhs were |
Details of Allotment till
March 31, 2023 |
|
222.00 |
1980.89 |
used to meet the working capital
requirements |
The Rights equity shares were issued as partly paid-up and an amount of
' 222/- (i.e. 40% of the Issue Price) per Rights equity share has been received on
application (of which ' 4 towards face value of Rights equity share and ' 218/- towards
premium amount of Rights equity share). The balance amount of ' 333/- per Rights equity
share will be called within a period of twelve months from the
date of allotment i.e. February 09, 2023 as prescribed under Securities
and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations,
2018.
7. Dividend
To conserve the funds of the Company, your directors do not recommend
any dividend for the Financial Year 2022-23.
8. Dividend Distribution Policy
The Company has in place a Dividend Distribution Policy in accordance
with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and the same is available on the Company's website at https://www.aarti-surfactants.com/assets/
investors/dividend-distribution-policy.pdf
9. Matters Related to Directors and Key Managerial Personnel
The Board of Directors comprises of six Directors, of which two are
Executive Directors, two Non-Executive Directors and two Independent Directors (including
one Woman Independent Director). The Chairman of the Board is an Independent Director. The
Board has highly qualified members and has varied experience in their respective fields.
The constitution is in compliance with Section 149 of the Companies Act, 2013 and
Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015, as amended from time to time.
At the 4th AGM held on August 05, 2022, the following re-appointments
were considered: -
a) Mr. Nikhil P Desai (DIN: 01660649) was re-appointed as Managing
Director of the Company for a period of five years effective from August 20, 2022.
b) Mr. Santosh M. Kakade (DIN: 08505234) was re-appointed as an
Executive Director effective from August 20, 2022.
Re-appointments:
Based on recommendation of Nomination and Remuneration Committee, the
Board of Directors at its meeting held on July 24, 2023, approved the re-appointment of
Mr. Mulesh M. Savla (DIN: 07474847), as an Independent Director of the Company for second
term of five years commencing from June 13, 2024,
subject to approval of shareholders at the ensuing Annual General
Meeting:
Directors retiring by rotation:
Pursuant to the provisions of Section 152 of the Companies Act, 2013
read with the relevant rules made thereunder, one-third of the Directors are liable to
retire by rotation every year and if eligible, offer themselves for re-appointment at the
AGM.
Mr. Dattatray S. Galpalli (DIN: 01853463), Director being longest in
the office, is liable to retire by rotation at the ensuing Annual General Meeting of the
Company and he being eligible has offered himself for re-appointment. A resolution seeking
shareholders' approval for his re-appointment forms part of the AGM Notice.
Pursuant to Regulation 36 of the Listing Regulations read with
Secretarial Standard-2 on General Meetings, a brief profile of the Directors proposed to
be appointed / re-appointed is made available, as an Annexure to the Notice of the Annual
General Meeting.
Pursuant to the provisions of Regulation 34(3) read with Schedule V to
the Listing Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia
(COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice, the
Secretarial Auditor of the Company, certifying that none of the Directors of the Company
have been debarred or disqualified from being appointed or continuing as Directors of
companies by the Securities and Exchange Board of India or by the Ministry of Corporate
Affairs or by any such statutory authority. The said Certificate is annexed to the
Corporate Governance Report of the Company for the Financial Year 2022-23.
Resignation
During the year under review, none of the directors of the Company have
resigned.
Key Managerial Personnel
During the year under review, Mr. Prashant Gaikwad resigned as a
Company Secretary and Compliance Officer of the Company, with effect from April 14, 2022
due to personal reasons.
Based on the recommendations of the Nomination & Remuneration
Committee, the Board of Directors at its meeting held on August 04, 2022 appointed
Mrs. Priyanka Chaurasia as Company Secretary and Compliance Officer of
the Company with effect from August 04, 2022.
Declarations by Independent Directors
In accordance with Section 149(7) of the Companies Act, 2013 and
Regulation 25(8) of the Listing Regulations, as amended, each Independent Director of the
Company has provided a written declaration confirming that he/ she meets the criteria of
independence as stipulated under Section 149(6) of the Companies Act, 2013 and Regulation
16(1)(b) of the Listing Regulations.
In the opinion of the Board of Directors, the Independent Directors
fulfil the conditions specified in the Companies Act, 2013 read with the rules made
thereunder as well as Listing Regulations and are independent from Management, hold the
highest degree of integrity and possess expertise in their respective fields with enormous
experience.
All the Independent Directors have complied with the Code for
Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
All the Independent Directors of the Company have enrolled their names
in the online database of Independent Directors maintained with the Indian Institute of
Corporate Affairs in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of
the Companies (Appointment & Qualification of Directors) Rules, 2014.
Familiarisation Programmes
The Company conducts Familiarisation programmes for its Independent
Director which is imparted at the time of appointment of an Independent Director on Board
as well as annually. The details of the training and Familiarisation programmes conducted
by the Company are hosted on the Company's website at https://www.aarti-surfactants.
com/independent-directors.htm
10. Directors' Responsibility Statement
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the following
statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) That in the preparation of the annual accounts for the financial
year ended March 31, 2023, the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
b) That the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company at the end of the
Financial Year and of the profit and loss of the Company for that period;
c) That the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the Act
for safeguarding the Assets of the Company and for preventing and detecting fraud and
other irregularities;
d) That Directors have prepared the annual accounts on a going concern
basis;
e) The Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively;
f) The Directors had devised adequate systems and processes,
commensurate with the size of the Company and the nature of its business, to ensure
compliance with the provisions of all applicable laws and that such systems and processes
are operating effectively.
11. Board and Committees of the Board
Board Meetings
During the year under review, the Board of Directors met 4 (four)
times. The agenda of the Meetings were circulated to members of the Board in advance along
with necessary documents, reports, recommendations etc., so that each Board Member could
actively participate on agenda items during the meeting. The details of Board Meetings and
the attendance of the Directors at such meetings are provided in the Corporate Governance
Report, which forms part of this Annual Report. The intervening gap between the meetings
was within the prescribed period under the Companies Act, 2013 and the Listing
Regulations.
Committees of the Board
The Committees of the Board focus on certain specific areas and make
informed decisions in line with the delegated authority.
The following statutory Committees constituted by the Board of
Directors, function according to their respective roles and defined scope:
a) Audit Committee
b) Nomination and Remuneration Committee
c) Corporate Social Responsibility Committee
d) Stakeholders Relationship Committee
e) Risk Management Committee
Details of composition, terms of reference and number of meetings held
for respective Committees are given in the Report on Corporate Governance, which forms a
part of this Annual Report.
12. Related Party Transactions
The Company has a Policy on Materiality of Related Party Transaction
and dealing with Related Party Transaction which is uploaded on the Company's website at https://
www.aarti-surfactants.com/assets/investors/Policy-on- Related-Party-Transactions-2022.pdf
All related party transactions that were entered into during the FY
2022-23 were on an arm's length basis and were in the ordinary course of the business. All
transactions entered with related parties were in compliance with the applicable
provisions of the Companies Act, 2013 read with the relevant rules made thereunder and the
Listing Regulations. There are no materially significant related party transactions made
by the Company with Promoters, Key Managerial Personnel or other Designated persons which
may have potential conflict with interest of the Company at large.
The related party transactions are approved by the Audit Committee.
Omnibus approval is obtained for the transactions which are foreseen and repetitive in
nature. A statement of related party transactions is presented before the Audit Committee
on a quarterly basis, specifying the nature, value and terms and conditions of
transactions. A report of factual findings arising out of the accepted procedures carried
out in regard to transactions with Related Parties is given by the Statutory Auditors on
quarterly basis and the same is placed before the Audit Committee.
The details of related party transactions are provided in the
accompanying financial statements.
Particulars of contracts or arrangements made with related parties
Since all related party transactions entered into by the Company were
in ordinary course of business and were on an arm's length's basis, Form AOC-2 is not
applicable to Company.
13. Corporate Social Responsibility
The Company's Corporate Social Responsibility (CSR) initiatives and
activities are aligned to the requirements of Section 135 of the Companies Act, 2013 read
with relevant rules, schedules etc.
Besides our direct involvement, we are partner with numerous
implementing agencies to carryout need assessment and make impact interventions. Our focus
areas include the following segments:
Education & Skill Development
Childcare & Healthcare Facilities
Women Empowerment
Social Welfare
Disaster relief and rehabilitation
Green Environment Project
Rural Development
Water conservation and environment
The detailed Policy on Corporate Social Responsibility is available on
the website of the Company at https://www.aarti-surfactants.com/assets/investors/
Corporate%20Social%20Responsibility%20Policy.pdf
A brief note on various CSR initiatives undertaken during the year
including the composition of the CSR Committee is presented in this Annual report. The CSR
annual report is annexed as Annexure B and forms an integral part of the Report.
14. Nomination and Remuneration Policy
Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of
the Listing Regulations, your Company has in place a Nomination and Remuneration Policy
which lays down a framework in relation to remuneration of Directors, Key Managerial
Personnel and Senior Management of the Company. The policy also lays down criteria for
selection and appointment of Board Members. The said policy has been posted on the website
of the Company at https://www.aarti-surfactants.com/assets/
investors/nomination-and-remuneration-policy.pdf
The details of this policy are given in the Corporate Governance
Report.
15. Risk Management
Your Company recognises that risk is an integral and unavoidable
component of business and is committed to managing the risk in a proactive and effective
manner.
The Company aims to use risk management to take better informed
decisions and improve the probability of achieving its strategic and operational
objectives.
In compliance with Regulation 21 of Listing Regulations, Your Company
has a Risk Management Committee consisting of Mr. Nikhil Parimal Desai (Chairman), Mr.
Mulesh Manilal Savla, Mr. Santosh Kakade, Mr. Chandrakant Vallabhaji Gogri & Mr.
Nitesh Harakchand Medh. The Committee through its risk management framework continuously
identifies, evaluates and takes appropriate measures to mitigate/ minimise various
elements of risks. The Risk Management Committee meets periodically to ensure that
appropriate methodologies, processes and systems are in place to monitor and evaluate
risks associated with the business of the Company and also to monitor and oversee the
implementation of the Risk Management Policy.
The said policy has been posted on the website of the Company at https://www.aarti-surfactants.com/assets/
investors/Risk%20Management%20Policv.pdf
16. Particulars of Employees
The statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure
and forms part of this report.
In terms of Section 136(1) of the Act, details of employee remuneration
as required under provisions of Section 197 of the Companies Act, 2013 and rule 5(2) and
rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014 is available for inspection. Any member interested in obtaining a copy of the same
may write to Company at investors@aarti-surfactants.com from their registered
e-mail address.
Material Developments in Human Resources / Industrial
Relations Front, Including Number of People Employed
The company has maintained a positive relationship with its workers and
staff during the past year. The company's commitment to caring for its people, customers,
suppliers, and the community is reflected in its policies, programs, and development
efforts. The company's dedication to building and strengthening its human capital is
commendable. By defining policies that support employee growth and goals, the company
creates an environment where employees can thrive and reach their full potential. This, in
turn, can lead to increased job satisfaction, productivity, and overall success for the
organization.
As of March 31, 2023, the Company had 308 permanent employees at its
manufacturing plants and administrative office.
17. Material changes and commitment if any affecting the financial
position of the company occurred between the end of the financial year to which this
financial statements relate and the date of the report
There are no other material changes and commitments affecting the
financial position of the Company occurred between the end of the Financial Year to which
these financial statements relate and the date of the report.
18. Internal financial control systems and their adequacy
Your Company has clearly laid down policies, guidelines and procedures
that form part of internal control systems, which provide for automatic checks and
balances. Your Company has maintained a proper and adequate system of internal controls.
The Company has appointed Raman S. Shah & Associates, Chartered Accountants, as an
Internal Auditor who periodically audits the adequacy and effectiveness of the internal
controls laid down by the Management and suggests improvements. This ensures that all
Assets are safeguarded and protected against loss from unauthorised use or disposition and
that the transactions are authorised, recorded and reported diligently. Your Company's
internal control systems commensurate with the nature and size of its business operations.
Internal Financial Controls are evaluated and Internal Auditors' Reports are regularly
reviewed by the Audit Committee of the Board.
Statutory Auditors Report on Internal Financial Controls as required
under Clause (i) of sub-section 3 of Section
143 of the Companies Act, 2013 is annexed with the Independent
Auditors' Report.
19. Investor Education and Protection Fund (IEPF)
There is no amount due, to be transferred to the IEPF account.
20. Particulars of Loans, Guarantees and Investments
Details of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 forms part of the notes to the
Standalone Financial Statement of the Company.
21. Deposits
Your Company has not accepted any deposits covered under Chapter V of
the Companies Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the
Companies (Acceptance of Deposits) Rules, 2014)], during the Financial Year 2022-23.
22. Annual Board Evaluation
Pursuant to the provisions of Companies Act, 2013 and the Listing
Regulations, a structured questionnaire was prepared after taking into consideration
various aspects of the Board's functioning, composition of the Board and its Committees,
culture, execution and performance of specific duties, obligations and governance.
The performance of the Committees and Independent Directors were
evaluated by the entire Board of Directors except for the Director being evaluated. The
performance evaluation of the Chairman, Non- Independent Directors and Board as a whole
was carried out by the Independent Directors. The Board of Directors expressed their
satisfaction with the outcome of evaluation and the process followed thereof.
23. Significant and material orders passed by the regulators or courts
or tribunals
The Regional Director, Northwestern Region, Ministry of Corporate
Affairs vide its order dated April 28, 2023 had granted its approval for Shifting of
Registered Office from the 'State of Gujarat' to the 'State of Madhya Pradesh',
24. Health Environment and Safety
At Aarti Surfactants Limited, we hold paramount the well-being of our
employees, customers, and the communities we operate in. Our unwavering commitment to
Environment, Health, and Safety (EHS) is reflected in our steadfast efforts to foster a
secure and healthy workplace for all. Throughout the year, we have diligently pursued the
implementation of safer
process technologies and unit operations, aimed at mitigating risks and
ensuring the highest standards of safety. Our company has taken substantial measures to
adopt production processes that are not only efficient and innovative but also
environmentally friendly. The continual monitoring and periodic review of our EHS
Management System exemplify our dedication to upholding the highest EHS standards. These
practices remain central to our operations, underscoring our unwavering pledge to
sustainability and responsible business practices.
25. Sustainability
Sustainability lies at the core of our business philosophy. We
recognize the imperative to use resources judiciously, ensuring that our actions today do
not compromise the well-being and prospects of future generations. The concept of
sustainability, which encompasses environmental, economic, and social considerations,
guides our decision-making and strategic planning. Throughout 2022-23, we have taken
deliberate steps to embed sustainability into our business practices. By adopting
responsible resource management, optimizing energy consumption, and reducing our carbon
footprint, we actively contribute to preserving our planet's precious resources.
Furthermore, our commitment to sustainability extends beyond environmental concerns; we
strive to create a positive impact on society through ethical practices, community
engagement, and fostering economic prosperity.
26. Vigil Mechanism / Whistle Blower Policy
The Company has established a Vigil Mechanism and Whistle Blower Policy
for its Directors and employees to report concerns about unethical behavior, actual or
suspected fraud, actual or suspected leak of UPSI or violation of Company's Code of
Conduct. It also provides for adequate safeguards against the victimisation of employees
who avail of the mechanism, and allows direct access to the chairman of the audit
committee in exceptional cases. Further, your Company has prohibited discrimination,
retaliation, or harassment of any kind against any employee who reports under the Vigil
Mechanism or participates in the investigation.
The said Policy is available on the website of the Company at https://www.aarti-surfactants.com/assets/
investors/whistle-blower-policy.pdf
27. Auditors and Reports
Statutory Auditors & their Audit Report
In accordance with the provisions of Section 139 of the Companies Act,
2013, Gokhale & Sathe, Chartered Accountants (Firm Registration No.: 103264W) were
appointed as Statutory Auditor of your Company at the 1st Annual General Meeting till the
conclusion of 6th Annual General Meeting to be held in 2024.
The Auditors have issued an unmodified opinion on the Financial
Statements, both standalone and consolidated for the financial year ended March 31, 2023.
The said Auditors' Report(s) for the financial year ended March 31, 2023 on the financial
statements of the Company forms part of this Annual Report.
The Auditors Report for the financial year ended 31st March, 2023 does
not contain any qualification, adverse remark or reservation and therefore, do not call
for any further explanation or comments from the Board under Section 134(3) of the
Companies Act, 2013.
The Auditors have not reported any matter to the Company required to be
disclosed under Section 143(12) of the Companies Act, 2013.
Cost Auditors and their Audit Report
In terms of Section 148 of the Companies Act, 2013 read with the
Companies (Cost Record and Audit) Rules, 2014, the Company is required to maintain cost
accounting records and have them audited every year.
The Board has appointed 'PHS & Associates', Cost Accountants,
(Membership No. 101038) as the Cost Auditors of the Company for FY 2023-24. The
remuneration payable to the Cost Auditor is required to be placed before the Members in a
General Meeting for their approval. Accordingly, a resolution for seeking Member's
approval for the remuneration payable to PHS & Associates, Cost Accountants, is
included in the Notice convening the Annual General Meeting in terms of Rule 14 of the
Companies (Audit & Auditors) Rules, 2014.
The Company has maintained cost records as specified under section
148(1) of the Act.
Secretarial Auditor & their Audit Report
Pursuant to the provisions of Section 204 of Companies Act, 2013 and
rules made thereunder, the Board had appointed CS Sunil M. Dedhia (COP No. 2031),
Proprietor
of Sunil M. Dedhia & Co, Company Secretary in Practice to undertake
Secretarial audit of the Company.
Pursuant to provisions of Section 204(1) of the Companies Act, 2013 and
Regulation 24A of the Listing Regulations, the Secretarial Audit Report for the Financial
Year ended March 31, 2023 issued by CS Sunil M. Dedhia, the Secretarial Auditor of the
Company is annexed as Annexure C and forms an integral part of this Report. During the
year under review, the Secretarial Auditor had not reported any fraud under Section
143(12) of the Companies Act, 2013.
As regards the observations of the Secretarial Auditor in their Report,
the same is self explanatory and need no further clarifications.
28. Annual Return
In terms of Section 92(3) of the Companies Act, 2013 read with Section
134(3)(a) of the Companies Act, 2013, the Annual Return of the Company as on 31st March,
2023 is available on the Company's website at www.aarti-surfactants.com
29. Corporate Governance
Corporate Governance essentially involves balancing the interests of a
Company's stakeholders. The Company continues to nurture a culture of good governance
practices across functions, offices and manufacturing facilities.
Your Company has complied with the mandatory Corporate Governance
requirements stipulated under the Listing Regulations. The separate Report on Corporate
Governance is annexed hereto forming part of this report. The requisite certificate from
Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate
Governance.
30. Management Discussion and Analysis Report
Pursuant to Regulation 34 read with Schedule V to the Listing
Regulations, Management's Discussion and Analysis for the year under review is presented
in a separate section forming part of the Annual Report.
31. Business Responsibility & Sustainability Reporting (BRSR)
The Listing Regulations mandate the inclusion of the Business
Responsibility & Sustainability Reporting as part of the Annual Report for top 1000
listed entities based on market capitalisation. The Company does not fall part
of the top 1000 listed entities for FY 2022-23, hence the BRSR is not
applicable to the company.
32. Compliance Management System
The Company with its sheer focus committed to achieve 100% compliance.
We have adopted a third-party managed IT-based Compliance Management System. It has a
repository of all applicable regulations and requisite compliances. It has an in-built
alert system that sends alerts to the users and intimates concerned personnel about
upcoming compliances.
33. Disclosure under the Sexual Harassment of Women at Work Place
(Prevention, Prohibition and Redressal) Act, 2013
Your Company has constituted an Internal Complaints Committee, under
the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act,
2013 and has a policy and framework for employees to report sexual harassment cases at
workplace. The Company's process ensures complete anonymity and confidentiality of
information.
The Company has Zero tolerance towards any action on the part of any
one which may fall under the ambit of 'Sexual Harassment at workplace and is fully
committed to uphold and maintain the dignity of every woman working with the Company.
The Company has complied with the provisions relating to the
constitution of Internal Complaints Committee under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The status of the Complaints
2022-23 is as follows: |
During the FY |
Particulars |
No. of Complaints |
Number of complaints at the
beginning of the financial year |
Nil |
No. of complaints filed and
resolved during the financial year |
Nil |
No. of complaints pending at
the end the financial year |
Nil |
34. Conservation of energy, technology absorption, foreign exchange
earnings and outgo
The particulars relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the
Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as
amended from time to time, are provided in Annexure D to this report.
35. Secretarial Standards Compliance
During the year under review, the Company has complied with all the
applicable Secretarial Standards issued by the Institute of Company Secretaries of India
and approved by the Central Government pursuant to Section 118 of the Companies Act, 2013.
36. Details of application made or any proceeding pending under the
insolvency and bankruptcy code, 2016 during the financial year alongwith their status as
at the end of the financial year
During the Financial Year 2022-23, there was no application made and
proceeding initiated / pending by any Financial and/or Operational Creditors against your
Company under the Insolvency and Bankruptcy Code, 2016 ("the Code").
37. Details of difference between the amount of valuation at the time
of one time settlement and the valuation done at the time of taking a loan from the banks
or financial institutions along with the reasons thereof
During the Financial Year 2022-23, the Company has not made any
settlement with its bankers for any loan / facility availed or/and still in existence.
38. Green Initiative
Your Company has adopted a green initiative to minimize the impact on
the environment. The Company has been circulating the copy of the Annual Report in
electronic form to all members whose email addresses are available with the Company. Your
Company appeals to other members to also register themselves for receiving the Annual
Report in electronic form.
Acknowledgement
Your Board takes this opportunity to thank Company's employees at all
levels for their hard work and commitment. Your Directors would like to express their
grateful appreciation for the assistance and support by all Shareholders, Government
Authorities, Auditors, Financial Institutions, Customers, Employees, Suppliers, other
business associates and various other stakeholders.
For and on behalf of the Board
Mulesh Manilal Savla
Chairman
Mumbai/July 24, 2023 DIN: 07474847
Annexure A
FORM AOC-1
Salient features of Financial Statement of Subsidiary Company as per
Companies Act, 2013.
Part "A": Subsidiaries
(Amount in Lakhs, except % of shareholding)
Name of Subsidiary Company |
Aarti HPC Limited |
Date of acquisition |
December 26, 2019 |
Financial Period ended |
March 31, 2023 |
Reporting Currency &
Exchange Rate |
INR |
Share Capital |
475.00 |
Reserves & Surplus |
(9.22) |
Total Assets |
474.94 |
Total Liabilities |
9.16 |
Investments |
0 |
Turnover / Total Income |
0 |
Profit / (Loss) Before
Taxation |
(0.60) |
Provision for Taxation |
0 |
Profit / (Loss) after Taxation |
(0.60) |
Proposed Dividend |
Nil |
% of Shareholding |
100 |
Note:-
The Company i.e. Aarti HPC Limited (wholly owned subsidiary company of
Aarti Surfactants Limited) is yet to commence its business operations.
As per our report of even date
For Gokhale & Sathe
Chartered Accountants
Firm Registration Number: 103264W |
For and on behalf of the Board |
Partner
Tejas Parikh Chandrakant Gogri Nikhil Desai
M.No.123215 Director Managing Director
DIN : 00005048 DIN : 01660649
Mumbai/April 27, 2023 |
Priyanka Chaurasia Nitesh
Medh
Company Secretary Chief Financial Officer ICSI M.No.A44258 ICAI M.No
: 155868 |
Annexure B
The Annual report on CSR activities carried out during FY 2022-23
1. Brief outline on CSR Policy of the Company:
The Corporate Social Responsibility (CSR) policy of the Company is
formulated in accordance with Section 135 of the Companies Act, 2013, and Schedule VII of
the Act. Guided by its core values, the Company is committed to impactful CSR initiatives
that extend beyond financial contributions.
The policy underscores a comprehensive approach to community
development, focusing on areas such as education, healthcare, women's empowerment,
environmental sustainability, destitution rehabilitation, preservation of Indian art and
culture, rural progress, and disaster relief. The policy reflects meticulous planning and
implementation, with a dedicated CSR Committee ensuring the selection, execution, and
monitoring of projects in alignment with guiding principles. The Board's responsibilities
encompass policy approval, annual action plan endorsement, and oversight to ensure CSR
projects effectively benefit marginalized communities. The Company's ethical and
transparent approach aligns with its Code of Conduct, emphasizing the pursuit of
sustainable impact through strategic CSR endeavors.
2. Composition of CSR Committee:
Sr. No. Name of
Director |
Designation |
Number of meetings of CSR
Committee held during the year |
Number of meetings of CSR
Committee attended during the year |
1. Chandrakant Vallabhaji
Gogri |
Chairman |
1 |
1 |
2. Nikhil Parimal Desai |
Member |
1 |
1 |
3. Misha Bharat Gala |
Member |
1 |
1 |
3. Provide the web-link(s) where Composition of CSR Committee, CSR
Policy and CSR Projects approved by the Board are disclosed on the website of the Company:
The Composition of CSR Committee, CSR Policy and CSR projects approved
by the Board are disclosed on the website of the Company at www.aarti-surfactants.com
4. Provide the executive summary along with web-link(s) of Impact
Assessment of CSR Projects carried out in pursuance of sub-rule (3) of rule 8, if
applicable: Not Applicable
5. (a) Average net profit of the company as per sub-section (5) of
section 135: - ' 1173.19 Lakhs
(b) Two percent of average net profit of the company as per sub-section
(5) of section 135: - ' 23.46 Lakhs
(c) Surplus arising out of the CSR Projects or programmes or activities
of the previous financial years: - Nil
(d) Amount required to be set-off for the financial year, if any: - '
1.66 Lakhs
(e) Total CSR obligation for the financial year [(b)+(c) - (d)]: - '
21.80 Lakhs
6. (a) Amount spent on CSR Projects (both Ongoing Project and other
than Ongoing Project): - ' 21.83 Lakhs
(b) Amount spent in Administrative Overheads: - Nil
(c) Amount spent on Impact Assessment, if applicable: - Nil
(d) Total amount spent for the Financial Year [(a)+(b)+(c)]: - '
21.83 Lakhs
(e) CSR amount spent or unspent for the Financial Year: -
Total Amount Spent |
Amount Unspent
(in ' lakhs) |
for the Financial Year. (in '
lakhs) |
Total Amount transferred to
Unspent CSR Account as per subsection (6) of section 135. |
Amount transferred to any
fund specified under Schedule VII as per second proviso to sub-section (5) of section 135. |
|
Amount. Date of transfer. |
Name of the Fund Amount.
Date of transfer. |
21.83 |
|
Not Applicable |
(f) Excess amounts for set-off, if any: -
Sr. No. Particular |
Amount (in ' lakhs) |
(i) Two percent of average net
profit of the company as per sub-section (5) of section 135 |
' 23.46 |
(ii) Total amount spent for
the Financial Year |
' 21.83 |
(iii) Excess amount spent for
the Financial Year [(ii)-(i)] |
Nil |
(iv) Surplus arising out of the
CSR projects or programmes or activities of the previous Financial Years, if any |
Nil |
(v) Amount available for set
off in succeeding Financial Years [(iii)-(iv)] |
Nil |
7. Details of Unspent Corporate Social Responsibility amount for the
preceding three Financial Years:
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
Sr. No. |
Preceding Financial
Year(s) |
Amount transferred
to Unspent CSR Account under sub- section (6) of section 135
(in ') |
Balance Amount in
Unspent CSR Account under sub- section (6) of section 135 (in
') |
Amount Spent in
the Financial Year (in ') |
Amount transferred to
a Fund as specified under Schedule VII as per second proviso to sub-
section (5) of section 135, if any |
Amount remaining
to be spent in succeeding Financial Years (in ') |
Deficiency, if any |
Not Applicable |
8. Whether any capital assets have been created or acquired through
Corporate Social Responsibility amount spent in the Financial Year: - Nil
9. Specify the reason(s), if the company has failed to spend two per
cent of the average net profit as per sub-section (5) of section 135: - Not Applicable
Chandrakant V. Gogri
Chairman of CSR Committee DIN:00005048
Nikhil P. Desai
Managing Director DIN:01660649
Mumbai/July 24, 2023
To,
The Members,
Aarti Surfactants Limited
(CIN: L24100MP2018PLC067037)
Plot no 57, 58, 60 to 64, 62A, S-3/1,
Sector-3, Sagore Village,
Pithampur Industrial Area,
District Dhar - 454775, Madhya Pradesh
I have conducted the secretarial audit of the compliance of applicable
statutory provisions and the adherence to good corporate practices by Aarti Surfactants
Limited (hereinafter called "the Company"). Secretarial Audit was conducted
in a manner that provided me a reasonable basis for evaluating the corporate
conducts/statutory compliances and expressing my opinion thereon.
Based on my verification of the Company's books, papers, minute books,
forms and returns filed and other records maintained by the Company and also the
information provided by the Company, its officers, agents and authorized representatives
during the conduct of secretarial audit, I hereby report that in my opinion, the Company
has, during the audit period covering the Financial Year ended on March 31, 2023
('Audit Period') complied with the statutory provisions listed hereunder and also that
the Company has proper Board-processes and compliance-mechanism in place to the extent, in
the manner and subject to the reporting made hereinafter:
I have examined the books, papers, minute books, forms and returns
filed and other records maintained by the Company for the financial year ended on March
31, 2023 according to the provisions of:
(i) The Companies Act, 2013 (the Act) and the Rules made there under;
(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the
rules made there under;
(iii) The Depositories Act, 1996 and the Regulations and Bye-laws
framed there under;
(iv) Foreign Exchange Management Act, 1999 and the rules and
regulations made there under to the extent of Foreign Direct Investment, Overseas Direct
Investment, External Commercial Borrowings which were not applicable;
(v) The following Regulations and Guidelines prescribed under the
Securities and Exchange Board of India Act, 1992 ('SEBI Act'):-
(a) The Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011;
(b) The Securities Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015;
(c) The Securities and Exchange Board of India
(Issue of Capital and Disclosure Requirements) Regulations, 2018;
(d) The Securities and Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021 which were not applicable to the Company
during the Audit Period;
(e) The Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015 ("SEBI LODR");
(f) Securities and Exchange Board of India (Issue and Listing of
Non-Convertible Securities) Regulations, 2021, to the extent applicable;
(g) The Securities and Exchange Board of India
(Registrars to an Issue and Share Transfer Agents) Regulations, 1993
regarding the Companies Act and dealing with client;
(h) The Securities and Exchange Board of India
(Delisting of Equity Shares) Regulations, 2009 which were not
applicable to the Company during the Audit Period;
(i) The Securities and Exchange Board of India (Buyback of Securities)
Regulations, 2018 which were not applicable to the Company during the Audit Period; and
(j) The Securities and Exchange Board of India (Issue and Listing of
Non-Convertible and Redeemable Preference Shares) Regulations, 2013 to the extent
applicable to the Company vide SEBI Circular No. CIR/ IMD/DF/50/2017 dated May 26, 2017;
I have also examined compliance with the applicable clauses of the
following:
(i) Secretarial Standards issued by The Institute of Company
Secretaries of India;
(ii) Listing Agreements entered into by the Company with BSE Limited
and National Stock Exchange of India Limited;
During the Audit Period under review and as per the representations and
clarifications made, the Company has complied with the provisions of the Act, Rules,
Regulations, Guidelines, Standards etc. mentioned above, except that the Company has not
yet been able to file Form IEPF - 4 being Statement of shares transferred to the Investor
Education and Protection Fund under IEPF Authority (Accounting, Audit, Transfer and
Refund) Rules, 2016 in respect of 29,914 equity shares allotted on August 20, 2019
pursuant to Composite Scheme of Arrangement involving the Company which have already been
transferred by the Company to IEPF Authority on September 12, 2019 due to technical issue
being encountered on the MCA portal, which has also been intimated to the IEPF Authority,
but still remains unresolved;
I further report that based on review of compliance system
prevailing in the Company, I am of the opinion that the Company has adequate systems and
processes in place commensurate with its size and nature of operations to monitor and
ensure compliance with the following laws applicable specifically to the Company:
(a) Indian Boiler Act, 1923 & The Indian Boilers
Regulations, 1950;
(b) Petroleum Act, 1934;
(c) Hazardous Wastes (Management, Handling and Transboundary Movement)
Rules, 2016;
(d) Air (Prevention and Control of Pollution) Act, 1981;
(e) Water (Prevention and Control of Pollution) Act, 1974;
(f) The Noise (Regulation and Control) Rules, 2000;
(g) Environment Protection Act, 1986 and other environmental laws;
(h) Hazardous Wastes (Management, Handling and Transboundary Movement)
Rules, 2008; and
(i) Public Liability Insurance Act, 1991.
I further report that the Board of Directors of the Company is duly
constituted with proper balance of Executive Directors, Non-Executive Directors and
Independent Directors. The changes in the composition of the Board of Directors that took
place during the period under review were carried out in compliance with the provisions of
the Act.
Adequate notice was given to schedule the Board Meetings, agenda and
detailed notes on agenda were sent at least seven days in advance, and a system exists for
seeking and obtaining further information and clarifications on the agenda items before
the meeting and for meaningful participation at the meeting.
All decisions at the Board Meetings and Committee Meetings were taken
unanimously as recorded in the minutes of the meetings of the Board of Directors or
Committees of the Board, as the case may be.
I further report that there are adequate systems and processes in
the Company commensurate with the size and operations of the Company to monitor and ensure
compliance with applicable laws, rules, regulations and guidelines.
I further report that during the Audit Period under review, the
Company has made issue and allotment of further 8,92,291 equity shares of ' 10/-
each at an issue price of ' 555/- per share (including premium of ' 545/-)
on February 9, 2023 on rights basis to existing shareholders partly paid up to the extent
of ' 4/- (received on application together with premium of ' 218/-) per
share to raise approximately ' 49.52 crore. There were no other specific events /
actions in pursuance of the above referred laws, rules, regulations, guidelines,
standards, etc. having a major bearing on the Company's affairs.
This report is to be read with Annexure which forms an integral part of
this report.
CS Sunil M. Dedhia
Proprietor, Sunil M. Dedhia & Co.
Practising Company Secretary FCS No: 3483 C.P No. 2031 Peer Review
Certificate No. 867/2020 UDIN: F003483E000784065
Place: Mumbai Date: August 11, 2023
To The Members,
Aarti Surfactants Limited
(CIN: L24100MP2018PLC067037)
Plot no 57, 58, 60 to 64, 62A, S-3/1,
Sector-3, Sagore Village,
Pithampur Industrial Area,
District Dhar - 454775, Madhya Pradesh
My report of even date is to be read along with this letter.
(1) Maintenance of Secretarial record is the responsibility of the
management of the Company. My responsibility is to express an opinion on these secretarial
records based on my audit.
(2) I have followed the audit practices and processes as were
appropriate to obtain reasonable assurance about the correctness of the contents of the
secretarial records. The verification was done on test basis to ensure that correct facts
are reflected in secretarial records. I believe that the processes and practices, I
followed provide a reasonable basis for my opinion.
(3) I have not verified the correctness and appropriateness of
financial records and Books of Accounts of the Company.
(4) Wherever required, I have obtained the Management representation
about the compliance of Laws, Rules and Regulations and happening of events etc.
(5) The compliance of the provisions of Corporate and Other Applicable
Laws, Rules, Regulations, Standard is the responsibility of Management. My examination was
limited to the verification of procedures on test basis.
(6) The Secretarial Audit report is neither an assurance as to the
future viability of the Company nor the efficacy or effectiveness with which the
Management has conducted the affairs of the Company.
CS Sunil M. Dedhia
Proprietor, Sunil M. Dedhia & Co. Practising Company Secretary FCS
No: 3483 C.P No. 2031
Place: Mumbai Peer Review Certificate No. 867/2020
Date: August 11, 2023 UDIN: F003483E000784065
Disclosure pursuant to Section 134(3)(m) of the Companies Act, 2013
read with Rule 8 of the Companies (Accounts), Rules 2014
A) Conservation for Energy
The Steps Taken or Impact on Conservation of Energy;
1. LED Lighting Upgrade: The shift from traditional lamps to
energy-efficient LED lights has significantly reduced daily energy consumption.
2. Variable Frequency Drive (VFD): The adoption of high-efficiency
Variable Frequency Drives (VFD) for agitator motors has led to substantial energy savings
per batch. This shift has resulted in reduced energy consumption compared to the previous
fiscal year.
3. Waste Heat Recovery Boiler: The strategic
implementation of a Waste Heat Recovery Boiler has resulted in
substantial saving of steam generation.
4. Optimization of Steam Consumption: A series of careful
modifications, has led to a significant reduction in monthly steam consumption during a
specific period.
5. Efficient Cooling Solution: As part of our ongoing efforts to
optimize energy usage, we have replaced an air conditioning system with radiator coolers
to achieve efficient cooling with reduced energy consumption.
6. Fire Hydrant Water Management: Improvements in water resource
management practices have led to consistent water savings through a shift in our approach
to raw water makeup.
The steps taken by the company for utilizing alternate sources of
energy:
Installation of Solar Project: A solar project has been successfully
deployed on our rooftop to meet auxiliary energy needs.
The capital investment on energy conservation equipment
1) An investment of ' 20.00 lakhs has been dedicated to solar
projects, demonstrating our commitment to harnessing renewable energy sources.
2) A substantial capital infusion of ' 11.00 lakhs has been directed
towards water harvesting initiatives, underscoring our emphasis on sustainable water
resource management.
3) Additionally, a significant capital outlay of ' 28.80 lakhs
has been strategically channelled into energy conservation measures, exemplifying our
proactive approach to optimizing energy efficiency.
B) Technology absorption-
Efforts made towards
technology absorption |
Nil |
Benefits derived like product
improvement, cost reduction, product development or import substitution |
N.A. |
In case of imported technology
(imported during the last three years reckoned from the beginning of the financial year): |
Nil |
Details of technology imported |
N.A. |
Year of import |
N.A. |
Whether the technology has
been fully absorbed |
N.A. |
If not fully absorbed, areas
where absorption has not taken place, and the reasons thereof |
N.A. |
Expenditure incurred on
Research and Development: |
Years (Rs. in Lakhs) |
Financial year 2022-23 |
85.31 |
Financial year 2021-22 |
104.00 |
C) Foreign Exchange Earnings and Outgo
The details of Foreign exchange earnings and outgo's are as follows:-
(Rs. in Lakhs)
Particulars |
Financial year 2022-23 |
Financial year 2021-22 |
Foreign Exchange earnings |
16,319.54 |
15,888.27 |
Foreign Exchange outgo's |
27,639.96 |
25,592.85 |
For and on behalf of the Board
Mulesh Manilal Savla
Chairman
Mumbai/July 24, 2023 DIN: 07474847
|