Dear Members,
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.
01. Financial results
(Rs. 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 |
02. Performance
Sales during the year remained almost the same as last year, registering 1% increase
from Rs. 4,929 cr to
Rs. 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
Rs. 2,479 cr to Rs. 2,505 cr within India and about 2% increase from Rs. 2,450 cr to
Rs. 2,497 cr outside India.
Profit before tax decreased by 9% from Rs. 804 cr to
Rs. 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 Rs. 1,445 cr to Rs. 1,715 cr because of higher sales prices and
volumes in the Crop Protection sub-segment; the EBIT increased by about 67% from
Rs. 191 cr to Rs. 319 cr. Sales of the POC segment decreased by about 6% from Rs. 3,484 cr
to
Rs. 3,287 cr, mainly because of lower sales volumes in two sub-segments; the
EBIT decreased by about 48% from Rs. 586 cr to Rs. 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 Rs. 7.50 per equity
share of Rs. 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 ofRs.
25 per equity share of Rs. 10 each fully paid up.
During 2021-22, the Board approved Rs. 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 Rs. 69.90 cr. The buy-back was closed on May
09, 2022.
04. Energy conservation, technology absorption and 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 on page number 28.
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 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 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 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.
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 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 implemented each sub-segment has a Chief
Risk and
.Officer Compliance
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 financialcontrols 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 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
consultancyfirmhas 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.
08. Fixed deposits
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.
13. Annual return
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.
Cost Auditors
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.
Secretarial Auditors
SPANJ & Associates, Company Secretaries, continue to be the Secretarial Auditors
for 2022-23 and their report is given on page number 35.
15. Directors' 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. Directors
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 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-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
18. Analysis of remuneration
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
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 |
|
(Sunil Lalbhai) |
| Mumbai |
Chairman and Managing Director |
| April 28, 2023 |
DIN: 00045590 |
|