Aarti Industries Ltd.
|BSE: 524208||Sector: Industrials|
|NSE: AARTIIND||ISIN Code: INE769A01020|
|BSE 15:40 | 22 Mar||1082.80||
|NSE 15:31 | 22 Mar||1090.30||
|Mkt Cap.(Rs cr)||8,803|
|Mkt Cap.(Rs cr)||8803.16|
Aarti Industries Ltd. (AARTIIND) - Director Report
Company director report
(Figures in Rs. Crores)
Note :- Result for year ended 31st March 2017 are in compliance with theIndian Accounting Standards (Ind-AS) notified by Ministry of Corporate Affairs.Consequently result for year ended 31st March 2016 have been restated tocomply with Ind-AS to make them comparable.
Your directors are pleased to recommend a Dividend of H1 (@20%) per Share (Face valueof H5/-each) for the financial year 2016-17
Your Company has transferred H31 Crores to General Reserve (Previous Year: H25.25Crores) and H30 Crores to Debenture Redemption Reserve (Previous Year: H30 Crores) alsoH0.60 Crores has been transferred to Capital Redemption Reserve pursuant to the scheme ofBuy Back.
Your Company reported Gross Total Income at H3050 Crores for FY 2016-17 as againstH2934 Crores for FY 201516. Similarly the exports for the year were at H1415 Crores forFY 2016-17 v/s H1352 Crores for FY 2015-16.
Your Company's Earnings Before Interest Depreciation and Taxes stood at H611 Crores inFY 2016-17 as compared to H540 Crores in FY 2015-16 registering a growth of 13%. LikewiseNet Profit Before Tax rose by 14% to H379 Crores in FY 2016-17 as compared to H331 Croresin FY 2015-16.
Likewise Net Profit after Tax & Deferred Tax also grew by 21% to H307 Crores in FY2016-17 as compared to H252 Crores in Financial Year 2015-16.
Likewise the Consolidated Total income for FY 2016-17 was at H3163 Crores as comparedto H3007 Crores for FY 201516 and exports for FY 2016-17 was H1523 Crores vs H1431Crores for FY 2015-16.
On a Consolidated basis your Company's Earnings Before Interest Depreciation and Taxesstood at H655 Crores in FY 2016-17 as compared to H578 Crores in FY 2015-16 registering agrowth of 13%. Similarly Net Profit after consolidation grew by 23% to H316 Crores in FY2016-17 as compared to H257 Crores in FY 2015-16. Likewise Consolidated EPS surged byabout 25% at H38.45 for FY 2016-17 as compared to H30.83 for FY 2015-16.
The Company had on 16th December 2016 completed Buyback of 1200000(Twelve Lakhs) fully paid up Equity Shares (representing up to about 1.44% of the totalnumber of Equity shares of the Company) from all the Equity Shareholders/ Beneficialowners of the Company who held Equity Shares as on the record date i.e. 2ndNovember 2016 ("Record Date") on a proportionate basis through the tender offerusing stock exchange mechanism ("Tender offer") at a price of H800/- (RupeesEight Hundred Only) per Equity Share (including premium of H795/- per share) for anaggregate amount of H96 crores. The number of Equity Shares reduced from 83320383 to82120383 post Buyback and accordingly Issued Subscribed and Paid-up Capital reduced toH410601915/-.
Apart from the above there was no changes in the Share Capital during the FinancialYear under review.
CORPORATE SOCIAL RESPONSIBILITY
Our Company through Aarti Foundation & Dhanvallabh Charitable Trust and variousother NGOs has been doing work in following Segments:
Cluster & Rural Development
Education & Skill Development
Childcare & Healthcare Facilities
Women Empowerment & Livelihood Opportunities
Disaster Relief & Rehabilitation
Eradication of Hunger & Poverty
Water Conservation & Environment
Research & Development work for upliftment of Society
Rural Education Water Conservation Tribal Welfare Agriculture Animal HusbandryHealth and Hygiene Disaster Relief and Rehabilitation are the main areas of focus in thesocial welfare plans of our CSR Activities. Many of our Pilot projects had beenappreciated by various NGO's and Other Corporate Houses who have also started adoptingthose models thereby multiplying the magnitude of the reach of these social activities forthe benefit of the Society at large.
A brief note on various CSR initiatives undertaken during the year is presented earlierin this Annual report.
CSR annual report is annexed as Annexure-A and forms an integral part of the Report.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT INCLUDING NUMBEROF PEOPLE EMPLOYED.
As on March 31 2017 the Company had 3862 permanent employees at its manufacturingplants and administrative office. The Company recognizes the importance of human value andensures that proper encouragement both moral and financial is extended to employees tomotivate them.
The Company enjoyed excellent relationship with workers and staff during the year underreview.
REMUNERATION AND NOMINATION POLICY
The Board of Directors has framed a policy which lays down a framework in relation toremuneration 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 details of this policy are given in the Corporate Governance Report.
The statement containing particulars of employees as required under Section 197(12) ofthe Companies Act 2013 read with rule 5(2) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 is given in an Annexure and forms part of thisreport.
In terms of Section 136(1) of the Companies Act 2013 the Report and the Accounts arebeing sent to the Members exciuding the aforesaid Annexure. Any Member interested inobtaining a copy of the Annexure may write to the Company Secretary at the RegisteredOffice of the Company.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANYOCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATEAND THE DATE OF THE REPORT
Company has incorporate a Wholly Owned Subsidiary Company in the name of Aarti PoiychemPrivate Limited with an initial authorized share capital of H 100000 (One Lakh) on 25thMay 2017. In spite of that no other material changes and commitment affecting thefinancial position of the company occurred between the end of the Financial Year to whichthis financial statements relate and the date of the report.
However during the year under review there was a material change in the Share Capitalpursuant to the Buyback of Equity shares of the Company. The details of which arementioned under the head Share Capital of this report.
The details of the number of meetings of the Board held during the Financial Year2016-17 forms part of the Corporate Governance Report.
Risk Management Committee through its dynamic risk management framework continuousiyidentifies evaiuates and takes appropriate measures to mitigate various eiements ofrisks.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has cieariy iaid down poiicies guideiines and procedures that form partof internai controi systems which provide for automatic checks and baiances. Your Companyhas maintained a proper and adequate system of internai controls. This ensures that aiiAssets are safeguarded and protected against ioss from unauthorized use or disposition andthat the transactions are authorised recorded and reported diligently. Your Company'sinternal control systems commensurate with the nature and size of its business operations.Internai Financiai Controis are evaiuated and Internal Auditors' Reports are regularlyreviewed 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 ("the Act") isannexed with the Independent Auditors' Report.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipuiatedunder Reguiation 34 read with Schedule V to the Securities and Exchange Board of India(Listing Obiigations and Disciosure Requirements) Reguiations 2015 ("ListingReguiations") is presented in a separate section forming part of the Annuai Report.
BUSINESS RESPONSIBILITY REPORTING
Business Responsibiiity Reporting for the year under review as stipulated underRegulation 34 read with SEBI Circular No CIR/CFD/CMD/10/2015 dated 4thNovember 2015 is forming part of this Annuai Report. As a green initiative the BR Reporthas been hosted on the Company's website www.aarti-industries.com
DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowiedge and beiief and according to the information andexpianations obtained by them your Directors make the foiiowing statements in terms ofSection 134(3)(c) of the Companies Act 2013 :
a. That in the preparation of the annuai financiai statements for the year ended 31stMarch 2017 the applicable accounting standards have been followed along with properexplanation relating to material departures if any;
b. That the directors had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonabie and prudent so as togive a true and fair view of the state of affairs of the Company at the end of theFinancial 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 ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe Assets of the Company and for preventing and detecting fraud and other irreguiarities;
d. That Directors' have prepared the annuai accounts on a going concern basis;
e. The directors had laid down internal financial controls to be followed by theCompany and that such internal financiai controis are adequate and were operatingeffectiveiy;
f. The directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the Financial Year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the Company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the Company at large.
All related party Transactions are presented to the Audit Committee. Omnibus approvalis obtained for the transactions which are foreseen and repetitive in nature. A statementof all related party transactions is presented before the Audit Committee on quarterlybasis specifying the nature value and terms and conditions of transactions.
The related party transactions policy is uploaded on the Company's website at theweb-link given below :
The details of Related party transactions are provided in the accompanying financialstatements.
Since all related party transactions entered into by the Company were in ordinarycourse of business and were on an arms length's basis Form AOC-2 is not applicable toCompany.
STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SUB-SECTION (6) OFSECTION 149
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and Regulation16 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations 2015.
Your Company has complied with the mandatory Corporate Governance requirementsstipulated under Regulation 34(3) of the Listing Agreement. Report on Corporate Governanceis annexed hereto forming part of this report.
CONSOLIDATED FINANCIAL STATEMENT
Your Directors have pleasure in presenting Consolidated Financial Statements which formpart of the Annual Report and Accounts.
The details forming part of the extract of Annual Return in the Form MGT-9 as requiredunder Section 92 of the Companies Act 2013 is included in the Report as Annexure-B andforms an integral part of the Report.
The Company did not have any deposits at the beginning of the year under review. TheCompany has neither accepted nor renewed any deposits during the year under review.
The Company does not have any deposits which are not in compliance with therequirements of Chapter V of the Companies Act 2013.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Company has appointed CS Sunil M. Dedhia (COP No. 2031) Proprietor ofSunil M. Dedhia & Co. Company Secretary in Practice to undertake the SecretarialAudit of the Company. The Secretarial Audit Report is included as Annexure-C and forms anintegral part of this Report.
The said report does not contain any observation or qualification requiring explanationor comments from the Board under Section 134(3) of the Companies Act 2013.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Companies Act 2013 are given in the Notes to the financial statements.
Pursuant to the provisions of Companies Act 2013 and the SEBI (Listing Obligation andDisclosure Requirements) Regulations 2015 a structured questionnaire was prepared aftertaking into consideration various aspects of the Board's functioning composition of theBoard and its Committees culture execution and performance of specific dutiesobligations and governance.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Chairman and Non-Independent Directors was carried out by theIndependent Directors. The Board of Directors expressed their satisfaction with theevaluation process.
The Company has 6 (six) direct subsidiaries namely Aarti Corporate Services LimitedAlchemie (Europe) Limited Innovative Envirocare Jhagadia Limited Ganesh PolychemLimited Aarti USA Inc. Aarti Polychem Private Limited (incorporated on 25thMay 2017) and 2 (two) indirect subsidiaries namely Shanti Intermediates Private LimitedNascent Chemical Industries Limited both hold through Aarti Corporate Services Limited.
During the year the Board of Directors reviewed the affairs of the subsidiaries. Inaccordance with Section 129(3) of the Companies Act 2013 we have prepared consolidatedfinancial statements of the Company and all its subsidiaries which form part of theAnnual Report.
Further a statement containing salient features of the financial statement of ourSubsidiaries in the prescribed format AOC-1 is included in the Report as Annexure-D andforms an integral part of this Report. The statement also provides the details ofperformance financial position of each of the Subsidiaries.
DIRECTORS / KEY MANAGERIAL PERSONNEL
Shri Manoj M. Chheda (DIN: 00022699)and Shri Kirit R. Mehta (DIN: 00051703) Whole timeDirectors of the Company shall retire by rotation at the ensuing Annual General Meetingand being eligible offers themselves for re-appointment.
Your Directors also recommend approval for renewal of term of Shri Rashesh ChandrakantGogri (DIN 00066291) Vice - Chairman and Managing Director of the Company whose presentterm expired on 8th June 2017 and Shri Renil Rajendra Gorgi (DIN: 01582147)whole-time Director of the Company whose present term expires on 15th August 2017.
Your Directors also recommend renewal of term of Shri Rajendra Vallabhaji Gogri (DIN00061003) Chairman and Managing Director whose present term expires on 30th June2018.
Present Term of Shri Ramdas M. Gandhi (DIN : 00029437) and Shri Laxmichand K. Jain(DIN: 00042099) Independent Directors of the Company expires on 24th September2017. Notice(s) have been received from member(s) along with requisite deposits proposingtheir candidature for appointment as Independent Directors.
During the Year 2016-17 Smt. Hetal Gogri Gala (DIN: 00005499) Whole-time Director wasre-appointed for a period of 5 (five) years w.e.f. 1st November 2016.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant material orders passed by the Regulators/Courts which wouldimpact the going concern status of the Company and its future operations.
ENVIRONMENTAL SAFETY AND HEALTH
Your Company is committed to ensure a sound Safety Health and Environment (SHE)performance related to its activities products and services. Your Company had beencontinuously taking various steps to develop and adopt Safer Process technologies and unitoperations. Your Company has been investing heavily in areas such as Process Automationfor increased safety and reduction of human error element Enhanced level of training onProcess and Behaviour based safety adoption of safe & environmental friendlyproduction process Installation of Bioreactors Chemical ROs Multiple effect evaporatorand Incinerator etc to reduce the discharge of effluents commissioning of Waste Heatrecovery systems and so on to ensure the Reduction Recovery and Reuse of effluents &other utilities. Monitoring and periodic review of the designed SHE Management System aredone on a continuous basis.
Some of the on going initiatives in this regard as briefed below:
Introducing Aarti Management System: An inhouse developed framework of 32 elementsdetailing procedures and processes catering to all Plant Related Activities - 3 elementsnamely MOC (to manage change) BBS (major root causes of incidents are due to behaviour)and Permit Systems catering to reduce SHE related risks had been launched and beingimplemented at various levels of operations. Other elements are being developed andreviewed and would be adopted in due course Review Existing Process Safety Parameters:Structured & regular HAZOP meetings are being carried out as per scheduled HAZOPcalendar to further strengthen process safety of existing processes. Also HIRA (HazardIdentification and Risk Assessment) for procedures and practices are being initiated forsome of the units and would be gradually implemented across various units.
With these and various other initiatives your Company firmly places the SHE at the topof its goals and aims to provide a workplace which is safer and healthier for the societyat large.
WHISTLE BLOWER POLICY
The Company has a whistle blower policy to report genuine concerns or grievances. TheWhistle Blower policy has been posted on the website of the Company and the web linkthereto is http://aarti-industries.com/media/investors/corporate_governance/1494923104_Whistie_B[ower_ Policy_Ammended.pdf
The Company does not have any materia[ subsidiary whose net worth exceeds 20% of theconsolidated net worth of the Company in the immediate[y preceding accounting year or hasgenerated 20% of the conso[idated income of the Company during the previous FinancialYear. A policy on material subsidiaries had been formulated and is available on thewebsite of the Company and the web [ink thereto is
FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS.
The Independent Directors of the Company were familarised and the details offamiliarisation programmes imparted to them are p[aced on the website of the Company andthe web [ink thereto is http://aarti-industries.com/media/investors/corporate_governance/1494923569_Detai[s_of_ Fami[irisation_Programme.pdf
DIVIDEND DISTRIBUTION POLICY
As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the top 500 listed companies shall formulate a dividend distributionpolicy. Accordingly the policy was adopted to set out the parameter and circumstancesthat will be taken in to account by the Board in determining the distribution of dividendto its shareholders and/ or retaining profits earned by the company. A policy is availableon the website of the Company and the web [ink thereto is
Statutory Auditor of the Company M/s. Gokha[e & Sathe Chartered Accountants (FirmRegistration. No. 103264W) ho[ds office ti[[ the conc[usion of the ensuing Annua[ Genera[Meeting of the Company. They have been ho[ding office as Statutory Auditors of the Companyfor a period of more than 10 years and hence are not e[igib[e for re -appointment as persection 139(2) of Companies Act 2013.
In view of the above Board on the recommendation of Audit Committee appointed M/s.Kirtane & Pandit Chartered Accountants (Firm Registration. No. 105215W/W100057) asStatutory Auditors of the Company to ho[d office upto conc[usion of 35th Annua[Genera[ Meeting. At the request of the Company M/s. Kirtane & Pandit havecommunicated their e[igibitity and wi[[ingness to accept the office if appointed. Membersare requested to appoint Auditors and to fix their remuneration as mentioned at Item No. 5of the notice.
There is no qua[ification reservation or adverse remark or disc[aimer made by theAuditor in their report.
The Cost Auditor Ms. Ketki D. Visariya (Fe[[owship No.16028) Cost Accountant wasre-appointed by the Company under provisions of Section 148(5) read with Section 141 ofthe Companies Act 2013 and she attended the Audit Committee Meeting where cost auditreports are discussed.
The due date for fi[ing the Cost Audit Reports in XBRL mode for the Financia[ Yearended 31st March 2016 was 30th September 2016 and the Cost AuditReport were fi[ed by the Cost Auditor on 29th September 2016. The due date forfi[ing the Cost Audit Reports for the Financia[ Year ended 31st March 2017 is30th September 2017.
The Company is seeking the ratification from the Shareho[ders for the Remuneration ofMs. Ketki D. Visariya Cost Auditor of the Company for the Financial Year ending 31stMarch 2018 vide resolution no. 13 of the Notice of AGM.
NUMBER OF CASES FILED IF ANY AND THEIR DISPOSAL UNDER SECTION 22 OF THE SEXUALHARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
Your Company has Zero tolerance towards any action on the part of any one which mayfall under the ambit of 'Sexual Harassment' at workplace and is fully committed to upholdand maintain the dignity of every women working with the Company. The Policy framed by theCompany in this regard provides for protection against sexual harassment of women atworkplace and for prevention and redressal of such compliants.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 as amended from time to time forms a partof this in Annexure-E.
The Board of Directors places on record its sincere appreciation for the dedicatedservices rendered by the employees of the Company at all levels and the constructiveco-operation extended by them. Your Directors would like to express their gratefulappreciation for the assistance and support by all Shareholders Government AuthoritiesAuditors financial institutions Customers employees suppliers other businessassociates and various other stakeholders.
For and on behalf of the Board
RAJENDRA V. GOGRI
CHAIRMAN AND MANAGING DIRECTOR
Place Date: : Mumbai
11th August 2017
Statement in the Annual Report describing the Company's objectives projectionsexpectations and estimates regarding future performance may be "Forward LookingStatements" and are based on currently available information. The Management believesthese to be true to the best of its knowledge at the time of preparation of this Report.However these statements are subject to certain future events and uncertainties whichcould cause actual results to differ materially from those which may be indicated in suchstatements.