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Aarti Surfactants Ltd.

BSE: 543210 Sector: Industrials
NSE: AARTISURF ISIN Code: INE09EO01013
BSE 00:00 | 07 Oct 776.85 -17.80
(-2.24%)
OPEN

774.05

HIGH

790.00

LOW

774.05

NSE 00:00 | 07 Oct 776.65 -11.30
(-1.43%)
OPEN

790.00

HIGH

790.00

LOW

771.30

OPEN 774.05
PREVIOUS CLOSE 794.65
VOLUME 688
52-Week high 1507.50
52-Week low 605.95
P/E 96.38
Mkt Cap.(Rs cr) 589
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 774.05
CLOSE 794.65
VOLUME 688
52-Week high 1507.50
52-Week low 605.95
P/E 96.38
Mkt Cap.(Rs cr) 589
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Aarti Surfactants Ltd. (AARTISURF) - Director Report

Company director report

To

The Members of Aarti Surfactants Limited

Your Board of Directors ("Board") is pleased to present thisFourth Annual Report of your Company ("the Company" or "Aarti SurfactantsLimited") and the Audited Statements of Accounts for the year ended March 31 2022.

Financial Results

(Rs. In lakhs)

Standalone Consolidated
Particulars 2021-20202022 2021 2021-20202022 2021
Revenue From Operations 57552 46577 57552 46577
Other Income 29 6 29 6
Total Income 57581 46583 57581 46583
EBITDA 3244 4557 3243 4556
Depreciation and Amortisation 1245 1221 1245 1221
Profit/(Loss) before Finance Costs 1999 3336 1997 3335
Finance Costs 1067 1044 1067 1044
Profit/(Loss) before Tax 932 2292 932 2291
Net Profit/(Loss) for the period 550 2164 549 2163
Earnings Per Shares (Rs)
Basic 7.25 28.53 7.24 28.52
Diluted 7.25 28.53 7.24 28.52

Financial Performance

Your Company reported a total income of Rs. 57581 Lakhs for FY 2021-22as against Rs. 46583 Lakhs for FY 2020-21. Similarly the exports for the year were at Rs.15888 Lakhs for FY 2021-22 as against Rs. 8711 Lakhs for FY 2020-21.

Your Company's Earnings Before Interest Depreciation and Taxes stood atRs. 3244 Lakhs in FY 2021-22 as compared to Rs. 4557 Lakhs in FY 2020-21. Likewise NetProfit Before Tax declined to Rs. 932 Lakhs in FY 2021-22 from Rs. 2292 Lakhs in FY2020-21.

Likewise Net Profit after Tax stood at Rs. 550 Lakhs in FY 202122 ascompared to Rs. 2164 Lakhs in FY 2020-21.

On a Consolidated basis your Company's Earnings Before InterestDepreciation and Taxes stood at Rs. 3243 Lakhs in FY 2021-22 as compared to Rs. 4556Lakhs in FY 2020-21. Similarly Net Profit after consolidation was at Rs. 549 Lakhs in FY2021-22 as compared to Rs. 2163 Lakhs in FY 2020-21.

Dividend

To conserve the funds of the Company your directors do not recommendany dividend for the FY 2021-22.

Transfer to Reserves

During the financial year under review the Company did not transferany amount to any reserves.

Share Capital

There were no changes in the Share Capital during the Financial Yearunder review. The paid - up Equity Share Capital of the Company as on March 31 2022 isRs. 75844770 divided into 7584477 numbers of equity shares of Rs. 10 each andPreference Share Capital of the Company is Rs. 10823870 divided into 1082387 numbersof preference shares of Rs. 10 each.

Corporate Social Responsibility

During the FY 2021-22 the provisions of Corporate SocialResponsibility ("CSR") as prescribed under Section 135 of the Companies Act2013 read with Companies (Corporate Social Responsibility Policy) Rules 2014 becameapplicable to your Company. Accordingly your Company constituted a CSR committee andundertook the following initiatives:

• Distribution of medical equipments

• Donation towards Covid-19 relief

The detailed policy on CSR is available on the website of the Companyon the web link https://www.aarti-surfactants.com/ assets/investors/csr-poiicv.pdf

A brief note on various CSR initiatives during the year is presented inAnnexure-A and forms an integral part of the Report.

Material developments in human resources/industrial relations frontincluding number of people employed

The Company enjoyed a healthy relationship with workers and staffduring the year under review. The Company cares for their people Customers suppliersand community which reflects in the company's policy programs and development efforts.Your Company is committed to build and strengthen its human capital by defining policiesthat support their growth goals and help them achieve excellence. As on March 31 2022the Company had 338 permanent employees at its manufacturing plants and administrativeoffice.

Nomination and Remuneration Policy

Your Company has in place a Nomination and Remuneration Policy whichlays down a framework in relation to remuneration of Directors Key Managerial Personneland Senior Management of the Company. The policy also lays down criteria for selection andappointment of Board Members. The remuneration paid to the Directors Key ManagerialPersonnel and Senior Management of the Company is as per the terms laid down in theNomination and Remuneration Policy of the Company.

The details of this policy are given in the Corporate GovernanceReport.

Personnel

The statement containing particulars of employees as required underSection 197(12) of the Companies Act 2013 read with rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is given in an Annexureand forms part of this report.

In terms of Section 136(1) of the Companies Act 2013 the Report andthe Accounts are being sent to the Members excluding the aforesaid Annexure. Any Memberinterested in obtaining a copy of the Annexure may write to the Company Secretary at theRegistered Office of the Company for a copy of it.

Material changes and commitment if any affecting the financial positionof the company occurred between the end of the financial year to which this financialstatements relate and the date of the report

There are no other material changes and commitments affecting thefinancial position of the company occurred between the end of the Financial Year to whichthese financial statements relate and the date of the report.

Meetings

The Board met 4 (Four) times during the financial year. The details ofthe number of meetings of the Board held during the Financial Year 2021-22 forms part ofthe Corporate Governance Report. The Maximum Gap between two meetings did not exceed 120days as prescribed in the Companies Act 2013. The details of attendance of each Directorat these meetings are provided in the Corporate Governance Report.

Risk Management

The Company implemented an integrated risk management approach throughwhich it reviews and assesses significant risks on a regular basis to ensure that a robustsystem on risk controls and mitigation is in place. Senior management periodically reviewsthis risk management framework to keep updated and address emerging challenges.

Internal control systems and their adequacy

Your Company has clearly laid down policies guidelines and proceduresthat form part of internal control systems which provide for automatic checks andbalances. Your Company has maintained a proper and adequate system of internal controls.The Company has appointed an Internal Auditor who periodically audits the adequacy andeffectiveness of the internal controls laid down by the management and suggestsimprovements. This ensures that all Assets are safeguarded and protected against loss fromunauthorised use or disposition and that the transactions are authorised recorded andreported diligently. Your Company's internal control systems are commensurate with thenature and size of its business operations. Internal Financial Controls are evaluated andInternal Auditors' Reports are regularly reviewed by the Audit Committee of the Board.

Statutory Auditors' Report on Internal Financial Controls as requiredunder Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct") is annexed with the Independent Auditors' Report.

Management's Discussion and Analysis Report

Pursuant to Regulation 34 read with Schedule V to the Securities andExchange Board of India (Listing Obligations And Disclosure Requirements) Regulations2015 ("Listing Regulations") Management's Discussion and Analysis for the yearunder review is presented in a separate section forming part of the Annual Report.

Business Responsibility Reporting (BRR)

The Listing Regulations mandates the inclusion of the BRR as part ofthe Annual Report for top 1000 listed entities based on market capitalisation. Althoughyour Company does not fall under the said criteria in FY 2021-22 yet the same is in aseparate section forming part of this Report.

Related Party Transactions

The Company has a Policy on Materiality of Related Party Transactionand dealing with Related Party Transaction which is uploaded on the Company's website atthe web link https:// www.aarti-surfactants.com/assets/investors/Policy-on-Related-Party-Transactions-2022.pdf

All related party transactions that were entered into during the FY2021-22 were on an arm's length basis and were in the ordinary course of the business.There are no materially significant related party transactions made by the Company withPromoters Key Managerial Personnel or other designated persons which may have potentialconflict of interest with the Company at large.

All related party transactions are presented to the Audit Committee.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions oftransactions.

The details of related party transactions are provided in theaccompanying financial statements.

Since all related party transactions entered into by the Company werein ordinary course of business and were on an arm's length's basis Form AOC-2 is notapplicable to Company.

Corporate Governance

Corporate Governance essentially involves balancing the interests of aCompany's stakeholders. The Company is committed to good corporate governance practicesand the Corporate Governance practices of the Company are a reflection of its valuespolicies and relationship with our stakeholders. Your Company has complied with themandatory Corporate Governance requirements stipulated under the Listing Regulations.Report on Corporate Governance is annexed hereto forming part of this report. Therequisite certificate from 'Gokhale & Sathe' Chartered Accountants (the statutoryauditors of the company) is attached to the Report on Corporate Governance.

Annual Return

Pursuant to Section 92(3) of the Companies Act 2013 read with readwith Rule 12 of the Companies (Management and Administration) Rules 2014 a copy of theAnnual Return of the Company for financial year 2021-22 prepared in accordance withSection 92(1) of the Act has been placed on the website at the weblink-https://www.aarti-surfactants.com/

Deposits

The Company has not accepted any deposits from the public and as suchno amount on account of principal or interest on deposits from the public was outstandingas on the date of Balance Sheet.

The Company does not have any deposits which are not in compliance withthe requirements of Chapter V of the Companies Act 2013.

Particulars of Loans Guarantees or Investments

Details of Loans Guarantees and Investments covered under theprovisions of Section 186 of the Companies Act 2013 forms part of the notes to thestandalone financial statement of the Company.

Annual Board Evaluation

Pursuant to the provisions of Companies Act 2013 and the ListingRegulations a structured questionnaire was prepared after taking into considerationvarious aspects of the Board's functioning composition of the Board and its Committeesculture execution and performance of specific duties obligations and governance.

The performance of the Committees and Independent Directors wereevaluated by the entire Board of Directors except for the Director being evaluated. Theperformance evaluation of the Chairman Non-Independent Directors and Board as a whole wascarried out by the Independent Directors. The Board of Directors expressed theirsatisfaction with the evaluation process.

Subsidiary Company

The Company as on March 31 2022 has 1 direct subsidiary namely AartiHPC Limited.

The Company does not have any material subsidiary whose net worthexceeds 10% of the consolidated net worth of the Company in the immediately precedingfinancial year or has generated 10% of the consolidated income of the Company during theprevious Financial Year. A policy on material subsidiaries had been formulated and isavailable on the website of the Company on the web link- https://www.aarti-surfactants.com/assets/investors/policy-for-determination- of-material-subsidiary.pdf

During the year the Board of Directors reviewed the affairs of thesubsidiary. In accordance with Section 129(3) of the Companies Act 2013 we have preparedconsolidated financial statements of the Company and its subsidiary which form part ofthe Annual Report.

Further a statement containing salient features of the financialstatement of our Subsidiary in the prescribed format AOC-1 is included in the Report asAnnexure-B and forms an integral part of this Report. The statement also provides thedetails of performance financial position of the subsidiary.

There are no associate or joint venture companies within the meaning ofSection 2(6) of the Companies Act 2013.

Consolidated Financial Statements

In accordance with the provisions of Companies Act 2013 (hereinafterreferred to as "the Act") Regulation 33 of the Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as "Listing Regulations") and applicable Accounting Standards theAudited Consolidated Financial Statements of the Company for the FY 2021-22 together withthe Auditors' Report form part of this Annual Report.

Directors / Key Managerial Personnel (KMP)

None of the Directors of the Company are disqualified for beingappointed as Directors as specified in Section 164(2) of the Companies Act 2013 and Rule14(1) of the Companies (Appointment and Qualification of Directors) Rules 2014.

In accordance with the provisions of Section 152 of Companies Act2013 Mr. Chandrakant Vallabhaji Gogri (DIN: 00005048) Director of the Company is liableto retire by rotation at the ensuing Annual General Meeting and being eligible offershimself for re-appointment.

In accordance with the provisions of Sections 196 197 and 203 andother applicable provisions if any of the Companies Act 2013 read with Schedule V ofthe Companies Act 2013 the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 consent of the Members of the Company by way of Special Resolutionis sought for the re- appointment of Mr. Nikhil Parimal Desai as Managing Director of theCompany.

In accordance with the provisions of Sections 196 197 and 203 andother applicable provisions if any of the Companies Act 2013 read with Schedule V ofthe Companies Act 2013 the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 consent of the Members of the Company by way of Special Resolutionis sought for the re- appointment of Mr. Santosh M. Kakade as an Executive Director of theCompany.

Mr. Prashant Gaikwad resigned as the Company Secretary and ComplianceOfficer of the Company from the closure of business hours on April 14 2022.

During the year under review there were no changes in the Directors /Key Managerial Personnel of the Company except as stated above.

The Board is of the opinion that all the Independent Directors holdhighest degree of integrity and are individuals who are experts in their respective fieldswith enormous experience. The Independent Directors of the Company appeared and clearedthe proficiency test as prescribed by the Companies Act 2013.

Statement on declaration given by independent directors undersub-section (6) of section 149

All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andRegulation 16 of the Listing Regulations.

Environmental Safety and Health

Your Company is committed to ensure the highest standards ofEnvironment Health and Safety (EHS) while performing its business operations. Weproactively and consistently undertake initiatives in developing and adopting saferprocess technologies and manufacturing operations.

Your Company has been investing in areas such as:

1. Process automation to achieve quality and quantity of product withsafety interlocks by reducing the chances of human error;

2. Enhanced level of training on process and preventive maintenance;

3. Behaviour based safety training to workers staff and HODs forbetter implementation and awareness;

4. Adoption of safe and Good Manufacturing Practices (GMP)environment-friendly production process;

5. Installation of Chemical ROs Multiple effect evaporator and Zeroliquid discharger among others to reduce the discharge of effluents.

6. Energy Conservations:

* Commissioning of waste heat recovery systems to ensure the reductionof steam cost

* Lobe blowers replaced by Screw blowers for Power savings

* Replaced Air Conditioners by AHU cooling by using water chillers

7. Process Improvement done:

* Provide Water cooler to improve the dew points Instruments air

* Improve process air dew points by some modifications works in the Airplant

8. Investing plan for the year 2022-23:

* Solar Power for Common power load

* Rainwater harvesting to increase ground water level

* One Waste Heat boiler for recovery of process heat.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to theinformation and explanations obtained by them your Directors make the followingstatements in terms of Section 134(3)(c) of the Companies Act 2013:

a) That in the preparation of the annual financial statements for theyear ended March 31 2022 the applicable accounting standards have been followed alongwith proper explanation relating to material departures if any;

b) That the Directors had selected such accounting policies and appliedthem consistently and made judgments and estimates that are reasonable and prudent so asto give 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 themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the Assets of the Company and for preventing and detecting fraud andother irregularities;

d) That Directors have prepared the annual accounts on a going concernbasis;

e) The Directors had laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively;

f) The Directors had devised proper systems to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingeffectively.

Familiarisation Programme for Independent Directors

The Company has a Familiarisation programme for its IndependentDirector which is imparted at the time of appointment of an Independent Director on Boardas well as annually. The details of familiarisation programmes imparted to them are placedon the website of the Company and the web link thereto ishttps://www.aarti-surfactants.com/assets/investors/details-of-familirization-programme-22.pdf

Significant and material orders passed by the regulators or courts

There are no significant and material orders passed by theRegulators/Courts which would impact the going concern status of the Company and itsfuture operations.

Vigil Mechanism/Whistle Blower Policy

The Company has established a Vigil Mechanism and Whistle Blower Policyfor its Directors and employees to report concerns about unethical behaviour actual orsuspected fraud actual or suspected leak of UPSI or violation of Company's Code ofConduct. It also provides for adequate safeguards against the victimisation of employeeswho avail of the mechanism and allows direct access to the chairperson of the auditcommittee in exceptional cases The said policy has been posted on the website of theCompany i.e. https:// www.aarti-surfactants.com/assets/investors/whistle-blower-policy.pdf

The Company affirms that no person has been denied access to the AuditCommittee Chairman.

Statutory Auditors

Gokhale & Sathe (Firm Registration No: 103264W) CharteredAccountants were appointed as the statutory auditors of the Company to hold office fromthe conclusion of the 1st Annual general meeting till the conclusion of the 6thAnnual General meeting of the Company i.e. for a period of five years. As per theprovisions of Section 139 of the Act they have confirmed that they are not disqualifiedfrom continuing as Auditors of the Company.

Auditors' Report

There are no qualifications reservations or adverse remarks ordisclaimer made by the Auditor in their report. The Auditors of the Company have notreported any instances of fraud committed against the Company by its officers or employeesas specified under Section 143(12) of the Companies Act 2013.

Cost Auditors

Your Company maintains necessary cost records as specified by theCentral Government under Section 148(1) of the Act read with the Companies (Cost Recordsand Audit) Rules 2014.

The Board has appointed 'PHS & Associates' Cost Accountants(Membership No. 101038) as the Cost Auditors of the Company for FY 2022-23 under Section148 and all other applicable provisions of the Act.

The remuneration payable to the Cost Auditor is required to be placedbefore the Members in a General Meeting for their approval. Accordingly a resolution forseeking Member's approval for the remuneration payable to 'PHS & Associates' CostAccountants is included in the notice convening the Annual General Meeting.

Internal Auditor

Raman S. Shah & Associates Chartered Accountants(F.R.No.119891W) were appointed as an Internal Auditor of the Company for FY 2022-23.

Secretarial Auditor & Their Report

Pursuant to the provisions of Section 204 of the Companies Act 2013and rules made thereunder the Company had appointed CS Sunil M. Dedhia (COP No. 2031)Proprietor of Sunil M. Dedhia & Co. Company Secretary in Practice to undertake theSecretarial Audit of the Company.

The Secretarial Audit Report is included as Annexure-C and forms anintegral part of this Report.

As regards observation (i) made in the Secretarial Audit Reportrelating to Non-listing and Trading of Redeemable Preference Shares issued pursuant toComposite Scheme of Arrangement between the Company and Aarti Industries Limited it isclarified that listing is delayed due to certain clarifications sought by the designatedStock Exchange i.e. BSE Limited in respect of compliance requirement of relevant SEBIcirculars and genuine difficulties faced by the Company in complying with the same. Whilewe have complied with all the requirements there is also a requirement for the RedeemablePreference Shares to be rated by the Credit rating agency with a minimum credit rating ofAA-. Since our Company has recently been incorporated and does not have its ownindependent past track record getting this rating at this juncture is not possibleinspite of having an absolute clean credit record. Further the Stock Exchange has alsosought clarification on the Issue Price of Redeemable Preference Shares which has beenindicated in the Annexure 1 to the said Scheme i.e. at fair value which has been takenbased on the valuation Report sought for the said Scheme. Hence there has been delay inlisting of these Redeemable Preference Shares. The Company is considering possible optionsto address the issues in this regard;

As regards other observations (ii) to (iv) the same areselfexplanatory and warrant no further clarifications.

The BSE Limited vide its letter no. DCS/AMAL/MJ/IP/2288/2021- 22 datedApril 6 2022 has conveyed its approval on Listing however National Stock Exchange ofIndia Limited (NSE) has requested for a few more clarifications - which are submitted tothe NSE leaving no actions / queries pending at the Company's end. Upon approval from theNSE the Company will immediately file applications to at Both the Exchanges for 'Approvalfor Trading of these Shares' and thereafter upon the final approvals - the RedeemablePreference Shares will be allowed for trading at the Exchange Platform.

During the year under review the Secretarial Auditor had not reportedany fraud under Section 143(12) of the Act and therefore no details are required to bedisclosed under Section 134 (3) (ca) of the Act.

Disclosure under the Sexual Harassment of Women at Work Place(Prevention Prohibition and Redressal) Act 2013

Your Company is fully committed to uphold and maintain the dignity ofevery woman working with the Company. The Company has Zero tolerance towards any action onthe part of any one which may fall under the ambit of 'Sexual Harassment at workplace. ThePolicy framed by the Company in this regard provides for protection against sexualharassment of women at workplace and for prevention and redressal of such complaints.

Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment.

Status of the Complaints during the FY 2021-22 is as follows:

Particular No. of Complaints
Number of Complaints pending as on beginning of the Financial Year Nil
Number of Complaints filed and resolved during the Financial Year Nil
Number of Complaints pending as on the end of the Financial Year Nil

The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.

Conservation of energy technology absorption foreign exchangeearnings and outgo

The particulars relating to conservation of energy technologyabsorption foreign exchange earnings and outgo required under Section 134(3)(m) of theCompanies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 asamended from time to time are provided in Annexure-D to this report.

Secretarial Standards

The Company has complied with Secretarial Standards issued by theInstitute of Company Secretaries of India on Meetings of the Board of Directors (SS-1) andGeneral Meetings (SS-2).

Other disclosure

a) During the financial year under review the Company has not issuedequity shares with differential voting rights as to dividend voting or otherwise.

b) During the financial year under review the Company has not issuedany sweat equity shares.

c) Details of shares held in trust for the benefit of employees wherethe voting rights are not exercised directly by the employees in terms of Section 67 ofthe Companies Act 2013 - Not applicable

d) The Company was not required to revise its financial statements orDirectors' Report during the financial year under review in terms of Section 131 of theCompanies Act 2013.

Acknowledgement

The Board of Directors places on record its sincere appreciation forthe dedicated services rendered by the employees of the Company at all levels and theconstructive cooperation extended by them. Your Directors would like to express theirgrateful appreciation for the assistance and support by all Shareholders GovernmentAuthorities Auditors financial institutions Customers employees suppliers otherbusiness associates and various other stakeholders.

For and on behalf of the Board
Sd/-
Mulesh M. Savla
Chairman
Mumbai May 26 2022 DIN: 07474847

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