Atul Ltd 2008-09

| Annual Report 2008-09 27 Inventory Inventory constituted 36% of current assets as on March 31, 2009. Inventory value decreased by 6% from Rs209 crores as on March 31, 2008 to Rs197 crores as on March 31, 2009. The inventory cycle stood at 62 days during the year against 77 days in the previous year. Debtors Debtors constituted 40% of the current assets as on March 31, 2009. Sundry debtors decreased substantially by 21% – from Rs281 crores as on March 31, 2008 to Rs223 crores as on March 31, 2009 – against the increase in revenues of about 17% during the year. The quality of the debtors is reflected in proportion of debtors not more than ‘six months old’ coming down to 5% of total debtors, from 6% in the previous year. Debtor days stood at 66 days during the year against 96 days in the previous year. Loans and advances Loans and advances decreased by 3% from Rs113 crores as on March 31, 2008 to Rs110 crores as on March 31, 2009. This reduced mainly because of refunds received of moneys blocked with the Government departments paid in the past and lower advance tax payment. Creditors Creditors of the Company (including creditors for services and expenses) decreased from Rs199 crores as on March 31, 2008 to Rs145 crores as on March 31, 2009 despite growth in business activity. The creditors’ cycle decreased from 120 days of turnover equivalent in the previous year to 84 days during the year, somewhat increasing the burden on the working capital cycle. Tax management Total tax liability increased from Rs3 crores to Rs10 crores during the year. Current tax: Current tax increased from Rs4 crores to Rs8 crores during the year. The average corporate tax rate was about 16.61%. Deferred tax: The Company provided Rs1.61 crores for deferred tax during the year against Rs0.64 crores during the previous year. Foreign exchange management As a part of the Accounting Policy, transactions denominated in foreign currencies are recorded at the rate prevailing on the date of the transaction. On account of a growing demand, nearly 48% of the revenues were derived from exports during the year (48% in the previous year). Aromatics Division accounted for the highest share of total export at 35%. To protect the income against any foreign exchange fluctuations, the Company follows a documented policy. Human Resources There is a continuous endeavour at Atul to improve HR practices so that people remain high on motivation and learning to give their best. Several steps were taken in this direction during the year: 1) Modification of performance management system significantly so as to make it more objective and transparent 2) Crystallisation of job descriptions for every unique position to enhance role clarity 3) Formalisation of Atul Values so that they become a seamless thread and in turn help present a common identity 4) Decision to implement the latest version of PeopleSoft, a world-class HR software, to boost HR capabilities 5) Several training programs to enrich skills in select functions A Union Settlement for a period of 5 years was signed for at Ankleshwar site. Workmen, staff and managers worked as one team to achieve common objectives. The new HR initiatives will make the Company one of the best in the industry HR practices to ensure and secure long- term success, and the Company is committed to make this happen. Internal Control Systems The Company has during the year taken steps to improve its current structure of internal controls for safeguarding the assets of the Company; ensuring transactions are in accordance with Company policies and are duly authorised, recorded and reported; preventing possibilities of fraud or any other irregularities. The internal audit department of the Company is staffed with qualified professionals and the efficiency and effectiveness of controls are independently reviewed by them. During the year, a system of peer review of the in-house audit department was also introduced. The annual audit plan is reviewed by the Audit Committee and major findings and actions taken | proposed to be taken are also reported to the Audit Committee.