Atul Ltd | Annual Report 2023-24 ENDURE | ENHANCE | EXCEL
Forward looking statements In this annual report, we have shared information and made forward looking statements to enable investors to know our product portfolio, business logic and direction and thereby comprehend our prospects. Such statements that we make are based on our assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘believe’, ‘estimate’, ‘intend’, ‘plan’, ‘project’ or words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward looking statements will be realised although we believe we have been prudent in our assumptions. The actual results may be affected because of uncertainties, risks and even inaccurate assumptions. If uncertainties or known or unknown risks materialise or if underlying assumptions prove inaccurate, actual results may vary materially from those anticipated, believed, estimated, intended, planned or projected. We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise. The Members may send in their comments or suggestions for improvement of the annual report by e-mail to shareholders@atul.co.in In the middle of difficulty lies opportunity. -Albert Einstein The tree featured on the cover page of this report, commonly known as the coastal she-oak or saru (scientific name: Casuarina equisetifolia), is native to India (amongst other countries). It produces high-quality fuelwood and charcoal, is termite-resistant and highly durable, and is used as a supporting material in buildings. Additionally, it has a high carbon sequestration capacity. Atul draws inspiration from such wonders of nature. The unseen roots of the tree represent the firm foundation and enriching legacy of the Company, while the trunk signifies its perseverance to endure and withstand the test of time. The leaves and branches symbolise the aspiration of the Company to enhance its operations and to grow. The tree reaching towards the sky represents endeavour of the Company to excel, achieve new heights in the midst of competition Contents Board of Directors 01 Directors’ Report 05 Annexure to the Directors’ Report 11 Management Discussion and Analysis 23 Corporate Governance Report 31 Business Responsibility and Sustainability Report 52 Notice 89 Performance trend 103 Standalone Financial Statements Independent Auditor’s Report 105 Financial Statements 116 Consolidated Financial Statements Independent Auditor’s Report 184 Financial Statements 192 To download or read this report online, please visit www.atul.co.in 47th Annual General Meeting Friday, July 26, 2024 10:30 am The meeting will be held through video conferencing
Board of Directors The strong foundation of ethical conduct laid down by the Founders coupled with the strategic direction of its Board, strengthens the business plans and drives sustainable business growth at Atul. The Company is led by a seasoned and diverse team that encourages meritocracy, empowerment and decentralised decision-making. Its governance stands on trust, transparency and adherence to the core Values of the Company. Atul holds itself and its business partners to the highest level of ethics and accountability. Governance structure The Board of Directors represents a mix of professionalism, qualification, knowledge, skillsets, integrity, expertise and diversity of experience. Their profound understanding of the operations of the Company and knowledge of the business and the industry help drive effective decision-making that enhances organisational growth and safeguards the interests of stakeholders. The Board provides oversight and a strategic direction to decision-making on all economic, environmental and social aspects and reviews the performance of the Company every quarter. The Board generally meets five times a year. As of March 31, 2024, the Board comprises 12 members including four Executives and eight Independent Directors. Sunil Lalbhai Mr Sunil Lalbhai is a Managing Director since June 1984 and the Chairman of the Board of the Company since August 2007. Mr Lalbhai holds a postgraduate degree in Chemistry from the University of Massachusetts and a postgraduate degree in Economic Policy and Planning from Northeastern University. Executive Directors Samveg Lalbhai Mr Samveg Lalbhai is a Director of the Company since January 2000 and a Managing Director of the Company since December 2000. Mr Lalbhai holds a graduate degree in Commerce from Gujarat University. Committees of the Board Audit Committee Corporate Social Responsibility Committee Investment Committee Nomination and Remuneration Committee Risk Management Committee Stakeholders Relationship Committee Chairperson Member C M M M C M Corporate Overview Statutory Reports Financial Statements 1
Susim Datta Mr Susim Datta was a Director of the Company from October 2002 to March 2024. He was the Chairman of Hindustan Unilever Ltd as well as all Unilever Group companies in India and Nepal from 1990 to 1996. Mr Datta holds a postgraduate degree in Science and Technology from the University of Calcutta and is a Chartered Engineer. Non-executive Directors Mukund Chitale Mr Mukund Chitale is a Director of the Company since October 2014. He is a founder of the Chartered Accountancy firm, Mukund M Chitale & Co. Mr Chitale holds a graduate degree in Commerce from the University of Mumbai and is a Fellow Member of the Institute of Chartered Accountants of India. Bharathy Mohanan Mr Bharathy Mohanan joined the Company in August 1992 and is a Whole-time Director since January 2009. He is currently the President, Utilities and Services and the Occupier of the Company. Mr Mohanan holds a graduate degree in Engineering (Honours) from the University of Calicut. Gopi Kannan Thirukonda Mr Gopi Kannan Thirukonda joined the Company in October 1993 and is a Whole-time Director since October 2014. He is currently the Chief Financial Officer of the Company. Mr Thirukonda holds a graduate degree in Science from the University of Madras and a postgraduate diploma in management from the Indian Institute of Management, Ahmedabad. He is a Member of the Institute of Chartered Accountants of India, the Institute of Cost and Management Accountants of India and the Institute of Company Secretaries of India. M C M M M C Atul Ltd 2 Annual Report 2023-24
Shubhalakshmi Panse Ms Shubhalakshmi Panse is a Director of the Board since March 2015. She was the Chairperson and Managing Director of Allahabad Bank Ltd. Ms Panse holds a postgraduate degree in Science from Savitribai Phule Pune University and a postgraduate degree in Business Administration from Drexel University and is a certified Associate of the Indian Institute of Bankers. Baldev Arora Mr Baldev Arora is a Director of the Board since April 2015. He was the Chairman of Cyanamid Agro Ltd and the Chairman and Managing Director of Wyeth Lederle Ltd. Mr Arora holds a graduate degree in Mechanical Engineering from Panjab University. Pradeep Banerjee Mr Pradeep Banerjee is a Director of the Board since May 2022. He was an Executive Director on the Board of Hindustan Unilever Ltd (HUL), Managing Director of a joint venture entity of HUL in the Netherlands and the Chairman of a joint venture entity in Nepal. He is a senior advisor to Boston Consulting Group and a Designated Partner in Pradeep Banerjee Associates LLP. Mr Banerjee holds a graduate degree in Chemical Engineering from Indian Institute of Technology, Delhi. Rangaswamy Iyer Mr Rangaswamy Iyer is a Director of the Board since May 2023. He was the Finance Director and Managing Director of Cyanamid and Wyeth India Ltd. Currently, he advises Lincoln International, USA, and consults multiple firms on business strategy and development. Mr Iyer holds a postgraduate degree in Commerce and a postgraduate degree in Financial Management from the University of Mumbai. M M M C C M M M M M M C Corporate Overview Statutory Reports Financial Statements 3
Sharadchandra Abhyankar Mr Sharadchandra Abhyankar is a Director of the Board since October 2023. He is a Senior Partner at Khaitan & Co and is engaged with the NSE Center of Excellence, UPES School of Law, Government Law College, Mumbai and the Department of Law at Mumbai University. Mr Abhyankar holds a graduate degree in Arts (Economics and Commerce) and a postgraduate degree in Law from the University of Mumbai and is a Fellow of Government Law College, Mumbai. He is also a member of The Bombay Incorporated Law Society. Praveen Kadle Mr Praveen Kadle is a Director of the Company since May 2024. He is the Managing Director of Prachetas Capital Pvt Ltd and a Non-executive Director of Tata International Ltd. He has held various senior positions in Tata Group and has served as the Founding Managing Director of Tata Capital Ltd for almost a decade and as an Executive Director (Corporate Affairs) and Chief Financial Officer of Tata Motors Ltd. Mr Kadle holds a degree in Commerce from the University of Mumbai. He is a Member of the Institute of Chartered Accountants of India, the Institute of Cost and Management Accountants of India and the Institute of Company Secretaries of India. Sujal Shah Mr Sujal Shah is a Director of the Board since October 2023. He is a Founding Partner at SSPA & Co. He contributed to drafting valuation standards for the Institute of Chartered Accountants of India and has authored numerous valuation-related papers. Mr Shah holds a graduate degree in Commerce from the University of Mumbai and is a Fellow Member of the Institute of Chartered Accountants of India. M M Atul Ltd 4 Annual Report 2023-24
Corporate Overview Statutory Reports Financial Statements 5 Directors’ Report 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, 2024. 01. Financial results (` cr) Standalone Consolidated 2023-24 2022-23 2023-24 2022-23 Revenue from operations 4,358 5,062 4,726 5,427 Other income 134 199 58 115 Total income 4,492 5,261 4,784 5,542 Profit before tax 510 730 451 688 Tax expenses (125) (178) (127) (181) Profit for the year 385 552 324 507 Profit is attributable to: Owners of the Company 385 552 323 514 Non-controlling interests - - 1 (7) Balance in retained earnings at the beginning of the year 4,107 3,664 4,153 3,747 Profit attributable to owners of the Company 385 552 323 514 Transfer from comprehensive income - 5 - 6 Buy-back of equity shares (net of amount adjusted from general reserve) (62) (18) (62) (18) Dividend (74) (96) (74) (96) Balance in retained earnings at the end of the year 4,356 4,107 4,340 4,153 02. Performance Standalone revenue for the year at ` 4,358 cr decreased by 14% compared to that of last year. The decline was the outcome of decrease in price realisation in India and outside by 19% and increase in volume by 5%. Sales in India decreased by 3% as compared with those outside which decreased by 25%. Sales volume increased in India by 18%, but decreased outside by 9%. Details about the two segments are given in Management Discussion and Analysis. PBT at ` 510 cr decreased by 30% mainly because of decrease in sales, lower exchange gains and higher depreciation. Consolidated revenue for the year at ` 4,726 cr decreased by 13%compared to that of last year. Sales of Life Science Chemicals (LSC) segment decreased by 27% whereas those of Performance and Other Chemicals (POC) segment decreased by 5%. PBT at ` 451 cr decreased by 34% mainly because of decrease in sales, lower exchange gains and higher depreciation and loss of ` 32 cr and ` 51 cr in Atul Products Ltd (100% subsidiary) and Anaven LLP (50-50 joint operation with Nouryon BV) respectively. Atul Products commissioned a new manufacturing plant to manufacture 300 TPD caustic in December 2023 and had start-up related problems (which are expected to be largely overcome by the end of the first quarter). Anaven – which operates one of the most modern plants in the world to manufacture Monochloro acetic acid and the best in India – did not run its plant at the optimum capacity because of lower offtake of the product.
Atul Ltd 6 Annual Report 2023-24 03. Dividend and buy-back of equity shares The Board recommended dividend of ` 20 per equity share of ` 10 each fully paid-up for the year ended on March 31, 2024. The dividend will entail an outflow of ` 58.88 cr on the paid-up equity share capital of ` 29.44 cr. The Board approved ` 50 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 improve earnings per share by decrease in the equity base, thereby leading to long-term increase in value for the members. The Company bought back 72,000 equity shares at an aggregate consideration of ` 49.93 cr. 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 11. 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 developed and implemented a comprehensive risk management system to ensure that risks to its continued existence as a going concern and to its growth are identified and remedied on a timely basis. The Company considered leading standards and practices while defining and developing the formal risk management system, leading standards and practices were considered. The risk management system is relevant to the business reality, is pragmatic, simple and involves the following: a) Risk identification and definition – Focuses on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors. b) 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. c) 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. d) 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. e) 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 approved the Risk Management Policy of the Company. The Company laid down procedures to inform the Board on a) to d) listed above. The Audit Committee | the 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 | the Risk Management Committee. The Company has a risk management oversight structure in which each sub-segment has a Chief Risk and Compliance Officer. 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. As per the requirements of Rule 3(1) of the Companies (Accounts) Rules, 2014, the Company uses only such accounting software for maintaining its books of account that records the audit trail of all the transactions, creates an edit log of all the changes made in the books of account along with when such changes were made and by whom. This feature of recording the audit trail has operated throughout the year and was not tampered with during the year.
Corporate Overview Statutory Reports Financial Statements 7 In respect of the aforesaid accounting software, after thorough testing and validation, the audit trail was not enabled for direct data changes at the database level in view of the possible impact on the efficient performance of the system. In respect of audit trail at the database level, the Company has established and maintained an adequate internal control framework over its financial reporting and based on its assessment, concluded that the internal controls for the year ended March 31, 2024, were effective. It is in the process of upgrading the system to meet the database level audit trail requirement and expects to implement this from May 01, 2024. 07. Internal financial controls The internal financial controls 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: a) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company, b) provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with the authorisations of the Management and Directors of the Company, c) 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 consultancy firm has reviewed the adequacy of the internal financial controls concerning to the Financial Statements. The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2024, and the Board believes that the controls are adequate. 08. Fixed deposits During 2023-24, 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 137 and 139. During 2023-24, the Company has received all stipulated amounts of principal and interest as per schedule in respect of loans granted, except that, in respect of the secured loan given to Anaven LLP, the amount of ` 4.58 cr as principal and an amount of ` 1.29 cr as interest are overdue (net of tax deducted at source) as at March 31, 2024. The principal amount is secured and hence, the Company has not made any provision. As a matter of abundant precaution, the Company has made provision for the interest of ` 1.29 cr (net of tax deposited at source) in the books as at March 31, 2024, though the Company is expecting to recover the same. The Company is evaluating various options to mitigate the unprecedented adverse business conditions which Anaven LLP is facing. 10. Subsidiary, joint venture and associate companies | entities and joint operation During 2023-24, there were no changes in the number of subsidiary, joint venture and associate companies | entities and joint operation. Details of subsidiary, joint venture and associate companies | entities and joint operation are given on page number 13. 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 151. 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 15. 13. Annual return Annual return 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 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, 2024, 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 2023-24, on July 28, 2023.
Atul Ltd 8 Annual Report 2023-24 Secretarial Auditors SPANJ & Associates, Company Secretaries, continue to be the Secretarial Auditors for 2023-24 and their report is given on page number 18. 15. Directors’ responsibility statement a) In preparation of the annual accounts for the financial year that ended on March 31, 2024, the applicable accounting standards have been followed and there are no material departures. b) The accounting policies were selected and applied consistently and judgements and estimates thus made were reasonable and prudent 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) 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. d) Theattachedannual accounts for theyear ended on March 31, 2024, were prepared on a going concern basis. e) Adequate internal financial controls to be followed by the Company were laid down, and they were adequate and operating effectively. This is given under paragraph number 07. f) 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 a) According to Article 86 of the Articles of Association of the Company, Mr Bharathy Mohanan retires by rotation and being eligible, offers himself for reappointment at the AGM scheduled on July 26, 2024. b) Mr Rangaswamy Iyer was appointed as an Independent Director effective May 01, 2023, for a period of five years. c) Mr Sharadchandra Abhyankar and Mr Sujal Shah were appointed as Independent Directors, effective October 20, 2023, for a period of five years. d) Subject to the approval of the members in the AGM, Mr Gopi Kannan Thirukonda was reappointed by the Board as a Whole-time Director effective October 17, 2024, for a period of three years and Mr Praveen Kadle was appointed as an Independent Director effective May 01, 2024, for a period of five years. e) Mr Bansi Mehta, Mr Srinivasa Rangan and Mr Susim Datta, Independent Directors and Mr Rajendra Shah, Non-executive Director ceased to be Directors during the year. T he Board places on record its deep appreciation for their valuable contribution through sustained involvement, critical analysis and insightful guidance. In the opinion of the Board, Mr Rangaswamy Iyer, Mr Sharad Abhyankar, Mr Sujal Shah and Mr Praveen Kadle, Independent Directors, fulfil requisite conditions as per applicable laws and are independent of the management of the Company. 16.2 Policy on appointment and remuneration The policy is displayed on thewebsite 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: a) Qualification: well-educated and experienced in senior leadership positions in industry profession. b) Trait: positive attributes and qualities. c) Independence: criteria prescribed in the Act and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the Regulations), for the Independent Directors, including no pecuniary interest and conflict of interest. 16.2.2 Remuneration of the Non-executive Directors a) Sitting fees: up to ` 50,000 for attending a Board, Committee and any other meeting b) Commission: up to 1% of net profit as may be decided by the Board based on i) Membership of committee(s), ii) Profit iii) Attendance iv) Category (Independent or Non-executive) 16.2.3 Remuneration of the Executive Directors This is given under paragraph number 17.2. 16.3 Criteria and method of the annual evaluation 16.3.1 The criteria for evaluation of the performance of a) the Executive Directors, b) the Non-executive Director (other than Independent Directors), c) the Independent Directors, d) the Chairman, e) the
Corporate Overview Statutory Reports Financial Statements 9 Committees of the Board and f) the Board as a whole are summarised in the table at the end of the Directors’ Report on page number 10. 16.3.2 The Independent Directors have carried out annual: a) review of the performance of the Executive Directors b) review of the performance of the Chairman and assessment of quality, quantity and timeliness of the flow of information to the Board c) 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: a) its committees, namely, Audit, Corporate Social Responsibility, Investment, Nomination and Remuneration, Risk Management and Stakeholders Relationship b) 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 andother employees 17.1 Appointments and cessations of the Key Managerial Personnel There were no appointments | cessations of the Key Managerial Personnel during 2023-24. 17.2 Remuneration The Remuneration Policy related to the Key Managerial Personnel andother employeesconsistsof the following: 17.2.1 Components: a) Fixed pay i) Basic Salary ii) Allowances iii) Perquisites iv) Retirals b) Variable pay 17.2.2. Factors for determining and changing fixed pay: a) Existing compensation b) Education c) Experience d) Salary bands e) Performance f) Market benchmark 17.2.3 Factors for determining and changing variable pay: a) Company performance b) Business performance c) Individual performance d) 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 23. 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 Regulations, is given on page number 31. Details about the number of meetings of the Board held during 2023-24, are given on page number 36. The composition of the Audit Committee is given on page number 39. All the recommendations given by the Audit Committee were accepted by the Board. 20.3 Whistleblower Policy The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistleblower Policy). The Policy provides
Atul Ltd 10 Annual Report 2023-24 an independent mechanism for reporting and resolving complaints about 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 2023-24. 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 44. 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 52. 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 26, 2024 DIN: 00045590 Evaluation of Evaluation by Criteria Executive Director Independent Directors Qualification, Experience, Availability and attendance, Integrity, Commitment, Governance, Transparency, Communication, Business leadership, People leadership, Investor relations Non-executive Director (other than Independent Director) Independent Directors Qualification, Experience, Availability and attendance, Integrity, Commitment, Governance, Independence, Communication, Preparedness, Participation and Value addition Independent Director All other Board Members Qualification, Experience, Availability and attendance, Integrity, Commitment, Governance, Independence, Communication, Preparedness, Participation and Value addition Chairman Independent Directors Qualification, Experience, Availability and attendance, Integrity, Commitment, Governance, Impartiality, Communication, Business leadership, People leadership and Meeting conduct Committees Board Members Composition, Process and Dynamics Board as a whole Independent Directors Composition, Process and Dynamics Notes: i) Figures less than ` 50,000 have been shown as ‘0.00’ at relevant places in the annual report. ii) DIN stands for Director identification number.
Corporate Overview Statutory Reports Financial Statements 11 Index No. Subject title Page 1. Energy conservation, technology absorption and foreign exchange earnings and outgo 1.1 Energy conservation 11 1.2 Technology absorption 12 1.3 Foreign exchange earnings and outgo 12 2. Subsidiary, joint venture and associate companies | entities and joint operation 2.1 Operational 13 2.2 Non-operational 14 3. Corporate social responsibility 3.1 A brief outline of CSR Policy, programs and scope of the Company 15 3.2 Composition of the CSR Committee 15 3.3 Details of URL for disclosure of the composition of the CSR Committee, CSR Policy and CSR projects on the website of the Company 15 3.4 Impact assessment 16 3.5 CSR obligation 16 3.6 Details of the CSR amount spent | unspent for the financial year 16 3.7 Details of the unspent CSR amount for the preceding three financial years 16 3.8 Details relating to the capital asset created or acquired through CSR spend 17 3.9 Reasons for not spending two percent of the average net profit 17 4. Secretarial Audit Report 18 5. Statement of particulars under Sections 134(3)(q) and 197(12) of the Companies Act, 2013 21 1. Energy conservation, technology absorption and foreign exchange earnings and outgo 1.1. Energy conservation 1.1.1 Measures taken: a) Installation of evaporative chiller to reduce consumption of power b) Installation of hot water air pre-heater to decrease consumption of piped natural gas c) Replacement of low-pressure reciprocating air compressors with energy-efficient screw air compressors 1.1.2 Additional investments and proposals being implemented: a) Recycling of yard steam piping steam condensate as boiler feed water across the site b) Replacement of fifth-generation cell elements with sixth-generation energy-efficient cell elements c) Replacement of old electrical motors with energy-efficient motors Annexure to the Directors’ Report
Atul Ltd 12 Annual Report 2023-24 1.2. Technology absorption 1.2.1 Research and development a) Specific areas in which research and development (R&D) was carried out by the Company: T he Company focused its R&D efforts on developing continuous processes with a smaller plant and a better environmental footprint, developing new products, making value-added products from waste and improving existing processes. b) Benefits derived from R&D: T he Company increased the yield of 15 products, decreased the consumption of raw materials in 17 products and solvents in four products, recovered five value-added products fromwaste and developed 48 new products. c) Future plan: T he Company is investing further in people and equipment to strengthen its R&D and thereby enhance its capability. d) R&D expenditure (` cr) Capital Revenue Total Total R&D expenditure as a percentage of total sales 57.60 33.96 91.56 2.13% 1.2.2 Technology absorption, adaptation and innovation a) Efforts in brief made towards technology absorption, adaptation and innovation: The Company upgraded some of its operations by imbibing new technologies. b) Benefits derived as a result of the above efforts: The above efforts have resulted in a decrease in the time cycle and an increase in throughput. c) Technology imported during the last three years reckoned from the beginning of the financial year: The Company did not import any technology. 1.3. Foreign exchange earnings and outgo 1.3.1 Export sales: activities, development initiatives and future plans The Company sold its products in 88 countries, directly and through its subsidiary companies in the USA, the UK, the UAE, China and Brazil. Sales outside India* decreased by 23% from ` 2,315 cr to ` 1,793 cr. *Free On Board (FOB) value 1.3.2 Total foreign exchange earnings and outgo (` cr) Particulars 2023-24 2022-23 Earnings Exports – FOB value 1,793.22 2,314.82 Dividends 12.66 15.58 Outgo Payment for raw materials, books and periodicals, dividend, etc 717.81 917.61
Corporate Overview Statutory Reports Financial Statements 13 2. Subsidiary, joint venture and associate companies | entities and joint operation 2.1. Operational (` cr) No. Name Equity share capital Other equity Total assets Total liabilities Investments Revenue Profit before tax Provision for tax Profit after tax Dividend % shareholding Reporting currency Subsidiary companies 01. Aaranyak Urmi Ltd 0.21 (0.10) 0.35 0.24 - 0.34 (0.00) (0.00) (0.00) - 100% INR 02. Atul Bioscience Ltd 29.02 39.31 163.54 95.20 0.01 132.11 2.83 0.89 1.94 - 100% INR 03. Atul Biospace Ltd 11.03 7.00 18.61 0.58 10.00 2.82 0.08 0.06 0.02 - 100% INR 04. Atul Brasil Quimicos Ltda 1.18 0.92 2.55 0.45 - 0.80 (0.73) - (0.73) - 100% BRL 05. Atul China Ltd 3.91 10.59 47.00 32.50 - 159.77 2.00 0.09 1.91 - 100% RMB 06. Atul Consumer Products Ltd 0.05 1.19 3.57 2.33 0.03 15.73 0.59 0.17 0.43 - 100% INR 07. Atul Crop Care Ltd 0.05 1.57 4.63 3.01 0.00 24.00 0.90 0.12 0.78 - 100% INR 08. Atul Europe Ltd 34.58 7.81 69.85 27.46 10.64 115.27 0.68 0.20 0.47 4.35 100% GBP 09. Atul Fin Resources Ltd 22.85 13.99 37.27 0.43 19.47 5.62 5.32 0.49 4.84 - 100% INR 10. Atul Finserv Ltd 48.70 113.34 191.61 29.57 138.61 3.33 0.53 0.15 0.38 - 100% INR 11. Atul Infotech Pvt Ltd 0.30 21.17 22.77 1.30 0.02 6.65 0.68 0.18 0.50 - 100% INR 12. Atul Ireland Ltd 0.90 (0.56) 1.37 1.03 - 2.03 (0.24) - (0.24) - 100% EUR 13. Atul Middle East FZ-LLC 0.68 6.78 7.55 0.09 - 2.94 1.06 - 1.06 - 100% AED 14. Atul Products Ltd 5.00 453.23 1,043.86 585.63 - 64.85 (32.35) 0.01 (32.36) - 100% INR 15. Atul Rajasthan Date Palms Ltd 8.11 (0.91) 21.48 14.28 - 1.23 (0.09) 0.02 (0.12) - 73.98% INR 16. Atul USA Inc 16.68 35.75 101.56 49.13 - 370.71 7.15 1.71 5.43 8.31 100% USD 17. DPD Ltd 2.63 67.24 86.90 17.03 - 49.19 16.25 2.08 14.17 - 98% GBP 18. Osia Infrastructure Ltd 3.85 4.97 10.26 1.44 0.00 16.21 2.17 0.51 1.66 - 100% INR Associate companies 19. Amal Ltd 12.36 76.97 98.67 9.33 77.42 30.76 3.46 1.03 2.43 - 49.86% INR 20. Amal Speciality Chemicals Ltd 7.72 33.72 90.78 49.34 - 57.64 (1.94) - (1.94) - 49.86% INR Joint venture company 21. Rudolf Atul Chemicals Ltd 5.84 48.31 74.62 20.47 - 139.26 27.79 8.57 19.22 2.92 50% INR Joint operation 22. Anaven LLP 134.00 (61.63) 223.73 151.36 - 72.49 (50.97) - (50.97) - 50% INR
Atul Ltd 14 Annual Report 2023-24 2.2. Non-operational (` cr) No. Name Equity share capital Other equity Total assets Total liabilities Investments Revenue Profit before tax Provision for tax Profit after tax Dividend % shareholding Reporting currency Subsidiary companies 01. Aasthan Dates Ltd 2.10 (0.24) 1.86 0.00 - 0.06 0.06 0.00 0.06 - 100% INR 02. Atul Aarogya Ltd 0.07 0.06 0.13 0.00 - - 0.00 0.00 0.00 - 100% INR 03. Atul Adhesives Pvt Ltd 0.59 (0.04) 0.54 0.00 - - 0.03 0.01 0.02 - 100% INR 04. Atul Ayurveda Ltd 0.08 0.00 0.09 0.00 0.00 - 0.00 0.00 0.00 - 100% INR 05. Atul Clean Energy Ltd 0.10 (0.00) 0.10 0.00 0.00 - 0.00 (0.00) 0.00 - 100% INR 06. Atul Deutschland GmbH 0.90 (0.65) 0.68 0.43 - - (0.03) - (0.03) - 100% Euro 07. Atul Entertainment Ltd 0.07 0.04 0.11 0.00 0.00 - 0.00 (0.00) 0.00 - 100% INR 08. Atul Healthcare Ltd 22.77 (0.25) 22.52 0.00 22.50 - (0.00) - (0.00) - 100% INR 09. Atul Hospitality Ltd 0.06 0.03 0.09 0.00 - - 0.00 - 0.00 - 100% INR 10. Atul Lifescience Ltd 0.10 (0.01) 0.09 0.00 - - 0.00 - 0.00 - 100% INR 11. Atul Natural Dyes Ltd 0.01 (0.00) 0.01 0.00 - - (0.00) - (0.00) - 100% INR 12. Atul Natural Foods Ltd 0.01 (0.00) 0.01 0.00 - - (0.00) - (0.00) - 100% INR 13. Atul Nivesh Ltd 2.50 1.13 3.63 0.00 - - 0.31 0.08 0.23 - 100% INR 14. Atul Paints Ltd 0.01 (0.00) 0.01 0.00 - - (0.00) - (0.00) - 100% INR 15. Atul Polymers Products Ltd 0.05 (0.03) 0.08 0.06 - - 0.00 - 0.00 - 100% INR 16. Atul Renewable Energy Ltd 0.01 (0.00) 0.01 0.00 - - (0.00) - (0.00) - 100% INR 17. Atul (Retail) Brands Ltd 0.10 (0.00) 0.10 0.00 - - 0.00 0.00 0.00 - 100% INR 18. Atul Seeds Ltd 0.09 (0.02) 0.07 0.00 - - 0.00 0.00 0.00 - 100% INR 19. Biyaban Agri Ltd 1.09 (0.52) 0.58 0.01 - 0.03 0.02 0.00 0.02 - 100% INR 20. Jayati Infrastructure Ltd 0.09 (0.02) 0.07 0.00 - - 0.00 0.00 0.00 - 100% INR 21. Osia Dairy Ltd 0.09 (0.02) 0.07 0.00 - - 0.00 0.00 0.00 - 100% INR 22. Raja Dates Ltd 4.10 (0.58) 3.59 0.07 - 0.14 0.01 (0.02) 0.03 - 100% INR 23. Sehat Foods Ltd 0.10 0.00 0.11 0.00 - - 0.00 0.00 0.00 - 100% INR Associate company 24. Valsad Institute of Medical Sciences Ltd 27.00 8.47 50.95 15.48 - - 0.30 0.12 0.18 - 50% INR AED: United Arab Emirate Dirham, BRL: Brazilian Real, CNY: Chinese Yuan, GBP: Great Britain Pound, INR: Indian Rupee, USD: United States Dollar Rate of exchange considered as on March 31, 2024 are 1 AED = ` 22.71, 1 BRL = ` 16.63, 1 CNY = ` 11.55, 1 Euro = ` 89.91, 1 GBP = ` 105.14, 1 USD = ` 83.40
Corporate Overview Statutory Reports Financial Statements 15 3. Corporate social responsibility 3.1 A brief outline of CSR Policy, programs and scope of the Company 3.1.1 Policy Atul will volunteer its resources to the extent it can reasonably afford to contribute towards enhancing the quality of life, thereby the standard of living of people, particularly the marginalised sections of the society. Essentially, the indicative beneficiaries are the needy, who are living below the poverty line in rural or urban areas, particularly where Atul is operating. The endeavour is to uplift them through the chosen programs (mentioned below) so that they can live with dignity and self-respect. 3.1.2 Programs and scope The Companywill take up projects and | or carry out activities under six broad programs: a) Education b) Empowerment, c) Health d) Relief e) Infrastructure and f) Conservation with varied scope of work. a) Education i) Establish and | or support educational institutions ii) Enhance education in rural areas iii) Support needy and | or meritorious students b) Empowerment i) Establish and | or support vocational training institutes ii) Promote sustainable livelihood opportunities for women and youth iii) Promote integrated development of rural | tribal areas c) Health i) Establish and | or improve medical care centers ii) Promote health, nutrition, hygiene and sanitation iii) Promote sports and fitness d) Relief i) Eradicate hunger and malnutrition ii) Support deserving | needy people iii) Provide support during natural calamities e) Infrastructure i) Develop and | or improve rural infrastructure ii) Develop and | or improve rural amenities iii) Develop and | or improve child-friendly infrastructure f) Conservation i) Conserve natural resources ii) Protect environment | flora and fauna iii) Protect and | or promote art and culture 3.2 Composition of the CSR Committee: No. Name of Directors Designation | Nature of Directorship Number of meeting held during the year Number of meeting attended during the year 1. Shubhalakshmi Panse Chairperson | Independent Director 1 1 2. Sunil Lalbhai Member | Executive Director 1 1 3. Bharathy Mohanan Member | Executive Director 1 1 3.3 Details of URL for disclosure of the composition of the CSR Committee, CSR Policy and CSR projects on the website of the Company: www.atul.co.in/investors/investorsstakeholders-information/corporate-social-responsibility/
Atul Ltd 16 Annual Report 2023-24 3.4 Impact assessment: The Company has carried out impact assessment through an independent third party. The detailed report and executive summary is available at www.atul.co.in/investors/investorsstakeholders-information/corporate-social-responsibility/ 3.5 CSR obligation: (` cr) a) Average net profit of the Company as per Section 135(5) 765.34 b) 2% of the average net profit of the Company as per Section 135(5) 15.31 c) Surplus arising out of the CSR projects or programs or activities of the previous financial years Nil d) Amount required to be set-off for the financial year Nil e) Total CSR obligation for the financial year [b) + c) - d)] 15.31 3.6. a) Details of the amount spent (ongoing projects and other than ongoing projects) for the financial year: ` 14.57 cr b) Amount spent on administrative overheads: ` 0.72 cr c) Amount spent on impact assessment: ` 0.03 cr d) Total amount spent for the financial year [a)+b)+c)]: ` 15.32 cr e) CSR amount spent or unspent for the financial year: (` cr) Amount unspent Total amount spent for the financial year Total amount transferred to the Unspent CSR Account as per Section 135(6) Amount transferred to any fund specified under Schedule VII as per the second proviso to Section 135(5) Amount Date of transfer Name of the fund Amount Date of transfer 15.32 Nil NA NA Nil NA NA: not applicable f) Excess amount for set-off, if any: (` cr) No. Particulars Amount (i) 2% of average net profit of the Company as per Section 135(5) 15.31 (ii) Total amount spent for the financial year 15.32 (iii) Excess amount spent for the financial year [(ii)-(i)] 0.01 (iv) Surplus arising out of the CSR projects or programs or activities of the previous financial years Nil (v) Amount available for set-off in succeeding financial years [(iii)-(iv)] Nil *Being a small amount, no set-off is considered 3.7. Details of the unspent CSR amount for the preceding three financial years: No. Preceding financial year Amount transferred to the Unspent CSR Account under Section 135 (6) Amount in Unspent CSR Account under Section 135(6) Amount spent in the financial year Amount transferred to any fund specified under Schedule VII as per Section 135(5), if any Amount remaining to be spent in succeeding financial years Deficiency, if any Amount Date of transfer - - - - - - - - -
Corporate Overview Statutory Reports Financial Statements 17 3.8. Whether any capital assets have been created or acquired through CSR spend in the financial year? Yes If yes, enter the number of capital assets created | acquired: one Details relating to the asset(s) created or acquired through CSR spend in the financial year: No. Short particulars of the property | asset(s) including complete address and location of the property Pincode of the property | asset(s Date of creation Amount of CSR amount spend (` cr) Details of entity | authority | beneficiary of the registered owner CSR registration number, if applicable Name Registered address 1. Atul Community Center building Survey no. 480 Atul 396 020, Gujarat, India 396 020 August 14, 2023 2.39 CSR00007021 Atul Rural Development Fund ARDF hall, Near Riverside colony 1, Atul 396 020, Gujarat, India 3.9. Reasons if the Company has failed to spend two percent of the average net profit as per Section 135(5): not applicable Chairperson CSR Committee Chairman and Managing Director Shubhalakshmi Panse DIN: 02599310 Sunil Lalbhai DIN: 00045590
Atul Ltd 18 Annual Report 2023-24 4. Secretarial Audit Report Form number MR – 3 Secretarial Audit Report For the financial year ended on March 31, 2024 {Pursuant to Section 204(1) of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014} To the members of Atul Ltd We have conducted the Secretarial Audit of the compliance with applicable statutory provisions and the adherence to good corporate practices by Atul Ltd (hereinafter called the Company). The Secretarial Audit was conducted in amanner that provided us with a reasonable basis for evaluating the corporate conducts | statutory compliances and expressing our opinion thereon. Based on our verification of the 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 authorised representatives, during the conduct of the Secretarial Audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended March 31, 2024, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanisms in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended March 31, 2024, according to the provisions of: a) The Companies Act, 2013 (Act ) and the rules made thereunder; b) The Securities Contracts (Regulation) Act, 1956 and the rules made thereunder; c) The Depositories Act, 1996 and the regulations and bye-laws framed thereunder; d) The Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of foreign direct investment, overseas direct investment and external commercial borrowings; e) The following regulations and guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act ): i) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 ii) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 iii) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 iv) The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 v) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 vi) 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 vii) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 viii) The Securities and Exchange Board of India (Buy-Back of Securities) Regulations, 2018 ix) The Securities and Exchange Board of India (Depositories and Participants) Regulations, 2018 Other sector-specific laws as applicable to the Company, including product laws, pollution laws, manufacturing laws and safety laws as per confirmations of compliances placed before the Board of Directors, for our verification carried out on a test-check basis and considered as an assurance for the existence of a proper compliance management system. However, it has been found that there were no instances requiring compliance with the provisions of the laws indicated at points iii), iv), v) and vii) of paragraph e) mentioned hereinabove during the period under review. We have also examined compliance with the applicable clauses of the following: a) Secretarial standards issued by the Institute of Company Secretaries of India. b) The Listing Agreements entered into by the Company with BSE Ltd and National Stock Exchange of India Ltd and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended).
Corporate Overview Statutory Reports Financial Statements 19 During the period under review, the Company has complied with the provisions of the Act, rules, regulations, guidelines, standards mentioned hereinabove and there is an adequate compliance management system for other sector-specific laws as reported hereinabove. We have relied on the representations made by the Company and its officers for systems and mechanisms formed by the Company for compliance under other sector-specific laws and regulations applicable to the Company. We further report that the Board of Directors of the Company is duly constituted with proper balance of the Executive Directors and the Non-executive Directors (Independent and Non-independent ). The changes in the composition of the Board that took place during the period under review were carried out in compliance with the provisions of the Act. During the year under review, the following changes occurred in the Board of Directors: a) Mr Rangaswamy Iyer (DIN: 00474407), was appointed as an Independent Director effective May 01, 2023, for a period of five years. The shareholders have approved his appointment at the Annual General Meeting held on July 28, 2023; b) Mr Bansi Mehta (DIN: 00035019), ceased to be an Independent Director of the Company upon completion of his term of five years on May 31, 2023; c) Mr Sunil Lalbhai (DIN: 00045590), was reappointed as the Chairman and Managing Director of the Company effective July 01, 2024, for a period of five years at the Annual General Meeting held on July 28, 2023; d) Mr Rajendra Shah (DIN: 00009851), ceased to be a Non-executive Director who desired not to be reappointed upon the expiry of his term at the Annual General Meeting held on July 28, 2023; e) Mr Sharadchandra Abhyankar (DIN: 00108866), was appointed as an Independent Director of the Company effective October 20, 2023, for a period of five years. The shareholders have approved his appointment through the Postal Ballot on December 01, 2023; f) Mr Sujal Shah (DIN: 00058019), was appointed as an Independent Director of the Company effective October 20, 2023, for a period of five years. The shareholders have approved his appointment through the Postal Ballot on December 01, 2023; g) Mr Srinivasa Rangan (DIN: 00030248), an Independent Director of the Company resigned on December 13, 2023; h) Mr Susim Datta (DIN: 00032812), ceased to be an Independent Director of the Company upon completion of his second term of five years on March 31, 2024; Adequate notice was given to all the Directors to schedule the Board meetings, agenda and detailed notes on the 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. The majority decision is carried through, while the views of the dissenting Members are captured and recorded as part of the minutes, wherever required. We 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 the applicable laws, rules, regulations and guidelines. We further report that during the audit period, there were no specific events or actions having a major bearing on the affairs of the Company in pursuance of the above-referred laws, rules, regulations, guidelines, standards, etc. Against the buy-back offer of equity shares of the Company for an amount not exceeding ` 50.00 cr at a price not exceeding ` 7,500/- per equity share, the Company bought back 72,000 equity shares from the open market through stock exchanges at an average price of ` 6,934.70/- per equity share {Volume weighted average price calculated in terms of the SEBI (Buy-back of Securities) Regulations, 2018} at an aggregate consideration of ` 49.93 cr. The buy-back was closed on January 01, 2024. For SPANJ & ASSOCIATES Company Secretaries (Ashish C Doshi) Partner Membership number: F3544 Certificate of practice number: 2356 Ahmedabad UDIN: F003544F000246391 April 26, 2024 Peer review certificate number: 702 | 2020
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