Atul Ltd | Integrated Report 2023-24 ENDURE | ENHANCE | EXCEL
The tree featured on the cover page, 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. It also has a high carbon sequestration capacity. We draw inspiration from such wonders of nature. The unseen roots of the tree represent the firm foundation and enriching legacy of our Company while the trunk signifies our perseverance to endure and withstand the test of time. The leaves and branches symbolise our aspiration to enhance the processes. The tree reaching towards the sky represents our endeavour to excel and grow our Company; thus, become a much better version of ourselves. - Albert Einstein In the middle of difficulty lies opportunity. Contents 2 About Atul - Footprint 5 Performance at a glance 6 Business strategy 7 Pillars of value creation 8 Value creation model 10 Materiality assessment 12 Stakeholder engagement 26 Governance philosophy 27 Governance structure - Board of Directors 30 ESG framework 31 Risk framework 2-15 Corporate overview 16 Letter to the shareholders 18 Financial trend (standalone financials) short-term 22 Financial trend (standalone financials) long-term 24 Environment and Social highlights 16-25 Performance overview 26-34 Governance overview Theme Excel Endure Enhance 32 Corporate information 33 Abbreviations Contact The members may send in their comments or suggestions for improvement of the integrated annual report by mailing to shareholders@atul.co.in
United Nations Sustainable Development Goals Reporting scope This report covers the sustainability performance of Atul. To enhance focus, our Company has placed the products belonging to the two reporting segments, namely Life Science Chemicals, and Performance and Other Chemicals, under nine sub-segments (interchangeably called businesses), namely Aromatics, Bulk Chemicals and Intermediates, Colors, Crop Protection – Bulk Actives, Crop Protection – Retail, Floras, Pharmaceuticals, Polymers – Performance Material and Polymers – Retail. These, in turn, are managed through a matrix organisation structure for achieving all-round functional excellence. Reporting boundary The financial information presented in this report pertains to standalone operations of our Company encompassing its national and international business, subsidiary and joint venture entities (unless specifically mentioned otherwise in relevant sections). The non-financial information primarily focuses on its own operations (unless specifically mentioned otherwise in relevant sections). Reporting period The reporting period for this report is from April 01, 2023 to March 31, 2024. Materiality determination This report provides balanced information about the relevant matters that substantively affect the ability of our Company to create value both positively and negatively. We have taken a holistic perspective by engaging with the stakeholders to identify material information or matters. Forward-looking statements In this report, wehave shared informationandmade forward-looking statements toenable investors to know theproduct portfolio, business logic of our Company and thereby comprehend its prospects. These include all statements other than statements of historical facts, including those regarding the financial position, business strategy, management plans and objectives for future operations. 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. Basis of reporting It is aligned with the internationally recognised frameworks and guidelines, including: Integrated Reporting <IR> framework (a benchmark for best practices in corporate reporting) Sustainability Accounting Standards Board Sustainable Development Goals set by the United Nations We hope that this first edition of integrated report of our Company will serve as a comprehensive reflection of our Company performance and way forward. It is our endeavour that with each passing year, we enrich the report with additional, relevant information to all the stakeholders that may help them make informed decisions. 1 Corporate Overview Performance Overview Governance Overview
About Atul Our Company was incorporated on September 05, 1947, by Kasturbhai Lalbhai, to create wealth in rural India, generate employment on a large scale and make India self-reliant. It is the first private sector company of independent India to be inaugurated by the first Prime Minister of the country, Jawaharlal Nehru, on March 17, 1952. It is a diversified Indian company (a part of Lalbhai Group, one of the oldest business houses in India with a legacy of conducting business with a larger purpose) meeting the needs of varied industries. It is one of the largest integrated chemical companies that has manufactured many products for the first time in India. Atul Brasil Quimicos Ltda Anaven LLP Atul China Ltd Anaven LLP Atul Europe Ltd Atul Ireland Ltd Atul Middle East FZ-LLC Atul USA Inc Atul Foundation Atul Rajasthan Date Palms Ltd Anaven LLP Atul Bioscience Ltd DPD Ltd Anaven LLP Amal Ltd Anaven LLP Anaven LLP Anaven LLP Atul Ltd Rudolf Atul Chemicals Ltd e L P Valsad Institute of Medical Sciences Ltd l dation Anaven L P Atul Club Atul Ltd 2 Integrated Report 2023-24
Values Kasturbhai Lalbhai (1894 – 1980) The legacy of the Founder of Atul has been synonymous with three terms: excellence, perseverance and trusteeship. At Atul, we have the most onerous responsibility to expand and diversify its footprint and follow his figurative footsteps. We are endeavouring to achieve this remit in full measure. Balwantrai Mazumdar (1902 – 1981) An economist, Balwantrai Mazumdar was a voracious reader, sound thinker, patient listener and a farsighted professional. He created an atmosphere of camaraderie that brought out the collective best in the people of Atul. He was the moving force behind making Atul Complex one of the largest eco-friendly chemical sites of its kind in the world. He remained with the Group till the end of his life as did most of the people who worked with our Founder. Siddharth Lalbhai (1923 – 1998) A chemical engineer and the elder son of the Founder, Siddharth Lalbhai dedicated his life to the development of Atul. He accorded equal value to creation of wealth and service to society. The principles of trusteeship that he upheld, the personal qualities of integrity, perseverance and simplicity that he lived by and the single-minded devotion that he gave to tasks on hand will always remain our guiding force. Integrity Understanding Unity Responsibility Excellence bird’s eye view of Atul site 3 Corporate Overview Performance Overview Governance Overview
Serving diverse industries Production facilities in India (Ankleshwar, Atul, Panoli and Tarapur) Subsidiary companies with production facilities in India (Ambernath and Atul) and the UK (Bristol) Joint venture entities with production facilities in India (Atul and Jodhpur) Wholly-owned subsidiary companies in Brazil (São Paulo), China (Shanghai), Ireland (Dublin), the UAE (Dubai), the UK (Wilmslow) and the USA (Charlotte) Distribution network of retail sales across India Has started selling its retail products in neighbouring countries touching lives in many ways ... Agriculture Composites Construction Automobile Cosmetic Defence Dyestuff Electrical and Electronics Flavour Food Fragrance Glass Home Care Horticulture Paint and Coatings Paper Personal Care Rubber Soap and Detergent Pharmaceuticals Sport and Leisure Textile Tyre Wind Energy Manufactures 900 products and 400 formulations Owns 140 brands Serves 4,000 customers in 88 countries Footprint Atul Ltd 4 Integrated Report 2023-24
Ankleshwar site 4,02,250 kL Fresh water consumption decreased 83,055 MT Waste recycled 25,920 tCO₂e Emissions decreased Environment *Consolidated financials 2,20,971 Beneficiaries of CSR projects 41 CSR projects implemented 54,892 Beneficiaries of health and well-being initiatives Social no Cases of corruption and anti-competitive practices no Instances of data breach 100% Adherence to Code of Conduct Governance Financial* Non-financial ₹ 4,726 cr Revenue ₹ 504 cr Capital expenditure ₹ 20 per share Dividend per share ₹ 30 cr Savings through improvement in process efficiency ₹ 705 cr EBITDA ₹ 451 cr PBT Performance at a glance 5 Corporate Overview Performance Overview Governance Overview
We are committed to significantly enhance value for our stakeholders by Business strategy Purpose having people who practice Values and exemplify a high standard of behaviour improving the quality of life of the communities we operate in seeking sustained, dynamic growth and securing long-term success fostering a spirit of continuous learning and innovation adopting developments in science and technology providing high-quality products and services, thus becoming the most preferred partner taking responsible care of the surrounding environment Strategic priorities increasing productivity, efficiency, and strengthening people and business processes leveraging depth in science and technology and having integrated manufacturing broadening and deepening its presence in the marketplace developing and growing a retail product portfolio to participate in the full value chain seeking growth through existing, downstream, value-added and diversified product portfolio serving the society, particularly in the areas of national priorities like education, empowerment and infrastructure Atul Ltd 6 Integrated Report 2023-24
Pillars of value creation Our Company optimises the deployment of the six capitals across its operations to maximise value for its stakeholders. This refers to the strength of team members within an organisation. It encompasses their knowledge, skills and attributes. It also comprises their alignment with and support for the governance framework. Our Company is committed to continually enriching and empowering its team members (through upskilling), thus fulfilling their aspirations while creating a purpose-led and future-ready organisation. Human capital This refers to relationships that an organisation has established with different stakeholder groups, formal and informal entities and institutions associated with it to improve both individual and collective well-being. Our Company is committed to nurturing relationships with each of its stakeholder groups, creating a favourable impact on them and together implementing well-being programs for the society at large to promote inclusive growth. Social and relationship capital This refers to the knowledge base of an organisation. It comprises, amongst others, intellectual properties like copyrights, patents, procedures, protocols, rights and licenses, softwares and systems. Our Company is committed to enhancing consumer experience through improvements and innovations in i) processes across its functions in general and ii) research and development in particular, to introduce sustainable manufacturing processes and new products. Intellectual capital This refers to the monetary pool that is available to an organisation for production of its goods or provision of its services. It is usually obtained from equity, debt and (or) generated through operations. Our Company is committed to efficiently using its monetary resources (generated from its operations) to deliver long-term sustainable growth and thus enhance its value and share it with all its stakeholders. Financial capital This refers to the manufacturing assets (such as buildings, machineries and plants) that the organisation depends upon for carrying out its operations. It also comprises products manufactured by an organisation whether for sale or for its own use. Our Company is committed to safely improving efficiencies and increasing capacities (debottlenecking and new), incorporating initiatives related to digitalisation and deliver quality products to its consumers. Manufactured capital This refers to all renewable and non-renewable resources that are used by an organisation for manufacturing | producing goods or providing services. It comprises amongst others air, forests, land, minerals and water. Our Company is committed to managing its ecological footprint through sustainable sourcing and initiatives to mitigate risks related to climate change, pollutants and water scarcity, thus create a positive impact on the planet. Natural capital 7 Corporate Overview Performance Overview Governance Overview
Value creation model WHAT WE DEPEND ON WHAT WE DO Businesses Aromatics Bulk Chemicals and Intermediates Colors Crop Protection - Bulk Actives Crop Protection - Retail Pharmaceuticals Polymers - Performance Materials Polymers - Retail Floras *Consolidated basis FINANCIAL CAPITAL Net worth: ` 5,089 cr CapEX: ` 345 cr Borrowings (net): nil HUMAN CAPITAL Team strength: 3,255 members Training man-hours: 49,000 hrs Safety training man-hours: 12,000 hrs INTELLECTUAL CAPITAL R&D laboratories: 10 R&D expenditure: ` 92 cr R&D team strength*: 248 MANUFACTURED CAPITAL Manufacturing and production sites*: 8 Manufacturing and production assets: ` 1,714 cr Zero liquid discharge sites*: 5 NATURAL CAPITAL Total energy consumption: 1,00,25,630 GJ (of which 1,90,286 GJ is renewable energy consumption) Total water consumption: 39,82,287 kL Solar salt consumption: 86,000 tonnes SOCIAL AND RELATIONSHIP CAPITAL CSR spent: ` 15 cr No. of customers: 4,000 No. of suppliers: 3,800 Consumer insights Innovation Sourcing Manufacturing Marketing Sales Logistics Atul Ltd 8 Integrated Report 2023-24
VALUE WE CREATE FOR VALUE WE CREATE *Consolidated basis Revenue: ` 4,358 cr PAT: ` 385 cr RoCE: 12.52% Rate of dividend: 200% Satisfaction survey score*: 73% Positions filled internally*: 44% LTIFR (permanent team members): 0.13 Labour unrest: nil Amount saved because of of improvement in process efficiency: ` 30 cr New products developed: 47 New formulations developed: 1 Patents granted: 2 No. of products: 900 No. of formulations: 400 Industries served: 30 Countries served: 88 Water recycled: 5,61,350 kL Water harvested: 3,26,235 kL Waste recycled: 83,055 MT Value-added products from waste: 5 CSR beneficiaries: 2,20,971 Resolution of customer complaints: 83% Procurement sourced from India: 82% Sourcing by value from suppliers more than 10 years of relationship: 55% Consumers We aim to provide superior quality products and services to our consumers to meet their expectations. Customers We supply our products to customers consisting of users and channel partners (distributors and retailers) to grow their businesses (and ours). People We aim to create a safe and happy environment, reward team members fairly and provide them with opportunities to learn and grow. Suppliers and business partners We partner with suppliers and business partners for our requirement of materials and services which in turn grow their businesses (and ours). Government We contribute to the exchequers, in India and outside, through our business operations. Shareholders We strive to deliver responsible, profitable and consistent growth for our shareholders. Planet We aim to make the planet better by consistently improving our operations, amongst others, to bring down gaseous emissions, liquid effluents and solid wastes. Society We serve in particular the communities we operate in and in general the society to make a difference in the lives of people. 9 Corporate Overview Performance Overview Governance Overview
Materiality assessment is the foundation of the environmental, social and governance (ESG) initiatives for our Company. It allows us to gather critical insights on the importance of specific ESG topics. We have introduced a formal process to identify material topics to help us understand those that matter the most to our Company business and stakeholders. By engaging with the stakeholders, we get diverse perspectives – this makes our ESG initiatives more impactful and relevant. Validating and reviewing the material topics We validated the final list of material topics in relevance to our business based on the criticality of impact and plotted the identified topics on a materiality matrix. We have appropriately integrated the topics into the performance management system. Prioritising the material topics The identified material topicswere thenprioritised through collective inputs from key internal and external stakeholders. Identifying the relevant topics We collated a comprehensive list of material topics based on business requirements, stakeholder concerns and peer analysis. Parnera hillock, Atul site Materiality assessment Materiality determination process In 2021-22, for the first time, we conducted materiality assessment through a structured process to capture the perspectives of all stakeholders to adopt a holistic approach towards ESG topics material to our Company. We repeated the same process in 2023-24 to obtain fresh perspectives. Atul Ltd 10 Integrated Report 2023-24
1 Climate change 2 Water 3 Pollutants 4 Occupational health and safety 5 Employee development 6 Customer relations 7 Logistics 8 Innovation and technology 9 Energy 10 Process and chemical safety 11 Community support 12 Corporate governance 13 Quality assurance 14 Product stewardship 15 Digitalisation 16 Marketing 17 Biodiversity 18 Diversity and inclusion 19 Compliance 20 Information security and data privacy Materiality matrix High High Importance to stakeholders (impact) Importance to business (impact) High impact Moderate impact Low impact Low Moderate Low Moderate 17 18 19 20 15 16 14 9 11 12 10 13 6 5 3 2 1 8 7 4 Environmental Social Governance 11 Corporate Overview Performance Overview Governance Overview
Capitals Stakeholder engagement Operations of our Company directly or indirectly impact various sections of society. Business model of our Company places stakeholders – consumers, customers, team members, suppliers and business partners, planet, government, society and shareholders – at the core, and we endeavour to understand their evolving needs and expectations. This understanding empowers us to make informed decisions that builds trust and safeguards their interests and ensures sustained value creation across short, medium and long-term. We have identified eight stakeholder groups critical to our Company. Financial Manufactured Human Natural Intellectual Social and Relationship Consumers Customers Capital linkages Capital linkages Key interests and concerns Key interests and concerns Competitive costs On-time deliveries Product availability Product quality Sustainable products Digital transformation Knowledge support On-time deliveries Reliable services Return on investment Methods of engagement Advertisements In-person connect Product labels Technical services Website Methods of engagement CRM platform Distributor meets* Induction sessions (new distributors) In-person connect Performance reviews Frequency ongoing Frequency ongoing, once a year* Atul Ltd 12 Integrated Report 2023-24
Team members Suppliers and business partners Capital linkages Capital linkages Key interests and concerns Key interests and concerns Competitive remuneration Diversity and inclusion Learning, development and career growth Purpose at work Safe and secure workplace Fair selection process Knowledge support Mutually beneficial partnerships Shared commitment on responsible sourcing Timely payments Methods of engagement Communication* Engagement survey* Goal setting, performance reviews and feedbacks Intranet Learning and development programs Methods of engagement In-person connect Supplier evaluation and reviews Supplier meet* Supplier portal Website Frequency ongoing, once a year* Frequency ongoing, once a year* Atul site 13 Corporate Overview Performance Overview Governance Overview
Planet Government Capital linkages Capital linkages Key interests and concerns Key interests and concerns Pollutants decrease and treatment Protection of biodiversity Regeneration of nature Renewable energy Water harvesting and recycling Capacity and skill building Compliance to laws Contribution to exchequer Natural assets protection Product safety Methods of engagement Advocacy with relevant local and state authorities Engagement with communities Environment impact assessments Environment laboratory Products from pollutants (circular economy) Methods of engagement Advocacy through industry associations In-person connect Public-private partnerships Public hearings Statutory approvals Frequency ongoing Frequency ongoing Atul Ltd 14 Integrated Report 2023-24
Society Shareholders Capital linkages Capital linkages Key interests and concerns Key interests and concerns Education and empowerment Employment Environment protection Health Infrastructure development Business resilience and growth Communication Corporate governance Dividends Long-term value creation Methods of engagement Community feedback In-person connect Initiatives by and projects of Atul Foundation Need assessment surveys Partnerships with NGOs Methods of engagement Analyst meet* Annual general meeting* Annual report* Stock exchange filings Website Frequency ongoing Frequency ongoing, once a year* bird’s eye view of Atul site 15 Corporate Overview Performance Overview Governance Overview
Letter to the shareholders Even though our Company put up a sub-optimal performance in 2023-24 – standalone sales at ` 4,301 cr decreased by 14% from the hitherto highest of ` 5,002 cr achieved in 2022-23, standalone PBT at ` 510 cr decreased from ` 730 cr in 2022-23 and from ` 828 cr, the highest achieved in 2020-21, consolidated PBT at ` 451 cr was lower mainly because of loss of ` 32 cr incurred in Atul Products, a 100% subsidiary, consolidated PBT was also lower due to 50% impact of loss of ` 51 cr in Anaven, 50-50 joint venture (JV) with Nouryon and consolidated RoCE at 12% came down from 20% in 2022-23 and from 36%, the highest achieved in 2019-20 – I am confident that the above numbers and percentages will change for the better. In the midst of this slowdown in sales, I wish to share some of the positive developments: There was a growth in volume both at standalone level and consolidated level. Gross working capital tie-up decreased both at standalone and consolidated levels. Manufacturing related problems in two businesses which adversely impacted PBT have been overcome. Phosgene downstream products plant that was destroyed by fire in 2022-23, was rebuilt and commissioned. Crop Protection retail (CPR) generated PBT after eight years. CPR launched Sindica, a patented formulation. Polymers retail generated PBT after two years. The business introduced 10 new products. Atul Products that commissioned the facility to manufacture caustic chlorine stabilised its operations in June 2024. Atul Bioscience that incurred a loss in 2022-23 became PBT positive. Rudolf Atul Chemicals, 50-50 JV with Rudolf Group, achieved its highest sales and PBT. Amal that incurred a consolidated loss (after starting a new plant in its 100% subsidiary) in 2022-23 became PBT positive. Our defining goals are to enhance the financial and non-financial performance of our Company. In the short-term, we will like to realise sales of ` 800 cr from the investment of ` 600 cr in 10 projects made between 2021-22 and 2023-24, realise sales of ` 840 cr from the investment of ` 200 cr in a project starting in the 2nd quarter (Q) of 2024-25, Dear Shareholders, enhance combined sales of the subsidiary, JV and associate entities to their current potential of ` 1,100 cr, open hospital of Valsad Institute of Medical Sciences, a 50-50 JV with local medical practitioners, in the 3rd Q of 2024-25. It will take some time for the projects to reach high capacity utilisation. In addition, team Atul is working to institutionalise new ways of working across other functions. For example, the team in Commercial function has implemented five applications (iSourcing, iSupplier, Transport, Vehicle, Warehouse), Finance function has implemented Oracle Single Instance across all entities, HR function has articulated five world-class processes related to recruitment and learning and development, Research function has commissioned two pilot plants and a process engineering laboratory and Manufacturing and other functions have commenced a more structured approach to document the progress on ESG. The external environment continues to be uncertain, but certain trends short-term and long-term are clear. The two wars (Russia – Ukraine and Israel – Palestine) are having an adverse impact on input prices and freight cost. Many countries are levying anti-dumping duties on certain chemicals to protect local manufacturers. Where local demand is higher than local supply, such an action may only result in higher prices for the user industries. Shortage of hard currency in some countries of Africa and South America is impacting smooth business transactions. Chemical industry (US$ 6.1 t) and pharmaceutical industry (US$ 1.6 t) together are 7% of the world GDP (US$ 105 t). The share of India in world chemical industry and world pharmaceutical industry is just 3% and 6% respectively. ESG is becoming more relevant than ever before; solar and wind are becoming key sources of electricity. Our internal enduring mandates remain the same so as to face the ever-changing external environment: Achieve excellence in technology and manufacturing reflected through world-class, sustainable manufacturing. Pervade technology (digitalisation) in every function (not just manufacturing). Engage with consumers to understand future trends and ideas. Atul Ltd 16 Integrated Report 2023-24
Remain lean on fixed cost and conserve cash while evolving the future (measure performance by free cash flow). The financial position* of our Company even in these tumultuous times is strong; we are working to make it stronger: Our Company is debt-free; it has cash surplus of ` 269 cr (net of debt of its subsidiary and JV entities). Osia Infrastructure, a 100% subsidiary and Rudolf Atul Chemicals are debt-free. Atul Products has taken an external debt of ` 158 cr. Its debt equity ratio is 0.2. Atul Bioscience is expected to bring down its debt of ` 55 cr to ` 45 cr in 2024-25. Its debt equity is 0.8. DPD has a debt of £ 0.5 m and is expected to become debt-free in 2024-25. Its debt equity is 0.1. Atul Rajasthan Date Palms, 74-26 JV with the Government of Rajasthan, has a debt of 13 cr. Consolidated Amal, a 50% associate, has a debt of ` 19 cr; its debt equity is 0.3. A strong financial position will allow each entity to energetically seize emerging opportunities and implement new projects. Once we have streamlined the investment made in the last three fiscals, we will expand further by growing in selected downstream and upstream products, related products and new businesses, executing opportunities to acquire onemoremanufacturing | production base and investing further in the two retail businesses in India and beyond. In its own small way, Atul Foundation (AF) exemplified that a business must give back to the society more than it takes from it. 33,000 square feet Atul Foundation Healthcare Center was opened on June 26, 2023. After putting up a state-of-the-art waste management facility for Atul village, AF took up the same for 45 nearby villages. Atul Adhyapikas are now going to anganwadis (pre-primary) beyond their earlier mandate to teach at primary level. new team members - from campus to corporate The schools run by AF continued to deliver. One of the students of AV was in the first 1% of India in Class 12 exam. Performance of the two PPPs and the four ITIs managed by AF is considered excellent. Our Company Board is changing, and it is time to say ‘thank you’ and ‘welcome’. Mr Rajendra Shah, Mr Bansi Mehta, Mr Susim Datta and Mr Srinivasa Rangan retired after 41, 31, 21 and 13 years. My colleagues and I thank them for their astute guidance, insightful questioning and consistent contribution. Mr Rangaswamy Iyer, Mr Sharadchandra Abhyankar, Mr Sujal Shah and Mr Praveen Kadle were appointed as Independent Directors. We welcome the newly appointed Directors and look forward to their valuable inputs. The Board will recommend additional Independent Directors in the course of 2024-25. An understanding of the past shapes our existence, grounds our ideals and widens our vision. So we remind ourselves of the legacy of eternal and universal Values: integrity, perseverance and trusteeship and the attributes: bias for action, continuous improvements and learning agility left behind by the legendary Founder of our Company, Mr Kasturbhai Lalbhai. These Values and attributes will guide us on how we will work in the present to build our Company for the years ahead. I take this opportunity to thank you for your enduring trust in our Company - its best days are still ahead. Sincerely, Sunil Siddharth Lalbhai Chairman and Managing Director *as on June 30, 2024 What has changed? A lot and very little. On the one hand, a lot has changed in the larger world around us; daily life has changed drastically. On the other, very little has changed. Teamwork, for example, remains just the same ever since people started working together. Even so, teamwork can remain elusive and requires people with the courage to sit down with one another and accept the dissent and discomfort that is necessary to improve and innovate. This is the endeavour at Atul – to have and develop team members who understand and believe that teamwork is amongst the ultimate competitive advantages both because it is so powerful and so rare (and therefore nurture and promote it). Corporate Overview Performance Overview Governance Overview 17
Financial trend (standalone financials) short-term 2019-20 2020-21 2021-22 2022-23 2023-24 24.1% 922 27.5% 19.3% 953 17.9% 895 16.2% 696 950 EBITDA EBITDA % Earnings before interest, taxes, depreciation and amortisation (` cr ) (` cr ) Sales India Outside India Growth % 2019-20 2020-21 2021-22 2022-23 2023-24 3,824 4,929 3,460 5,002 4,301 48% 52% 46% 50% 50% 50% 50% 43% 57% (1%) (10%) 42% 1% (14%) 54% Sales by geography India North America Europe Africa Asia (excluding India) South America 2023-24 2022-23 57% 18% 9% 12% 2% 2% 23% 50% 4% 2% 8% 13% Expenses as % of revenue 2023-24 2022-23 53% 11% 7% 4% 7% 3% 4% 3% 12% 51% 6% 4% 3% 3% 6% 5% Raw materials Employees Others Depreciation Power, fuel and water Selling and distribution Repairs and maintenance Tax Atul Ltd 18 Integrated Report 2023-24
2019-20 2020-21 2021-22 2022-23 2023-24 2.81 2.16 2.56 2.35 1.65 904 1,273 1,056 1,346 1,654 104 800 277 374 899 268 1,078 493 1,161 779 (` cr ) Property, plant and equipment* Fixed Asset Turnover Ratio Additions during the year *as at March 31 (` cr ) 2019-20 2020-21 2021-22 2022-23 2023-24 269 286 314 457 356 Capital expenditure 2019-20 2020-21 2021-22 2022-23 2023-24 275% 640 200% 250% 608 325% 552 200% 385 631 Profit after tax and dividend Dividend % PAT (` cr ) Utilisation Sources Sources and utilisation cash (` cr ) 723 2022-23 2023-24 91 Operating cash flows Reduction in investments Other sources 63 388 909 2023-24 2022-23 Direct taxes Fixed assets Investment in group entities Buy back of equity share Dividend Surplus 344 196 38 74 62 100 552 449 177 96 86 Corporate Overview Performance Overview Governance Overview 19
Inventories* Inventories % to sales NoDs 2019-20 2020-21 2021-22 2022-23 2023-24 427 701 648 563 511 (` cr ) 11.2% 14.8% 14.2% 13.0% 13.1% 41 54 52 47 48 Trade receivables* Inventories % to sales NoDs *as at March 31 2019-20 2020-21 2021-22 2022-23 2023-24 (` cr ) 719 1,059 894 849 714 18.8 63 69 72 60 65 20.6 21.5 17.9 19.7 (` cr ) Net working capital and turnover ratio* Working capital Working capital turnover ratio 2019-20 2020-21 2021-22 2022-23 2023-24 624 893 1,112 1,144 859 6.12 3.87 4.43 4.37 5.01 *as at March 31 (` cr ) Return on average capital employed Average capital employed1 Return on average capital employed %2 2019-20 2020-21 2021-22 2022-23 2023-24 2,380 2,808 3,424 3,812 4,089 33.8% 29.6% 23.6% 19.2% 12.5% ¹ excluding capital work-in-progress | revaluation reserve ² excluding exceptional | non-recurring items *as at March 31 Atul Ltd 20 Integrated Report 2023-24
Payment to the exchequer 2019-20 2020-21 2021-22 2022-23 2023-24 640 698 948 914 774 (` cr ) Earnings per share and book value per share Earnings per share Book value per share 2019-20 2020-21 2021-22 2022-23 2023-24 216 1,035 213 1,254 205 1,459 187 1,555 130 1,728 (` cr ) Employee benefit expenses and sales per employee Employee benefit expenses Sales per employee 2019-20 2020-21 2021-22 2022-23 2023-24 249 276 301 321 1.31 1.16 1.62 1.57 1.34 249 (` cr ) Market capitalisation* *as at March 31 2019-20 2020-21 2021-22 2022-23 2023-24 11,791 20,935 30,440 20,544 16,894 (` cr ) Corporate Overview Performance Overview Governance Overview 21
Financial trend (standalone financials) long-term (` cr ) Particulars Ind AS 2023-24 2022-23 2021-22 2020-21 2019-20 2018-19 2017-18 2016-17 Operating results Net sales 4,301 5,002 4,929 3,460 3,824 3,845 3,052 2,639 Total income 4,492 5,261 5,083 3,616 3,983 3,947 3,186 2,891 EBITDA 696 895 953 950 922 768 511 512 Finance costs 2 2 3 2 2 4 9 21 EBTDA 694 893 950 948 920 764 502 491 Depreciation 184 163 146 120 117 112 105 91 Profit from operations¹ 510 730 804 828 803 652 397 400 Exceptional | Non-recurring items - - - - - - - - PBT 510 730 804 828 803 652 397 400 Tax 125 178 196 197 163 223 127 115 Net profit 385 552 608 631 640 429 270 285 Dividend (including DDT³)4 74 96 59 - 151 40 33 36 Financial position Gross block5 2,818 2,485 2,098 1,839 1,595 1,333 1,243 1,118 Net block5 1,871 1,702 1,446 1,295 1,139 988 989 965 Other assets (net) 3,229 2,893 2,943 2,416 1,931 1,662 1,209 1,111 Capital employed 5,100 4,595 4,389 3,711 3,070 2,650 2,198 2,076 Equity share capital 29 30 30 30 30 30 30 30 Other equity 5,060 4,560 4,286 3,681 3,040 2,620 2,168 1,891 Total equity 5,089 4,590 4,316 3,711 3,070 2,650 2,198 1,921 Borrowings (net) - - 73 - - - - 155 Per equity share (`) Dividend6 25.00 32.50 25.00 20.00 27.50 15.00 12.00 10.00 Book value 1,728 1,555 1,459 1,254 1,035 893 741 648 EPS 130.41 187.05 205.34 212.78 215.82 144.51 91.16 96.18 Key indicators EBITDA % 16.18 17.89 19.33 27.46 24.11 19.97 16.74 19.40 EBTDA % 16.14 17.85 19.27 27.40 24.06 19.87 16.45 18.61 PBT % 11.86 14.59 16.31 23.93 21.00 16.96 13.01 15.16 Employee cost % 7.46 6.02 5.60 7.20 6.51 5.70 5.93 6.56 Finance costs % 0.05 0.04 0.06 0.06 0.05 0.10 0.29 0.80 Operating cash flow | total revenue % 13.88 13.91 4.27 18.71 21.40 10.06 10.21 12.80 Asset turnover ratio7 1.65 2.35 2.56 2.16 2.81 3.04 2.60 2.44 RoCE %1 12.52 19.21 23.57 29.56 33.82 32.05 22.38 25.71 RoNW %1 7.96 12.40 15.15 18.61 22.38 17.70 13.11 16.23 Payment to exchequer 774 914 948 698 640 627 442 307 Notes: 1Excluding exceptional items | 2Relates to one-time dividend received, grouped as revenue but excluded from EBITDA above | 3Dividend distribution tax up to 2019-20 | 4Paid during the year | 5Including capital work-in-progress | 6Proposed | paid for the year | 7Excluding capital work-in-progress Atul Ltd 22 Integrated Report 2023-24
(` cr ) Particulars Schedule VI 2015-16 2014-15 2013-14 2012-13 2011-12 2010-11 2009-10 2008-09 Operating results Net sales 2,403 2,510 2,307 1,964 1,746 1,508 1,168 1,159 Total income 2,652 2,571 2,405 2,022 1,792 1,553 1,204 1,196 EBITDA 485 391 362 268 203 194 143 124 Finance costs 26 24 31 32 43 26 26 41 EBTDA 459 367 331 236 160 168 117 83 Depreciation 62 55 54 49 44 39 37 32 Profit from operations¹ 397 312 277 187 116 129 80 51 Exceptional | Non-recurring items 3 - 20 5 6 10 - (5) PBT 400 312 297 192 122 139 80 46 Tax 126 95 84 56 34 43 27 10 Net profit 274 217 213 136 88 96 53 36 Dividend (including DDT³)4 30 30 26 21 16 16 14 10 Financial position Gross block5 945 1,345 1,285 1,202 1,100 1,002 986 967 Net block5 883 578 573 526 474 420 424 443 Other assets (net) 1,011 719 719 585 550 474 355 384 Capital employed 1,894 1,297 1,292 1,111 1,024 894 779 827 Equity share capital 30 30 30 30 30 30 30 30 Other equity 1,562 986 911 726 612 537 454 429 Total equity 1,592 1,016 941 756 642 567 484 459 Borrowings (net) 302 281 351 355 382 327 295 368 Per equity share (`) Dividend6 10.00 8.50 7.50 6.00 4.50 4.50 4.00 3.00 Book value 537 343 317 255 216 191 163 155 EPS 92.53 73.30 71.74 45.69 29.70 30.34 19.15 12.77 Key indicators EBITDA % 20.18 15.58 15.69 13.65 11.63 12.86 12.24 10.70 EBTDA % 19.10 14.62 14.35 12.02 9.16 11.14 10.02 7.16 PBT % 16.52 12.43 12.01 9.52 6.64 8.55 6.85 4.40 Employee cost % 6.99 6.14 6.07 6.52 6.70 6.76 8.82 7.85 Finance costs % 1.08 0.96 1.34 1.63 2.46 1.72 2.23 3.54 Operating cash flow | total revenue % 14.13 12.33 5.86 8.24 6.73 3.88 8.86 17.23 Asset turnover ratio7 3.10 2.02 1.87 1.70 1.67 1.55 1.20 1.22 RoCE %1 30.91 26.76 26.04 21.04 16.93 18.46 13.09 11.19 RoNW %1 20.78 22.18 23.45 18.74 13.56 16.37 11.24 8.95 Payment to exchequer 335 305 267 212 191 167 99 101 Notes: 1Excluding exceptional items | 2Relates to one-time dividend received, grouped as revenue but excluded from EBITDA above | 3Dividend distribution tax | 4Paid during the year | 5Including capital work-in-progress | 6Proposed | paid for the year | 7Excluding capital work-in-progress Corporate Overview Performance Overview Governance Overview 23
Environment and Social highlights Environment 3,26,235 kL of water harvested 4,02,250 kL of fresh water consumption decrease 83,055 MT of waste recycled 25,920 tCO₂e of emissions decreased 109% increase in consumption of energy from renewable sources Zero liquid discharge plant Atul Ltd 24 Integrated Report 2023-24
Social 2,20,971 beneficiaries supported through initiatives of Atul Foundation 52,000 children nurtured with quality education in 240 villages 52,190 trees planted and conducted conservation activities in 83 villages 23 villages covered via three projects under infrastructure program 6,908 tribal youth empowered through vocational training institutes Women empowerment at Urmi Corporate Overview Performance Overview Governance Overview 25
Governance philosophy Integrity Working with honesty, following the highest standards of professionalism. Integrity is when our decisions and actions remain consistent with our thoughts and words, written or spoken. Understanding How well we work with others depends on our ways to connect and this in turn is based on our level of understanding of human relationships. This certainly does not mean that we accept poor performance, but that we do it the right way. Understanding is the external manifestation of internal realisation. Unity Working together and taking advantage of synergy while harnessing unique abilities of each of us to achieve a larger goal. Unity is the realisation that though we may work in different areas, we are finally interconnected, and that interdependence is a higher order of living than independence. Though we may be many, we share a common purpose. Responsibility Delivering value and taking ownership of actions. Responsibility must also give us the realisation that what is good for the business must be in the overall good. In essence, we must work with a spirit of trusteeship for the shareholders and other stakeholders. What comes to us must be returned many times over. Excellence A drive that is more from inside than outside; it is about us seeking to continuously improve and develop an eye for innovation even in day-to-day work. Excellence is about excelling in everything we do and not giving up. Excellence is also a journey, not simply a destination. The name ‘Atul’ is a unique asset, which represents a rich heritage of Values. In an environment where change is a way of life, continuity of Values provides stability and is fundamental to us. We have therefore formalised key Values and are committed to institutionalising them. We will seek to create an environment wherein these Values are consistently practised and nurtured and ensure that they are not compromised. Stakeholders Values As teammembers of a responsible corporate entity, we remain steadfast in our commitment to enhancing the governance framework to foster accountability and transparency. Our proactive efforts are to instil Values across our Company and endeavouring for sustained excellence in all that we undertake to create long-term value for the stakeholders. Consumers Planet Customers Government Team members Society Suppliers and business partners Shareholders Atul Ltd 26 Integrated Report 2023-24
Governance structure Our Company governance structure is multi-tiered, comprising the Board of Directors, Board Committees, CEO and the Management Committee. The Board is responsible for and committed to the principles of corporate governance in our Company. It discharges some of its responsibilities directly and others through the Board Committees. In addition to the Board Committees, the Board is supported by the CEO and Executive Directors. Board oversight Management Accountability Board of Directors Board Committees Audit Committee Corporate Social Responsibility Committee Investment Committee Nomination and Remuneration Committee Risk Management Committee Stakeholders Relationship Committee CEO, Executive Directors and Management Committee Board composition Executive Directors Promoters Executive Directors Independent Directors 100% Members of Audit Committee and Nomination and Remuneration Committee are Independent Directors 83% Committees are led by Independent Directors 18 % 18 % 64 % Corporate Overview Performance Overview Governance Overview 27
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 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. M M C M 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. M M 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 Member of the Institute of Chartered Accountants of India. C C Board of 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. 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. 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. M M Atul Ltd 28 Integrated 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. M C M M 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), the 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. M 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. M C M M C 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 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 Member of the Institute of Chartered Accountants of India. M 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 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. Mr Kadle holds a graduate 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. M Corporate Overview Performance Overview Governance Overview 29
ESG framework We have integrated environment, social and governance (ESG) framework into the business strategy of our Company based on our belief that ESG and financial performance make a business sustainable. We are continually working towards our ESG and financial objectives to make a positive difference to all the stakeholders. We constituted an internal ESG Committee on May 2, 2023 to discharge its responsibility to oversee the governance of ESG practices and ESG risks, thereby ensuring that the ESG agenda gets the requisite management attention and resources. ESG governance structure Board Risk Management Committee ESG Committee (internal) Functional leads water treatment plant, Atul site Atul Ltd 30 Integrated Report 2023-24
Risk framework Enterprise risk management (ERM) at Atul involves identifying, evaluating, prioritising, categorising, mitigating, monitoring and reporting principal risks through bottom-up and top-down approaches. The bottom-up approach engages businesses and cross-functional teams in risk identification and mitigation planning, while the top-down approach ensures comprehensive framework effectiveness and long-term risk strategising. Risks are categorised into major themes to prioritise mitigation strategies, overseen by an ERM council of Senior Management officials and the Risk Management Committee of the Board. Enterprise risk management Aims at understanding the diverse impact of risks and the degree of influence on their causes. It involves recognising various processes, identifying the root causes and gaining a clear understanding of risk associations. Risk governance structure Board of Directors Risk Management Committee Audit Committee Enterprise Risk Management Committee Risk identification Aims at discovering crucial risks and map out the root causes or contributing factors. Aims at addressing vital risks to limit their impact to a manageable level (within the stated risk appetite). It requires explicit action planning, assigning responsibilities and setting milestones. Risk mitigation Aims at providing the Audit Committee and the Board with regular information on risk profile changes and mitigation strategies. Risk reporting and oversight Aims at defining risk priorities and ownership of essential risks, assessing differing impacts considering risk appetite and existing mitigation measures. Risk categorisation Risk evaluation and prioritisation Corporate Overview Performance Overview Governance Overview 31
Directors Mr Sunil Lalbhai (Chairman and Managing Director) Mr Rajendra Shah (up to July 28, 2023) Mr Bansi Mehta (up to May 31, 2023) Mr Samveg Lalbhai (Managing Director) Mr Susim Datta (up to March 31, 2024) Mr Bharathy Mohanan (Whole-time Director and President - Utilities and Services) Mr Srinivasa Rangan (up to December 13, 2023) Mr Mukund Chitale Mr Gopi Kannan Thirukonda (Whole-time Director and CFO) Ms Shubhalakshmi Panse Mr Baldev Arora Mr Pradeep Banerjee Mr Rangaswamy Iyer (effective May 01, 2023) Mr Sharadchandra Abhyankar (effective October 20, 2023) Mr Sujal Shah (effective October 20, 2023) Mr Praveen Kadle (effective May 01, 2024) Company Secretary Mr Lalit Patni Statutory Auditors Deloitte Haskins & Sells LLP Cost Auditors R Nanabhoy & Co Secretarial Auditors SPANJ & Associates Registered office Atul House G I Patel Marg Ahmedabad 380 014, Gujarat India Head office Atul 396 020, Gujarat India E-mail address: sec@atul.co.in Website: www.atul.co.in Bankers Axis Bank Bank of Baroda Bank of India State Bank of India Corporate information Atul Ltd 32 Integrated Report 2023-24
RkJQdWJsaXNoZXIy MjA2MDI2