To
The Members of
AARTI PHARMALABS LIMITED (Formerly known as ‘Aarti Organics
Limited')
Your Directors present this Fourth Annual Report of your Company
("the Company" or "Aarti Pharmalabs Limited") together with the
Audited Financial Statements of the Company for the Financial Year ended March 31, 2023.
1. FINANCIAL HIGHLIGHTS & SUMMARY
Financial Highlights
` In lakhs except EPS and Book Value
| Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
| Total Income from Operations (Gross) |
1,51,125 |
94,102 |
1,94,523 |
1,19,994 |
| EBITDA |
30,962 |
18,230 |
34,437 |
20,946 |
| Depreciation & Amortisation |
5,577 |
3,723 |
6,254 |
4,212 |
| Profit from Operations before Other Income, Finance |
25,256 |
14,255 |
27,951 |
16,483 |
| Costs and Exceptional Items |
|
|
|
|
| Other Income |
128 |
251 |
232 |
251 |
| Profit before Finance Costs |
25,384 |
14,506 |
28,183 |
16,734 |
| Finance Costs |
2,049 |
1,134 |
2,105 |
1,196 |
| Profit before Tax |
23,336 |
13,373 |
26,077 |
15,538 |
| Total Tax Expenses |
6,163 |
2,700 |
6,728 |
3,313 |
| Non-controlling Interest |
0 |
0 |
0 |
0 |
| Net Profit for the period |
17,173 |
10,673 |
19,349 |
12,225 |
| Other Comprehensive Income (net of taxes) |
-70 |
707 |
-345 |
707 |
| Total Comprehensive income for the year |
17,103 |
11,379 |
19,005 |
12,932 |
| Earnings Per Share (`) (Basic & Diluted) |
18.95 |
11.78 |
21.35 |
13.49 |
| Book Value Per Share (`) |
159 |
142 |
172 |
153 |
Summary
Your Company reported Gross Total Income at ` 1,51,253 lakhs for FY
2022-23 as against ` 94,353 lakhs for FY 2021-22. Similarly the exports for the year were
at ` 66,307 lakhs for FY 2022-23 as against ` 40,391 lakhs for FY 2021-22.
Likewise the Consolidated Total income from operations for FY 2022-23
stood at ` 1,94,755 lakhs as compared to ` 1,20,246 lakhs for FY 2021-22 and exports for
FY 2022-23 was ` 79,298 lakhs v/s ` 48,059 lakhs for FY 2021-22.
Consolidated Financial Statements
In accordance with the provisions of Companies Act, 2013, Regulation 33
of the Listing Regulations, and applicable Accounting Standards, the Audited Consolidated
Financial Statements of the Company for the FY 2022-23, together with the Auditors'
Report, form part of this Annual Report.
2. TRANSFER TO RESERVES
Your Company has not transferred any amount to any Reserve for the
Financial Year 2022-23.
3. SUBSIDIARY COMPANIES
As on March 31, 2023, the Company has two (2) direct subsidiaries,
namely, Aarti Pharmachem Limited and Aarti USA Inc. These companies, which were erstwhile
subsidiaries of Aarti Industries Limited, became the subsidiaries of the Company pursuant
to the Scheme of Arrangement (‘Scheme') between Aarti Industries Limited and
Aarti Pharmalabs Limited and their respective shareholders. The Hon'ble National
Company Law Tribunal (‘NCLT'), Ahmedabad Bench, vide its order dated September
21, 2022 approved the Scheme.
Aarti USA Inc. has generated during the previous Financial Year more
than 10% of the consolidated income of the Company. Accordingly, the said Company is a
material subsidiary of the Company. Except Aarti USA Inc., the Company does not have any
material subsidiary whose net worth exceeds 10% of the consolidated net worth of the
Company in the immediately preceding accounting year or has generated 10% of the
consolidated income of the Company during the previous Financial Year. A policy on
material subsidiaries had been formulated and is available on the website of the Company
and the web link thereto is: https://www.aartipharmalabs.
com/investors/policy-on-determination-of-material-subsidiary-feb-2023.pdf During the year,
the Board of Directors reviewed the affairs of the subsidiaries. In accordance with
Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial
statements of the Company and all its subsidiaries, which form part of the Annual Report.
Further a statement containing salient features of the financial
statement of our Subsidiaries/Jointly controlled entity in the prescribed format
AOC–1 is included in the Report as Annexure-A and forms an integral part of
this Report.
4. SHARE CAPITAL
Your Company's Equity Share Capital as on March 31, 2023 was as
follows:
| Particulars |
No. of Shares |
Face Value Per Share (in `) |
Total Amount (in `) |
| Authorized |
10,00,00,000 |
5 |
50,00,00,000 |
| Share Capital |
|
|
|
| Issued, Subscribed & Paid-up Share Capital |
9,06,26,008 |
5 |
45,31,30,040 |
Pursuant to the Scheme of Arrangement (‘Scheme') for demerger
of pharma undertaking of Aarti Industries Limited into Aarti Pharmalabs Limited, which was
approved by the Hon'ble NCLT, Ahmedabad Bench vide its Order dated September 21,
2022, the authorised share capital was reorganized and increased from ` 50,00,000
(Rupees Fifty lakhs only) divided into 5,00,000 equity shares of ` 10 each to `
50,00,00,000 (Rupees Fifty Crores only) divided into 10,00,00,000 equity shares of ` 5
each.
Further, as per the Scheme, the initial issued and paid up equity share
capital of the Company, comprising 2,50,000 shares of ` 10/- each, aggregating to `
25,00,000/- was canceled. Further, as on October 21, 2022, i.e. Record Date determined
pursuant to the provisions of the Scheme, the Company had issued and allotted 1 (One)
Equity Share of ` 5/- each fully paid up of the Company for every 4 (Four) Equity shares
of ` 5/- each fully paid up held in Aarti Industries Limited (‘AIL') to each
member of AIL, whose name was recorded in the register of members of AIL as holding shares
on the Record Date. Pursuant to the said allotment of Equity Shares, the paid-up share
capital of the Company is ` 45,31,30,040/- consisting of 9,06,26,008 equity shares of `
5/- each.
During the year 2022-23, apart from the above, there was no change in
the authorized and paid up share capital of the Company.
5. STATE OF AFFAIRS
The state of your Company's affairs is given in the Management
Discussion and Analysis, which forms part of this Annual Report.
6. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
In accordance with the prevailing provisions of the Section 149 of the
Companies Act, 2013 read with Regulation 17 of the Listing Regulations, as amended from
time to time, as on March 31, 2023, the Board of Directors, comprises ten Directors (with
two Executive Directors, three Non-Executive Non-Independent and five Independent
Directors).
The composition of the Board of the Company was revised in view of the
listing of shares of the Company on the Stock Exchanges and the proposals were approved at
the Board Meeting held on October 17, 2022. Further, the said appointments were approved
by the Shareholders through Postal Ballot on January 10, 2023, as below;
1. Appointment as Non-Executive Independent Director of the Company of
the following persons;
| a. Shri Vinay Nayak, |
| b. Shri Bhavesh Vora, |
| c. Shri Vilas Gaikar, |
| d. Smt. Jeenal Savla, |
| e. Smt. Rupal Vora. |
2. Appointment of Shri Parimal Desai as Non-Executive Director of the
Company;
3. Appointment of Smt. Hetal Gogri Gala as Vice Chairperson and
Managing Director of the Company;
4. Appointment of Shri Narendra Salvi as Managing Director of the
Company;
In accordance with the regulatory requirements, Shri Rajendra V. Gogri
(DIN: 00061003), Non-Executive Director of the Company retires by rotation in the ensuing
Annual General Meeting and, being eligible, offers himself for re-appointment. The Board
recommends his re-appointment for the consideration of the Members.
Pursuant to Regulation 36 of the Listing Regulations read with
Secretarial Standard-2 on General Meetings, a brief profile of the Director proposed to be
re-appointed is made available, as an Annexure to the Notice of the Annual General
Meeting.
Pursuant to the provisions of Regulation 34(3) read with Schedule V to
the Listing Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia
(COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the
Secretarial Auditor of the Company, certifying that none of the Directors of the Company
have been debarred or disqualified from being appointed or continuing as Directors of
companies by the Securities and Exchange Board of India or by the Ministry of Corporate
Affairs or by any such statutory authority. The said Certificate is annexed to the
Corporate Governance Report of the Company for the Financial Year 2022-23.
Key Managerial Personnel
In accordance with the provisions of Section 203 of the Companies Act
2013 read with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
the Board at its meeting held on October 17, 2022, approved the appointment of the
following persons as the Company's Key Managerial Personnel effective from the even
date;
1. Managing Director;
a. Smt. Hetal Gogri Gala (additionally she has been designated as the
Vice Chairperson)
b. Shri Narendra J. Salvi
2. Shri Nikhil Natu, Company Secretary;
3. Shri Piyush Lakhani, Chief Financial Officer.
During the year under review, apart from the above, there was no change
in the Key Managerial Personnel of the Company.
7. INDEPENDENT DIRECTORS
Statement on declaration given by Independent Directors under
sub-section (6) of section 149
In accordance with Section 149(7) of the Companies Act, 2013, all
Independent Directors have given declarations that they meet the criteria of independence
as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the
Listing Regulations.
In the opinion of the Board of Directors, the Independent Directors
fulfill the conditions specified in Companies Act, 2013 read with the Rules made
thereunder as well as Listing Regulations and are independent from Management, hold the
highest degree of integrity and possess expertise in their respective fields with enormous
experience.
All the Independent Directors have complied with the Code for
Independent Directors prescribed in Schedule IV to the Companies Act, 2013.
All the Independent Directors of the Company have enrolled their names
in the ‘Independent Directors Data Bank' maintained by Indian Institute of
Corporate Affairs ("IICA").
Familiarisation Programme for Independent Directors
The Company has a Familiarisation programme for its Independent
Directors which is imparted at the time of appointment of an Independent Director on Board
as well as annually. During the year, the Independent Directors of the Company were
familiarised and the details of familiarization programmes imparted to them are placed on
the website of the Company and the web link thereto is:https://www.aartipharmalabs.com/
investors/familiarization-programme-fy2022-23.pdf
8. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the
information and explanations obtained by them, your Directors make the following
statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a. That in the preparation of the annual financial statements for the
year ended March 31, 2023, the applicable accounting standards have been followed along
with proper explanation relating to material departures, if any;
b. That the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and prudent so as
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. That the Directors had taken proper and sufficient care 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. That Directors have prepared the annual accounts on a going concern
basis;
e. The Directors had laid down internal financial controls to be
followed by the Company and that such internal financial controls are adequate and were
operating effectively;
f. The Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
9. MEETINGS
The Board of Directors met seven (7) times during the Financial Year
under review. The details of the number of meetings of the Board and its Committees held
during the Financial Year 2022-23 and the attendance of each Director/Member at these
meetings are provided in the Corporate Governance Report forming part of the Annual
Report. The intervening gap between the Board Meetings was within the period prescribed
under the Companies Act, 2013 and the Listing Regulations.
10. DIVIDEND
During the year, the Company has declared an Interim Dividend of ` 2/-
(@ 40%) each per share.Thus, the total payout towards Dividend was ` 1,812.52 lakhs
(Previous Year: Nil).
Your Board of Directors do not recommend a Final Dividend for the year
under review.
The dividend payout was in accordance with the Dividend Distribution
Policy which is available on the website of the Company.
Dividend Distribution Policy
As per Regulation 43A of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("Listing Regulations"), the top 1000 listed
companies shall formulate a Dividend Distribution Policy. Accordingly, the policy was
adopted to set out the parameters and circumstances that will be taken into account by the
Board in determining the distribution of dividend to its shareholders and/or retaining
profits earned by the
Company. The Policy is available on the website of the Company and the
web link thereto is: https://www.
aartipharmalabs.com/investors/dividend-distribution-policy-feb-2023.pdf
11. CORPORATE SOCIAL RESPONSIBILITY
Your Company through, Aarti Foundation and Dhanvallabh Charitable Trust
– Our CSR arms undertake community interventions to enhance the lives of the
communities. Besides our direct involvement, we partner with numerous implementing
agencies to carry out need assessment and make impactful interventions. Our Focus areas
during the year have been;
| Education & Skill Development |
| Childcare & Healthcare Facilities |
| Women Empowerment & Livelihood Opportunities |
| Cluster & Rural Development |
| Disaster Relief & Rehabilitation |
| Eradication of Hunger & Poverty |
| Water Conservation & Environment |
| Research & Development work for upliftment of |
| Society |
The detailed policy on Corporate Social Responsibility is available on
the website of the Company and the web link thereto is: https://www.aartipharmalabs.com/
investors/csr-policy-feb-2023.pdf.
A brief note on various CSR initiatives undertaken during the year
including the composition of the CSR Committee is presented in this Annual report. The CSR
annual report is annexed as Annexure-B and forms an integral part of the Report.
12. AUDIT COMMITTEE
The details of the composition of the Audit Committee, terms of
reference, meetings held, etc. are provided in the Corporate Governance Report, which
forms part of this Report. During the year, there were no cases where the Board had not
accepted any recommendation of the Audit Committee.
13. VIGIL MECHANISM/WHISTLE BLOWER POLICY
The Company has established a Vigil Mechanism and Whistle Blower Policy
for its Directors and Employees to report concerns about unethical behaviour, actual or
suspected fraud, actual or suspected leak of UPSI or violation of Company's Code of
Conduct. It also provides for adequate safeguards against the victimisation of employees
and allows direct access to the Chairperson of the Audit Committee in exceptional cases.
The said policy has been posted on the website of the Company and the web link thereto is:
https://www.aartipharmalabs. com/investors/vigil-mechanism-policy-feb-2023.pdf
The Company affirms that no person has been denied access to the Audit
Committee Chairman.
14. RELATED PARTY TRANSACTIONS
The Company has a Policy on Materiality of Related Party Transactions
and dealing with Related Party Transactions which is uploaded on the Company's
website at the web-link given below: https://www.
aartipharmalabs.com/investors/rpt-policy-feb-2023.pdf
All related party transactions that were entered into during the FY
2022-23 were on arm's length basis and were carried out in the ordinary course of the
business. There are no materially significant related party transactions made by the
Company with Promoters, Key Managerial Personnel or other Designated Persons which may
have potential conflict with interest of the Company at large.
The related party transactions are approved by the Audit Committee.
Omnibus approval is obtained for the transactions which are foreseen and repetitive in
nature. A statement of related party transactions is presented before the Audit Committee
on a quarterly basis, specifying the nature, value and terms and conditions of
transactions. A report of factual findings arising out of the accepted procedures carried
out in regard to transactions with Related Parties is given by the Statutory Auditors on
quarterly basis and the same is placed before the Audit Committee.
The details of related party transactions are provided in the
accompanying financial statements.
Particulars of contracts or arrangements made with related parties
Since all related party transactions entered into by the Company were
in ordinary course of business and were on an arm's length's basis, Form
AOC–2 is not applicable to Company.
15. BANK LOAN FACILITIES
Your Company continues to manage its treasury operations efficiently
and has been able to borrow funds for its operations at competitive rates. During the
Financial Year, your Company had below rating for its bank loan facilities of ` 400
Crores, which were revalidated from time to time:
| Rating Agency |
CRISIL Rating Limited |
| Rating |
CRISIL A+/ Stable (Assigned) |
16. DEPOSITS
Your Company has not accepted any deposits covered under Chapter V of
the Companies Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the
Companies (Acceptance of Deposits) Rules, 2014)], during the Financial Year 2022-23.
17. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
The particulars of loans given, investments made, guarantees given and
securities provided during the year under review and as covered under the provisions of
Section 186 of the Companies Act, 2013 have been disclosed in the notes to the standalone
financial statements forming part of the Annual Report.
18. PARTICULARS OF EMPLOYEES
The statement containing particulars of employees as required under
Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure
and forms part of this Report. In terms of Section 136(1) of the Companies Act, 2013, the
Report and the Accounts are being sent to the Members excluding the aforesaid Annexure.
Any Member interested in obtaining a copy of the Annexure may write to the Company
Secretary at the Registered Office of the Company for a copy of it.
Material Developments in Human Resources/Industrial Relations Front,
including number of people Employed
At APL, our focus is "Right person for right job at right
time", keeping this in mind we recruit people with the relevant experience and
academic background and ensure long term engagement brings results in win-win situations
for both employees as well as the organisation. We believe our people are assets in the
organisation and invest quality time in nurturing their talent, improving productivity
consistently and providing growth paths for them. People at APL are proud of their
association with the company.
At APL, employee well-being and growth form the core of everything we
do and we consistently strive to co-create culture that help us in building a world-class
experience for our people. We have many cases of promotion from within. Employees have
joined as a Fresher and grown as a Functional leader over a period taking functional
responsibilities, over a period of time. We identify potential employees for future
leadership and provide them the platform for growth, putting them on fast-track This has
helped strengthening employees bonding thus during the last year employee turnover has
come down by ~ 1% i.e. from 11.81% in the year 2020-21 to 11.08% in the year 2022-23. To
meet our growth aspirations, we on-boarded around 397 bright talents during the last year
and created various growth avenues for our internal talent, thus accomplishing 7% internal
growth transitions in FY 2021-22.
We believe fairness and equal treatment to all the employees across the
organisation. We have well defined performance evaluation and rewarding systems. We
consistently foster performance culture. We identify the training needs during the PMS and
plan for the necessary training during the year and monitor the same through annual
training calendar. The basic philosophy is organisation grows if the people grow.
We also enter into an agreement with our Union Employees from time to
time; maintain a healthy and peaceful environment. We recognise the right of employees of
collective bargaining.
Recognition and Reward for Bright Stars – "Employee of the
Month"
Employees play pivotal role ensuring success of the organisation.
Nurturing their talent, innovations, rewarding and recognising their contributions
appropriately encourages employees to give their best to the organisation. Every month
Recognition and Reward Committee assess the deserving employees based upon their
contributions / suggestions for bringing effectiveness in the processes with respect to
productivity improvement, innovation and self- initiatives etc.
Skills & Capability Building Initiative
Highly skilled employee is an integral part to meet with changing
business needs. The best results of employees' endeavour will determine the
excellence in Product Quality and Services to the customer. We have invested 16000
man-hours on Skills and Competencies building programme, enabling employees to meet with
future challenges. Also the special Skill development programme is designed for Operative
Staff focussed with the right combination of knowledge and practical execution based
curriculum.
Employee Engagement
Engaged workforce is the most productive source for the organisation in
their success, delivering the best of their abilities with greater sense of belongingness
and commitment at their jobs. We at APL believe every small step contributes value to
employees' Work-Life-Balance. Celebrating employees' special moments (Birthdays
/ Anniversary / Regional Festivals), extending support to foster intellectual growth
through various Learning and Development initiatives to nurture conviviality and happiness
culture at workplace.
19. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL
POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS
FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT
There were no other material changes and commitments affecting the
financial position of the Company, which had occurred between the end of the Financial
Year to which these financial statements relate and the date of the Report.
20. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013 read
with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the
Rules') all unpaid or unclaimed dividends are required to be transferred by the
Company to the IEPF established by the Government of India, after the completion of seven
years. Further, according to the rules, the shares on which Dividend has not been paid and
claimed by the Shareholders for seven consecutive years or more shall be transferred to
the Demat account of the IEPF Authority. While no amount was required to be transferred to
the IEPF, since the Company was incorporated in the year 2019 and the first dividend was
paid by the Company in the current FY. However, pursuant to the Scheme, the proportionate
number of shares (i.e. 313,656 shares) held by the shareholders of Aarti Industries
Limited, which were lying in the IEPF account, were credited to the IEPF demat account by
the Company. Further, an amount of ` 614,621 (net of TDS) towards Interim Dividend for
Financial Year 2022-23 accrued on the said number of shares was also credited to the
designated Bank Account of the IEPF Authority.
21. ANNUAL RETURN
Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies
Act, 2013, the Annual Return as on March 31, 2023 is available in prescribed format on the
Company's website on www.aartipharmalabs.com.
22. CORPORATE GOVERNANCE
Corporate Governance essentially involves balancing the interests of a
Company's stakeholders. The Company continues to nurture a culture of good governance
practices across functions, offices and manufacturing facilities.
Your Company has complied with the mandatory Corporate Governance
requirements stipulated under the Listing Regulations. The separate Report on Corporate
Governance is annexed hereto forming part of this Report. The requisite certificate from
Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate
Governance.
23. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Pursuant to Regulation 34 read with Schedule V to the Listing
Regulations, Management's Discussion and Analysis for the year under review is
presented in a separate section forming part of the Annual Report.
24. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTING (BRSR)
The Listing Regulations mandate the inclusion of the Business
Responsibility & Sustainability Reporting as part of the Annual Report for top 1000
listed entities based on market capitalisation. BRSR for the year under review, as
stipulated under Regulation 34(f) of Listing Regulations read with SEBI Circular No.
SEBI/HO/CFD/ CMD-2/P/CIR/2021/562 dated May 10, 2021 is in a separate section forming part
of the Annual Report.
25. ANNUAL BOARD EVALUATION
Pursuant to the provisions of Companies Act, 2013 and the Listing
Regulations, a structured questionnaire was prepared after taking into consideration
various aspects of the Board's functioning, composition of the Board and its
Committees, culture, execution and performance of specific duties, obligations and
governance.
The performance of the Committees and Independent Directors were
evaluated by the entire Board of Directors except for the Director being evaluated. The
performance evaluation of the Chairman, Non-Independent Directors and Board as a whole was
carried out by the Independent Directors. The Board of Directors expressed their
satisfaction with the outcome of evaluation and the process followed thereof.
26. NOMINATION AND REMUNERATION POLICY
Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of
the Listing Regulations, your Company has in place a Nomination and Remuneration Policy
which lays down a framework in relation to remuneration of Directors, Key Managerial
Personnel and Senior Management of the Company. The Policy also lays down criteria for
selection and appointment of Board Members. The said policy has been posted on the website
of the Company and the web link thereto is:
https://www.aartipharmalabs.com/investors/ nomination-and-remuneration-policy-feb-2023.pdf
The details of this policy are given in the Corporate Governance
Report.
27. RISK MANAGEMENT
Your Company recognises that risk is an integral and unavoidable
component of business and is committed to managing the risk in a proactive and effective
manner. The Company aims to use risk management to take better informed decisions and
improve the probability of achieving its strategic and operational objectives.
In compliance with Regulation 21 of Listing Regulations, your Company
has a Risk Management Committee consisting of Shri Rashesh Gogri (Chairman), Smt. Hetal
Gogri Gala, Shri Narendra J. Salvi, Shri Rajendra Gogri, Shri Parimal Desai and Dr. Vinay
Nayak. The Committee through its risk management framework continuously identifies,
evaluates and takes appropriate measures to mitigate/minimize various elements of risks.
The Risk Management Committee periodically, to ensure that appropriate methodologies,
processes and systems are in place to monitor and evaluate risks associated with the
business of the Company and also to monitor and oversee the implementation of the Risk
Management Policy.
The said policy has been posted on the website of the Company and the
web link thereto is: https:// www.aartipharmalabs.com/investors/APL_Risk%20
Management%20Policy.pdf
28. COMPLIANCE MANAGEMENT SYSTEM
The Company with its sheer focus is committed to achieve 100%
compliance. We have adopted a third-party managed IT-based Compliance Management System.
It has a repository of all applicable regulations and requisite compliances. It has an
in-built alert system that intimates concerned personnel about upcoming compliances.
29. HEALTH AND SAFETY:
Your Company is committed to maintain the world-class standards of
health, safety, security, human rights, environment protection, product quality and
processes, while conducting all its business operations, services, and expansion
activities. In its pursuit of the said objectives, the Company has been investing heavily
in areas such as Process Automation for increased safety and reduction of human error
element, enhanced level of training on Process and Behaviour based safety requirements,
adoption of expensive but safe & environment friendly production processes,
installation of bioreactors, chemical ROs, multiple effect evaporator, MVR, latest PVA gel
technology and so on to ensure the improvement in Reduction, Quality/Recovery and Reuse of
effluents & other utilities.
Aarti Pharmalabs Limited has implemented comprehensive safety programs
for its employees, including training on chemical handling, personal protective equipment
(PPE) usage, and emergency response. The Company conducts safety drills, safety audits,
and safety inspections to identify and mitigate potential hazards at the workplace,
ensuring a safe working environment for its employees.
Safety Performance Leading Indicators
The Company has established Process Hazard Analysis (PHA), which
involves analysing processes to identify potential hazards and determine ways to minimise
or eliminate them during R&D level. Besides, powder safety is ensured by us, which
involves taking necessary precautions when handling powder-based materials such as dust or
combustible liquids. The Company has achieved more than 98% compliance in powder safety
during the year under review.
The Company performs cross site audits, which involve auditing various
sites for compliance with safety regulations and standards. Such audit engagements help
improve safety standards by identifying potential hazards & improves skill of EHS
professionals across the Company. The Company had performed a Regulatory Audit (in EHS) by
a third party during the year under review. Further, the Company has established the
‘Near Miss Reporting' with the help of advanced technologies to eliminate
potential risk which may result in an incident.
With a view to ensure safety and well-being of our people, the Company
has developed and adopted a robust, comprehensive and reliable Occupational Health and
Safety Management System under Aarti Pharma Management System. All our employees, contract
employees and visitors are covered under the Company's Occupational Health and Safety
Management System.
Process Safety Management
APL has well established process safety procedures, practices and
systems to evaluate the risk associated with manufacturing processes of hazardous
chemicals. The Chemical Reaction Hazard and Fire & Explosion Hazard testing data
required for interpretation and informed decision-making during plant design and
processing are generated in house through developed in-house infrastructure and
capability. Besides, the Company conducts Powder Safety studies eg. MIE, MIT, LIT, Powder
Resistivity, etc., for all new and existing powder handling operations. The Company has a
centralised Process Safety Lab consisting of Reaction Calorimeter (RC1e) and two Thermals
Screening Units (TSu). During the year under review, a total 1,618 TSu samples were
analysed and 176 RC1e tests were performed.
Customer Health & Safety
The Health and Safety of our Customer is of paramount importance and
wearecommitted towards it.The Company follows GHS labelling and MSDS for documenting and
communicating product specifications, hazards, and mitigation measures. Besides, APL
subscribes to the best practices prescribed by the European Union's Registration,
Evaluation, Authorization and Restriction of Chemicals (REACH) regulations. During the
year under review, we did not receive any major complaint for health and safety issues
from our customers.
Contractor Health & Safety
With a view to ensure our Contractor's Health & Safety, the
Company has established the following checks;
- Thorough screening and evaluation of Contractors for medical fitness
before permitting them to commence work,
- Imparting Training to the Contractors so that they understand the
safety protocols that need to be followed while at work,
- Implementation of Work permit system so that only authorised
personnel can access the site and perform their duties safely.
ENVIRONMENT
Energy Conservation & Consumption
During the year under review, our consumption of energy from both
renewable and non-renewable sources was 250,463 GJ. Of the total energy used in our
manufacturing plants and R&D center, 3.5% comes from renewable sources. We have also
started switching over from furnace oil to cleaner fuel for several of our facilities. To
further reduce dependency on fossil fuels, we are planning to install solar power panels
at almost all our facilities.
Hazardous Waste Management
All hazardous and non hazardous wastes generated from our facilities
are segregated, recovered, recycled and disposed as per their individual characteristics,
in compliance with all regulations.
Water & Wastewater Management
Our total water consumption for FY 2022-23 was 716,243 KL, including
both fresh and recycled/recovered water. Out of our total water consumption, over 43.5% is
recycled water and our primary source of the freshwater is industrial bodies.
The Company continuously improves its wastewater management and output.
We have installed wastewater treatment plants and water recovery plants consisting of
state-of-the-art reverse osmosis units (RO), multiple-effect evaporators (MEEs) and
agitated thin film dryers (ATFD) to recover water from the wastewater. Further, a zero
liquid discharge policy across all units has been adopted.
Product End Life
The Company has a complete process of handling the product at the end
of life. Every product which is manufactured at our facility has defined shelf life based
on the study carried out at our R&D. We support our customer, if requested, in
treatment of the product at the end of its shelf life. During the FY 2022-23, there were
zero cases of product end life treatment and hence there was no environmental impact.
30. STATUTORY AUDITORS & AUDITORS' REPORT
During the year under review, Jatin Vora & Associates Chartered
Accountants (Firm Registration No: 118024W), had expressed their inability to continue as
the Statutory Auditor of the Company, since the firm was not subject to ‘peer
review' and thereby, not eligible to be appointed as Statutory Auditor of a listed
company. Thus, the Board of Directors at their meeting held on November 29, 2022 had
appointed Gokhale & Sathe, Chartered Accountants (Firm Registration No. 103264W), as
Statutory Auditors of the Company to fill the casual vacancy caused by the resignation of
Jatin Vora & Associates. Further, the appointment of Gokhale & Sathe, Chartered
Accountants was approved by the Shareholders through Postal Ballot on January 10, 2023,
such that they would hold the office until the conclusion of the ensuing Annual General
Meeting.
In view of the above, the Board on the recommendation of the Audit
Committee has recommended the appointment of Gokhale & Sathe, Chartered Accountants
(Firm Registration. No. 103264W) as the Statutory Auditors of the Company to hold office
from the conclusion of this Annual General Meeting till the conclusion of 9th Annual
General Meeting to be held in 2028. At the request of the Company, Gokhale & Sathe
have communicated their eligibility and willingness to accept the office, if appointed.
The members are requested to appoint Auditors and to fix their remuneration as mentioned
at Item No. 3 of the notice.
There are no qualifications, reservations or adverse remarks or
disclaimer made by the Auditor in their Report. The Auditors of the Company have not
reported any instances of fraud committed against the Company by its officers or employees
as specified under Section 143(12) of the Companies Act, 2013.
31. COST AUDITORS & RECORDS
In terms of the Section 148 of the Companies Act, 2013 read with the
Companies (Cost Record and Audit) Rules, 2014, the Company is required to maintain cost
accounting records and have them audited every year.
The Board accordingly, has appointed Ketki D. Visariya, Cost
Accountants, (Membership No. 16028) as the "Cost Auditors" of the Company for FY
2023-24. The remuneration payable to the Cost Auditor is required to be placed before the
Members in a General Meeting for their approval. Accordingly, a resolution for seeking
Member's approval for the remuneration payable to Ketki D. Visariya, Cost
Accountants, is included at Item No. 4 of the Notice convening the Annual General Meeting
in terms of Rule 14 of the Companies (Audit & Auditors) Rules, 2014.
The Company has maintained cost records as specified under section
148(1) of the Act.
32. SECRETARIAL AUDITOR & REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and rules made thereunder, the Company had appointed CS Sunil M. Dedhia (COP No. 2031),
Proprietor of Sunil M. Dedhia & Co., Company Secretary in Practice to undertake the
Secretarial Audit of the Company.
Pursuant to provisions of Section 204(1) of the Companies Act, 2013 and
Regulation 24A of the Listing Regulations, the Secretarial Audit Report for the Financial
Year ended March 31, 2023 issued by CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia
& Co. Company Secretary in Practice and the Secretarial Auditor of the Company is
annexed as Annexure-C and forms an integral part of this Report. During the year
under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of
the Act.
There is no qualification, reservation or adverse remark or disclaimer
made by the Auditor in their report. As regards the observations of the Secretarial
Auditor in their Report, the same is self explanatory and need no further clarifications.
33. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has clearly laid down policies, guidelines and procedures
that form part of internal control systems, which provide for automatic checks and
balances. Your Company has maintained a proper and adequate system of internal controls.
The Company has appointed Manish Modi and Associates as an Internal Auditor who
periodically audits the adequacy and effectiveness of the internal controls laid down by
the Management and suggests improvements. This ensures that all Assets are safeguarded and
protected against loss from unauthorised use or disposition and that the transactions are
authorised, recorded and reported diligently. Your Company's internal control systems
are commensurate with the nature and size of its business operations. Internal Financial
Controls are evaluated and Internal Auditors' Reports are regularly reviewed by the
Audit Committee of the Board. The Statutory Auditors Report on Internal Financial Controls
as required under Clause (i) of sub-section 3 of Section 143 of the Companies Act, 2013 is
annexed with the Independent Auditors' Report.
34. SECRETARIAL STANDARDS COMPLIANCE
During the year under review, the Company has complied with all the
applicable Secretarial Standards issued by the Institute of Company Secretaries of India
and approved by the Central Government pursuant to Section 118 of the Companies Act, 2013.
35. NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL UNDER SECTION 22
OF THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL)
ACT, 2013
Our Company is fully committed to uphold and maintain the dignity of
every woman working with the Company. The Company has Zero tolerance towards any action on
the part of any one which may fall under the ambit of ‘Sexual Harassment at
workplace'. The Policy framed by the Company in this regard provides for protection
against sexual harassment of women at workplace and for prevention and redressal of such
complaints.
Internal Complaints Committees (ICC) has been set up to redress
complaints received regarding sexual harassment at each location and meetings are held
periodically and records are maintained in prescribed format.
Status of the Complaints during the FY 2022-23 is as follows:
| Particulars |
No. of Complaints |
| Number of Complaints pending as on beginning of the Financial
Year |
0 |
| Number of Complaints filed and resolved during the Financial
Year |
0 |
| Number of Complaints pending as on the end of the Financial
Year |
0 |
The Company has complied with the provisions relating to the
constitution of Internal Complaints Committee under the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
36. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Particulars relating to conservation of energy, technology absorption,
foreign exchange earnings and outgo required under Section 134(3)(m) of the Companies Act,
2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to
time, are provided in Annexure–D to this report.
37. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
During the year, the Hon'ble National Company Law Tribunal (NCLT),
Ahmedabad Bench vide its order dated September 21, 2022 approved the Scheme of Arrangement
(Scheme) between Aarti Industries Limited (Demerged Company) and Aarti Pharmalabs Limited
(Resulting Company) and their respective shareholders under the provisions of Section
230-232 of Companies Act, 2013.
38. DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE
INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE FINANCIAL YEAR ALONGWITH THEIR STATUS AS
AT THE END OF THE FINANCIAL YEAR
During the FY 2022-23, there was no application made and proceeding
initiated / pending by any Financial and/or Operational Creditors against your Company
under the Insolvency and Bankruptcy Code, 2016 ("the Code").
Further, there is no application or proceeding pending against your
Company under the Code.
39. DETAILS OF DIFFERENCE BETWEEN THE AMOUNT OF VALUATION AT THE TIME
OF ONETIME SETTLEMENT AND THE VALUATION DONE AT THE TIME OF TAKING A LOAN FROM THE BANKS
OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF
During the Financial Year 2022-23, the Company has not made any
settlement with its bankers for any loan/ facility availed or/and still in existence.
ACKNOWLEDGEMENT
The Board of Directors place on record its sincere appreciation for the
dedicated services rendered by the employees of the Company at all levels and the
constructive cooperation extended by them. Your Directors would like to express their
grateful appreciation for the assistance and support by all Shareholders, Government
Authorities, Auditors, Financial Institutions, Customers, Employees, Suppliers, other
business associates and various other stakeholders.
|
For and on behalf of the Board |
|
Hetal Gogri Gala |
|
Vice Chairperson and |
| Place: Mumbai |
Managing Directors |
| Date: August 5, 2023 |
DIN:00005499 |
|