SENSEX NIFTY
Aarti Industries Directors Report, Aarti Ind Reports by Directors
YOU ARE HERE > MONEYCONTROL > MARKETS > CHEMICALS > DIRECTORS REPORT - Aarti Industries
Aarti Industries
BSE: 524208|NSE: AARTIIND|ISIN: INE769A01020|SECTOR: Chemicals
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
Aug 04, 13:49
397.90
-19.9 (-4.76%)
VOLUME 24,472
LIVE
NSE
Aug 04, 13:49
398.00
-19.8 (-4.74%)
VOLUME 109,656
Download Annual Report PDF Format 2015 | 2014 | 2013 | 2012 | 2011 | 2010
Directors Report Year End : Mar '15    « Mar 14
Dear Members,
 
 The Directors are pleased to present this Thirty Second Annual Report
 and the Audited Statement of Accounts for the year ended 31st March,
 2015.
 
 FINANCIAL RESULTS (RS. in Crores)
 
 
                                                      Standalone 
 
 Particulars                                    2014-15          2013-14
 
 Net Sales                                        2,824            2,599
 
 Other Operating Income                              47               34
 
 Total Income from Operations (Net)               2,871            2,633
 
 Expenses
 
 a) Cost of Material Consumed                     1,646            1,631
 
 b) Purchases of Stock-in-trade                     132              117 
 
 c) Changes in inventories of Finished Goods,        17             (62) 
    Work-in-progress and Stock-in-trade
 
 d) Employee Benefits Expenses                       90               76
 
 e) Depreciation and Amortisation Expenses           79               87 
 
 f) Other Expenses                                  529              476
 
 Total Expenses                                   2,493            2,325
 
 Profit/(Loss) from Operations before Other 
 Income, Finance Costs and Exceptional Items        378              308
 
 Other Income/Exceptional Items                       5               10
 
 Profit/(Loss) before Finance Costs                 383              318 
 
 Finance Costs                                      137              118
 
 Profit/(Loss) before Tax                           246              201
 
 Tax Expenses
 
 a) Provision for Taxation-Current                   40               38
    (net of MAT entitlement)
 
 b) Provision for Deferred Tax                       18               14 
 
 Total Tax Expenses                                  58               52
 
 Share of Profit/(Loss) of Associates                 -                -
 
 Minority Interest                                    -                -
 
 Net Profit/(Loss) after consolidation              188              149
 
 Earnings Per Share (RS.)                         21.20            16.78
 
 Book Value Per Share (RS.)                      102.47            87.90
 
 
 
                                                     Consolidated
 
 Particulars                                    2014-15          2013-14
 
 Net Sales                                        2,861            2,598
 
 Other Operating Income                              47               34
 
 Total Income from Operations (Net)               2,908            2,632
 
 Expenses
 
 a) Cost of Material Consumed                     1,644            1,630
 
 b) Purchases of Stock-in-trade                     171              117
 
 c) Changes in inventories of Finished Goods,        17             (62)
    Work-in-progress and Stock-in-trade
 
 d) Employee Benefits Expenses                       94               79
 
 e) Depreciation and Amortisation Expenses           82               88
 
 f) Other Expenses                                  516              467
 
 Total Expenses                                   2,524            2,319
 
 Profit/(Loss) from Operations before Other         384              313
 Income, Finance Costs and Exceptional Items
 
 Other Income/Exceptional Items                       9               11
 
 Profit/(Loss) before Finance Costs                 393              324
 
 Finance Costs                                      138              118
 
 Profit/(Loss) before Tax                           255              206
 
 Tax Expenses 
 
 a) Provision for Taxation-Current                   43               40
    (net of MAT entitlement)
 
 b) Provision for Deferred Tax                       18               14
 
 Total Tax Expenses                                  61               54
 
 Share of Profit/(Loss) of Associates                14               11
 
 Minority Interest                                  (2)              (1)
 
 Net Profit/(Loss) after consolidation              206              162
 
 Earnings Per Share (RS.)                         23.24            18.34
 
 Book Value Per Share (RS.)                      114.73            98.29
 
 DIVIDEND
 
 Your Company had declared and paid Interim Dividends of RS. 3.75 ps. (@
 75%) per share (of RS. 5/- each). Your directors are pleased to
 recommend a Final Dividend of RS. 1.75 ps. (@ 35%) per share (of RS.
 5/- each) for the Financial Year 2014-15, aggregating to the Total
 Dividend of RS. 5.50 ps. (@ 110%) per share (of RS. 5/- each) for the
 Financial Year 2014-15 compared to the Total Dividend of RS. 4.50 ps.
 (@ 90%) per share (of RS. 5/- each) for the Financial Year 2013-14. The
 total amount of Dividend pay-out for the year would be RS. 48.73 Crores
 (Previous Year: RS. 39.87 Crores).
 
 Your Company has transferred RS. 19.00 Crores to General Reserve
 (Previous Year: RS. 14.90 Crores) and RS. 30.00 Crores to Debenture
 Redemption Reserve (Previous Year: Nil).
 
 FINANCIALS
 
 Your Company is pleased to report continuation of its growth momentum.
 Inspite of the inventory losses due to sharp decline in input prices
 (trailing the fall in crude prices), your Company had been able to
 present the growth in bottom line by over 25%.
 
 Your Company''s Total Income stood at RS. 2,871 Crores, up by 9% as
 compared to RS. 2,633 Crores in Financial Year 2013-14. Operating
 Profit rose by 15% to RS. 456 Crores for Financial Year 2014-15 as
 compared to RS. 395 Crores for Financial Year 2013-14. Operating
 Margins increased from 15% for Financial Year 2013-14 to about 16% for
 Financial Year 2014-15.
 
 Net Profit Before Tax rose by 22% to RS. 246 Crores in Financial Year
 2014-15 as compared to RS. 201 Crores in Financial Year 2013-14.
 Likewise, Net Profit after Tax & Deferred Tax also grew by 26% to RS.
 188 Crores in Financial Year 2014-15 as compared to RS. 149 Crores in
 Financial Year 2013-14.
 
 On a Consolidated basis, your Company''s Total Income stood at RS. 2,908
 Crores, up by 10% as compared to RS. 2,633 Crores in Financial Year
 2013-14. Operating Profit (before other income) rose by 16% to RS. 466
 Crores as compared to RS. 402 Crores in Financial Year 2013-14.
 Similarly, Net Profit after consolidation grew by 27% to RS. 206 Crores
 in Financial Year 2014-15 as compared to RS. 162 Crores in Financial
 Year 2013-14. Likewise, Consolidated EPS surged by about 27% at RS.
 23.24 for Financial Year 2014-15, as compared to RS. 18.34 for
 Financial Year 2013-14.
 
 With these stable and consistent performances, the Consolidated Profits
 for your Company had surpassed RS. 200 Crores mark. After going Public
 in 1992, your Company had been able to achieve and cross the historic
 RS. 100 Crores consolidated profits in Financial Year 2011-12 and in
 next three years'' time your Company has been able to double the same.
 With these numbers, the consolidated profits have grown for last 5
 years at a CAGR of about 26%, while the revenues have grown at a CAGR
 of about 19% during the same period. A large part of this growth is on
 account of increased volumes from global markets.
 
 CHEMICAL INDUSTRY - STRUCTURE & DEVELOPMENT
 
 Speciality Chemicals are a group of high value, low volume chemicals
 formulated for developing/enhancing properties of specific products.
 The customised product requires special technologies, process expertise
 and understanding of client needs, and so the industry typically
 commands limited competition, yielding higher gross margins and returns
 than other chemical sub-segments.
 
 The Global Speciality Chemicals market is growing at a fast pace.
 Despite the economic recession, it has recovered and is showing signs
 of high growth in the future. According to Tech Navio Analysis, the
 Global Speciality Chemicals
 
 market is expected to grow at a CAGR of 5.16% during the period
 2013-2018 and reach US 0.9 billion by 2018 (from US$ 619.0 billion
 in 2014).
 
 Industry Segmentation
 
 The chemical industry is an integral constituent of the growing Indian
 Industry. It includes basic chemicals and its products, petrochemicals,
 fertilizers, paints, varnishes, gases, soaps, perfumes and toiletry and
 pharmaceuticals. It is one of the most diversified of all industrial
 sectors covering thousands of commercial products. This Industry
 occupies a pivotal position in meeting basic needs and improving 
 quality of life. The Industry is the main stay of industrial and 
 agricultural development of the country and provides building blocks 
 for several downstream industries, paints, soaps, detergents, 
 pharmaceuticals, varnish etc.
 
 The Indian Chemical industry has witnessed robust growth in the past
 decade and has been ranked 6th largest in the world and 3rd largest in
 the Asia according to United Nations Industrial Development
 Organisation (UNIDO). The industry has been forecast to reach USD 200
 billion mark by 2020.
 
 Indian government is rendering extensive support to give impetus to the
 Indian chemical industry and has set up the task force to consider
 suggestions for National Chemical Policy to ensure steady growth of the
 country''s chemical sector.
 
 Indian Speciality chemicals industry is expected to grow at a robust
 pace driven by consumption boom, infrastructure spending and exports to
 international markets.
 
 Proxy to play consumption as well as infrastructure theme
 
 The key demand drivers for Speciality chemicals are per capita income
 growth, rising urbanisation and infrastructure spending. The per capita
 chemical consumption for India in most categories of Speciality
 chemicals (paints, dyes, polymers, home and personal care etc.) is only
 about 15-20% of the global average, thus, there is a significant
 opportunity for growth.
 
 While around 70% of Speciality chemical demand is linked to consumer
 spending, the balance is used by construction and infrastructure
 industry. As domestic consumer as well as infrastructure spending
 slowed in the past couple of years, Indian Speciality chemical
 companies were impacted though overall impact was limited due to strong
 growth in exports. However, both these dynamics are expected to improve
 in medium to long term.
 
 The robust demand for Speciality chemicals (FICCI est: 13%) would be
 driven by strong growth in end-user industries itself. While the ones
 linked to infrastructure (construction chemicals, paints, water
 chemicals, industrial cleaners) are expected to grow at >15%, the other
 categories (dyes, personal care, plastic additives, rubber chemicals)
 are expected to grow at 10-15%.
 
 Key end user industries for Speciality chemicals in India and their
 expected growth rates
 
 Segment                                      2012 Size        Exp. vol. 
                                             (in RS. bn)       CAGR (%)
 
 Paints and Coatings                             4.0              15
 
 Colorants                                       3.7              10
 
 Speciality polymers                             15               15
 
 Home care surfactants                           12                5
 
 Plastic additives                               10               12
 
 Textile chemicals                               0.9              11
 
 Construction chemicals                          0.7              25
 
 Water chemicals                                 0.7               7
 
 Personal care ingredients                       0.5               9
 
 Flavors and fragrances                          0.5              10
 
 Paper chemicals                                 0.5              22
 
 Printing inks                                   0.5              10
 
 Industrial cleaners                             0.2              19
 
 Rubber chemicals                                0.2              13
 
 Other segments                                  6.3              15
 
 Total                                          22.4              13
 
 Source FICCI
 
 Exports to propel further growth
 
 With improving cost competitiveness (particularly w.r.t. China),
 favourable IPR framework and strong domestic demand outlook, India is
 emerging as a preferred manufacturing destination for Speciality
 chemicals. China is losing out its edge over India in chemical
 manufacturing due to:
 
 (1) steep cost inflation (labour costs);
 
 (2) stricter compliance of environmental regulations being enforced in
 China, while in India the same had been already in place since past few
 years; and
 
 (3) Yuan appreciation in recent years.
 
 Chemical exports from India have grown at 22% CAGR over 2010-14,
 significantly outpacing the global demand growth (3-4%) and the trend
 has continued through in 2015 as well.
 
 Shares in exports of chemicals
 
 Exports from India are likely to get further fillip and India is
 expected to increase export market share (from miniscule 2% currently)
 with:
 
 * Curtailment of capacities in developed countries: While capacities
 are being closed in developed world, a simultaneous scale up of
 capacities is being witnessed in emerging economies.
 
 * De-risking of exports by global MNCs: The major MNCs are trying to
 de-risk their supply chain by diversifying their
 
 RM procurement away from China (amongst the developing countries).
 During the past decade, China aggressively added chemical capacities
 and became the largest exporter (amongst the developing countries) to
 MNCs. However, as risks associated with Chinese exports increase
 (domestic slowdown, currency appreciation etc.), MNCs are seeking to
 increasingly prefer India amongst the developing countries for their RM
 supplies.
 
 The Indian Chemical Companies are expected to get further fillip under
 the Make in India drive. Various new projects are proposed to be
 commenced with a focus to make India as a manufacturing hub for those
 products. This shall increase the direct and indirect demand of various
 chemicals. These chemicals are expected to contribute directly or
 indirectly as Import Substitute or contribute to the increase in
 exports from India.
 
 Your Company is a leading manufacturer of Speciality Chemicals and has
 integrated presence across various value chains. Your Company''s
 diversified end-user application and customer profile had provided a
 significant insulation against the global downturns and various
 geographic volatilities. Your Company''s strength to meet the Stringent
 and Customised specifications for each of its 800  customers have
 helped it gain customer confidence and trust and also to open up new
 growth opportunities. Exports, which accounts for half of the total
 revenues, is well spread across various customers which your Company
 caters across different geographies, as mentioned in the adjacent
 chart.
 
 Also significant quanta of domestic supplies are converted/value added
 and eventually exported. Thus about 70% of our volumes are directly or
 indirectly exported. Your Company''s global market position, strategic
 arrangements with key customers, Customised delivery offerings,
 increased scale of Operations, ability to meet the stringent
 quality requirements of the customers, have enabled your Company to
 increase its presence in the global arena over a period of time and
 also have helped it to work along with the customers in their growth
 plan and thus have been able to add new products around this phase of
 growth.
 
 We now present you some highlights of the year passed by, starting with
 the brief Segmental financials as below:
 
 
                                                         (RS. in Crores)
 
 
 Particulars                                Speciality   Pharmaceuticals
                                             Chemicals  
 
 Sales                                           2,398               303
 
 % of Total Sales                                82.5%             10.4%
 
 Export                                          1,251               164
 
 % of Sales                                      52.2%             54.1% 
 
 EBIT                                              408                36
 
 % of Sales                                      17.0%             11.9%
 
 Capital Employed as at 31st March, 2015         1,486               485
 
 ROCE %                                          27.5%              7.4%
 
 
 
 Particulars                                Home & Personal        Total
                                            Care Chemicals
 
 Sales                                             207             2,908
 
 % of Total Sales                                 7.1%            100.0%
 
 Export                                             34             1,449
 
 % of Sales                                      16.4%             49.8%
 
 EBIT                                                3               447
 
 % of Sales                                       1.5%             15.4%
 
 Capital Employed as at 31st March, 2015            87             2193*
 
 ROCE %                                           3.5%             20.4%
 
 (* includes unallocated Capital Employed of RS. 135 Crores)
 
 As you would note, Speciality Chemicals continues to account for a
 major part of Revenues and EBIT. However, it may also be noteworthy,
 that Pharmaceuticals Segments, wherein the USFDA approvals had been
 accorded to our units in 2011, had breakeven in 2012. The Pharma
 Segment revenues had registered a CAGR of over 22% over last four
 years, while the EBIT had jumped from RS. 4 Crores to RS. 36 Crores
 during the same period. Further details about each of these segments
 are presented below:
 
 Speciality Chemicals Segment:
 
 Speciality Chemicals Segment accounts for the majority of revenues and
 profits for the Company. RM Price volatility impacts the segment''s
 topline the most, but has very limited impact on the bottom line. We
 present below a note which explains this in more detail.
 
 Impact of RM Volatility
 
 Since the Company adopts a Cost Plus pricing for its various Speciality
 Chemicals, its topline is linked with the Input costs. During Financial
 Year 2014-15, we had witnessed sharp corrections in the prices of Crude
 Oil during the period of November 2014 to March 2015. As a result, the
 prices of various Raw-materials procured by the Company viz, Benzene,
 Aniline, Methanol, Phthallic Anhydride, etc had also declined
 accordingly. This resulted in the decline in revenues for the segment,
 which is evidenced from the below table:
    
 Segments Financials      Annual           Q1               Q2
 (Standalone)             Financial        Financial        Financial 
                          Year 2013-14     Year 2013-14     Year 2013-14 
 
 
 Benzene Price (RS./kg)   90 (for Q4            88                85
                          Financial Year
                          2013-14) 
 
 Sales Revenue                  2,217          614               625 
 (RS. in Crores)
 
 EBIT (RS. in Crores)             333           98               104 
 
 EBIT %                         15.0%        16.0%             16.6% 
 
 
 Segments Financials      Q3               Q4                     Annual  
 Standalone)              Financial        Financial           Financial 
                          Year 2013-14     Year 2013-14     Year 2013-14 
 
 
 Benzene Price (RS./kg)             70               50       50 (for Q4
                                                               Financial 
                                                           Year 2014-15)
 
 Sales Revenue                     568              554            2,361
 (RS. in Crores)
 
 EBIT (RS. in Crores)              88*              105              395
 
 EBIT %                          15.5%            19.0%            16.7%
 
 * Q3 EBIT lower on account of annual mandatory shutdown of Acid unit,
 Forex Mark to market loss and Inventory markdown.
 
 As you would note from above, the Sales revenues had declined in Q3 and
 Q4, in spite of having registered a volume growth of about 13%, due to
 falling RM prices.
 
 Further, since the Company''s product pricing is on Cost Plus basis,
 EBIDTA per KG is constant, hence increase in volumes results into
 higher absolute EBIDTA resulting into higher segmental EBIT. This is
 reflected in the increase in EBIT, as mentioned in above table.
 Further, also note that the EBIT mentioned above were after adjusting
 for inventory markdown in Q3 for about RS. 8 Crores. and in Q4 for 
 about RS. 11 Crores. Hence, in spite of these markdowns, the overall 
 EBIT for the segment grew by about 19% on Y-o-Y basis.
 
 It may also be noted that the demand for most of the products
 manufactured by your Company is in-elastic to the RM price
 fluctuations. Further, in case of high value added products, the impact
 of the same becomes significantly lower to have any impact.
 
 We now present below the key financials for Speciality Chemicals
 Segment:                
                                                         (RS. in Crores)
 
 KEY FINANCIALS                FINANCIAL YEAR             FINANCIAL YEAR
                                      2014-15                    2013-14
 
 Sales                                  2,398                      2,216
 
 % of Total Sales                       82.5%                      84.2% 
 
 Export                                 1,251                      1,130
 
 % of Segment Sales                     52.2%                      51.0%
 
 Segment EBIT                             408                        332
 
 EBIT %                                 17.0%                      15.0%
 
 KEY FINANCIALS                FINANCIAL YEAR             FINANCIAL YEAR
                                      2012-13                    2011-12
 
 Sales                                  1,757                      1,350
 
 % of Total Sales                       83.8%                      80.7%
 
 Export                                   946                        639
 
 % of Segment Sales                     53.8%                      47.3%
 
 Segment EBIT                             319                        217
 
 EBIT %                                 18.2%                      16.1%
 
 As you would note, fall in raw material prices, kept the growth in
 topline limited to about 8%, while the increase in volume of initial
 and high value added products resulted the increase in Segmental EBIT
 by about 23% on Y-o-Y basis and even on CAGR over last four years.
 
 Your Company continues to maintain its leadership position in the
 domestic market for its range of Benzene Based Derivatives and enjoys
 global market share of about 25% to 40% amongst various products
 supplied by them.
 
 For most of the above processes, your Company had reached near to 90% 
 capacity utilisation. As a result, your Company had been in last 2-3
 years initiated various expansion projects to increase its capacities
 of various existing processes and also had plans to introduce the new
 products to cater to the growing demand of its over 800 domestic and
 global customers. Some of these projects are briefed below:
 
 NCB Expansion:
 
 During last year, your Company had started the process of expansion of
 its NCB Capacities from 57000 MT to about 75000 MT. During Q3 Financial
 Year 2014-15, your Company had commissioned the first phase of its
 expansion, thereby enhancing the capacities upto 66000 MT, while the
 balance is expected to be commissioned by Q3 Financial Year 2015-16. As
 a result, the production of NCB had increased in Q4 Financial Year
 2014-15 to 14800 MT as compared to the quarterly average of 13500 MT
 for Financial Year 2013-14. Production during Financial Year 2014-15
 was about 53400 MT as compared to 54230 MT for Financial Year 2013-14.
 The production during first nine months was lower on account of shut
 down taken during the year for the on-going brownfield expansion
 activities. These incremental capacities would increase our market
 share for NCB in domestic and global markets and also provide adequate
 feedstock for the related downstream products (viz. Hydrogenated
 Products and various other products), having higher EBIDTA. As you
 would recollect, your Company had already expanded its Hydrogenation
 capacities and now has sufficient capacities to cater to the global
 demand for next few years. Increase in the feeder capacities such as
 NCB, helps your Company to increase the utilisation of these expanded
 hydrogenation capacities as well.
 
 PDA Expansion:
 
 Further, your Company''s scale up of its PDA capacities from 250 tpm to
 1000 tpm had reached its final stage of implementation and is expected
 to be commissioned in phased manner from Q1 Financial Year 2015-16.
 
 Benzene to PDA Process Flow
 
 These capacities shall increase your Company''s capabilities for
 increase its presence in the end-use applications of High End Polymers
 & Additives. This will also add your Company as the only Indian source
 for few MNCs which presently do not source this product from India.
 
 Introduction of Toluene and Ethylene Based Products:
 
 Your Company''s diversification into Toluene chemistry by way of
 introduction of Nitrotoluene and Derivatives is expected to
 commercialise by end of current year. Your Company plans to setup a
 unit with a capacity of about 30000 tpa. Your Company is confident to
 attain faster volume growth in this new value chain, as the
 end-customer and the applications are fairly similar or same to the
 ones which are presently being serviced by your Company. The
 introduction of these products will further strengthen your Company''s
 market position and capabilities to supply basket of products catering
 to end user application such as Optical Brighteners, Agrochemicals,
 Pigments, Pharmaceuticals, etc.
 
 This unit shall also provide the feeder material required for the
 proposed Ethylation unit being setup at Dahej SEZ. Your Company would
 be setting up the Ethylation unit by adopting the Swiss Technology. It
 will be first time in India, that a Company is going to procure
 Ethylene by pipeline and operate the greener Ethylation process. Your
 Company plans to gradually introduce a range of Ethylene based
 chemicals over longer tern catering the end-user applications of
 Agrochemicals, Engg. Polymers, Pigments, Additives, etc. The Dahej SEZ
 project is presently being carried on by Anushakti Specialities LLP,
 which is a 100% subsidiary of your Company. Your Company proposes to
 absorb the same into itself during Financial Year 2015-16, so as to
 bring the entire chemical operations under one roof. The Company
 expects to commission this SEZ unit in Q1 of Financial Year 2016-17.
 
 Greenfield Chlorination Complex
 
 Your Company further proposes expansion of its capacities by way of
 setting up new units for other key processes and targets to commission
 the same within next 2 year''s time. Your Company plans to setup a
 Chlorination Complex at Jhagadia. This complex shall expand your
 Company''s capacities in the Chloro Benzene range of chemicals and shall
 also provide additional capacities to introduce a new range of
 chlorinated compounds. Since Chlorine is manufactured in nearby Chloro
 Alkali units, your Company proposes to procure the same by pipeline on
 a continuous basis, which adds as a significant logistical benefit to
 set up the facility at Jhagadia.
 
 Speciality Chemical Complex
 
 Your Company also proposes to set up another speciality Chemical
 complex at Jhagadia to manufacture of range of Speciality Chemicals
 from the present value chain and also plans to introduce few new
 products which were being developed under secrecy agreement with the
 MNC customers.
 
 Co-Generation Power Plant
 
 With large capacities being commissioned over next 12-30 months at
 Jhagadia, your Company plans to set up a Captive Co-generation Power
 Plant similar to the ones being already operational at its Vapi unit,
 but with a higher capacity. This shall help meet the partial power
 needs of the unit at Jhagadia at significantly lower power costs. Thus,
 this shall bring about cost savings in respect of the future projects
 being proposed at Jhagadia.
 
 These projects would cater to the growing demands for
 
 various Agrochemicals and Engg. Polymers and would help the Company
 increase its market share in this space.
 
 These capacities would provide the further diversification of the
 product mix and would drive the growth beyond Financial Year 2017-18.
 
 Pharmaceuticals:
 
 Indian pharmaceutical industry was valued at USD 12 Bn in 2013. The
 market is primarily driven by exports to regulated as well as
 semi-regulated markets. Currently, India exports drugs to more than 200
 countries and vaccines and bio-pharma products to about 151 countries.
 Globally, India ranks 3rd in terms of volume and 14th in terms of
 value. Industry estimates show that generic drug user fee amendments in
 USA, compulsory licensing and national pharmaceutical pricing policy
 have increased the legal expenditures of the top 10 drug makers in
 India by ~50% in the past three years.
 
 The regulatory environment in the pharmaceutical sector is more
 challenging now than ever before. To meet the new norms, companies will
 have to invest in re-establishing their competitive position.
 Optimization of product portfolio to target high return products and
 building distinguishing capabilities to stay ahead of competition would
 be the key to success. The winning companies will be the ones which
 analyze their competitive position and meet the rapid changes happening
 in the industry by evaluating and speedily implementing the five levers
 outlined below.
 
 Over a period of time, Mergers and Acquisitions in Pharma segment have
 resulted into consolidation and rationalisation. Gradually the
 Innovator companies have started focusing more on Oncology drugs as a
 major thrust area. Your Company had been working into this area and is
 expected to benefit over long term.
 
 China had been a traditional source of intermediates to various
 companies manufacturing APIs world over. However, tighter compliance of
 pollution norms, increasing and stricter regulatory processes,
 consolidation of various pharma companies, had resulted into restricted
 suppliers, which ultimately affects the supply of various
 intermediates. This has opened up opportunities in India for
 manufacture of various intermediates as Import Substitutes. Your
 Company is working for various such intermediates with various
 companies and expects to attain a strategic position in the
 intermediates space.
 
 Your Company had been looking at older/already off-patented Generics to
 be supplied in regulated markets, directly and indirectly, wherein very
 few/restricted suppliers operates. With commissioning of expanded
 capacities and having a range of 48 commercial APIs, with 33 EUDMFs, 28
 US DMF, more than 60% exports coming from regulated markets, your
 Company is better placed to increase its share in the regulated
 markets.
 
 We present below the key financials for Pharmaceuticals Segment: 
 
                                                         (RS. in Crores)
 
 KEY FINANCIALS                FINANCIAL YEAR             FINANCIAL YEAR
                                      2014-15                    2013-14
 
 Sales                                    303                        249 
 
 % of Total Sales                       10.4%                       9.5%
 
 Export                                   164                        117
 
 % of Segment Sales                     54.1%                      47.0% 
 
 Segment EBIT                              36                         30
 
 EBIT %                                 11.9%                      12.0%  
 
 
 
 KEY FINANCIALS                FINANCIAL YEAR             FINANCIAL YEAR
                                      2012-13                    2011-12
 
 Sales                                    187                        165
 
 % of Total Sales                        8.9%                       9.9%
 
 Export                                    92                         66
 
 % of Segment Sales                     49.2%                      40.0%
 
 Segment EBIT                               9                          4
 
 EBIT %                                  4.8%                       2.6%
 
 As you would note from above, the segment had been growing at the
 fastest pace. Out of incremental sales in Financial Year 2014-15 of
 about RS. 54 Crores, growth in exports sales was about RS. 39 Crores,
 i.e. more than 70% of incremental growth had been from global markets.
 Hence, increased volumes from Global and more particularly Regulated
 markets would help in faster paced growth for this segment.
 
 Home & Personal Care Chemicals
 
 Rising per capita income have enabled the increase of consumption of
 hygiene and personal care products. Increasing consumption is driving
 demand for wide range of Cosmetic Chemicals, Health care products as
 well as Hygiene products using Performance Chemicals, Polymers and Oleo
 Chemicals. Our PM''s Swachh Bharat Abhiyaan, is expected to increase
 the demand of these chemicals significantly.
 
 We present below the key financials for Home & Personal Care Chemicals
 Segment: 
 
 
                                                         (RS. in Crores)
 
 KEY FINANCIALS                FINANCIAL YEAR             FINANCIAL YEAR
                                      2014-15                    2013-14
 
 Sales                                    207                        167 
 
 % of Total Sales                        7.1%                       6.3%
 
 Export                                    34                         34
 
 % of Segment Sales                     16.4%                      20.4% 
 
 Segment EBIT                               3                          4
 
 EBIT %                                  1.5%                       2.4%  
 
 
 
 KEY FINANCIALS                FINANCIAL YEAR             FINANCIAL YEAR
                                      2012-13                    2011-12
 
 Sales                                    152                        158
 
 % of Total Sales                        7.3%                       9.5%
 
 Export                                    22                         21
 
 % of Segment Sales                     14.5%                      13.2%
 
 Segment EBIT                               5                          5
 
 EBIT %                                  3.3%                       3.1%
 
 Home & Personal Care Chemicals segment is relatively a low margin
 business. Your Company has two manufacturing units, one each at
 Pithampur (Madhya Pradesh) & at Silvassa. Your Company plans to carry
 out debottlenecking for some of its operations so as to expand the
 capacities for export oriented products which have better margins.
 These efforts shall help the increase of exports for this segment and
 also result into improvement of margins.
 
 SAFETY, HEALTH & ENVIRONMENT (SHE)
 
 Mitigating the Safety, Health and Environment related hazards tops the
 priority list of various risks for the Company and is being regularly
 monitored with stricter compliances for any deviations. Your Company''s
 continuous efforts and thrusts into adopting better, cleaner and cost
 efficient technologies in its road to growth had been recognised by the
 Chemtech Foundation. The Award Committee of Chemtech Foundation Chaired
 by Shri Nadir Godrej, CMD of Godrej Industries Ltd, had accorded your
 Company with the Prestigious award of Outstanding Achievement -
 Innovation - Chemtech CEW Leadership & Excellence Award 2015.
 
 Your Company had been chosen for this prestigious award for its
 continuous and commendable efforts in conserving environments as well
 as ensuring sustainable growth through path breaking innovation with
 thrust on 3Rs of Reduce-Reuse-Recover principle and several other
 initiatives. This Award recognizes your Company''s in-house technical
 innovations undertaken by the Company across various product
 development and continuous process & operations improvements while
 adopting eco-friendly technologies and constantly enhancing energy
 efficiency, by-products recovery, gainful usage from waste streams and
 more.
 
 This award recognizes the efforts of your Company and motivates it to
 persist with the efforts for continuous improvement and innovation
 keeping always in mind the philosophy of Growth with Sustainability
 for Sustainable Growth. Keeping these principles as an important
 element, your Company plans to invest further to capitalize on the
 growth opportunities available in the global arena.
 
 Your Company had bought an adjoining plot of land admeasuring about
 18,175 sq. mtrs. at Plot no. 806, 807, Phase III, GIDC, Vapi. This
 would help in decongesting the existing unit and thus improve the
 safety of the operation at Vapi significantly.
 
 Your Company had further invested significant amounts to improve its
 setup and mitigate these risks. Some of the initiatives in this regard
 as briefed below:
 
 Introduced Aarti Management System: An in-house developed framework of
 32 elements detailing procedures and processes catering to all Plant
 Related Activities - 3 elements namely MOC (Management of Change), BBS
 (major root causes of incidents are due to behavior) and Permit Systems
 catering to reduce SHE related risks are launched. Other elements are
 being developed and reviewed which will be introduced in this year.
 
 Process Safety studies and audits: To keep the thrust on achieving
 intrinsically safe processes, your Company had external safety audits
 and study by industry experts such as Chillworth, ABS, Zeplin, etc. In
 our journey to excel in field of process safety, your company focused
 on increasing in-house competency. Your Company''s operation team has
 done about 130 man hours of training on process safety leadership
 training conducted by DuPont and over 520 man hours of HAZOP training
 conducted by CLI (Centre Labour Institute). Your Company had also
 developed in-house capability for calorimetry of hazardous reaction,
 which is presently being done by very few Companies in India. Your
 Company also shared its journey with industry partners in a talk name
 Chemical Reaction Hazard Management: Challenges & Strategies -- A
 perspective at AARTI GROUP OF INDUSTRIES arranged in TIMA (Tarapur
 Industrial Manufacturers Association) Hall, MIDC Tarapur.
 
 Behaviour Based Safety: Belief causes behaviour and behaviour cause
 action. As per industry statistics, around 90% incident is due to human
 behaviour. Considering this, your Company had initiated Behaviour Based
 Safety (BBS) project, to improve behaviours at shop floor. Since
 inception, your Company conducted 81 batches covering 2293 employees
 (77%) across organization. In order to monitor the behaviour, an online
 reporting and tracking system is launched. Totally 17,000  BBS
 Observation rounds have been conducted by our employees across plants
 
 Process Automation plan had been implemented for critical unit
 operations and is now being evaluated / implemented over a period of
 time for other operations as well.
 
 Upgradation of facility into Zero discharge:
 
 Your Company had commissioned various equipments and processes such as
 water recovery, RO Plant, etc. and upgraded the two of its facilities
 into Zero Liquid discharge facility.
 
 Your company is evaluating further for making other plants as zero
 discharge facilities.
 
 Planning to introduce Automated Solid Handling Equipment: Your Company
 plans to automate the solid handling of various chemicals. This shall
 reduce the hazards of physical exposures related to manual handling of
 various chemicals.
 
 With these and various other initiatives, your Company firmly places
 the SHE at the top of its goals and aims to provide a workplace which
 is safer and healthier for the society at large.
 
 RISK, CONCERNS & ITS MANAGEMENT
 
 Your Company perceives risks or concerns common to industry such as
 concerns related to the Macro Indian Economic Outlook, Global Economic
 fallout, Regulatory risks, Foreign Exchange volatilities, Higher
 Interest rates, Volatile Raw-material prices and other commercial &
 business related risks. While Segments like Pharmaceuticals and Home &
 Personal Care and Speciality Chemicals with applications into
 Agrochemicals are not much affected by the economic cycle and have its
 own independent growth drivers, the diversity of end uses of Speciality
 Chemicals and the ability of the Company to interchangeably use the
 production facilities insulate the Company from any adversity for any
 specific end user applications. Further, your Company''s diversified
 revenue mix, flexible product mix and increasing export volumes also
 help to derisk the business from any domestic economic setbacks as well
 as certain specific global uncertainties. Diversified & wide customer
 base further reduces risks of dependence of business with few customer
 or few products. Your Company is entering into long term supply
 arrangement with its key suppliers to ensure continuous and adequate
 supply of raw-materials to meet the growing demand for the products.
 
 Chemical businesses are generally working capital intensive and hence
 the working capital requirements are also higher. Your Company has been
 making continuous efforts to reduce the working capital cycle.
 
 Risk management policy underpins your Company''s efforts to remain a
 competitive and sustainable company, enhancing its operational
 effectiveness and creating wealth for its employees, shareholders and
 stakeholders in pursuance of its strategy. Your Company has constituted
 a Risk Management Committee.
 
 The Company has a dynamic Risk Management framework to identify,
 evaluate business risks and opportunities. This framework seeks to
 create transparency, minimize adverse impact on the business. The
 business risk framework defines the risk management approach across the
 enterprise at various levels including documentation and reporting. The
 framework has different risk models which help in identifying risks,
 exposure and potential impact analysis for the Company level.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Aarti group: Committed to Social Responsibility.
 
 From the time of the inception of the Company, the Company''s Founder
 Visionary and Chairman Emeritus Shri Chandrakant Gogri has upheld the
 philosophy of ''giving back to the society'' with utmost fidelity.
 
 Your Company actively contributes to the following segments:
 
 1.  Education & Skill Development
 
 2.  Healthcare Facilities
 
 3.  Women Empowerment and livelihood
 
 4.  Water Conservation and Environment
 
 5.  Rehabilitation in Disaster Affected areas
 
 6.  Eradication of Hunger & Poverty
 
 7.  Donating to Govt. bodies viz. Prime Minister & Chief Minister
 Relief Funds.
 
 We advocate the concept of universal and all around development and
 hence work on Clusters in whole, while initiating a spectrum of
 development projects within the each identified locations. Our on-going
 initiatives are focused on bringing about an overall development in the
 rural sector. These initiatives are inspired by the guidelines set by
 Hon''ble Former President of India Dr. A.P.J. Abdul Kalam''s PURA
 (Providing Urban Amenities to Rural Area) model. Education, sanitation,
 health, water management, skill building, environment forms the key
 factors of this PURA model. Your Company had been actively involved and
 has been under implementation of PURA Model in villages at Kutch,
 Gujarat and at Beed (Marathawada, Maharashtra).
 
 A brief about the various activities being undertaken at the Kutch
 Cluster for the implementation of PURA model and to being about an
 overall development and upliftment of the Cluster is presented below:
 
 Kutch Cluster 
 
 Education:
 
 Every year over four hundred students from around 12 villages receive
 free Secondary and Higher Secondary Education at Tulsi Vidya Mandir
 (TVM). TVM is one of its kind rural school to admit dropouts & rejected
 from other schools & poor students and had achieved an average 90%
 results in SSC and 95% results in HSC. The Company intends to expand
 the TVM horizons by commencing Technical and Army Entrance Training
 courses.
 
 Further, a new project named Vidya Sarthi had been undertaken,
 wherein local youngsters (presently 20) are trained and recruited for
 imparting extra coaching to students of Government managed Primary
 schools in vicinity of TVM. This model not only provides employment
 opportunities to the youngsters but also provides the additional
 support to the Government managed schools in achieving the goal of
 Education for all
 
 Sanitation: After your Company''s engagement, one of the village had
 achieved 100% sanitation mark and has an underground drainage system
 and waste water recycle plant. Taking cues from our PM''s ''Swachh Bharat
 Abhiyaan'' your Company had undertaken to provide toilets to all
 families of TVM students of neighbouring 12 villages. Approximately
 over 100 toilets would be provided by your Company under this
 programme.
 
 Rain water harvesting: A traditional lake was revived to store maximum
 rain water. Animals, birds, farmers are benefitted by this Mirik lake
 
 Cattle feed depot: Cattle owners from around twenty villages are being
 provided cattle feed at subsidized rates from this center.
 
 In addition to above, various Health Camps, Agricultural Training Camps
 and other activities are carried out to promote the overall development
 of the cluster. The results had been so encouraging that your Company
 further plans to set up three PURA model Clusters in due course of
 time. The Model implementation was further appreciated by the local
 NGOs and other agencies, who had also started replicating the model for
 development in other neighbouring Districts.
 
 Your Company had been engaged into similar Cluster development
 activities at Beed, Maharashtra which had been adversely affected by
 drought situations.
 
 In addition to above, your Company has actively involved into various
 activities which are broken into few critical segments. Some of these
 activities are briefed below:
 
 1.  Education & Skill Development:
 
 Education, in particularly in English Medium in Mumbai region, have
 become very expensive and beyond the reach of a lot of Urban Poor
 families. Your Company contributes and participates into distributing
 Education Aid through Kutch Jain Mahajan. On an average over 2700
 students from Jr. KG to XII Std. had been aided under this programme.
 
 Your Company had contributed in Building Infrastructure for Nahur
 Welfare Association and Trust, which plans to start CBSE curriculum
 school named Dhan-Vallabh English Medium School at Mulund, Mumbai.
 The School would start with Nursery, Jr. KG & Sr. KG from 2015-16 and
 focuses on imparting education to Low income groups of the Urban
 Mumbai.
 
 Your Company also actively supports Five Nomad Boys and Girls hostels
 accommodating over 300 pupils at Radhanpur in the State of Gujarat.
 
 Your Company also works with Yusuf Meherally Center (YMC) in arranging
 and running alternative schools for children of Saltpan workers and
 Fishermen on coastal belt of Kutch. At present 21 such schools are
 being run whereby over 650 children are being educated.
 
 Your Company had in past adopted the Ratanpur Boarding School managed
 by Sushil Trust and directly supports entire expenditure for
 approximately 240 students at this Boarding School, every year.
 
 In addition to this, your Company provides direct help to schools
 located nearby its operations/facilities by way of sponsoring text
 books/ note books, grant/aid for fees, etc.
 
 To promote the technical educations, your Company gives donation to
 Institute of Chemical Technology to enable them to provide interest
 free bridge loan to Post Graduation students.
 
 Your Company had also funded the local NGO for setting digital
 classroom in 25 rural primary schools run by Govt. near its Bhachau
 factory.
 
 2.  Health
 
 Considering increased number of patients with kidney-related diseases,
 requiring expensive treatment of frequent dialysis, your Company had
 donated 10 Dialysis Machines to Ahmedabad based hospitals to offer
 treatment for the low income group at very nominal rates.
 
 In addition to above, your Company continuously supports various Health
 Camps and Blood Donation camps around and beyond its manufacturing
 units. Your Company also sponsors Medical Conference for Doctors
 working in rural areas to help them understand the new advancement in
 the Medical fields.
 
 3.  Woman Empowerment
 
 Your Company had initiated a unique programmed named Sanskardhan at
 Maninagar, Gujarat where women are provided training in Stitching and
 Beautician Courses. Such programs promotes the Spirit of Women
 Empowerment and endorses independence and sustainability among them.
 
 Your Company had also started Nursing School where women from
 different areas and economically backward classes are trained to enable
 them procure employment opportunities into Metro Cities and even
 abroad. This year, your Company aims at undertaking the training for
 approx 250 women under this programme.
 
 In an another initiative, your Company in association with Jan Seva
 Charitable Trust giving accommodation along with food supply to
 approximately 60 tribal women who had enrolled for higher education.
 
 4.  Environment
 
 Your Company had set up cattle feed depots in around 27 villages
 within the drought affected district of Beed in Maharashtra. The
 project also involves the provision of water pumps for bore well along
 with 2 check dams on Riddhi and Siddhi rivers. Your Company is keen to
 expand the current phase of the project in association with the
 Government and the local NGO - Siddhivinayak Parivar.
 
 Your Company had instituted the project of Parjanya Ecology to
 develop a check dam at Anjar Taluka, Kutch. Reduction of Green spaces
 had been a global concern and is also a reason for various climatic and
 ecological changes. Your Company, in its efforts to promote and
 conserve green spaces, had developed a Garden at Vapi with dedicated
 Jogging and walking tracks, seating arrangements for elderly people,
 water fountain and such other amenities. Over 80 trees/plants had been
 planted at this Vapi Garden.
 
 Your Company had further committed to build several toilets under the
 PM''s ''Swachh Bharat Abhiyaan'' across the remote areas of Gujarat over a
 span of two years.
 
 5.  Rehabilitation in Disaster Affected areas
 
 Aarti industries which holds an expertise of working in collaboration
 with the government and local NGOs has carried out rehabilitation in
 almost all the disaster affected areas in Kutch, Tamil Nadu, Orissa,
 Jammu & Kashmir, Indonesia, Bihar, Uttarakhand and Maharashtra. In
 Jammu & Kashmir after the floods in 2014, Aarti rehabilitated
 approximately 50 families providing them with housing, kitchen kit,
 winter kit, health and checkup at Srinagar. Your Company continues its
 efforts to rehabilitate further families in these affected region.
 
 6.  Eradication of Hunger & Poverty
 
 With an initiative to provide the basic amenities to the Urban Slum,
 under the Urban Slum Rehabilitation programme was adopted by Kutch Jain
 Foundation (KJF). Your Company had not only financially supported KJF
 but also have been actively involved in the day-to-day functioning of
 the foundation. The Foundation is engaged into building Community
 Township with livelihood opportunities and provide the needy Urban Slum
 families subsidized accommodation at these Township.
 
 In addition to above, your Company participates into a spectrum of CSR
 activities evolving around the general upliftment of the economically
 backward class of people. Your Company also makes active contribution
 to Prime Minister Relief Funds, Chief Minister Relief Funds and such
 other Government Bodies to assist them in their relief measures in the
 affected areas.
 
 Your Company also plans to contribute for any further activities which
 promotes the upliftment of the society and shall always remain
 committed to the moral objectives.
 
 CSR annual Report is annexed as Annexure ''A'' and forms an integral part
 of the Report.
 
 MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT,
 INCLUDING NUMBER OF PEOPLE EMPLOYED.
 
 As on 31st March, 2015 the Company had 2039 permanent employees at its
 manufacturing plants and administrative office. The Company recognizes
 the importance of human value and ensures that proper encouragement
 both moral and financial is extended to employees to motivate them.
 
 The Company enjoyed excellent relationship with workers and staff
 during the last year.
 
 REMUNERATION AND NOMINATION POLICY
 
 The Board of Directors has framed a 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 details of this
 policy are given in the Corporate Governance Report.
 
 PERSONNEL
 
 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.
 
 MATERIAL CHANGES AND COMMITMENT 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
 
 No material changes and commitments affecting the financial position of
 the Company occurred between the end of the financial year to which
 this financial statements relate on the date of this Report.
 
 MEETINGS
 
 The details of the number of meetings of the Board held during the
 Financial year 2014-15 forms part of the Corporate Governance Report.
 
 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. This ensures that all Assets are
 safeguarded and protected against loss from unauthorized use or
 disposition and that the transactions are authorised, recorded and
 reported diligently. Your Company''s internal control systems
 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.
 
 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 31st March, 2015, 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.
 
 RELATED PARTY TRANSACTIONS
 
 All related party transactions that were entered into during the
 financial year were on arm''s length basis and were in the ordinary
 course of the business. There are no materially significant related
 party transactions made by the Company with Promoters, Key Managerial
 Personnel or other designated persons which may have potential conflict
 with interest of the Company at large.
 
 All related party Transactions are presented to the Audit Committee.
 Omnibus approval is obtained for the transactions which are foreseen
 and repetitive in nature. A statement of all related party transactions
 is presented before the Audit Committee on quarterly basis, specifying
 the nature, value and terms and conditions of transactions.
 
 The related party transactions policy is uploaded on the Company''s
 website at the web-link given below:
 
 http://www.aartigroup.com/pdfs/Related%20Party%20Transaction%20Policy%2
 0Pdf.pdf
 
 The details of Related party transactions are provided in the
 accompanying financial statements.
 
 Since all related party transactions entered into by the Company were
 in ordinary course of business and were on an arms length''s basis, Form
 AOC - 2 is not applicable to Company.
 
 STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER
 SUB-SECTION (6) OF SECTION 149
 
 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 Clause 49 of the Listing Agreement.
 
 CORPORATE GOVERNANCE
 
 Your Company has complied with the mandatory Corporate Governance
 requirements stipulated under Clause 49 of the Listing Agreement.
 Report on Corporate Governance is annexed hereto forming part of this
 report.
 
 ANNUAL RETURN
 
 The details forming part of the extract of Annual Return in the Form
 MGT-9, as required under Section 92 of the Companies Act, 2013 is
 included in the Report as Annexure - ''B'' and forms an integral part of
 the Report.
 
 CONSOLIDATED FINANCIAL STATEMENT
 
 Your Directors have pleasure in presenting Consolidated Financial
 Statements which form part of the Annual Report and Accounts.
 
 DEPOSITS
 
 The Company has neither accepted nor renewed any deposits during the
 year under review. The Company does not have any deposits which are not
 in compliance with the requirements of Chapter V of the Companies Act,
 2013.
 
 SECRETARIAL AUDIT
 
 The Board had appointed CS Sunil M. Dedhia of Sunil M. Dedhia & Co.,
 Practising Company Secretary, to conduct Secretarial Audit for the
 financial year 2014-15. The Secretarial Audit Report for the financial
 year ended 31st March, 2015 is annexed herewith marked as Annexure ''C''
 and forms an integral part to this Report. The Secretarial Audit Report
 does not contain any qualification, reservation or adverse remark.
 
 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
 
 Details of Loans, Guarantees and Investments covered under the
 provisions of Section 186 of the Companies Act, 2013 are given in the
 notes to the Financial Statements.
 
 BOARD EVALUATION
 
 Pursuant to the provisions of Clause 49 of the Listing Agreement , 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 evaluation of the Independent Directors was completed.
 The performance evaluation of the Chairman and Non-Independent
 Directors was carried out by the Independent Directors. The Board of
 Directors expressed their satisfaction with the evaluation process.
 
 SUBSIDIARIES AND ASSOCIATES
 
 The Company has 6 (six) subsidiaries, namely, Aarti Corporate Services
 Limited, Alchemie (Europe) Limited, Anushakti Specialities LLP,
 Innovative Envirocare Jhagadia Limited, Shanti Intermediates Private
 Limited and Nascent Chemical Industries Limited and 6 (six) associates
 namely, Ganesh Polychem Limited, Anushakti Chemicals and Drugs Limited,
 Anushakti Holdings Limited, Aarti Intermediates Private Limited, Aarti
 Biotech Limited, Perfect Enviro Control System Limited.
 
 During the year Board of Directors (''the Board'') 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/Associates in the prescribed format AOC -
 1 is included in the Report as Annexure ''D'' and forms an integral part
 of this Report. The statement also provides the details of performance,
 financial position of each of the Subsidiaries/ Associates.
 
 DIRECTORS
 
 Shri Renil R. Gogri and Shri Shantilal T. Shah retire by rotation and,
 being eligible, offer themselves for re appointment. Your Directors
 recommend Shri Renil R. Gogri and Shri Shantilal T. Shah for
 re-appointment.
 
 During the Year 2014-15, Independent Directors, namely, Shri Bhavesh R.
 Vora, Shri P. A. Sethi and Shri K. V. S. Shyam Sunder were re-appointed
 for a period of 5 (five) years with effect from 24th September, 2014
 and Shri Ramdas M. Gandhi, Shri Vijay H. Patil and Shri Laxmichand K.
 Jain were re-appointed for a period of 3 (three) years with effect from
 24th September, 2014.
 
 The Board of Directors appointed Prof. Ganapati D. Yadav and Smt. Priti
 P. Savla, Additional Directors of the Company in the category of
 Independent Directors with effect from 25th September, 2014 and they
 hold office till the date of ensuing Annual General Meeting. Notice(s)
 have been received from member(s) along with requisite deposits
 proposing their candidature for appointment as such.
 
 Shri Chetan B. Gandhi was appointed as Chief Financial Officer of the
 Company w.e.f. 30th May, 2014.
 
 SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
 
 There are no significant material orders passed by the
 Regulators/Courts which would impact the going concern status of the
 Company and its future operations.
 
 COMMENTS ON AUDITORS REPORT
 
 There are no qualification, reservation or adverse remark or disclaimer
 made:
 
 (i) by the auditor in his report; and
 
 (ii) by the company secretary in practice in his secretarial audit
 report.
 
 WHISTLE BLOWER POLICY
 
 The Company has a whistle blower policy to report genuine concerns or
 grievances. The Whistle Blower policy has been posted on the website of
 the Company (www.aartigroup.com)
 
 MATERIAL SUBSIDIARY
 
 The Company does not have any material subsidiary whose net worth
 exceeds 20% of the consolidated net worth of the Company in the
 immediately preceding accounting year or has generated 20% of the
 consolidated income of the Company during the previous financial year.
 Accordingly, a policy on material subsidiaries has not been formulated.
 
 FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS
 
 The Company has a familiarisation Programme for Independent Directors
 with regard to their role, rights, responsibilities in the Company,
 Nature of the industry in which the Company operates, the Business
 models of the Company etc. and the same is available on the website of
 the Company (weblink - http://www.aartigroup.com/pdfs/Family.pdf.).
 
 AUDITORS
 
 In the 31st Annual General Meeting (AGM) of the Company held on 24th
 September, 2014, M/s. Gokhale & Sathe, Chartered Accountants (Firm
 Regn. No. 103264W) had been appointed as the Statutory Auditors of the
 Company for a period up to 3 (three) years to hold office from the
 conclusion of the 31st (AGM) until the conclusion of the 34th AGM of
 the Company. In terms of the provisions of the Companies Act, 2013, it
 is necessary to get the appointment ratified by the shareholders in
 every Annual General Meeting until the expiry of the period of original
 appointment.
 
 In view of the above, the Board of Directors recommends your
 ratification of the appointment of M/s. Gokhale & Sathe, Chartered
 Accountants (Firm Regn. No. 103264W) as the Statutory Auditors as
 mentioned at Item No. 5 of the Notice.
 
 COST AUDITORS
 
 The Cost Auditor Ms. Ketki D. Visariya (Fellowship No. 16028), Cost
 Accountant, re-appointed by the Company under provisions of Section
 148(5) read with Section 141 of the Companies Act, 2013 attend the
 Audit Committee Meeting, where cost audit reports are discussed.
 
 The due date for filing the Cost Audit Reports in XBRL mode for the
 financial year ended 31st March, 2014 was 30th September, 2014 and the
 Cost Audit Reports were filed by the Cost Auditor on 26th September,
 2014. The due date for filing the Cost Audit Reports for the financial
 year ended 31st March, 2015 is 30th September, 2015.
 
 The Company is seeking the ratification from the Shareholders for the
 appointment of Ms. Ketki D. Visariya, Cost Auditor of the Company for
 the financial year ending 31st March, 2016 vide resolution no. 10 of
 the Notice of AGM.
 
 NUMBER OF CASES FILED, IF ANY, AND THEIR DISPOSAL UNDER SECTION 22 OF
 THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION
 AND REDRESSAL) ACT, 2013
 
 Your Company has Zero tolerance towards any action on the part of any
 one which may fall under the ambit of ''Sexual Harassment'' at workplace,
 and is fully committed to uphold and maintain the dignity of every
 women working with the Company. 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.
 
 
 Particulars                                           NO. OF COMPLAINTS
 
 Number of Complaints pending as on beginning                        NIL
 of the financial year
 
 Number of Complaints filed during the                               NIL
 financial year
 
 Number of Complaints pending as on the end                          NIL
 of the financial year
 
 DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN
 EXCHANGE EARNINGS AND OUTGO:
 
 (A) CONSERVATION OF ENERGY
 
 (i) The steps taken or impact on conservation of energy;
 
 * The Company had been operating various captive and co-generation
 Power plants. The Company expects a significant savings in the
 consumption of natural resources/fuel by adoption of such process.
 
 * Wherever possible, Variable Frequency Drives are installed to reduce
 the power consumption.
 
 * Energy audit is conducted and recommendations are implemented.
 
 * Low Pressure Steam Generation from Process areas to recover heat and
 use for Low Pressure Applications.
 
 * Chilling Water Generation from Chlorine tonners for Chilling
 Applications.
 
 (ii) Additional Investments & Proposals, if any, being implemented for
 Reduction of Consumption of Energy:
 
 * Implementation of Clean Development Mechanism Project, which will
 lead to higher recovery of Heat and thus, result in reduction of
 emission of green House gases.
 
 * Upgradation of Batch Nitration units into Continuous Nitration units,
 shall help in overall optimization of utilities thereby resulting the
 reduction in energy consumption.
 
 * The Company proposes to set up additional Captive Co-generation Power
 Plant at Jhagadia and Kutch Plants similar to the ones already operated
 at Vapi, thereby increasing thermal efficiency and reduced coal
 consumption per unit power as power produced without steam
 condensation.
 
 * Upgradation of various processes, wherever feasible, considering
 optimisation of utilities, thereby resulting the reduction in energy
 consumption.
 
 (iii) The capital investment on energy conservation equipments;
 
 Your Company has invested about RS. 24.7 Crores during Financial Year
 2014-15 into energy conservation equipments.
 
 (B) TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
 
 (a) Efforts, in brief, made towards technology absorption, adaptation
 and innovation:
 
 * Forward Integration for downstream products and expansion also with
 in-house technology.
 
 * Continuous endeavour to improve product quality and process yields.
 
 (b) Benefits derived as a result of above efforts:
 
 * Lower project costs for expansion
 
 * Value addition
 
 * Exports of higher value-added products resulting in increased foreign
 exchange earning.
 
 (c) Information regarding technology imported during the last 3 years:
 NIL
 
 (C) TOTAL FOREIGN EXCHANGE EARNINGS AND OUTGO
 
 The Foreign Exchange Earnings and outgo were RS. 1,449 Crores and RS.
 435 Crores respectively (Previous Year: RS. 1,281 Crores and RS. 442
 Crores respectively).
 
 ACKNOWLEDGEMENT
 
 The Board of Directors places on record its sincere appreciation for
 the dedicated services rendered by the employees of the Company at all
 levels and the constructive co-operation extended by them. Your
 Directors would like to express their grateful appreciation for the
 assistance and support by all Government Authorities, Auditors,
 financial institutions, banks, suppliers, other business associates and
 last but not the least the Shareholders.
 
 
 
                                          For and on behalf of the Board
 
 
                                                                    Sd/-
 Place : Mumbai                                        RAJENDRA V. GOGRI
 Dated : 13th May, 2015                     CHAIRMAN & MANAGING DIRECTOR
 
Source : Dion Global Solutions Limited
Quick Links for aartiindustries
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.