Annual Report 2019-20
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Innovation and Sustainability- Our Formula for Growth Annual Report 2019-20 2 Aarti Industries Ltd Innovation & Sustainability Our formula for Growth Every organisation that aspires to remain competitive in the rapidly changing market needs to have a set strategy for growth. For us, at Aarti Industries, this formula is: We have embarked on a quest to discover the newest and most efficient Adopting Another Innovation developments in the chemical industry Growth and make breakthroughs. Using the InnovationSustainability and Sustainability— Stepping Up, Dimension of combined strengths of the two elements Our Formula for Growthof Innovation and Sustainability,Growing we have Stronger Innovation been stirring up some strong reactions 26 Aarti Industries Limited that have propelled our growth. Annual Report 2019-20 Annual Report 2019-20 page 02 page 20 page 27 Index Corporate Overview Commitment to Financial Statements Sustainability Overview and Progress Standalone Financials 32 Driving Inclusive 02 Innovation and Sustainability– 126 Independent Auditor’s Report Growth through Our formula For Growth Sustainable Chemistry 134 Balance Sheet 04 About Aarti Industries Limited 34 Environment 135 Statement of Profit and Loss 06 Journey 36 People 136 Cash Flow Statement 08 Businesses 38 Health and Safety 137 Statement of Changes in Equity 14 Serving Leading Brands 40 Communities 138 Significant Accounting Policies 16 Presence 46 Helping in the Fight 141 Notes to the Financial Statements 18 Key Performance Indicators against COVID-19 Consolidated Financials 20 Note from the Chairman & MD Governance 164 Consolidated Independent 24 Awards and Recognitions 48 Robust Governance Mechanism Auditor’s Report Value Creation Story 51 Board of Directors 170 Consolidated Balance Sheet 27 Adopting Another 171 Consolidated Statement of Dimension of Innovation 56 Ten-year Highlights Profit and Loss 28 Business Model 57 Corporate Information 172 Consolidated Cash Flow Statement 30 Growth Strategy 173 Statement of Changes in Equity Statutory Reports 174 Significant Accounting Policies 58 Management 177 Notes to the Financial Statements Discussion and Analysis 70 Director’s Report 195 Notice 103 Report on Corporate Governance 203 Annexure to the Notice 121 Business Responsibility Report Annual Report 2019-20 In loving memory of the Co-founder of Aarti Industries who guided and inspired us Shri Shantilal T. Shah Vice Chairman of Aarti Industries Limited (28th December 1938 to 27th October 2019) Shri Shantilal Shah was an eminent intellectual and a great soul of unmatched courage. He was an idealistic leader with a strong will and unfailing kindness. He has been the key pillar of Aarti Industries right from its inception. He strongly believed in empowering young minds and encouraged their views and participation in shaping the Company’s direction, strategies and tactics. Shri Shantilal Shah embedded the value of Integrity in the very core of Aarti Industries as well as into the mind of every employee over the past three decades. He will always be with us in spirit and will continue to shine through his teachings and through the company he nurtured with unwavering commitment and determination. His pride for Aarti Industries and his people is best expressed in his own words, “Nothing is impossible to a winning heart. We can achieve great heights when we work with our whole mind, body and soul.” 2 Innovation and Sustainability — Our Formula for Growth Every organisation that aspires to remain competitive in the rapidly changing market needs to have a set strategy for growth. For us, at Aarti Industries, this formula is: We have embarked on a quest to discover the newest and most efficient Innovation Growth developments in the chemical industry and Sustainability make breakthroughs. Using the combined strengths of the two elements of Innovation and Sustainability, we have been providing customised chemical and API solutions and services that have propelled our growth. Annual Report 2019-20 Corporate Overview > Overview and Progress 3 We are a company driven by our Along with innovation, our commitment We believe in creating responsible passion to always learn something to sustainability has also been chemistry through our innovation new, combine it with our technological responsible for driving our success. excellence and holistic approach and know-how and experience, and develop Our pragmatic approach to business perseverance towards sustainability. products that will go a long way in sustainability and our determination As we progress on our growth journey, serving the needs of the Indian and to generate value for the society we will follow our core formula of global chemical industry. Our passion have set us apart from our peers. Innovation + Sustainability to achieve for innovation goes way back and we Through our in-house developed Aarti greater heights of success. are now reigniting that passion by Management System (AMS), we have gaining a better understanding of our been realising our sustainability goals customers’ needs and accelerating and paving way for a better planet. innovation to efficiently meet We have set ambitious targets of their demands. We have four R&D reducing our energy and water centres – one in Navi Mumbai, two consumption, preventing health in Vapi and one in Dombivali – which hazards due to exposure to chemicals, focus on innovating new speciality dust and on-site accidents. As a chemicals and pharmaceutical member of communities in India, applications. Moreover, our latest we understand the significant role we addition is the R&D centre in Navi must play in the society. We focus Mumbai, capable of housing about on improving education, healthcare, 250 skilled scientists and engineers water conservation and the livelihood who are passionate about the industry. of women, among other areas, in the These R&D centres, together, help communities where we operate. us enhance our capabilities; focus We view this as a great responsibility on niche, value-added products and and an even greater opportunity processes; improve product quality and to make the world a better place. process yields of existing products; Sustainability continues to be our key and undertake forward integration of value driver and adds purpose and downstream products. meaning to what we do. Highlights FY 2019-20 ` 4,621 crores ` 986 crores Revenue EBITDA ` 536 crores 21.3% Profit After Tax (PAT) EBITDA margin 4 About Aarti Industries Limited Chemistry Done Right At Aarti Industries Limited (Aarti Industries), we are passionate about formulating the perfect chemical composition to cater to the needs of a wide range of industries. Our process chemistry and engineering competencies, have made us one among India’s leading manufacturers of speciality chemicals and pharmaceuticals today. We started from 1984 with just two made us the Global Partner of Choice products and one manufacturing unit. for market leaders and others in the Strengths Today, our myriad products are used chemical industry. not only in India but are also exported to 60+ countries world over. This is While we stay committed to delivering possible due to the dedication of our high-quality intermediates to the committed and loyal employees who world, we remain cognisant of our 200+ leave no stone unturned in delivering responsibilities towards the society. Products high-performance products and Our social initiatives are directed services to our customers. towards impacting rural education, water conservation, tribal welfare, The products we supply are used agriculture, animal husbandry, health in downstream manufacturing with and hygiene, disaster relief and 700+ applications across a wide range of rehabilitation. We undertake these industries. We are the global leaders activities not only because it is the right Indian customers in benzene-based chemistry and have thing to do, but also because we believe also diversified our operations across in delivering shared value for everyone. other derivative chains. In everything we do, it is our constant Since inception, we have maintained endeavour to grow progressively and 400+ our unwavering focus on four major scale new heights of success, while Global customers areas: technical know-how, Research creating long-term sustainable value and Development (R&D), customer for all our stakeholders. centricity and sustainability. This has Core markets 17 Manufacturing plants Agrochemicals Pharmaceuticals Polymers and Fuel additives 2 additives USFDA approved units FMCG Dyes and Printing inks Other speciality 5,200+ pigments chemicals Employees Annual Report 2019-20 Corporate Overview > Overview and Progress 5 Vision Values To emerge as a ‘global partner Care of choice’ to leading consumers Our commitment to care of speciality chemicals and includes all our stakeholders – our pharmaceuticals employees, our customers, our suppliers, our community and our environment. Integrity We practice the highest ethical and Mission moral standards. Delighted Excellence stakeholders We continuously raise the bar of our performance to delight our stakeholders. 6 Journey On the Road to Responsible Chemistry Since inception, we have been resilient to challenges and have focused on staying ahead of competition. We started off small, in 1984, with aspirations and the commitment to create sustainable stakeholder value. Today, we have grown into a globally leading benzene-based speciality chemical and pharmaceuticals company. Our journey until now has been one of prudence and determination.