Aarti Drugs Ltd Directors Report.


The Members of


Your Board of Directors ("Board") are pleased to present this 36th (Thirty Sixth) Annual Report on the business and operations of the Company together with the Audited Financial Statements along with the Report of the Auditors for the year ended March 31, 2021.


(Rs. in lakhs)




FY 2020-21 FY 2019-20 FY 2020-21 FY 2019-20
Revenue from Operations 1,91,489 1,63,492 2,15,478 1,80,609
Other Operating Income 642 106 453 148
Total Income from Operations 1,92,131 1,63,598 2,15,930 1,80,757
Total Expenditure 1,58,383 1,46,939 1,79,052 1,62,675
Profit Before Depreciation, Amortisation, Interest and Tax Expenses 40,769 24,547 44,163 26,330
Finance Cost 2,261 3,220 2,296 3,373
Depreciation & Amortisation 4,760 4,667 4,988 4,875
Profit before Exceptional Items and Tax 33,749 16,660 36,879 18,082
Exceptional Income 22 838 22 447
Profit Before Tax 33,771 17,497 36,901 18,529
Less: Total Tax Expenses 8,000 3,930 8,862 4,389
Profit after 25,771 13,567 28,040 14,140
Earnings Per Share (Rs.) 27.65 14.53 30.09 15.14


During the year under review, Standalone Revenue from operations of the Company was Rs. 1,91,489 lakhs as compared to Rs. 1,63,492 lakhs for FY 2019-20 registering a growth of 17.12%.

The Company has achieved Export Sales of Rs. 66,374 lakhs as against Rs. 55,044 lakhs for the last year, registering a growth of 20.58%.

EBITDA has been Rs. 40,769 lakhs as compared to Rs. 24,547 lakhs for FY 2019-20, registering a growth of 66.09%. PAT has been Rs. 25,771 as against Rs. 13,567 lakhs for FY 2019-20, grew by 89.95%.

Likewise, Consolidated revenue from operations of the Company is Rs. 2,15,478 lakhs as compared to Rs. 1,80,609 lakhs for FY 2019-20 registering a growth of 19.31%. On Consolidated basis, Company’s EBITDA has been Rs. 44,163 lakhs as compared to Rs. 26,330 lakhs for FY 2019-20, registering a growth of 67.72%. PAT has been Rs. 28,040 lakhs as against Rs. 14,140 lakhs for FY 2019-20, grew by 98.31%.


Your Company had declared and paid Interim Dividend of Rs. 2.5/- (@ 25%) per share (of Rs. 10/- each) aggregating to Rs. 2,330 lakhs which was higher than previous year.


As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the top 500 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 at the weblink https://www.aartidrugs.co.in policies-and-related documents/


Your Company has transferred Rs. 2,577.12 lakhs to General Reserves. (Previous year Rs. 1,350 lakhs).


The Board, at its meeting held on August 20, 2020, approved and recommended the issue of Bonus shares in the proportion of 3:1 i.e. 3(Three) Bonus Equity share(s) of face value Rs. 10/- each for every 1(One) Equity share(s) of face value of Rs. 10/- each which was approved by the shareholders through Postal Ballot on September 20, 2020. The Company allotted 6,99,00,000 fully paid up Bonus Equity Shares of face value Rs. 10/- each The Bonus shares were credited to the eligible shareholders holding shares as on the record date, i.e. October 1, 2020. Pursuant to the said allotment of Bonus Equity Shares, the paid-up share capital of the Company has increased from Rs. 23,30,00,000 consisting of 2,33,00,000 Equity Shares of face value of Rs. 10/- each to Rs. 93,20,00,000 consisting of 9,32,00,000 Equity Shares of face value of Rs. 10/- each fully paid up. Approval of the shareholders was also obtained through the said postal ballot to increase Authorised Share capital of the Company from Rs. 25,00,00,000 to Rs. 120,00,00,000 to facilitate issue of Bonus shares.

The Board at its meeting held on March 19, 2021, had offered for buy back of 6,00,000 fully paid – up Equity shares of face value of Rs. 10/- (Rupees Ten only) each representing 0.64% of the total number of Equity shares at a price of Rs. 1000/- per Equity share (including premium of Rs. 990/- per Equity share) payable in cash for an aggregate amount of Rs. 60,00,00,000/- on a proportionate basis through the tender offer using stock exchange mechanism in accordance with prevailing regulations. Settlement of buy back bids was completed on May 19, 2021. Post Buy-back, the paid– up Equity Share Capital of the Company stood at Rs. 92,60,00,000/- consisting of 9,26,00,000 Equity Shares of face value of Rs. 10/- each Apart from the above, there were no changes in the Share Capital during the Financial Year under review.

The Company has neither issued shares with differential rights as to the dividend, voting or otherwise nor issued sweat equity shares. There is no scheme for employee stock option or provision of money for shares of the Company to the employees or Directors of the Company.


Your Company through Aarti Foundation and various other NGO’s has been doing work in the following segments:

• Education & Skill Development

• Healthcare

• Disaster relief and rehabilitation

• Social Welfare

• Rural Development

• Women Empowerment

• Water conservation and environment

• Research and Development work for upliftment of Society

Many of our Pilot projects have been appreciated by various NGO’s and Other Corporate Houses who have also started adopting those models thereby multiplying the magnitude of the reach of these social activities for the benefit of the Society at large.

The CSR Policy is available on the Company’s website on the weblink https://www.aartidrugs.co.in/policies-and-related-documents/

A brief note on various CSR initiatives undertaken during the year is presented in this Annual report.

The Annual Report on CSR activities is annexed as "Annexure - A" and forms an integral part of the Report.


Your Company recognizes human resources as one of its prime resources. Your Company enjoyed excellent relationships with workers and staff during the year under review and consider them their most important assets. Your Company cares for its people, customers, suppliers, and community at large which reflects in the Company’s policy, programs and development efforts. As on March 31, 2021, the Company had 1,239 permanent employees at its manufacturing plants and administrative office. Your

Company is committed to build and strengthen our human capital by defining policies that support their growth, goals, and help them achieve excellence.


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 remuneration paid to the Directors, Key Managerial Personnel and Senior Management of the Company are as per the terms laid down in the Nomination and Remuneration Policy of the Company.

The details of this policy are given in the Corporate Governance Report.


Disclosure pertaining to the remuneration and other details 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 annexure and forms part of this Report. However, In terms of Section 136(1) of the Companies Act, 2013, the Report and the Accounts are being sent to the Members excluding this 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.


There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Boards’ Report.


During the year under review, the Company has identified and evaluated elements of business risk. Business risk, inter-alia, further includes fluctuations in foreign exchange, Raw Material Procurement risk, Environmental & Safety Risk, Working Capital Risk, Market Risk and Business Operations Risk. The risk management framework defines the risk management approach of the Company and includes periodic review of such risk and also documentation, mitigating controls and reporting mechanism of such risks.

In compliance with Regulation 21 of the Listing Regulations, Board of Directors had constituted a Risk Management Committee consisting of Shri Prakash M. Patil (Chairman), Shri Rashesh C. Gogri, Shri Harshit M. Savla, Shri Harit P. Shah, Shri Adhish P. Patil and Shri Dhanaji L. Kakade. Independent Director, Shri K. G. Akamanchi has also been appointed as a member of the committee w.e.f. May 15, 2021. Main object of this Committee is to continuously identify, evaluate and take appropriate measures to mitigate various elements of risks.


The Board of your Company has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively. Your Company has maintained a proper and adequate system of internal controls. The Company has appointed M/s. Raman S. Shah & Associates, Chartered Accountants, as an Independent Internal Auditors 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 related party transactionsinternal 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.

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.


Management Discussion and Analysis Report with detailed review of operations, performance and future outlook, as stipulated under Regulation 34 read with Schedule V to the Listing Regulations is presented in a separate section forming part of this Annual Report.


The Listing Regulations mandates the inclusion of the BRR as part of the Annual Report for top 1000 listed entities based on market capitalisation. Business Responsibility Reporting for the year under review, as stipulated under Regulation 34(f) of Listing Regulations read with SEBI Circular No. CIR/ CFD/CMD/10/2015 dated November 4, 2015 is given in a separate section forming part of this Annual Report.


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 Dividends have not been paid or claimed by the Shareholders for seven consecutive years or more shall be transferred to the Demat account of the IEPF Authority. Accordingly the Company has transferred the unclaimed and unpaid dividends and corresponding shares as per the requirement of the IEPF Rules.


The Company has a Policy on Materiality of Related Party Transaction and dealing with Related Party Transaction which is uploaded on the Company’s website at the web-link https://www.aartidrugs.co.in/policies-and-related-documents/ All related party transactions that were entered into during the FY 2020-21 were on an arm’s length basis and were in the ordinary course of the business. There are no by materially significant 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 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 arm’s length’s basis, Form AOC–2 is not applicable to Company.


Corporate Governance essentially involves balancing the interests of a Company’s stakeholders. Corporate Governance practices of our Company are a reflection of our values, polices and relationship with our stakeholders. Your Company has complied with the mandatory Corporate Governance requirements stipulated under Regulation 34(3) of the Listing Regulations. Report on Corporate Governance is annexed hereto forming part of this report together with certificate from the Statutory Auditor regarding report on Corporate Governance.


Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available in prescribed format on the Company’s website on www.aartidrugs.co.in


Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 and no amount on account of principal or interest on public deposits was outstanding as on March 31, 2021.

The Company does not have any deposits which are not in compliance with the requirements of Chapter V of the Companies Act, 2013.


Pursuant to the provisions of Section 186 of the Act, the details of Loans, Guarantees and Investments made by the Company as at March 31, 2021 are given in the notes to the Financial Statements.


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 performances 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 evaluation process.


The Company, as on March 31, 2021, has 3 (three) subsidiaries, namely, Pinnacle Life Science Private Limited, Aarti Speciality Chemicals Limited and Pinnacle Chile SpA. Of the above subsidiaries, Pinnacle Life Science Private Limited and Aarti Speciality Chemicals Limited are wholly-owned subsidiaries. Pinnacle Life Science Private Limited has been classified as the material subsidiary as it fulfills the criteria given under Regulation 16(1)(c) of the Listing Regulations. Pursuant Regulation 24A of the Listing Regulations, the Secretarial Audit Report as prescribed in Section 204 of Companies Act, 2013 for the Material Subsidiary Company, Pinnacle Life Science Private Limited for financial year ended March 31, 2021 is annexed as"Annexure - C2" and forms an integral part of this Report. During the year, under review, Pinnacle Life Science LLC, Wholly Owned Subsidiary was wound up/ closed as said Company did not have any business activity.

The Company has attached along with its financial statements, a separate statement containing the salient features of the financial statements of the said subsidiaries in "Form AOC-1" which is annexed as "Annexure - B" and forms an integral part of this Report.

During the year, under review, the Board of Directors reviewed the affairs of the subsidiaries. Also in conformity with Section 134 of the Companies Act, 2013 and Rule 8(1) of the Company (Accounts) Rules, 2014, Note 33 of Consolidated Financial Statement cover the highlights of performance of subsidiaries and their contribution to the overall performance of the Company during the year. The Company does not have any Associate Company or Joint Venture. A policy on material subsidiaries has been formulated and is available on the website of the Company at the web link https://www.aartidrugs.co.in/policies-and-related-documents/


In accordance with the provisions of Companies Act, 2013 and Regulation 33 of the Listing Regulations and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the FY 2020-21, together with the Auditors’ Report, form part of this Annual Report.


The composition of the Board is in conformity with Section 149 of the Companies Act, 2013 and Regulation 17 of the Listing Regulations. As on March 31, 2021, the Board comprise of 12 (Twelve) Directors out of which 5 (Five) are Executive Directors, 1 (One) Non-Executive Director and 6 (Six) Non-Executive Independent Directors. The Chairman of the Board is an Executive Director. The Board has highly qualified members and having varied experience in their respective fields.

At 35th AGM held on August 25, 2020 Shri Narendra J. Salvi (DIN: 00299202) has been appointed as the Non-executive Director in place of Shri Rajendra V. Gogri (DIN: 00061003), who retired by rotation at the conclusion of AGM and did not offer for re-appointment. Except as stated above, there is no change in the composition of the Board of Directors and KMPs during the year under review.

In accordance with the provisions of Section 152 of Companies Act, 2013, Shri Harshit M. Savla (DIN: 00005340) Joint Managing Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting and, being eligible, offer himself for re-appointment. The Board recommends his re-appointment for the consideration of the Members. A brief profile of him is annexed to the Notice convening the ensuing Annual General Meeting. Your Directors have also recommended for the approval of renewal of terms of Shri Prakash M. Patil (DIN: 00005618) as the Managing Director, Shri Harshit M. Savla (DIN: 00005340) as Joint Managing Director and Shri Harit P. Shah (DIN: 00005501) as Whole Time Director of the Company whose present terms will expire on May 31, 2022. Shri Ramdas M. Gandhi, Independent Director of the Company left for heavenly abode on July 16, 2021. Late Shri Ramdas M. Gandhi was on the Board of the Company since December 31, 2005 and the Company immensely benefitted from his vision and leadership. The Board of Directors of the Company express their deep condolences and pay tribute to late Shri. Ramdas M. Gandhi.

None of the Directors of the Company are disqualified for being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013 and Rule 14(1) of the Companies (Appointment and Qualification of Directors) Rules, 2014

Independent Director

Independent Directors have given written declarations to the Company confirming that they meets the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and Regulation 16(b) of Listing Regulations. The terms and conditions of appointment of the Independent Directors are placed on the website of the Company at the weblink https://www.aartidrugs.co.in/ independent-directors/ The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and that they hold highest standards of integrity.

The Independent Directors of the Company have undertaken requisite steps towards the inclusion of their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment & Qualification of Directors) Rules, 2014.

Number of Meetings of the Board

During the year under review, the Board of Directors met 7 (Seven) times. The agenda of the meeting was circulated to the members of the Board in advance along with necessary documents, reports, recommendations etc. so that each Board member can actively participate on agenda items during the meeting. The details of Board and Committee Meetings and the attendance of the Directors at such meetings are provided in the Corporate Governance Report, which forms part of this Annual Report. The intervening gap between the meetings was within the prescribed period under the Companies Act, 2013 and the Listing Regulations.


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) in the preparation of the Annual Accounts for the financial year ended March 31, 2021, the applicable accounting standards have been followed. There are no material departures from the applicable accounting standards;

b) the Directors have 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 as on March 31, 2021 and of the profit of the Company for that period;

c) the Directors have 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) the Directors had prepared 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 system to compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.


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 familiarisation programmes imparted to them are placed on the website of the Company at the web link https://www.aartidrugs.co.in/independent-directors/

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS OR TRIBUNALS by theThere were no significant Regulators/Courts/Tribunals which would impact the going concern status of the Company and its future operations


Your Company is committed to ensure a sound Safety, Health and Environment (SHE) performance related to its activities, products and services. Your Company has been continuously taking various steps to develop and adopt Safer Process technologies and unit operations. Your Company is making continuous efforts for adoption of safe & environmental friendly production processes. Monitoring and periodic review of the designed SHE Management System are done on a continuous basis.


The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees to report concerns about unethical behavior, 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 who avail of the mechanism, 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 at the web link https://www aartidrugs.co.in/policies-and-related-documents/

The Company affirms that no person has been denied access to the Audit Committee Chairman.


In accordance with the provisions of Section 139 of the Companies Act, 2013, the members at the 34th Annual General Meeting held on August 6, 2019 had approved the appointment of M/s Kirtane & Pandit LLP. Chartered Accountants (Firm Registration No: 105215W/ W100057) for a term of 4 years, to hold office till the conclusion of 38th Annual General Meeting, As per the provisions of Section 139 of the Act, they have confirmed that they are not disqualified from continuing as Auditors of the Company.

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.


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 has appointed M/s. GMVP & Associates LLP as Cost Auditor of the Company for FY 2021-22 under Section 148 and all other applicable provisions of the Act.

Shareholder’s approval is being sought for ratification of the Remuneration proposed to be paid to M/s. GMVP & Associates LLP, Cost Auditor of the Company in respect of Cost Audit for the financial year ending March 31, 2022 as mentioned in the Notice convening the AGM.

The Company has maintained cost records as specified under section 148(1) of the Act.


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, 2021 issued by CS Sunil M. Dedhia (COP No. 2031), Proprietor of Sunil M. Dedhia & Co., Company Secretary in Practice and the Secretarial Auditor of the Company is annexed as "Annexure - C1" 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.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditor’s reports:

There is no qualification, reservation or adverse remark or disclaimer made by the Auditor in their report. As regards the observations of the Statutory Auditors and the Secretarial Auditor in their Report, the same are self-explanatory and need no further clarifications.


Your 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) have been set up to redress complaints received regarding sexual harassment. Details of Internal Complaints Committee Status of the Complaints during the FY 2020-21 is as follows:

Particulars No. of Complaints
Number of Complaints pending as on beginning of the Financial Year NIL
Number of Complaints filed during the Financial Year NIL
Number of Complaints pending as on the end of the Financial Year NIL

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


The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Companies Act, 2013 ("the Act") and rules framed thereunder is enclosed herewith as "Annexure - D" to this report.


During the Financial Year, your Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI).


Your Company has adopted green initiative to minimize the impact on the environment. The Company has been circulating the copy of the Annual Report in electronic format to all those members whose email addresses are available with the Company. Your Company appeals other Members also to register themselves for receiving Annual Report in electronic form.


The Board of Directors places on record its sincere appreciation for the dedicated services by the employees of the Company at all levels and the constructive cooperation extended by them. Your Directors would also like to express their grateful appreciation for the assistance and support by all Shareholders, Government Authorities, Auditors, Bankers, Financial Institutions, Customers, Employees, Suppliers, other business associates and various other stakeholders.

For and on behalf of the Board
Prakash M. Patil
Place: Mumbai Chairman, Managing Director & CEO
Date: July 27, 2021 DIN: 00005618