aarti surfactants ltd share price Directors report

To

The Members of Aarti Surfactants Limited

Your Directors have pleasure in presenting this Fifth Annual Report of Aarti Surfactants Limited ("the Company") together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2023.

1. Financial Performance & Summary

Financial Performance

The Companys financial performance during the year ended March 31, 2023 compared to the previous financial year is summarised below:

(Rs. in Lakhs)

Particulars		Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Revenue from Operation (Net)	60,129.32	57,551.70	60,129.32	57,551.70
EBITDA	4,807.97	3,243.63	4,807.37	3,243.14
Depreciation & Amortisation	1,548.69	1,244.57	1,548.69	1,244.57
Profit from Operations before Other Income, Finance Costs and Exceptional Items	3,225.87	1,970.01	3,225.27	1,969.52
Other Income	33.41	29.05	33.41	29.05
Profit before Finance Costs	3,259.28	1,999.06	3,258.68	1,998.57
Finance Costs	1,478.62	1,066.60	1,478.62	1,066.68
Profit before Tax	1,780.66	932.46	1,780.06	931.89
Total Tax Expenses	509.61	382.41	509.61	382.41
Non-controlling Interest	-	-	-	-
Net Profit for the period	1,271.05	550.05	1,270.45	549.48
Other Comprehensive Income (net of taxes)	6.00	4.80	6.00	4.80
Total Comprehensive income for the year	1,277.05	554.85	1,276.45	554.28
Earnings Per Share (Rs.)
Basic	16.64	7.25	16.64	7.25
Diluted	16.48	7.25	16.47	7.25
Book Value Per Share (Rs.)	198.33	179.23	198.22	179.21

Summary

During the year under review, your Company reported revenue of 60,129.32 lakhs for FY 2022-23 as against 57,551.70 lakhs for FY 2021-22. Similarly, the exports for the year were at 16,319.54 lakhs for FY 2022-23 as against 15,888.27 lakhs for FY 2021-22.

There was no change in nature of business of the Company, during the year under review.

2. Consolidated Financial Statements

In compliance with the applicable provisions of the Companies Act, 2013 including the relevant Indian Accounting Standards (Ind AS) as issued by the Institute of Chartered Accountants of India and notified under Section 133 of the Companies Act, 2013, this Annual Report includes Consolidated Financial Statements for the financial year 2022-23.

3. Transfer to Reserves

The Board of Directors has decided to retain the entire amount of profits for FY 2022-2023 in P&L account.

4. Subsidiaries, Associates and Joint Venture Companies

As on March 31, 2023, the Company has 1 direct subsidiary, namely, Aarti HPC Limited.

The Company does not have any Joint Venture or Associate Company within the meaning of Section 2(6) of the Companies Act, 2013. The Company does not have any material subsidiary as per the relevant provisions of Companies Act, 2013 and Listing Regulations.

Pursuant to the first proviso to Section 129(3) of the Companies Act, 2013 read with Rule 5 and 8 of the Companies (Accounts) Rules, 2014, the salient features of the financial statement and performance of subsidiary Company in Form AOC-1 is disclosed under Annexure A and forms part of this Report.

Pursuant to the provisions of Section 136 of the Companies Act, 2013, the financial statement of the Company, consolidated financial statements and separate audited financial statement in respect of subsidiary company are available on the website of the Company.

The Company has formulated a Policy for determining material subsidiaries. The said policy is available on the website of the Company at https://www.aarti-surfactants. com/assets/investors/policy-for-determination-of- materiai-subsidiarv.pdf

5. Share Capital

As on March 31, 2023, the Authorised Share Capital of the Company stood at 40,00,00,000 (Rupees Forty Crores only) consisting of 3,18,70,000 (Three Crore Eighteen Lakh Seventy Thousand) equity shares of 10/- (Rupees Ten) each and 81,30,000 (Eighty-One Lakh Thirty Thousand) Preference Shares of 10/- (Rupees Ten) each.

Pursuant to Rights Issue, the Company allotted 8,92,291 Partly paid up equity shares of 10/- each at an issue price of 555 /- (including premium of 545/-) per equity share aggregating to an amount of 49,52,21,505/- to all the eligible equity shareholders of the Company on February 09, 2023. The terms of payment include 40% on application and remaining 60% on final call

as may be decided by the Committee of the Board from time to time.

Consequently, the paid - up share capital of the Company as on March 31, 2023 stands as follows: -

Particulars	No. of Shares	Face Value Per Share (in )	Total Amount (in )
Fully paid up equity shares	75,84,477	10 each	7,58,44,770
Partly paid up equity shares	8,92,291	10 each ( 4 paid on application)	35,69,164
Non - Convertible Redeemable Preference Shares	10,82,387	10 each	1,08,23,870
Total	95,59,155		9,02,37,804

During FY 2022-23 there was no change in the authorised share capital of the Company.

The Company has neither issued any shares with differential rights as to dividend, voting or otherwise, nor issued any sweat equity shares during the year under review.

6. Utilisation of Issue Proceeds

The proceeds of funds raised by the Company through Rights Issue, has been utilised for the objects as stated in the Letter of Offer dated January 18, 2023. The disclosure in compliance with the Regulation 32 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is as under: -

Particulars	No. of Equity shares	Price (in )	Amount (Rs. in Lakhs)	Funds Utilised
Total Issue Size	8,92,291	555.00	4952.22	1980.89 lakhs were
Details of Allotment till March 31, 2023		222.00	1980.89	used to meet the working capital requirements

The Rights equity shares were issued as partly paid-up and an amount of 222/- (i.e. 40% of the Issue Price) per Rights equity share has been received on application (of which 4 towards face value of Rights equity share and 218/- towards premium amount of Rights equity share). The balance amount of 333/- per Rights equity share will be called within a period of twelve months from the

date of allotment i.e. February 09, 2023 as prescribed under Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018.

7. Dividend

To conserve the funds of the Company, your directors do not recommend any dividend for the Financial Year 2022-23.

8. Dividend Distribution Policy

The Company has in place a Dividend Distribution Policy in accordance with Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is available on the Companys website at https://www.aarti-surfactants.com/assets/ investors/dividend-distribution-policy.pdf

9. Matters Related to Directors and Key Managerial Personnel

The Board of Directors comprises of six Directors, of which two are Executive Directors, two Non-Executive Directors and two Independent Directors (including one Woman Independent Director). The Chairman of the Board is an Independent Director. The Board has highly qualified members and has varied experience in their respective fields. The constitution is in compliance with Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time.

At the 4th AGM held on August 05, 2022, the following re-appointments were considered: -

a) Mr. Nikhil P Desai (DIN: 01660649) was re-appointed as Managing Director of the Company for a period of five years effective from August 20, 2022.

b) Mr. Santosh M. Kakade (DIN: 08505234) was re-appointed as an Executive Director effective from August 20, 2022.

Re-appointments:

Based on recommendation of Nomination and Remuneration Committee, the Board of Directors at its meeting held on July 24, 2023, approved the re-appointment of Mr. Mulesh M. Savla (DIN: 07474847), as an Independent Director of the Company for second term of five years commencing from June 13, 2024,

subject to approval of shareholders at the ensuing Annual General Meeting:

Directors retiring by rotation:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the relevant rules made thereunder, one-third of the Directors are liable to retire by rotation every year and if eligible, offer themselves for re-appointment at the AGM.

Mr. Dattatray S. Galpalli (DIN: 01853463), Director being longest in the office, is liable to retire by rotation at the ensuing Annual General Meeting of the Company and he being eligible has offered himself for re-appointment. A resolution seeking shareholders approval for his re-appointment forms part of the AGM Notice.

Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard-2 on General Meetings, a brief profile of the Directors proposed to be appointed / re-appointed is made available, as an Annexure to the Notice of the Annual General Meeting.

Pursuant to the provisions of Regulation 34(3) read with Schedule V to the Listing Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice, the Secretarial Auditor of the Company, certifying that none of the Directors of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India or by the Ministry of Corporate Affairs or by any such statutory authority. The said Certificate is annexed to the Corporate Governance Report of the Company for the Financial Year 2022-23.

Resignation

During the year under review, none of the directors of the Company have resigned.

Key Managerial Personnel

During the year under review, Mr. Prashant Gaikwad resigned as a Company Secretary and Compliance Officer of the Company, with effect from April 14, 2022 due to personal reasons.

Based on the recommendations of the Nomination & Remuneration Committee, the Board of Directors at its meeting held on August 04, 2022 appointed

Mrs. Priyanka Chaurasia as Company Secretary and Compliance Officer of the Company with effect from August 04, 2022.

Declarations by Independent Directors

In accordance with Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the Listing Regulations, as amended, each Independent Director of the Company has provided a written declaration confirming that he/ she meets the criteria of independence as stipulated under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Listing Regulations.

In the opinion of the Board of Directors, the Independent Directors fulfil the conditions specified in the Companies Act, 2013 read with the rules made thereunder as well as Listing Regulations and are independent from Management, hold the highest degree of integrity and possess expertise in their respective fields with enormous experience.

All the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

All the Independent Directors of the Company have enrolled their names in the online database 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.

Familiarisation Programmes

The Company conducts Familiarisation programmes for its Independent Director which is imparted at the time of appointment of an Independent Director on Board as well as annually. The details of the training and Familiarisation programmes conducted by the Company are hosted on the Companys website at https://www.aarti-surfactants. com/independent-directors.htm

10. 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 accounts for the financial year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year and of the profit and loss of the Company for that period;

c) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities;

d) That Directors have prepared the annual accounts on a going concern basis;

e) The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f) The Directors had devised adequate systems and processes, commensurate with the size of the Company and the nature of its business, to ensure compliance with the provisions of all applicable laws and that such systems and processes are operating effectively.

11. Board and Committees of the Board

Board Meetings

During the year under review, the Board of Directors met 4 (four) times. The agenda of the Meetings were circulated to members of the Board in advance along with necessary documents, reports, recommendations etc., so that each Board Member could actively participate on agenda items during the meeting. The details of Board 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.

Committees of the Board

The Committees of the Board focus on certain specific areas and make informed decisions in line with the delegated authority.

The following statutory Committees constituted by the Board of Directors, function according to their respective roles and defined scope:

a) Audit Committee

b) Nomination and Remuneration Committee

c) Corporate Social Responsibility Committee

d) Stakeholders Relationship Committee

e) Risk Management Committee

Details of composition, terms of reference and number of meetings held for respective Committees are given in the Report on Corporate Governance, which forms a part of this Annual Report.

12. Related Party Transactions

The Company has a Policy on Materiality of Related Party Transaction and dealing with Related Party Transaction which is uploaded on the Companys website at https:// www.aarti-surfactants.com/assets/investors/Policy-on- Related-Party-Transactions-2022.pdf

All related party transactions that were entered into during the FY 2022-23 were on an arms length basis and were in the ordinary course of the business. All transactions entered with related parties were in compliance with the applicable provisions of the Companies Act, 2013 read with the relevant rules made thereunder and the Listing Regulations. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other Designated persons which may have potential conflict with interest of the Company at large.

The related party transactions are approved by the Audit Committee. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of transactions. A report of factual findings arising out of the accepted procedures carried out in regard to transactions with Related Parties is given by the Statutory Auditors on quarterly basis and the same is placed before the Audit Committee.

The details of related party transactions are provided in the accompanying financial statements.

Particulars of contracts or arrangements made with related parties

Since all related party transactions entered into by the Company were in ordinary course of business and were on an arms lengths basis, Form AOC-2 is not applicable to Company.

13. Corporate Social Responsibility

The Companys Corporate Social Responsibility (CSR) initiatives and activities are aligned to the requirements of Section 135 of the Companies Act, 2013 read with relevant rules, schedules etc.

Besides our direct involvement, we are partner with numerous implementing agencies to carryout need assessment and make impact interventions. Our focus areas include the following segments:

• Education & Skill Development

• Childcare & Healthcare Facilities

• Women Empowerment

• Social Welfare

• Disaster relief and rehabilitation

• Green Environment Project

• Rural Development

• Water conservation and environment

The detailed Policy on Corporate Social Responsibility is available on the website of the Company at https://www.aarti-surfactants.com/assets/investors/ Corporate%20Social%20Responsibility%20Policy.pdf

A brief note on various CSR initiatives undertaken during the year including the composition of the CSR Committee is presented in this Annual report. The CSR annual report is annexed as Annexure B and forms an integral part of the Report.

14. Nomination and Remuneration Policy

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations, your Company has in place a Nomination and Remuneration Policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy also lays down criteria for selection and appointment of Board Members. The said policy has been posted on the website of the Company at https://www.aarti-surfactants.com/assets/ investors/nomination-and-remuneration-policy.pdf

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

15. Risk Management

Your Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner.

The Company aims to use risk management to take better informed decisions and improve the probability of achieving its strategic and operational objectives.

In compliance with Regulation 21 of Listing Regulations, Your Company has a Risk Management Committee consisting of Mr. Nikhil Parimal Desai (Chairman), Mr. Mulesh Manilal Savla, Mr. Santosh Kakade, Mr. Chandrakant Vallabhaji Gogri & Mr. Nitesh Harakchand Medh. The Committee through its risk management framework continuously identifies, evaluates and takes appropriate measures to mitigate/ minimise various elements of risks. The Risk Management Committee meets periodically to ensure that appropriate methodologies, processes and systems are in place to monitor and evaluate risks associated with the business of the Company and also to monitor and oversee the implementation of the Risk Management Policy.

The said policy has been posted on the website of the Company at https://www.aarti-surfactants.com/assets/ investors/Risk%20Management%20Policv.pdf

16. Particulars of Employees

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure and forms part of this report.

In terms of Section 136(1) of the Act, details of employee remuneration as required under provisions of Section 197 of the Companies Act, 2013 and rule 5(2) and rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is available for inspection. Any member interested in obtaining a copy of the same may write to Company at investors@aarti-surfactants.com from their registered e-mail address.

Material Developments in Human Resources / Industrial

Relations Front, Including Number of People Employed

The company has maintained a positive relationship with its workers and staff during the past year. The companys commitment to caring for its people, customers, suppliers, and the community is reflected in its policies, programs, and development efforts. The companys dedication to building and strengthening its human capital is commendable. By defining policies that support employee growth and goals, the company creates an environment where employees can thrive and reach their full potential. This, in turn, can lead to increased job satisfaction, productivity, and overall success for the organization.

As of March 31, 2023, the Company had 308 permanent employees at its manufacturing plants and administrative office.

17. 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

There are no other material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which these financial statements relate and the date of the report.

18. Internal financial control systems and their adequacy

Your Company has clearly laid down policies, guidelines and procedures that form part of internal control systems, which provide for automatic checks and balances. Your Company has maintained a proper and adequate system of internal controls. The Company has appointed Raman S. Shah & Associates, Chartered Accountants, as an Internal Auditor who periodically audits the adequacy and effectiveness of the internal controls laid down by the Management and suggests improvements. This ensures that all Assets are safeguarded and protected against loss from unauthorised use or disposition and that the transactions are authorised, recorded and reported diligently. Your Companys 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.

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.

19. Investor Education and Protection Fund (IEPF)

There is no amount due, to be transferred to the IEPF account.

20. Particulars of Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 forms part of the notes to the Standalone Financial Statement of the Company.

21. Deposits

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014)], during the Financial Year 2022-23.

22. Annual Board Evaluation

Pursuant to the provisions of Companies Act, 2013 and the Listing Regulations, a structured questionnaire was prepared after taking into consideration various aspects of the Boards functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.

The performance of the Committees and Independent Directors were evaluated by the entire Board of Directors except for the Director being evaluated. The performance evaluation of the Chairman, Non- Independent Directors and Board as a whole was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the outcome of evaluation and the process followed thereof.

23. Significant and material orders passed by the regulators or courts or tribunals

The Regional Director, Northwestern Region, Ministry of Corporate Affairs vide its order dated April 28, 2023 had granted its approval for Shifting of Registered Office from the State of Gujarat to the State of Madhya Pradesh,

24. Health Environment and Safety

At Aarti Surfactants Limited, we hold paramount the well-being of our employees, customers, and the communities we operate in. Our unwavering commitment to Environment, Health, and Safety (EHS) is reflected in our steadfast efforts to foster a secure and healthy workplace for all. Throughout the year, we have diligently pursued the implementation of safer

process technologies and unit operations, aimed at mitigating risks and ensuring the highest standards of safety. Our company has taken substantial measures to adopt production processes that are not only efficient and innovative but also environmentally friendly. The continual monitoring and periodic review of our EHS Management System exemplify our dedication to upholding the highest EHS standards. These practices remain central to our operations, underscoring our unwavering pledge to sustainability and responsible business practices.

25. Sustainability

Sustainability lies at the core of our business philosophy. We recognize the imperative to use resources judiciously, ensuring that our actions today do not compromise the well-being and prospects of future generations. The concept of sustainability, which encompasses environmental, economic, and social considerations, guides our decision-making and strategic planning. Throughout 2022-23, we have taken deliberate steps to embed sustainability into our business practices. By adopting responsible resource management, optimizing energy consumption, and reducing our carbon footprint, we actively contribute to preserving our planets precious resources. Furthermore, our commitment to sustainability extends beyond environmental concerns; we strive to create a positive impact on society through ethical practices, community engagement, and fostering economic prosperity.

26. Vigil Mechanism / Whistle Blower Policy

The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and employees to report concerns about unethical behavior, actual or suspected fraud, actual or suspected leak of UPSI or violation of Companys 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 chairman of the audit committee in exceptional cases. Further, your Company has prohibited discrimination, retaliation, or harassment of any kind against any employee who reports under the Vigil Mechanism or participates in the investigation.

The said Policy is available on the website of the Company at https://www.aarti-surfactants.com/assets/ investors/whistle-blower-policy.pdf

27. Auditors and Reports

Statutory Auditors & their Audit Report

In accordance with the provisions of Section 139 of the Companies Act, 2013, Gokhale & Sathe, Chartered Accountants (Firm Registration No.: 103264W) were appointed as Statutory Auditor of your Company at the 1st Annual General Meeting till the conclusion of 6th Annual General Meeting to be held in 2024.

The Auditors have issued an unmodified opinion on the Financial Statements, both standalone and consolidated for the financial year ended March 31, 2023. The said Auditors Report(s) for the financial year ended March 31, 2023 on the financial statements of the Company forms part of this Annual Report.

The Auditors Report for the financial year ended 31st March, 2023 does not contain any qualification, adverse remark or reservation and therefore, do not call for any further explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

The Auditors have not reported any matter to the Company required to be disclosed under Section 143(12) of the Companies Act, 2013.

Cost Auditors and their Audit Report

In terms of 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 PHS & Associates, Cost Accountants, (Membership No. 101038) as the Cost Auditors of the Company for FY 2023-24. The remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their approval. Accordingly, a resolution for seeking Members approval for the remuneration payable to PHS & Associates, Cost Accountants, is included in the Notice convening the Annual General Meeting in terms of Rule 14 of the Companies (Audit & Auditors) Rules, 2014.

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

Secretarial Auditor & their Audit Report

Pursuant to the provisions of Section 204 of Companies Act, 2013 and rules made thereunder, the Board had appointed CS Sunil M. Dedhia (COP No. 2031), Proprietor

of Sunil M. Dedhia & Co, Company Secretary in Practice to undertake Secretarial audit of the Company.

Pursuant to provisions of Section 204(1) of the Companies Act, 2013 and Regulation 24A of the Listing Regulations, the Secretarial Audit Report for the Financial Year ended March 31, 2023 issued by CS Sunil M. Dedhia, the Secretarial Auditor of the Company is annexed as Annexure C and forms an integral part of this Report. During the year under review, the Secretarial Auditor had not reported any fraud under Section 143(12) of the Companies Act, 2013.

As regards the observations of the Secretarial Auditor in their Report, the same is self explanatory and need no further clarifications.

28. Annual Return

In terms of Section 92(3) of the Companies Act, 2013 read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return of the Company as on 31st March, 2023 is available on the Companys website at www.aarti-surfactants.com

29. Corporate Governance

Corporate Governance essentially involves balancing the interests of a Companys stakeholders. The Company continues to nurture a culture of good governance practices across functions, offices and manufacturing facilities.

Your Company has complied with the mandatory Corporate Governance requirements stipulated under the Listing Regulations. The separate Report on Corporate Governance is annexed hereto forming part of this report. The requisite certificate from Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate Governance.

30. Management Discussion and Analysis Report

Pursuant to Regulation 34 read with Schedule V to the Listing Regulations, Managements Discussion and Analysis for the year under review is presented in a separate section forming part of the Annual Report.

31. Business Responsibility & Sustainability Reporting (BRSR)

The Listing Regulations mandate the inclusion of the Business Responsibility & Sustainability Reporting as part of the Annual Report for top 1000 listed entities based on market capitalisation. The Company does not fall part

of the top 1000 listed entities for FY 2022-23, hence the BRSR is not applicable to the company.

32. Compliance Management System

The Company with its sheer focus committed to achieve 100% compliance. We have adopted a third-party managed IT-based Compliance Management System. It has a repository of all applicable regulations and requisite compliances. It has an in-built alert system that sends alerts to the users and intimates concerned personnel about upcoming compliances.

33. Disclosure under the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013

Your Company has constituted an Internal Complaints Committee, under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has a policy and framework for employees to report sexual harassment cases at workplace. The Companys process ensures complete anonymity and confidentiality of information.

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 and is fully committed to uphold and maintain the dignity of every woman working with the Company.

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 status of the Complaints 2022-23 is as follows:	During the FY
Particulars	No. of Complaints
Number of complaints at the beginning of the financial year	Nil
No. of complaints filed and resolved during the financial year	Nil
No. of complaints pending at the end the financial year	Nil

34. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to time, are provided in Annexure D to this report.

35. Secretarial Standards Compliance

During the year under review, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government pursuant to Section 118 of the Companies Act, 2013.

36. Details of application made or any proceeding pending under the insolvency and bankruptcy code, 2016 during the financial year alongwith their status as at the end of the financial year

During the Financial Year 2022-23, there was no application made and proceeding initiated / pending by any Financial and/or Operational Creditors against your Company under the Insolvency and Bankruptcy Code, 2016 ("the Code").

37. Details of difference between the amount of valuation at the time of one time settlement and the valuation done at the time of taking a loan from the banks or financial institutions along with the reasons thereof

During the Financial Year 2022-23, the Company has not made any settlement with its bankers for any loan / facility availed or/and still in existence.

38. Green Initiative

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

Acknowledgement

Your Board takes this opportunity to thank Companys employees at all levels for their hard work and commitment. Your Directors would like to express their grateful appreciation for the assistance and support by all Shareholders, Government Authorities, Auditors, Financial Institutions, Customers, Employees, Suppliers, other business associates and various other stakeholders.

For and on behalf of the Board

Mulesh Manilal Savla

Chairman

Mumbai/July 24, 2023 DIN: 07474847

Annexure A

FORM AOC-1

Salient features of Financial Statement of Subsidiary Company as per Companies Act, 2013.

Part "A": Subsidiaries

(Amount in Lakhs, except % of shareholding)

Name of Subsidiary Company	Aarti HPC Limited
Date of acquisition	December 26, 2019
Financial Period ended	March 31, 2023
Reporting Currency & Exchange Rate	INR
Share Capital	475.00
Reserves & Surplus	(9.22)
Total Assets	474.94
Total Liabilities	9.16
Investments	0
Turnover / Total Income	0
Profit / (Loss) Before Taxation	(0.60)
Provision for Taxation	0
Profit / (Loss) after Taxation	(0.60)
Proposed Dividend	Nil
% of Shareholding	100

Note:-

The Company i.e. Aarti HPC Limited (wholly owned subsidiary company of Aarti Surfactants Limited) is yet to commence its business operations.

As per our report of even date For Gokhale & Sathe Chartered Accountants Firm Registration Number: 103264W	For and on behalf of the Board
Partner Tejas Parikh Chandrakant Gogri Nikhil Desai M.No.123215 Director Managing Director DIN : 00005048 DIN : 01660649 Mumbai/April 27, 2023	Priyanka Chaurasia Nitesh Medh Company Secretary Chief Financial Officer ICSI M.No.A44258 ICAI M.No : 155868

Annexure B

The Annual report on CSR activities carried out during FY 2022-23

1. Brief outline on CSR Policy of the Company:

The Corporate Social Responsibility (CSR) policy of the Company is formulated in accordance with Section 135 of the Companies Act, 2013, and Schedule VII of the Act. Guided by its core values, the Company is committed to impactful CSR initiatives that extend beyond financial contributions.

The policy underscores a comprehensive approach to community development, focusing on areas such as education, healthcare, womens empowerment, environmental sustainability, destitution rehabilitation, preservation of Indian art and culture, rural progress, and disaster relief. The policy reflects meticulous planning and implementation, with a dedicated CSR Committee ensuring the selection, execution, and monitoring of projects in alignment with guiding principles. The Boards responsibilities encompass policy approval, annual action plan endorsement, and oversight to ensure CSR projects effectively benefit marginalized communities. The Companys ethical and transparent approach aligns with its Code of Conduct, emphasizing the pursuit of sustainable impact through strategic CSR endeavors.

2. Composition of CSR Committee:

Sr. No. Name of Director	Designation	Number of meetings of CSR Committee held during the year	Number of meetings of CSR Committee attended during the year
1. Chandrakant Vallabhaji Gogri	Chairman	1	1
2. Nikhil Parimal Desai	Member	1	1
3. Misha Bharat Gala	Member	1	1

3. Provide the web-link(s) where Composition of CSR Committee, CSR Policy and CSR Projects approved by the Board are disclosed on the website of the Company:

The Composition of CSR Committee, CSR Policy and CSR projects approved by the Board are disclosed on the website of the Company at www.aarti-surfactants.com

4. Provide the executive summary along with web-link(s) of Impact Assessment of CSR Projects carried out in pursuance of sub-rule (3) of rule 8, if applicable: Not Applicable

5. (a) Average net profit of the company as per sub-section (5) of section 135: - 1173.19 Lakhs

(b) Two percent of average net profit of the company as per sub-section (5) of section 135: - 23.46 Lakhs

(c) Surplus arising out of the CSR Projects or programmes or activities of the previous financial years: - Nil

(d) Amount required to be set-off for the financial year, if any: - 1.66 Lakhs

(e) Total CSR obligation for the financial year [(b)+(c) - (d)]: - 21.80 Lakhs

6. (a) Amount spent on CSR Projects (both Ongoing Project and other than Ongoing Project): - 21.83 Lakhs

(b) Amount spent in Administrative Overheads: - Nil

(c) Amount spent on Impact Assessment, if applicable: - Nil

(d) Total amount spent for the Financial Year [(a)+(b)+(c)]: - 21.83 Lakhs

(e) CSR amount spent or unspent for the Financial Year: -

Total Amount Spent	Amount Unspent (in lakhs)
for the Financial Year. (in lakhs)	Total Amount transferred to Unspent CSR Account as per subsection (6) of section 135.	Amount transferred to any fund specified under Schedule VII as per second proviso to sub-section (5) of section 135.
	Amount. Date of transfer.	Name of the Fund Amount. Date of transfer.
21.83		Not Applicable

(f) Excess amounts for set-off, if any: -

Sr. No. Particular	Amount (in lakhs)
(i) Two percent of average net profit of the company as per sub-section (5) of section 135	23.46
(ii) Total amount spent for the Financial Year	21.83
(iii) Excess amount spent for the Financial Year [(ii)-(i)]	Nil
(iv) Surplus arising out of the CSR projects or programmes or activities of the previous Financial Years, if any	Nil
(v) Amount available for set off in succeeding Financial Years [(iii)-(iv)]	Nil

7. Details of Unspent Corporate Social Responsibility amount for the preceding three Financial Years:

1	2	3	4	5	6	7	8
Sr. No.	Preceding Financial Year(s)	Amount transferred to Unspent CSR Account under sub- section (6) of section 135 (in )	Balance Amount in Unspent CSR Account under sub- section (6) of section 135 (in )	Amount Spent in the Financial Year (in )	Amount transferred to a Fund as specified under Schedule VII as per second proviso to sub- section (5) of section 135, if any	Amount remaining to be spent in succeeding Financial Years (in )	Deficiency, if any
Not Applicable

8. Whether any capital assets have been created or acquired through Corporate Social Responsibility amount spent in the Financial Year: - Nil

9. Specify the reason(s), if the company has failed to spend two per cent of the average net profit as per sub-section (5) of section 135: - Not Applicable

Chandrakant V. Gogri

Chairman of CSR Committee DIN:00005048

Nikhil P. Desai

Managing Director DIN:01660649

Mumbai/July 24, 2023

To,

The Members,

Aarti Surfactants Limited

(CIN: L24100MP2018PLC067037)

Plot no 57, 58, 60 to 64, 62A, S-3/1,

Sector-3, Sagore Village,

Pithampur Industrial Area,

District Dhar - 454775, Madhya Pradesh

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Aarti Surfactants Limited (hereinafter called "the Company"). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

Based on my verification of the Companys books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my opinion, the Company has, during the audit period covering the Financial Year ended on March 31, 2023 (Audit Period) complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31, 2023 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the Rules made there under;

(ii) The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made there under;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment, Overseas Direct Investment, External Commercial Borrowings which were not applicable;

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act):-

(a) The Securities and Exchange Board of India

(Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India

(Issue of Capital and Disclosure Requirements) Regulations, 2018;

(d) The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 which were not applicable to the Company during the Audit Period;

(e) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR");

(f) Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021, to the extent applicable;

(g) The Securities and Exchange Board of India

(Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(h) The Securities and Exchange Board of India

(Delisting of Equity Shares) Regulations, 2009 which were not applicable to the Company during the Audit Period;

(i) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 which were not applicable to the Company during the Audit Period; and

(j) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible and Redeemable Preference Shares) Regulations, 2013 to the extent applicable to the Company vide SEBI Circular No. CIR/ IMD/DF/50/2017 dated May 26, 2017;

I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India;

(ii) Listing Agreements entered into by the Company with BSE Limited and National Stock Exchange of India Limited;

During the Audit Period under review and as per the representations and clarifications made, the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards etc. mentioned above, except that the Company has not yet been able to file Form IEPF - 4 being Statement of shares transferred to the Investor Education and Protection Fund under IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 in respect of 29,914 equity shares allotted on August 20, 2019 pursuant to Composite Scheme of Arrangement involving the Company which have already been transferred by the Company to IEPF Authority on September 12, 2019 due to technical issue being encountered on the MCA portal, which has also been intimated to the IEPF Authority, but still remains unresolved;

I further report that based on review of compliance system prevailing in the Company, I am of the opinion that the Company has adequate systems and processes in place commensurate with its size and nature of operations to monitor and ensure compliance with the following laws applicable specifically to the Company:

(a) Indian Boiler Act, 1923 & The Indian Boilers

Regulations, 1950;

(b) Petroleum Act, 1934;

(c) Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2016;

(d) Air (Prevention and Control of Pollution) Act, 1981;

(e) Water (Prevention and Control of Pollution) Act, 1974;

(f) The Noise (Regulation and Control) Rules, 2000;

(g) Environment Protection Act, 1986 and other environmental laws;

(h) Hazardous Wastes (Management, Handling and Transboundary Movement) Rules, 2008; and

(i) Public Liability Insurance Act, 1991.

I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice was given to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

All decisions at the Board Meetings and Committee Meetings were taken unanimously as recorded in the minutes of the meetings of the Board of Directors or Committees of the Board, as the case may be.

I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I further report that during the Audit Period under review, the Company has made issue and allotment of further 8,92,291 equity shares of 10/- each at an issue price of 555/- per share (including premium of 545/-) on February 9, 2023 on rights basis to existing shareholders partly paid up to the extent of 4/- (received on application together with premium of 218/-) per share to raise approximately 49.52 crore. There were no other specific events / actions in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. having a major bearing on the Companys affairs.

This report is to be read with Annexure which forms an integral part of this report.

CS Sunil M. Dedhia

Proprietor, Sunil M. Dedhia & Co.

Practising Company Secretary FCS No: 3483 C.P No. 2031 Peer Review Certificate No. 867/2020 UDIN: F003483E000784065

Place: Mumbai Date: August 11, 2023

To The Members,

Aarti Surfactants Limited

(CIN: L24100MP2018PLC067037)

Plot no 57, 58, 60 to 64, 62A, S-3/1,

Sector-3, Sagore Village,

Pithampur Industrial Area,

District Dhar - 454775, Madhya Pradesh

My report of even date is to be read along with this letter.

(1) Maintenance of Secretarial record is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.

(2) I have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the processes and practices, I followed provide a reasonable basis for my opinion.

(3) I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

(4) Wherever required, I have obtained the Management representation about the compliance of Laws, Rules and Regulations and happening of events etc.

(5) The compliance of the provisions of Corporate and Other Applicable Laws, Rules, Regulations, Standard is the responsibility of Management. My examination was limited to the verification of procedures on test basis.

(6) The Secretarial Audit report is neither an assurance as to the future viability of the Company nor the efficacy or effectiveness with which the Management has conducted the affairs of the Company.

CS Sunil M. Dedhia

Proprietor, Sunil M. Dedhia & Co. Practising Company Secretary FCS No: 3483 C.P No. 2031

Place: Mumbai Peer Review Certificate No. 867/2020

Date: August 11, 2023 UDIN: F003483E000784065

Disclosure pursuant to Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts), Rules 2014

A) Conservation for Energy

The Steps Taken or Impact on Conservation of Energy;

1. LED Lighting Upgrade: The shift from traditional lamps to energy-efficient LED lights has significantly reduced daily energy consumption.

2. Variable Frequency Drive (VFD): The adoption of high-efficiency Variable Frequency Drives (VFD) for agitator motors has led to substantial energy savings per batch. This shift has resulted in reduced energy consumption compared to the previous fiscal year.

3. Waste Heat Recovery Boiler: The strategic

implementation of a Waste Heat Recovery Boiler has resulted in substantial saving of steam generation.

4. Optimization of Steam Consumption: A series of careful modifications, has led to a significant reduction in monthly steam consumption during a specific period.

5. Efficient Cooling Solution: As part of our ongoing efforts to optimize energy usage, we have replaced an air conditioning system with radiator coolers to achieve efficient cooling with reduced energy consumption.

6. Fire Hydrant Water Management: Improvements in water resource management practices have led to consistent water savings through a shift in our approach to raw water makeup.

The steps taken by the company for utilizing alternate sources of energy:

Installation of Solar Project: A solar project has been successfully deployed on our rooftop to meet auxiliary energy needs.

The capital investment on energy conservation equipment

1) An investment of 20.00 lakhs has been dedicated to solar projects, demonstrating our commitment to harnessing renewable energy sources.

2) A substantial capital infusion of 11.00 lakhs has been directed towards water harvesting initiatives, underscoring our emphasis on sustainable water resource management.

3) Additionally, a significant capital outlay of 28.80 lakhs has been strategically channelled into energy conservation measures, exemplifying our proactive approach to optimizing energy efficiency.

B) Technology absorption-

Efforts made towards technology absorption	Nil
Benefits derived like product improvement, cost reduction, product development or import substitution	N.A.
In case of imported technology (imported during the last three years reckoned from the beginning of the financial year):	Nil
Details of technology imported	N.A.
Year of import	N.A.
Whether the technology has been fully absorbed	N.A.
If not fully absorbed, areas where absorption has not taken place, and the reasons thereof	N.A.
Expenditure incurred on Research and Development:
Years (Rs. in Lakhs)
Financial year 2022-23	85.31
Financial year 2021-22	104.00

C) Foreign Exchange Earnings and Outgo

The details of Foreign exchange earnings and outgos are as follows:-

(Rs. in Lakhs)

Particulars	Financial year 2022-23	Financial year 2021-22
Foreign Exchange earnings	16,319.54	15,888.27
Foreign Exchange outgos	27,639.96	25,592.85

For and on behalf of the Board

Mulesh Manilal Savla

Chairman

Mumbai/July 24, 2023 DIN: 07474847