asahi songwon share price Directors report

<dhhead>Directors Report</dhhead>

To the Members of

Asahi Songwon Colors Limited

Your Directors’ take pleasure in presenting their 33^rd Annual Report on the business and operations of the Company together with the Audited Financial Statements both Standalone and Consolidated for the Financial Year ended March 31, 2023.

FINANCIAL HIGHLIGHTS

The Company’s standalone and consolidated financial performance for the year ended March 31, 2023 is summarised below:

( in lakhs)

Particulars	Standalone		Consolidated
	2022 2023	2021 2022	2022 2023	2021 2022
Revenue from Operations 1	33,736.49	40,109.26	50,455.14	41,082.26
Other Income	567.86	638.72	585.93	561.12
Total Income	34,304.35	40,747.98	51,041.07	41,643.38
Profit before Depreciation, Finance Cost, Exceptional Item and Tax Expenses	1,404.44	4,430.59	1,114.24	3,756.37
Less: Depreciation	1,001.18	880.53	1,486.45	1,195.70
Less: Finance Cost	867.80	325.10	1,401.96	472.42
Profit before Tax before Exceptional Item	(464.54)	3,224.96	(1,774.17)	2,088.25
Add: Exceptional Items	-	-	-	-
Profit before Tax (PBT)	(464.54)	3,224.96	(1,774.17)	2,088.25
Less: Tax Expenses	6.43	806.06	72.71	623.18
Profit after Tax (PAT)	(470.97)	2,418.90	(1,846.88)	1,465.07
Attributable to:
Owners of the Company	-	-	(1,164.90)	1,935.96
Non-Controlling Interest	-	-	(681.98)	(470.89)
Other Comprehensive Income/(Loss)	11.37	(35.49)	12.13	32.23
Total Comprehensive Income	(459.60)	2,383.41	1,834.75	1,432.84
Attributable to:
Owners of the Company	(459.60)	2,383.41	(1,153.10)	1,902.13
Non-Controlling Interest			(681.65)	(469.29)
Opening Balance in Retained Earnings	20,679.20	18,716.74	19,684.86	18,203.68
Amount available for appropriation	20,219.60	21,100.15	1,8531.76	20,105.81
Less: Dividend (including Dividend Distribution Tax) on equity shares	58.94	420.95	58.94	420.95
Closing Balance in Retained Earnings	20,160.66	20,679.20	1,8472.82	19,684.86

BRIEF DESCRIPTION OF THE COMPANY’S WORKING DURING THE YEAR/STATE OF COMPANY’S AFFAIRS a. General

Financial year 2022-2023 was marked by accumulated consumer demand, persistent supply interruptions and significant increases in commodity prices. Inflation reached its peak in several economies. Severe health outcomes in China, Russia’s war in Ukraine and tighter global financing costs added to the downside risks. While the Indian economy did not remain unscathed by these issues, it maintained a comparatively steady stance. The government’s increasing capital expenditure and an extraordinary growth in the MSME sector contributed to the growth. The Reserve Bank of India (RBI) implemented rigorous measures to address the escalating prices, raising the repo rate six times during FY2023. Better global supply chains, decreasing commodity prices, and a decrease in domestic demand is expected to lead to a decrease in inflation. All three business verticals of the Company were impacted by adverse conditions. Our pigments business was particularly affected by the customers’ destocking in response to the uncertain economic environment in European markets, leading to decreased demand and lower realisations for phthalocyanine and azo pigments. We experienced a drop in realisation for our APIs as well. The azo market is gradually recovering from the effects of the dynamic macro-environment. The recovery has borne well for us and we have managed to maintain optimal operation levels for our yellow pigment production, bolstered by a strong demand for the product. In Q1 FY2024, the Company’s azo business is already gaining steady momentum and the demand for phthalocyanine pigments is gradually improving. Raw material prices are stabilising. Your Directors are confident that as the situation gradually improves, the Company is well-poised to capitalise on upcoming opportunities through its operational excellence, maximised efficiency and elevated performance across our installed capacity.

b. Performance review

On standalone basis

During the year under review, the revenue from operation stood at 33,736 lakhs compared to 40,109 lakhs in the previous year. EBIDTA for FY2023 stood at 837 lakhs with an EBITDA margin of 2.48%. The Profit after tax (PAT) for FY2023 was (471) lakhs compared to 2,419 lakhs in the previous year.

On consolidated basis

During the year under review, the revenue from operation stood at 50,455 lakhs compared to 41,082 lakhs in the previous year. EBIDTA for FY2023 stood at 528 lakhs with an EBITDA margin of 1.05%. The Profit after tax (PAT) for FY2023 was (1,847) lakhs compared to 1,465 lakhs in the previous year. The consolidated numbers include the financial performance of Asahi Tennants Color Private Limited, Atlas Life Sciences Private Limited and Atlas Life Sciences (India) Private Limited, subsidiaries of the Company.

c. Exports

During the year under review, the total exports on a standalone basis contributed to 20,894 lakhs compared to 22,401 lakhs during the previous year. Your Company continues to focus on export markets for its product competitiveness and for seeking profitable opportunities for growth.

TRANSFER TO RESERVE

Yours Directors do not propose to transfer any amount to the General Reserves for the Financial Year ended March 31, 2023.

DIVIDEND

The Board of Directors at their meeting held on May 29, 2023 has recommended dividend at a rate of 0.50 per share (Fifty Paise Only) (5%) of face value of 10/- each on the fully paid up equity share capital as final dividend for the Financial Year 2022-2023. The payment is subject to the approval of members at the ensuing 33^rd Annual General Meeting ("AGM") of the Company. During the previous financial year, the Company has paid Final Dividend of 0.50 per share (5%) of face value of 10/- each on the fully paid up equity share capital of the Company.

The final dividend, if approved by the members at the ensuing Annual General Meeting would involve a total outgo of 58.94 lakhs towards dividend for the year.

As per the Income Tax Act, 1961 dividends paid or distributed by the Company shall be taxable in the hands of the shareholders. Accordingly, the Company makes the payment of the dividend from time to time after deduction of tax at source.

The dividend recommended is in accordance with the Dividend Distribution Policy of the Company. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") is annexed as Annexure – "F" and is also available on the Company’s website at www.asahisongwon.com.

INVESTOR EDUCATION AND PROTECTION FUND

Transfer of Unpaid/Unclaimed Dividend & Share Application Money to Investor Education and Protection Fund (IEPF)

During the year under review, unclaimed dividend amount of

0.72 lakhs towards the unpaid dividend account of the Company for the financial year 2014-2015 (Final Dividend) was transferred to Investor Education and Protection Fund (IEPF) of the Central Government. The said amount had remained unclaimed for seven years. Reminders are sent regularly to the Shareholders who have not claimed the dividend amount, to claim the same from the Company failing which, the unclaimed dividend lying in the unpaid account for seven years shall be transferred to IEPF within thirty days from the due date for transfer of unpaid dividend. Unclaimed dividend in respect of the financial year 2016-17 (Interim) is due for transfer to IEPF on April, 2024.

Transfer of Equity Shares to Investor Education Protection Fund Authority (IEPFA)

Pursuant to Section 124(6) of the Companies Act, 2013 read with Rule 6 of the Investor Education Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (as amended from time to time), all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more shall be transferred by the Company to the Demat Account of IEPFA within a period of thirty days of such shares become due for transfer. Upon transfer of such shares, all benefits (like dividend, bonus, split, consolidation etc.), if any, accruing on such shares shall also be transferred to the demat/ bank Account of IEPF(A) and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. During the year under review, the Company has transferred 100 Equity Shares to IEPFA, as dividend had not been encashed or claimed on the above shares during the seven consecutive years from the Financial Year 2014-2015. Further, the Company is in the process to transfer all shares in respect of which dividends declared for the year 2015-2016 or earlier financial years has not been paid or claimed by members for 7 (seven) consecutive years or more.

Details of Nodal Officer

The details of the nodal officer appointed by the Company under the provisions of IEPF is given below and the same is disseminated on the website of the Company www.asahisongwon.com

Name of the Company Secretary designated as Nodal Officer	Mr. Saji Varghese Joseph
Direct Phone No.	079-68325000
Email Id	cs@asahisongwon.com
Address	"Asahi House",
	20, Times Corporate Park
	Thaltej – Shilaj Road, Thaltej
	Ahmedabad - 380059

BUY BACK OF SHARES

During the year under review, the Board of Directors approved a proposal of buyback of 240,000 Equity Shares (representing 2% of the total paid-up equity share capital of the Company) at a price of 400/- per Equity Share to return surplus funds to shareholders of the Company and to improve earnings per shares by a decrease in the equity base. The details of Buy Back is given below:

Date of Board Meeting approving the buyback	May 19, 2022
Buyback price approved by the Board	400/- per
	Equity Shares
Buyback opening date	June
	22, 2022
Buyback closing date	July 05, 2022
Number of share bought back	2,40,000
Date of extinguishing of Equity Shares	July 15, 2022
Total Number of Equity Shares pre buyback	1,20,27,262
Total Number of Equity Shares post buyback	1,17,87,262

SHARE CAPTIAL a. Issue of equity Shares with differential rights

During the year under review, the Company has bought back 2,40,000 equity shares of 10/- each and accordingly Company’s issued, subscribed and paid-up equity share stood at 1178.73 lakhs divided into 1,17,87,262 equity shares of 10/- each. During the year under review, no equity shares with differential rights as to dividend, voting or otherwise where issued.

b. Issue of sweat equity shares

During the year under review, the Company has not issued any sweat equity shares.

c. Issue of employee stock options

The Company has not granted any Employee Stock Option within the meaning of section 62(1) (b) of the Companies Act, 2013 read with its Rules framed there under and Regulation 14 of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015.

d. Debentures

During the financial year under review, your Company do not issue any Debenture in terms of Section 42 of the Companies Act, 2013 read with Rule 14 of the Companies (Prospectus and Allotment) Rules, 2014 and no debentures were redeemed during the Financial Year 2022-2023.

LISTING

As at March 31, 2023, 1,17,87,262 Equity shares of the Company continue to remain listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE). The Company has paid the Annual Listing Fees to the said Stock Exchange(s) for the financial year 2023-2024.

FINANCIAL STATEMENTS

As per the provisions of the Act and in accordance with the Circulars issued by the Ministry of Corporate Affairs ("MCA") and Securities and Exchange Board of India (SEBI), from time to time, the Annual Report 2022-2023 containing Balance Sheet, Statement of Profit & Loss, other statements and notes thereto, including consolidated financial statements, prepared as per the requirements of Schedule III to the Act, Directors’ Report (including Management Discussion & Analysis and Corporate Governance Report) is being sent to all shareholders through permitted mode. The Annual Report 2022-2023 is also available at the Company’s website at www.asahisongwon.com.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the year under review, the Company has 3 Subsidiary Companies and 1 Associate Company.

Asahi Tennants Color Private Limited ("ATC")

Asahi Tennants Color Private Limited ("ATC") is a joint venture between your Company and Tennants Textile Colours Limited, England, where in your Company is holding 51% of total Equity Share Capital and the balance share capital of 49% is held by Tennants Textile Colours Limited, England. Tennants Textile Colours Limited (TTC) is the leading UK manufacturer of colour, based beside the River Lagan in Belfast, Northern Ireland with solvent production facility outside Birmingham, England. They produce a wide range of colour dispersions (Water & Solvent base) tailored to optimise their suitability for a range of markets including Textile, Paper, Paints & Coatings, Ink, Agriculture & Plastic. Today they export to over 41 countries globally from their base in the UK.

Atlas Life Sciences Private Limited

On April 18, 2022, the Company acquired 78% stake of Atlas Life Sciences Private Limited, a manufacturer of Active pharmaceutical ingredients (APIs) for an all-cash consideration of 4,800 lakhs. Atlas Life Sciences Private Limited is a leading manufacturer of Anti-convulsant, Anti-psychotic and Anti-diabetic APIs with storing focus on product and process research. Its key products includes: Pergabalin, R-Compound, Levosulpiride, Amisulpride, Glicazide, Phenylephrine.

Atlas Life Sciences (India) Private Limited

On April 28, 2022 the Company has incorporated Atlas Life Sciences (India) Private Limited a wholly owned subsidiary of the Company to manufacture Active Pharmaceutical Ingredient and Bulk Drugs. The Company has started construction of plant at Chhatral, Mehsana, Gujarat.

Plutoeco Enviro Association

Plutoeco Enviro Association, an Associate Company of the Company incorporated on October 27, 2020 as Section 8 Company to work as Non-Profit Organisation. Further, It is not Material associates as per the Securities Exchange Board of India (Listing Obligation and Disclosures Requirements) Regulations, 2015.

Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, statement containing the salient features of the financial statements of its subsidiaries in AOC-1 is attached to the financial statements in a separate section and forms part of this Report. The policy relating to material subsidiaries as approved by the Board may be accessed on the Company’s website www.asahisongwon.com . During the year, no other Company, except the companies mentioned above, has become or ceased to be subsidiary, joint venture or associate of the Company.

Financial Position and Performance of Subsidiaries, Joint Ventures and Associates

The financial summary of the subsidiary companies are as follows:

Particulars	Asahi Tennants Colors Private Limited		Atlas Life Sciences Private Limited		Atlas Life Sciences (India) Private Limited
	2022-2023	2021-2022	2022-2023	2021-2022	2022-2023	2021-2022
Revenue from Operations	4,148.64	973.42	1,2571.29	-	-	-
Profit Before Tax	(1,378.61)	(1,143.89)	91.82	-	-	-
Profit After Tax	(1,420.22)	(961.01)	67.14	-	-	-

ANNUAL ACCOUNTS OF SUBSIDIARY COMPANY

As provided in section 136 of the Act, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary Company are not being attached with the Financial Statements of the Company. The Company has uploaded on its website the Audited Financial Statements of the subsidiary Company and the related detailed information to any member of the Company who may be interested to receive the same. The Financial Statements of the subsidiary Company will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies and the financial highlights of subsidiaries are part of this Annual Report as Annexure-"A" as prescribed in Form AOC-1.

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to the requirement of Regulation 33 & Regulation 34 of the Securities Exchange Board of India

(Listing Obligations & Disclosure Requirements) Regulations, 2015 (hereinafter referred as Listing Regulations) read with other applicable provisions and prepared in accordance with applicable Ind AS, for financial year ended March 31, 2023.

FINANCE AND INSURANCE

The Company has been financed by State Bank of India, Federal Bank Limited and HDFC Bank Limited for both working capital and term loans. The Company’s Plant, Property, Equipments and Stocks are adequately insured under the Industrial All Risk Policy. The Company has insurance coverage for Public Liability, Marine Coverage and Commercial General Liability (CGL). The Company has Director’s and Officers Liability Policy (D&OL) to provide coverage against risk arising on thereon.

Bank Term Loans

During the year under review, CARE has reviewed the ratings to CARE A: Stable rating assigned to the long-term facilities of your Company. This rating is applicable to facilities having tenure of more than one year. CARE has also reafirmed the CARE A1 rating assigned to the short-term facilities of your Company. This rating is applicable to facilities having tenure up to one year.

PUBLIC DEPOSIT

During the year under review, the Company has not accepted or renewed any fixed deposit from public within the meaning of Section 73 of Companies Act, 2013 and read with the Companies (Acceptance of Deposits) Rules, 2014, as such, no amount of principal or interest was outstanding as on March 31, 2023.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANYWHICHHAVEOCCURREDBETWEENTHE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There have been no material changes and commitments, affecting the financial position of the Company since the close of Financial Year i.e. March 31, 2023 and the date of this report.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company during the financial year ended March 31, 2023.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

The Company has not received any significant or material orders passed by any regulatory authority, court or tribunal which shall impact the going concern status and Company’s operations in future.

BOARD OF DIRECTORS AND ITS COMMITTEES

Composition of the Board of Directors

As on March 31, 2023, the Board of Directors of the Company comprised of nine Directors, with three Executive and six Non-Executive Directors, which includes five Independent Directors. The composition of the Board of Directors meets the requirements of provisions of Regulation 17 of the Listing Regulations and Section 149 of the Companies Act, 2013.

Change in office of Directors and Key Managerial Personnel of the Company during the year under review and details of Directors seeking Re-appointment at 33^rd Annual General Meeting.

Directors liable to retirement by rotation

In accordance with the provisions of Section 152 (6) of the Companies Act, 2013 and in terms of the Articles of Association of the Company, Mr. Munjal M. Jaykrishna, Director of the Company is due to retire by rotation at the ensuing 33^rd

Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

Appointment of Women Independent Director

During the year under review, Mrs. Shivani Revat Lakhia (DIN:09527745) was appointed as Independent Director (Women) by the members through Postal Ballot on June 21, 2022 for five consecutive years with effect from March 24, 2022.

Profile of Directors seeking appointment/re-appointment

As required under Regulation 36 (3) of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015, particulars of Directors seeking appointment/ re-appointment at the ensuing Annual General Meeting are annexed to the notice convening 33^rd Annual General Meeting.

Key Managerial Personnel

Pursuant to the provisions of sections 2(51) and 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as on March 31, 2023, the Key Managerial Personnel (KMP) in the Company are as follows: Mr. Gokul M. Jaykrishna, Joint Managing Director & CEO Mr. Narendra Rathi, Chief Financial Officer Mr. Saji Varghese Joseph, Company Secretary During the year under review, Mr. Narendra Rathi was appointed as CFO and Key Managerial Personnel in the terms of provisions of Section 203 of the Companies Act, 2013 with effect from February 13, 2023 upon the resignation of Mr. Pratik Shah as CFO and Key Managerial Personnel with effect from close of business hours on December 12, 2022.

Mr. Gokul M. Jaykrishna, Joint Managing Director & CEO of the Company who is also serving as Managing Director & CEO of Asahi Tennants Color Private Limited, the Subsidiary of the Company received 44.45 lakhs as remuneration from the Subsidiary Company during the year 2022-2023. Whereas Mr. Arjun G. Jaykrishna, Executive Director of the Company who is also serving as Managing Director of Atlas Life Science Private Limited the Subsidiary of the Company received 23.35 lakhs as remuneration from the Subsidiary Company during the year 2022-2023.

Women Director

The Composition of the Board of Directors of the Company includes a women director viz. Mrs. Paru M. Jaykrishna and Mrs. Shivani Revat Lakhia. Accordingly, the Company is in compliance with the requirement of Section 149 (1) of the Companies Act, 2013 read with Rule 3 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Policy on Directors’ appointment and Policy on remuneration

Pursuant to Section 134(3)(e) and Section 178(3) of the Act, the policy on appointment of Board members including criteria for determining qualifications, positive attributes, independence of a director and the policy on remuneration of directors, KMP and other employees. The same are also available on the website of the Company at www.dabur.com at weblink https://www. asahisongwon.com.

Particulars of remuneration of Directors/KMP/ Employees’

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as per Annexure - "D" to this report.

Criteria for Determining Qualifications, Positive Attributes and Independence of a Director

The Nomination and Remuneration Committee has formulated Nomination, Remuneration and Evaluation Policy, which details the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Companies Act, 2013 and the Listing Regulations. The policy forms part of this report. 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 the Report.

Declaration of independence

The Company has received necessary declarations from the independent directors under Section 149(7) of the Companies Act, 2013, the he/she meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015. The Board confirms that the said Independent Directors meet the criteria as laid down under the Companies Act, 2013 as well as Securities Exchange Board of India (Listing Obligation and Disclosure Requirements, 2015. There are no pecuniary transactions entered into with the Independent Director apart from sitting fees.

Certificate from Practicing Company Secretary

Pursuant to Regulation 34(3) and Schedule V Para C clause (10) (i) of the Listing Regulations, M/s. Shyamsingh Tomar Associates, Company Secretary in Practice, Ahmedabad, has certified that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as Directors of the Company by the Securities and Exchange Board of India/Ministry of Corporate Affairs or any such statutory authority and the certificate forms part of the Report of Corporate Governance forming part of this Annual Report.

BOARD EFFECTIVENESS a. Familiarization Programme for the Independent Directors

Your Company has put in place a well structured familaristion programme for all its directors including independent directors of the Company with respect to the roles and responsibilities outlined under the Companies Act, 2013 and other related Regulations. The Directors are familiarized with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc. from time to time. The Company makes consistent efforts to acquaint the Board with the overall business performance covering all Business verticals, by way of presenting specific performance of each Plants, Product Category and Corporate Function from time to time. Details of the Familiarization Programme are explained in the Corporate Governance Report.

b. Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Regulation 25(3) & (4) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Independent Directors in their meeting held on November 10, 2022 have evaluated the Performance of Non-Independent Directors, Chairperson of the Company after considering the views of the Executive and Non-Executive Directors, Board as a whole assessed the quality, quantity and timeliness of flow of information between the Company’s Management and the Board. The Nomination and Remuneration Committee has also carried out evaluation of performance of every Director of the Company.

The evaluation of individual Director was carried out based on various parameters such as participation in the Board and its Committee meetings, contribution towards strategic proposals, suggesting risk mitigation measures, putting in place internal controls, governance, leadership and talent development and managing external stakeholders. Performance evaluation of various Sub- committees of the Board was carried out based on the criteria such as constitution, effective functioning of the Sub-committees as per the terms of reference, periodical suggestions and recommendations given by the Subcommittees to the Board etc.

On the basis of evaluation made by the Independent Directors and the Nomination and Remuneration Committee and by way of individual and collective feedback from the Non-Independent Directors, the Board has carried out the Annual Performance Evaluation of the Directors individually as well as evaluation of the working of the Board as a whole and Committees of the Board. The manner in which the evaluation has been carried out is explained in the Corporate Governance Report.

The Independent Directors are regularly updated on industry & market trends, plant process, and operational performance of the Company etc. through presentations in this regard and periodic plant visits. They are also periodically kept aware of the latest developments in the Corporate Governance, their duties as directors and relevant laws.

In the meeting of Independent Directors held during the year, the members considered evaluation of the performance of the Chairman based on criteria such as giving guidance to the Board and ensuring the independence of the Board etc. The performance of the Non- Independent Directors was also evaluated based on their contribution made to the growth of the Company, strategic initiatives and Board deliberation.

DIVERSITY OF THE BOARD

The Company recognises and embraces the benefit of having a diverse Board of Directors and views increasing diversity at the Board level as an essential element in maintaining competitive advantage in the Business in which it operates. This Policy can be accessed from the Company’s website www. asahisongwon.com

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provision under section 134 of the Companies Act, 2013, the Board of Directors, to the best of its knowledge and ability, confirm that:

i) in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii) the directors had selected such accounting policies and applied them consistently and made judgements 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 the profit and loss of the Company for that period; iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; iv) the annual financial statements have been prepared on a going concern basis; v) they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and vi) they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Number of Meetings of the Board of Directors

The Board meets at regular intervals to consider and approve financial results, business policies and strategic proposals apart from other items of business. The Board and Committee meetings are pre-scheduled, and a tentative annual calendar of meetings is circulated to the Directors in advance to ensure participation of all Directors.

During the year under review, six Board meetings were held, and meetings of Subcommittees were also held. The intervening gap between the meetings was within the period prescribed under the Act and the Listing Regulations. The details of the meetings are given in the Report on Corporate Governance which forms part of this Report. The Company provides all the Board members the facility to participate the meetings of Board and Subcommittees through Video Conferencing/Other Audio-Visual means. Pursuant to the requirements of Schedule IV to the Companies Act, 2013 and the Listing Regulations, a separate Meeting of the Independent Directors of the Company was held on November 10, 2022, and the Directors reviewed the matters enumerated under Schedule IV(VII)(3) to the Act and Regulation 25(4) of the Listing Regulations. All the Independent Directors attended the said meeting.

STATUTORY COMMITTEES OF THE BOARD

The Company has the following five (5) Board level Committees, which have been established in compliance with the requirements of the relevant provisions of applicable laws and statutes: 1. Audit Committee 2. Nomination and Remuneration Committee 3. Corporate Social Responsibility Committee 4. Stakeholders’ Relationship Committee 5. Risk Management Committee

Audit Committee

The Audit Committee comprises of three Non-Executive Directors, all of whom are Independent Directors. Dr. Pradeep Jha is the Chairman of the Audit Committee. The Composition of the Audit Committee meets the requirement of Section 177 of the Companies Act, 2013 and Regulation 18 of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015.

Dr. Pradeep Jha is the Chairman of the Audit Committee. The Composition of the Audit Committee meets the requirement of Section 177 of the Companies Act, 2013 and Regulation 18 of the Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulation, 2015. The Company Secretary is the Secretary of the Committee. The Joint Managing Director, Chief Financial Officer and Auditors are permanent invitees to the committee meetings. The detail of terms of reference of Audit Committee, number and dates of meetings held, attendance of the directors and remunerations paid to them are given separately in the attached Corporate Governance Report. Your Company has a well structured Internal Audit System commensurate with its size and operations. During the year there were no instances where the board had not accepted the recommendations of the Audit Committee.

Further details on the Audit Committee are provided in the Corporate Governance Section of the Annual Report.

Corporate Social Responsibility Committee

In terms of the provisions of Section 135 of the Companies Act, 2013 read with Companies (Corporate Social Responsibility Policy) Rules, 2014 the Board of Directors of your Company has constituted a Corporate Social Responsibility (‘CSR") Committee which is Chaired by Mrs. Paru M. Jaykrishna the Chairperson and Managing Director of the Company, the other members of the committee are Mr. Jayprakash M. Patel and Dr. Pradeep Jha who are independent directors of the Company. Your Company also has in place a CSR policy and the same is available on the website of the Company. The committee places before the Board the details of the activities to be undertaken during the year. A detail report is attached as Annexure – "G" forming part of this report.

Nomination and Remuneration Committee

The constitution and terms of reference of nomination and remuneration committee of the Company are in compliance with Section 178 of the Companies Act, 2013 and Regulation 19 and Part D of Schedule II of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 As on March 31, 2023, the Nomination and Remuneration Committee comprises of three (3) Non-Executive Independent Directors Mr. Jayprakasah M. Patel, Chairman, Mr. R. K. Sukhdevsinhji and Dr. Pradeep Jha, Member as its members. Further details relating to the Nomination and Remuneration Committee are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

Stakeholders Relationship Committee

The Stakeholders’ Relationship Committee is primarily responsible to review all matters connected with the Company’s transfer of securities and redressal of shareholders’/investors’/ security holders’ complaints. The constitution and terms of reference of Stakeholder Relationship Committee of the Company pursuant to Section 178(5) of the Companies Act, 2013 and Regulation 20 and Part D of Schedule VI of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Risk Management Committee

As per Regulation 21 of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has constituted a Risk Management Committee. Your Company has prepared Risk Management Policy and Formulated Risk Management Committee and define role and responsibilities as per Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDITORS RELATED MATTERS a. Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and Rules made thereunder M/s. Talati & Talati LLP., Chartered Accountants, Ahmedabad (Firm Registration No. 110758W/W100377) were appointed as Statutory Auditors of the Company for a term of five consecutive years, to hold office from the conclusion of the 32^nd Annual General Meeting ("AGM") until the conclusion of the 37^th Annual General Meeting of the Company to be held in the calendar year 2027. M/s. Talati & Talati LLP, Chartered Accountants, Ahmedabad, have submitted their Report on the Financial Statements of the Company for the Financial Year 2022-2023, which forms part of the Annual Report 2022-2023. The report of the Statutory Auditors along with Notes to Schedules is enclosed with this Report. The Auditor’s Comments on the Company’s Accounts for the financial year ended on March 31, 2023 are self-explanatory in nature and do not require any explanation as per provisions of Section 134 of the Companies Act, 2013. The Auditor’s Report does not contain any qualification, reservation or adverse remark.

The Company has received a certificate from the Auditors stating that their appointment, if made, will be within the limit specified under Sections 139 and 141 of the Companies Act, 2013. The Auditors have also confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold a valid certificate issued by the Peer Review Board of the ICAI.

b. Cost Auditors

During the year under review, cost audit was not applicable to the Company.

c. Secretarial Auditors

Pursuant to Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed M/s. Shyamsingh Tomar & Associates, Company Secretaries, Ahmedabad as a Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial Year 2022-2023 (Period from April 1, 2022 to March 31, 2023). The Report of Secretarial Auditor in the prescribed form MR-3 for the financial year 2022-2023 is set out as Annexure-"H" and it forms a part of this Report.

Certain remarks in the Secretarial Audit Report do not have material impact on financial performance of the Company. The views of the Management on such remark are given hereunder: During the year under review, penalty was levied by National Stock Exchange of India Limited for Non-compliance to Regulation 17 (1) (a) of Securities Exchange Board of India (Listing Obligation and Disclosure Requirements), Regulations, 2015 for the quarter ended March 31, 2022. The Company has appointed independent women director on March 24, 2022 and duly constituted and complied Regulation 17 (1) (a) of Securities Exchange Board of India (Listing Obligation and Disclosure Requirements), Regulations, 2015. The Company has duly paid penalty levied by National Stock Exchange of India Limited as per their Invoice. Further, under regulation 24A of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has received Secretarial Compliance Report for the 2022-2023 from M/s. Shyamsingh Tomar & Associates, Company Secretaries, Ahmedabad and same has filed with the Stock Exchanges (BSE& NSE).

d. Internal Auditors

M/s. Fenil P. Shah & Associates, a Practicing Chartered Accountants, Ahmedabad are the Internal Auditors of the Company for the financial year 2022-2023. Internal Auditors are appointed by the Board of Directors of the Company on a yearly basis, based on the recommendation of the Audit Committee. The Internal Auditors report their findings on the internal audit of the Company, to the Audit Committee on a quarterly basis. The scope of internal audit is approved by the Audit Committee.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRAL GOVERNMENT

During the year under review, neither the Statutory Auditors or the Secretarial Auditors have reported to the Audit Committee under section 143(12) of the Companies Act, 2013 any instances of fraud committed against your Company by its officers and employees, details of which would need to be mentioned in the Board’s Report.

POLICY MATTERS

Nomination, Remuneration and Evaluation Policy

In terms of provisions of Section 178(3) of the Act, the Nomination and Remuneration Committee of the Company has formulated and recommended to the Board a policy, containing the criteria for determining qualifications, competencies, positive attributes and independence for appointment of a Director (Executive/Non-Executive) and it highlights the remuneration for the Directors, Key Managerial Personnel and other employees, ensuring that it covers the matters mentioned in Section 178(4) of the Act. Nomination, Remuneration and Evaluation Policy approved by the Board forms part of this Report as per Annexure-"D".

Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, which enables the Directors and Employees to report instances of unethical behavior, fraud or violation of Company’s Code of Conduct. The policy provides for direct access to the Chairperson of the Audit Committee and safeguarding the employees and Directors who raises grievances against victimization. The policy has been circulated amongst the employees of the Company working at various locations, divisions/units. The policy formulated in line with the provisions of the Act and the Listing Regulations is available on the website of the Company at http://www.asahisongwon.com/pdf/Policy%20of%20 Whistle%20Blower%20Policy.pdf.

Corporate Social Responsibility Policy

In terms of the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors of your Company has constituted a Corporate Social Responsibility (CSR) Committee and framed a CSR policy which details the programs/activities that can be carried out under various program heads and the same is available on the website of the Company at http://www. asahisongwon.com/pdf/Policy%20on%20CSR.pdf The Company’s CSR Programmes are focused on Health Care and Education, Infrastructure Development, Sustainable Livelihood and Social Empowerment & Welfare. During the year, the Company carried out several initiatives under the CSR programme heads a report on CSR activities is attached as Annexure-"G" forming part of this report.

Risk Management Policy

The Company has formulated Enterprise Risk Management policy in accordance with the guidelines provided under the Charter of the Risk Management Committee of the Board of Directors, and pursuant to Regulation 21 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Risk Management policy provides a structured, consistent, and continuous process across the whole organization for identifying, assessing, deciding on mitigations and reporting on the opportunities and threats that may affect the achievement of its strategic objectives.

The Company has enhanced Enterprise Risk Management Charter and Policy to institutionalize a formal risk management function and framework consisting of Risk Management Process and Risk Governance and Communication Structure. For detailed framework and outcome refer to Enterprise Risk Management section in the Management Discussion and Analysis Report.

Dividend Policy

Pursuant to the provisions of Regulation 43A of the Listing Regulations, the Board of Directors of the Company has adopted a Dividend Policy which details the dividend philosophy of the Company, the factors which are considered by the Board while recommending/declaring dividend, suggested band for proposing dividend payout, periodicity of dividend, circumstances in which dividend is considered etc. The said policy is given in Annexure-"F" to this report and posted on the website of the Company at http://www.asahisongwon.com/ pdf/Dividend-Policy.pdf

CASH FLOW STATEMENT

As required under Regulation 34(2) (c) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, a Cash Flow Statement prepared in accordance with the Indian Accounting Standard 7 (Ind AS-7) is attached to the Financial Statement.

ANNUAL RETURN

The details forming part of the Annual Return of the Company containing the particulars prescribed under Section 92 and 132 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, in Form MGT-7, as on March 31, 2023, is made available on the Company’s website www.asahisongwon.com.

EXPORT HOUSE STATUS

The Company has been awarded status of "Two Star Export House" by Office of Development Commissioner, Kandla Special Economic Zone, Gandhidham, Kutch in accordance with provisions of Foreign Trade Policy 2015-2020. This status is valid till December 31, 2025.

AWARDS AND ACCOLADES

During the year under review, the Company has received GDMA First Award for highest self manufacturing turnover from domestic and export of Dye & Dye Intermediates for the year 2021-2022. During the year, Mrs. Paru M. Jaykrishna, Chairperson and Managing Director of the Company received Life Time Achievement Awards 2018-2019 from CHEMEXCIL.

RESEARCH AND DEVELOPMENT (R&D)

The Company has a Research and Development centre, which is recognized by the Ministry of Science and Technology, Government of India. Focused areas of the Research and Development Centre was on product quality, cost reduction, new product offerings and environmental sustainability.

ANY REVISION MADE IN FINANCIAL STATEMENTS OR BOARD’S REPORT

The Company has not revised the Financial Statements or Board’s Report in respect of any of the three preceding Financial Years.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All related party transactions which were entered during the Financial Year were in the ordinary course of business and on an arm’s length basis. There were no materially significant related party transactions entered by the Company with the Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interests of the Company. 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. Since all the related party transactions entered during the financial year were on an arm’s length basis and in the ordinary course of business, no details are required to be provided in Form AOC-2 as per Annexure – "B" as prescribed under Section 134(3) (h) of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. In accordance with the requirements of the Listing Regulations, the Company has also adopted Policy on Materiality and dealing with Related Party Transactions and the same has been placed on the website of the Company at www.asahisongwon.com.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

In compliance with Regulation 34(2)(e) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015,,the Management Discussion and Analysis Report forms part of this Annual Report

CORPORATE GOVERNANCE

The report of the Board of Directors of your Company on Corporate Governance in terms of Regulation 34 read with Schedule V of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented as a separate section titled Corporate Governance Report as per Annexure-"I". The composition of the Board, the Audit Committee, the Nomination and Remuneration Committee, the Stakeholders Relationship Committee, the Corporate Social Responsibility Committee and other Committees of the Board, the number of meetings of the Board and Committees of the Board, and other matters are presented in the Corporate Governance Report. A certificate from M/s. Shyamsingh Tomar & Associates, Company Secretaries, Ahmedabad regarding compliance with the Corporate Governance requirements as stipulated in the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which forms part of the Annual Report.

Further as required under Regulation 17(8) of the Listing Regulations, a certificate from the Joint Managing Director & CEO and Chief Financial Officer is annexed with this Report.

CODE OF CONDUCT

In compliance with Regulation 26(3) of the Listing Regulations and the Act, the Company has framed and adopted Code of Conduct (the Code) for Directors and Senior Management, which provides guidance on ethical conduct of business and compliance of law All members of the Board and Senior Management personnel have afirmed the compliance with the Code as on March 31, 2023. A declaration to this effect, signed by the Managing Director in terms of the Listing Regulations is given in the Report of Corporate Governance forming part of this Annual Report. The Code is made available on the Company’s website www.asahisongwon.com.

CODE OF PRACTICES AND PROCEDURES FOR FAIR DISCLOSURE OF UNPUBLISHED PRICE SENSITIVE INFORMATION

The Board has formulated Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information (Fair Disclosure Code) for fair disclosure of events and occurrences that could impact price discovery in the market for the Company’s securities and to maintain the uniformity, transparency and fairness in dealings with all stakeholders and ensure adherence to applicable laws and regulations. The copy of the same is available on the website of the Company at http://www.asahisongwon.com/pdf/Asahi%20Songwon%20 Colors%20Code%20of%20Practices%20and%20Procedure%20 for%20Fair%20Disclosure%20of%20Unpublished%20Price%20 Sensitive%20Information.pdf

PREVENTION OF INSIDER TRADING

The Board has formulated code of conduct for regulating, monitoring and reporting of trading of shares by Insiders. This code lays down guidelines, procedures to be followed and disclosures to be made by the insiders while dealing with shares of the Company and cautioning them on consequences of non-compliances. The copy of the same is available on the website of the Company www.asahisongwon.com.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information in accordance with the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 regarding conservation of energy, technology absorption and foreign exchange earnings and outgo is given as per Annexure – "C" hereto forming part of this Report.

DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

Your Company has in place adequate internal control systems commensurate with the size of its operations. The internal control systems, comprises of policies and procedures which are designed for safeguarding the assets, optimal utilization of resources, sound management of Company’s operations. These are continually reviewed by the Company to strengthen the same wherever required. The internal control systems are supplemented by internal audit carried out by an Independent Cost Accountant and periodical review by management. The Audit Committee of the Board addresses issues, if any, raised by both, the Internal Auditors and the Statutory Auditors.

Details in respect of adequacy of internal financial controls with reference to the financial statements are stated in Management Discussion and Analysis which forms part of this Report.

CERTIFICATIONS

Your Company has ISO 14001:2015 for Environmental Management System certification and ISO 9001-2015 for quality management system for plant at Vadodara.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PRHIBITION & REDRESSAL) ACT, 2013

The Company has in place a policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment. All women employees (permanent, temporary, contractual and trainees) are covered under this policy and it has been circulated amongst the employees of the Company and the same is exhibited on the notice board of all the business locations of the Company.

During the year under review, the Company had not received any compliant under Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

ENVIRONMENT, HEALTH AND SAFETY

The Company is committed to health and safety of its employees, contractors and visitors. We are compliant with all EHS Regulations stipulated under the Water (Prevention and Control of Pollution) Act, The Air (Prevention and Control of Pollution) Act, The Environment Protection Act, The Factories Act and Rules made there under. Safety and environmental standards are periodically reviewed and upgraded. The Company preserves in its efforts to educate safe and environmentally accountable behavior in every employee, as well as its vendors. The Company has undertaken various environment friendly measures in its different Units for promoting a better environment. The Company has in place adequate pollution control equipment.

The solid waste generated at the Works, after treatment of its liquid e_uent is shifted to a Gujarat Pollution Control Board (GPCB) approved site.

The Company has maintained a greenbelt around its sites as a part of its commitment to environment management.

The Company continues to demonstrate its commitment to a clean and safe environment. The state of the art e_uent treatment plant continues to run satisfactorily, so that the treated wastewater discharged is well within the stipulated norms set by GPCB. As a part of water conservation efforts, the Company has implemented suitable engineering solution to utilize recycled water as much as possible in cleaning, gardening and other utilities.

PARTICULAURS OF EMPLOYEES AND RELATED DISCLOUSRES

The information required pursuant to Section 197 of Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is given as per Annexure–"E" hereto forming part of this Report.

In accordance with the provisions of section 197(12) of the Companies Act, 2013 read with rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of employees drawing remuneration in excess of the limits, set out in the aforesaid rules, forms part of this Report. In line with the provisions of section 136(1) of the Companies Act, 2013, the Annual Report, as set out therein, are being sent to all the Members of your Company excluding the aforesaid information about the employees. Any Member, who is interested in obtaining these particulars about employees, may write to the Company Secretary of the Company.

REGISTRAR AND SHARE TRANSFER AGENT

Link Intime India Private Limited is the Registrar and Share Transfer Agent of the Company.

INDUSTRIAL RELATIONS

The Company maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and unstinting efforts of employees have enabled the Company to remain at the leadership position in the industry. It has taken various steps to improve productivity across organization.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors afirms that the Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees which have mandatory application during the year under review.

CHANGE OF REGISTERED OFFICCE

During the year under review, the Registered Office of the Company was shifted from ‘Asahi House’. 13, Aaryans Corporate Park, Thaltej-Shilaj Road, Nr. Shilaj Railway Corssing, Thaltej, Ahmedabad – 380059 to "Asahi House’, 20, Times Corporate House, Thaltej – Shilaj Road, Thaltej, Ahmedbad – 380059 within the Municipal Limit and within the State of Gujarat.

DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

During the year under review, the Company has neither made any application nor any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

GREEN INITIATIVE

The Ministry of Corporate Affairs had taken the Green Initiative in Report on Corporate Governance by allowing paperless compliances by Companies through electronic mode. Your Company supports the Green Initiative and has accordingly decided to send necessary communications to its Shareholders to their respective registered E-mail addresses.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors would like to express their appreciation for the assistance and cooperation received from the Government of India, Government of Gujarat, Electricity supply companies and Bankers and look forward to their continued support in future. We place on record our appreciation all our employees for their contribution to your Company’s performance. We applaud them for their superior levels of competence, dedication and commitment to your Company. The Company is thankful to the shareholders for reposing trust in the Company and their unflinching enthusiasm and patronage.