Atul Ltd Directors Report.

Dear Members,

The Board of Directors (Board) presents the annual report of Atul Ltd together with the audited Financial Statements for the year ended March 31, 2021.

01. Financial results

( cr)

2020-21 2019-20
Sales 3,460 3,824
Revenue from operations 3,512 3,906
Other income 104 77
Total revenue 3,616 3,983
Profit before tax 828 803
Provision for tax 197 163
Profit for the year 631 640
Balance brought forward 2,513 2,026
Transfer from comprehensive income (1) (2)
Disposable surplus 3,143 2,664
Dividend paid - 126
Dividend distribution tax (net) - 25
Balance carried forward 3,143 2,513

02. Performance

Sales decreased by 10% from Rs 3,824 cr to Rs 3,460 cr mainly due to lower volumes sold, primarily on account of the outbreak of the COVID-19 pandemic across the world. Sales in India decreased by about 5% from Rs 1,985 cr to Rs 1,885 cr. Sales outside India decreased by about 14% from Rs 1,839 cr to Rs 1,575 cr. The PBT increased by 3% from Rs 803 cr to Rs 828 cr inspite of the adverse impact of the pandemic mainly due to favourable input prices and higher dividend income. Sales of Life Science Chemicals (LSC) segment decreased by 4% from Rs 1,174 cr to Rs 1,124 cr, mainly because of lower sales volume in the sub-segments Crop Protection and Floras; the EBIT decreased by about 7% from Rs 213 cr to Rs 199 cr. Sales of Performance and Other Chemicals (POC) segment decreased by about 12% from Rs 2,650 cr to Rs 2,336 cr, mainly because of lower sales volume in three sub-segments; the EBIT decreased by about 1% from Rs 579 cr to Rs 574 cr. More details are given in the Management Discussion and Analysis (MDA).

03. Dividend and buy-back of equity shares

The Board recommends payment of dividend of Rs 20 per share on 2,95,87,051 equity shares of Rs 10 each fully paid-up. The dividend will entail an outflow of Rs 59.17 cr on the paid-up equity share capital of Rs 29.59 cr.

During 2020-21, the Board approved Rs 50 cr for buy-back of equity shares through the open market stock exchange route to return surplus funds to the shareholders of the Company and to improve earnings per share by a decrease in the equity base, thereby leading to a long-term increase in value for the shareholders. The buy-back of equity shares was completed as per details given below:

Buy-back opening date February 10, 2021
Buy-back closure date February 19, 2021
Average price per equity shares bought back 6,678.58
Aggregate consideration 49.88 cr
No. of equity shares bought back 74,682
Date of extinguishment of equity shares February 25, 2021
Total no. of equity shares of Rs 10 each, pre-buy-back 2,96,61,733
Total no. of equity shares of Rs 10 each, post-buy-back 2,95,87,051

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

Information required under Section 134 (3)(m) of the Companies Act, 2013, (the Act) read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, as amended from time to time, forms a part of this report, which is given at page number 28.

05. Insurance

The Company has taken adequate insurance to cover the risks to its employees, property (land and buildings), plant, equipment, other assets and third parties.

06. Risk management

Risk management is an integral part of business practice of the Company. The framework of risk management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following:

i) Risk identification and definition Focuses on identifying relevant risks, creating : updating undisputed clear definitions understanding along with details of the underlying root causes : contributing factors.

ii) Risk classification Focuses on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes, generating the root causes and a clear understanding of risk inter-relationships.

iii) Risk assessment and prioritisation Focuses on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls.

iv) Risk mitigation Focuses on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones.

v) Risk reporting and monitoring Focuses on providing to the Audit Committee and Board periodic information on risk profile evolution and mitigation plans.

Roles and responsibilities


The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) listed above. The Audit Committee : Risk Management Committee periodically reviews the risk management system and gives its recommendations, if any, to the Board.

The Board reviews and guides the Risk Management Policy.


Implementation of the Risk Management Policy is the responsibility of the Management. It ensures functioning of the risk management system as per the guidance of the Audit Committee : Risk Management Committee. The Company has a risk management oversight structure in which each sub-segment has a

Chief Risk and Compliance Officer.

The Management at various levels takes accountability for risk identification, appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and Board.

07. Internal financial controls

The internal financial controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements. These include policies and procedures that:

i) pertain to the maintenance of records, which in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company,

ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordance with Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and Directors of the Company,

iii) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the internal financial controls with respect to the Financial


The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2021, and the Board believes that the controls are adequate.

08. Fixed deposits

During 2020-21, the Company did not accept any fixed deposits.

09. Loans, guarantees, investments and security

Particulars of loans, guarantees, investments and security provided are given at page numbers 116 and 118.

10. Subsidiary, associate and joint venture entities

During 2020-21, Atul Lifescience Ltd, Atul Natural Dyes Ltd, Atul Natural Foods Ltd, Atul Products Ltd and Atul Renewable Energy Ltd were incorporated as wholly-owned subsidiary companies of the Company and Amal Speciality Chemicals Ltd, was incorporated as its wholly-owned subsidiary by Amal Ltd, an associate company of the Company. There were no other changes in the subsidiary, associate and joint venture entities, which were reported earlier.

11. Related party transactions

All the transactions entered into with the related parties were in ordinary course of business and on arms length basis. Details of such transactions are given at page number 128. No transactions were entered into by the Company that required disclosure in Form AOC-2.

12. Corporate social responsibility

Composition of the Corporate Social Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 32.

13. Annual return

Annual return for 2020-21 is available on the website of the Company at:

14. Auditors

Statutory Auditors

Deloitte Haskins & Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company at the 40th Annual General Meeting (AGM) held on July 28, 2017, until the conclusion of the 45th AGM.

The Auditors Report for the financial year ended March 31, 2021, does not contain any qualification, reservation or adverse remark. The report is enclosed with the financial statements in this annual report.

Cost Auditors

The Company has maintained cost records as required under the Act. The shareholders ratified the appointment of R Nanabhoy & Co as the Cost Auditors for 2020-21 on July 31, 2020.

Secretarial Auditors

The Board appointed SPANJ & Associates, Company Secretaries, as the Secretarial Auditors for 2020-21 on March 23, 2018, and their report is given at page number 37.

15. Directors responsibility statement

Pursuant to Section 134(5) of the Act, the Directors confirm that, to the best of their knowledge and belief:

15.1 In preparation of the annual accounts for the financial year ended March 31, 2021, the applicable accounting standards have been followed and there are no material departures.

15.2 The accounting policies were selected and applied consistently and judgements and estimates thus made were 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.

15.3 Proper and sufficient care was taken 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.

15.4 The attached annual accounts for the year ended March 31, 2021, were prepared on a going concern basis.

15.5 Adequate internal financial controls to be followed by the Company were laid down and they were adequate and operating effectively.

15.6 Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively.

16. Directors

16.1 Appointments : Reappointments : Cessations

i) Subject to the approval of the Members in the AGM, Mr S A Lalbhai was reappointed as a Managing Director effective December 15, 2021, for a period of five years.

ii) According to Article 86 of the Articles of Association of the Company, Mr B N Mohanan retires by rotation and being eligible, offers himself for reappointment at the AGM scheduled on July 30, 2021.

iii) In the opinion of the Board, the Independent Directors reappointed during the year possess integrity, rich experience and expertise relevant to the Company.

16.2 Policy on appointment and remuneration is displayed on the website of the Company at The salient features of the Policy are as under: 16.2.1 Appointment While recommending appointment of Directors, the Nomination and Remuneration Committee considers the following factors:

i) Qualification: well-educated and experienced in senior leadership positions in industry : profession

ii) Trait: positive attributes and qualities

iii) Independence: criteria prescribed in Section 149(6) of the Act for the Independent Directors, including no pecuniary interest and conflict of interest

16.2.2 Remuneration of the Non-executive Directors

i) Sitting fees: up to Rs 35,000 for attending a Board, Committee and any other meeting

ii) Commission: up to 1% of net profit as may be decided by the Board based on the following factors: a) Membership of committee(s) b) Profit c) Attendance d) Category (Independent or Non-independent)

16.2.3 Remuneration of the Executive Directors

This is given under para number 17.2. 16.3 Criteria and method of annual evaluation 16.3.1 The criteria for evaluation of performance of i) The Non-independent Directors (Executive), ii) the Non-independent Director (Non-executive), iii) the Independent Directors, iv) the Chairman, v) the Committee of the Board and vi) the Board as a whole are summarised in the table at the end of the Directors Report at page number 27.

16.3.2 The Independent Directors have carried out annual: i) review of performance of the Non-independent Directors Executive ii) review of performance of the Non-independent Director Non-executive iii) review of performance of the Chairman and assessment of quality, quantity and timeliness of the flow of information to the Board iv) review of performance of the Board as a whole

16.3.3 The Board has carried out annual evaluation of performance of:

i) its committees, namely, Audit, Corporate Social Responsibility, Investment, Nomination and Remuneration, Risk Management and Stakeholders Relationship ii) the Independent Directors The templates for the above purpose were circulated in advance for feedback of the Directors.

16.4 Familiarisation programs for the Independent Directors The Company has familiarisation programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on the nature of the industries in which it operates, its vision and strategy, its organisation structure and relevant regulatory changes. A visit is organised to one or more of its manufacturing sites. Details of the familiarisation programs are also available at

17. Key Managerial Personnel and other employees

17.1 Appointments and cessations of the Key Managerial Personnel There were no appointments : cessations of the Key Managerial Personnel during 2020-21.

17.2 Remuneration

The Remuneration Policy of the Key Managerial Personnel and other employees consists of the following: 17.2.1 Components:

i) Fixed pay

a) Basic salary

b) Allowances

c) Perquisites

d) Retirals

ii) Variable pay

17.2.2 Factors for determining and changing fixed pay:

i) Existing compensation

ii) Education

iii) Experience

iv) Salary bands

v) Performance

vi) Market benchmark

17.2.3 Factors for determining and changing variable pay:

i) Business performance

ii) Individual performance

iii) Grade

18. Analysis of remuneration

The information required pursuant to Sections 134 (3)(q) and 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, forms a part of this Report. However, as per the provisions of Sections 134 and 136 of the Act, the Report and the Accounts are being sent to the Members and others entitled thereto excluding the information on particulars of employees, which are available for inspection by the Members.

Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the registered office of the Company.

19. Management Discussion and Analysis

The Management Discussion and Analysis covering performance of the two reporting segments, namely, LSC and POC, is given at page number 41.

20. Corporate Governance Report

20.1 Statement of declaration given by the Independent Directors.

The Independent Directors have given declarations under Section 149(6) of the Act.

20.2 Report

The Corporate Governance Report along with the certificate from the Practicing Company Secretary regarding compliance of the conditions of Corporate Governance pursuant to Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given at page number 48. Details about the number of meetings of the Board held during 2020-21 are given at page number 53. The composition of the Audit Committee is given at page number 56.

All the recommendations given by the Audit Committee were accepted by the Board.

20.3 Whistleblowing Policy

The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistleblowing Policy). The Policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the Code of Conduct of the Company and is displayed on the website of the Company at No personnel have been denied access to the Audit Committee.

20.4 Secretarial standards

Secretarial standards as applicable to the Company were followed and complied with during 2020-21. 20.5 Prevention, prohibition and redressal of sexual harassment Details required under the Sexual Harassment of

Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and rules thereunder are given at page number 60.

21. Business Responsibility Report

As per Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report is given at page number 68.

22. Dividend Distribution Policy

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Dividend Distribution Policy is given at page number 74.

23. COVID-19

The COVID-19 pandemic is a worldwide crisis and has meant that the economies will have to operate alongside the disease.

The Company strictly followed the guidelines issued by the local, state and central governments and also went beyond to protect the health and well-being of its workforce and ensured minimum disruption to its customers. Despite this, the sales of the Company in the first quarter were affected due to the pandemic.

The Company provided support to its employees and their families to undergo vaccination.

24. Acknowledgements

The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and government authorities, stock exchanges and investors for their support.

For and on behalf of the Board of Directors
Atul (Sunil Siddharth Lalbhai)
April 30, 2021 Chairman and Managing Director