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Oriental Aromatics Ltd Directors Report

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Jul 15, 2024|09:39:59 AM

Oriental Aromatics Ltd Share Price directors Report

Dear Members,

The Board of Directors hereby submits the report of the business and operations of your Company ("the Company" or "Oriental Aromatics"), along with the Audited Financial Statements (Standalone and Consolidated) for the financial year ("FY") ended 31st March, 2023 and the report of the Auditors thereon.

1. FINANCIAL HIGHLIGHTS:

The Financial performance of the Company for the year ended 31st March, 2023 on a Standalone and Consolidated basis, is summarized below:

( in Lakh)

Particulars Standalone Consolidated
2022-2023 2021-2022 2022-2023 2021-2022
Revenue from Operation 84,907.26 86,879.19 84,907.26 86,879.19
Other Income 576.88 437.69 572.81 440.85
Profit before exceptional items, depreciation and finance costs 6,091.35 9,783.33 5,994.15 9,693.59
Less : Depreciation and amortisation expense 1,932.81 1,695.42 1,942.80 1,701.22
Profit before finance costs 4,158.54 8,087.91 4,051.35 7,992.37
Less: Finance costs 1,313.10 410.30 1,303.10 404.50
Profit before exceptional items and tax expenses 2,845.44 7,677.61 2,748.25 7,587.87
Less: Exceptional Items - - - -
Profit before tax 2,845.44 7,677.61 2,748.25 7,587.87
Less : Tax expense 782.97 2,272.05 773.96 2,257.64
Profit for the year 2,062.47 5,405.56 1,974.29 5,330.23
Attributable to :
Equity shareholders of the Company 2,062.47 5,405.56 1,974.29 5,330.23
Other comprehensive income (OCI) Income/(Loss) (6.11) (32.67) (6.11) (32.67)
Total comprehensive income 2,056.36 5,372.89 1,968.18 5,297.56
Balance in retained earnings at the beginning of the year 54,617.97 49,717.21 54,530.67 49,705.38
Add: Profit for the year (attributable to equity shareholders of the Company) 2,062.47 5,405.56 1,974.29 5,330.23
Less: Transfer to Items other comprehensive income - 0.00 - 0.14
Less: Dividends including tax on dividend - 504.80 - 504.80
Balance in retained earnings at the end of the year 56,680.43 54,617.97 56,,504.96 54,530.67

2. OPERATIONAL PERFORMANCE/STATE OF COMPANYS AFFAIRS:

a. Standalone Performance:

During the year under review, the revenue from operations of your Company stood at 84,907 Lakh as against 86,879 Lakh for the previous year, showing a decrease of 2.27 %.

The Company earned a Profit after tax of 2,062 Lakh as against 5,405 lakh for the previous year, thereby registering a decline of 61.85%.

Due to decrease in the profit, the Earning per share (EPS) decreased from 16.06 in the previous year to 6.13 in the year under review.

The net worth of your Company increased to 57,906 Lakh at the end of the FY 2022-23 from 55,850 Lakh at the end of FY 2021-22, thereby registering a growth of 3.68%.

b. Consolidated Performance:

The consolidated total sales of your Company for the FY 2022-23, stood at 84,907 lakh as against 86,879 lakh for the previous year, showing a decrease of 2.27 %.

The Company earned a Consolidated Profit after tax of 1,974 lakh as against 5,330 lakh for the previous year, thereby registering a decline of 62.96%.

As a result of decrease in the consolidated profit, the Earning per share (EPS) also decreased from 15.84 in the previous year to 5.87 in the year under review.

The Consolidated net worth of your Company increased to 57,729 Lakh at the end of the FY 2022-23 from 55,757 lakh at the end of FY 2021-22, thereby registering a growth of 3.53%.

Summarizing the operational performance for the FY 2022-23 as below:

In FY 2022-23 the decline in the Companys consolidated turnover can be attributed to an unusual drop in raw material prices particularly in the chemical sector which resulted in decline in selling price. The Companys consolidated Profit after tax stood at 1,974 Lakh as compared to 5,330 Lakh in the previous year thereby registering decline of 62.96% . This decline is due to increase in utility cost, higher utilization of working capital borrowing and overall increase in finance, manufacturing and operational costs.

The industrys competitive landscape has undergone significant changes, with the entry of numerous new players introducing additional capacity and existing players expanding their operations. As a result, there has been a shift towards a softer demand environment. This softness in demand has exerted pressure on selling prices due to an oversupply of products such as camphor, terpene chemicals, and specialty aroma ingredients. The increased competition and abundance of supply have led to pricing challenges within the market.

Moving forward, it is anticipated that the demand will remain soft in the coming years until the industry reaches a certain level of stabilization. While there is no significant destruction in demand, there is a temporary lag caused by excess stocking in the supply chain. Once stability is achieved, the company intends to capitalize on the improved conditions. However, it should be noted that external factors, particularly in the ingredient sector, currently pose some challenges. Nevertheless, the company maintains a positive outlook on the fragrance side of the business.

Oriental Aromatics follows a steadfast philosophy of pursuing profitable growth. The company remains committed to employing various strategies to achieve this goal, including efficient raw material procurement, reducing conversion costs, and continuous process reengineering. By continuously seeking opportunities for improvement and adaptation, the company aims to maintain a level of profitability within the markets dynamics.

3. DIVIDEND:

Your Directors have recommended a dividend of 0.5/- per share (10%) on the Paid up Equity shares of face value of 5/- each for the FY 2022-23, to those shareholders whose name appear on the Register of members as on Thursday, 03rd August, 2023, subject to the approval of members at the ensuing Annual General Meeting. The dividend payout is in accordance with the Companys Dividend Distribution Policy. 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.

4. TRANSFER TO RESERVES:

Your Directors do not propose to transfer any amount to reserves for the FY ended 31st March, 2023.

5. SHARE CAPITAL: a. Authorized Capital

The Authorized share capital of the Company as on 31st March 2023 stood at 35,00,00,000/- (Rupees Thirty Five Crore only) comprising of 7,00,00,000 Equity shares of 5/- each.

b. Paid Up Capital

The paid up Capital of the Company as on 31st March 2023 stood at 16,82,67,880/- (Rupees Sixteen crore eighty-two lakh sixty-seven thousand eight hundred and eighty only) comprising of 3,36,53,576 shares of 5/- each.

6. DEPOSITS COVERED UNDER CHAPTER V OF THE COMPANIES ACT, 2013:

During the year under review your Company has not accepted any Deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.

7. FINANCIAL STATEMENT:

The Audited standalone and consolidated financial statements for the year ended on 31st March, 2023 have been prepared in accordance with the Indian Accounting Standards (Ind AS) , provisions of the Companies Act, 2013 (hereinafter referred to as "The Act") read with the Companies (Accounts) Rules, 2014 as amended from time to time and Regulation 33 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations"). The estimates and judgements relating to the Financial Statements are made on a prudent basis, so as to reflect in a true and fair manner, the form and substance of transactions and reasonably present the Companys state of affairs, profits and cash flows for the year ended 31st March 2023. The Notes to the Financial Statements adequately cover the standalone and consolidated Audited Statements and form an integral part of this Report. The Audited financial statements together with Auditors Report form part of the Annual Report.

8. PERFORMANCE HIGHLIGHTS OF SUBSIDIARIES:

a. PT Oriental Aromatics (Indonesia)

Your Company has only one overseas subsidiary namely PT Oriental Aromatics in Indonesia which is engaged in the business of flavors and fragrances. During the FY 2022-23, it recorded a total loss of 19.60 lakh due to tax expenses of earlier years. There are no associate companies within the meaning of section 2(6) of the Act.

b. Oriental Aromatics & Sons Limited

Oriental Aromatics & Sons Limited was incorporated as wholly owned subsidiary of Oriental Aromatics on 27th December, 2019 which is engaged in the business of Specialty Aroma Chemicals, flavors and fragrances. During FY 2022-23, it recorded a total loss of 68.58 lakh. The Company has not yet commenced its operations.

Pursuant to the provisions of Section 129 (3) of the Act, a statement containing the salient features of financial statements of the Companys subsidiaries in Form AOC-1 is attached as "Annexure A" to the Boards Report.

In accordance with Section 136 of the Companies Act, 2013, the audited Financial Statements, including the Consolidated Financial Statement and audited accounts of each of its subsidiaries, are available on the website of the Company at http://www.orientalaromatics.com/investorrelations.php

9. SECRETARIAL STANDARDS:

Your Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively, have been duly followed by the Company.

10. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:

Sustainability Reporting is an emerging discipline encompassing the disclosure and communication of an entitys non-financial - environmental, social, and governance (ESG) performance and its overall impact. Pursuant to Regulation 34(2)(f) of SEBI Listing Regulations and SEBI Circulars dated May 05, 2021 and May 10, 2021, SEBI mandated reporting of Business Responsibility and Sustainability Report (BRSR) for the top 1000 listed companies (by market capitalization) replacing the existing Business Responsibility Report (BRR) with effect from the financial year 2022-23._The disclosures as per BRSR relates to Companys performance against the nine principles of the ‘National Guidelines on Responsible Business Conduct (NGBRCs). In view of the same, the BRSR initiatives taken from an Environmental, Social and Governance perspective in the prescribed format is available as a Separate Section of this Report and a copy of which is available on the Companys website www.orientalaromatics.com .

11. MATERIAL CHANGES AND COMMITMENTS:

No material changes and commitments affecting the financial position of the Company have occurred between the end of the financial year of the Company to which this report relates and the date of the report.

12. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS:

There are no significant and material orders passed by the Regulators/courts that would impact the going concern status of the Company and its future operations.

13. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Oriental Aromatics has implemented internal control systems that are aligned with the companys size, scale, and operational characteristics. Your Company has maintained a proper and adequate system of internal controls. Monitoring and assessment of internal controls across various functions is performed through continuous evaluations to ensure that the implemented internal control system is effective._To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal auditor, corrective actions are undertaken in the respective areas and thereby strengthening the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

14. CREDIT RATING:

Based on a review of the developments, the Rating Committee of ICRA, after due consideration had reafirmed the long-term rating at [ICRA]A and ICRA had also reafirmed the short-term rating at [ICRA] A2+, during the financial year 2022-23. The outlook on the long-term rating was revised to Negative from Stable. Therefore, the credit rating assigned stood as below:

Sr. No. Instrument Type Rating Agency Credit Ratings and Outlook Rating assigned on
1 Unallocated Limits Long term ICRA [ICRA]A (Negative); 17th January, 2023
2 Fund-based/ Non-Fund based limits Long term/ Short term ICRA [ICRA]A(Negative)/ [ICRA]A2+; 17th January, 2023

ICRA had revised the outlook to negative because it expected that the margin profile of Oriental Aromatics Limited (OAL) would be under pressure, considering the elevated raw material prices, competition in the camphor segment and demand constraints in the perfumery segment.

15. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

There were no loans or guarantees given or securities provided by the Company except investments made in wholly owned subsidiary (WOS), Oriental Aromatics & Sons Limited, for which Section 186 of the Companies Act, 2013 is not applicable.

Further, the details of investments in WOS are given in Notes to the financial statements forming part of Annual Report.

16. RELATED PARTY TRANSACTIONS:

All Related Party Transactions that were entered into during the FY 2022-2023 were on arms length basis and in the ordinary course of business.

All transactions entered into with the Related Parties as defined under the Companies Act, 2013 and Regulation 23 of the SEBI Listing Regulations during the financial year under review were on arms length basis and thus a disclosure in Form AOC-2 in terms of Section 134 of the Act is not required. Further, there are no material related party transactions during the year under review. Related party transactions have been disclosed under significant accounting policies and notes forming part of the Financial Statements in accordance with "IND AS".

As required under Regulation 23(1) of the SEBI Listing Regulations, the Company has formulated a policy on dealing with Related Party Transactions. The policy on dealing with Related Party Transactions as approved by the Board is uploaded on the Companys website www.orientalaromatics.com and the weblink thereto is: http://www.orientalaromatics.com/documents/corporate-governance/policies/policy-on-related-party-transactions.pdf

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

a. COMPOSITION:

The Board comprises of 7 (Seven) directors, out of which 4(four) are independent directors.

b. RE-APPOINTMENT/APPOINTMENT:

In terms of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Shyamal A. Bodani, Executive Director (DIN:00617950) of the Company retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

Mr. Dharmil A. Bodani, Managing Director (DIN: 00618333) shall be completing his tenure of five years on 21st August, 2023. The Board of Directors at its meeting held on 30th May, 2023 has recommended his re-appointment as Managing Director of the Company for a further period of five years with effect from 22nd August, 2023 till 21st August 2028, to the members in the 51st Annual General Meeting. Mr. Shyamal A. Bodani, Executive Director (DIN:00617950) shall be completing his tenure of five years on 21st August, 2023. The Board of Directors at its meeting held on 30th May, 2023 has recommended his re-appointment as Executive Director of the Company for a further period of five years with effect from 22nd August, 2023 till 21st August 2028, to the members in the 51st Annual General Meeting. As required under the SEBI Listing Regulations, particulars of Director seeking appointment/reappointment at the ensuing General Meeting has been given under Corporate Governance Report and in the Notice of the 51st Annual General Meeting. The aforesaid Director is not disqualified from being appointed as Director, as specified in Section 164 of the Companies Act, 2013.

The proposal regarding the re-appointment of the aforesaid Director is placed for your approval. The Board of Directors recommends their re-appointment.

c. DECLARATION BY INDEPENDENT DIRECTORS:

All the Independent Directors of Company have given the declarations that they meet the criteria of Independence as prescribed pursuant to the provisions of Section 149(6) of the Companies Act, 2013 and Regulation 25(8) and 16(1)(b) of SEBI Listing Regulations, as amended from time to time and are independent of the management.

The Independent Directors have complied with the Code for Independent Directors prescribed under Schedule IV of the Companies Act, 2013 and SEBI Listing Regulations. The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity.

d. NUMBER OF MEETINGS OF THE BOARD:

During the year five (5) Board Meetings were convened and held. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI Listing Regulations. Detailed information on the meetings of the Board is included in the Corporate Governance Report, which forms part of this Annual Report.

e. COMMITTEES OF THE BOARD:

The Company has constituted various Committees of the Board as required under the Companies Act, 2013 and the SEBI Listing Regulations. For details like composition, number of meetings held, attendance of members, etc. of such Committees, please refer to the Corporate Governance Report which forms a part of this Annual Report.

f. FAMILARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The Company has set Familiarization programme for Independent Directors with regard to their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, the business model of the Company etc. The details of which are available on the website of the Company www.orientalaromatics.com. The Weblink of the same is as below: http://www.orientalaromatics.com/documents/corporate-governance/policies/familiarization-program.pdf For details of the Familiarisation programme conducted, kindly refer Corporate Governance Report which forms part of this Annual Report.

g. BOARD EVALUATION: In terms of the provisions of the Companies Act, 2013 and SEBI Listing Regulations, a structured questionnaire was prepared after taking into consideration the various aspects of the Board functioning like composition of the Board and its committees, culture, execution and performance of Specific duties, obligations and governance.

The Board carried out an annual performance evaluation of its own performance, individual directors as well as the working of the committees of the Board. The performance evaluation of Board and committees was carried out by the Board after seeking all inputs from all the directors on the basis of criteria such as composition, structure, effectiveness and functioning of the Board and its respective committees.

The performance evaluation of the individual directors was carried out by the entire Board excluding the director being evaluated.

In the separate meeting of independent directors, performance evaluation of the chairman and the non-independent directors and Board as a whole was carried out taking into account views of executive and non-executive directors. The overall performance of Chairman, Executive Directors, Non-Executive Directors, Board and Committees of the Board was found satisfactory.

h. DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the financial year 2022-23, Mr. Bhadreshkumar Pandya - Executive Director- Operations resigned from the Board of the Company with effect from 15th August, 2022. The Board expresses its appreciation for Mr. Bhadreshkumar Pandya for the valuable guidance and services rendered by him during his tenure as Executive Director of the Company.

In terms of the provisions of Section 2(51) and Section 203 of the Act, the following are the Key Managerial Personnel (KMP) of the Company: Mr. Dharmil A. Bodani - Chairman and Managing Director Mr. Shyamal A Bodani -Executive director Mr. Satish Kumar Ray-Executive Director- Operations Mr. Parag K. Satoskar – Chief Executive Officer Mr. Girish Khandelwal - Chief Financial Officer Ms. Kiranpreet Gill -Company Secretary and Compliance Officer Ms. Anita Satoskar- Chief Research & Development Officer (appointed pursuant to the provisions of Section 2(51) of the Act)

18. CORPORATE GOVERNANCE REPORT

A separate section on Corporate Governance practices followed by the Company, together with a certificate from the Companys Auditors confirming compliance, forms a part of this Annual Report, as per SEBI Listing Regulations.

19. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Management Discussion and Analysis Report as required under the provisions of SEBI Listing Regulations forms part of this Annual Report.

20. DIRECTORS RESPONSIBILITY STATEMENT:-

Pursuant to the requirements under Section 134(3)(c) of the Companies Act, 2013, your Directors hereby state and confirm that: a. In the preparation of the annual accounts, the applicable accounting standards have been followed, and there have been no material departures. b. Such accounting policies have been selected and applied consistently and judgments and estimates have been made that are reasonable and prudent to give a true and fair view of the Companys state of affairs as at 31st March, 2023 and of the Companys profit for the year ended on that date. c. 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. d. The annual financial statements have been prepared on a going concern basis. e. That internal financial controls were laid down to be followed and that such internal financial controls were adequate and were operating effectively. f. Proper systems were devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

21. DISCLOSURES RELATED TO POLICIES:

a. CORPORATE SOCIAL RESPONSIBILITY (CSR):

Pursuant to Section 135 of the Companies Act, 2013 and the Rules made there under, the Board of Directors has constituted the Corporate Social Responsibility (CSR) Committee under the Chairmanship of Mr. Shyamal A. Bodani, Executive Director (DIN:00617950). The Company undertakes CSR activities in accordance with the CSR Policy. The Company has adopted a strategy for undertaking CSR activities either directly or through Keshavlal V. Bodani Education Foundation/ other implementing agencies, as deemed appropriate, and is committed to allocating at least 2% of average net profit of the last 3 years.

The Company has identified and adopted projects as per the activities included and amended from time to time in Schedule VII of the Companies Act, 2013. The Companys main focus area is promoting educational facilities for the students having learning disabilities by making contribution to Keshavlal V.Bodani Education Foundation. During the FY 2022-23, in addition to making contribution to Keshavlal V.Bodani Education Foundation, your Company also made contribution in ensuring environmental sustainability, ecological balance, Health Care and Sanitation, making available safe drinking water in and around our manufacturing unit, Empowering Women, Promotion of education relating to Culture. The Corporate Social Responsibility Policy is available on the website of the Company www.orientalaromatics.com and the web-link thereto is as below: http://www.orientalaromatics.com/ documents/corporate-governance/policies/csr-policy.pdf During the FY 2022-23, the Company has spent the amount of 211.82 Lakh towards the CSR initiatives. The disclosure relating to the amount spent and the details of the activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is provided in "Annexure-B" forming part of this report and the web-link thereto is as below: http://www.orientalaromatics.com/corporate-announcements/AnnualActionPlan-2223.pdf

b. NOMINATION AND REMUNERATION POLICY:

In terms of the provisions of the Companies Act, 2013 and the SEBI Listing Regulations as amended from time to time, the policy on nomination and remuneration of Directors, Key Managerial Personnel, Senior Management and other Employees has been formulated by the Committee and approved by the Board by Directors.

The objective of the Policy is:

i. to lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive/Non-Executive/Independent) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration

ii. to specify the manner for effective evaluation of_ performance of Board, its committees and individual directors to be carried out either_by the Board, by the Nomination and Remuneration Committee or by an independentflexternal agency and review its implementation and compliance.

iii. to recommend to the Board, appointment and removal of Director, KMP and Senior Management Personnel. iv. to assist the Board in ensuring that the Board nomination process is in line with the diversity policy of the Board relating to gender, thought, experience, knowledge and perspectives.

The remuneration has been paid as per the Nomination and Remuneration Policy of the Company. The policy may be accessed on the website of the Company at www.orientalaromatics.com and weblink thereto is: http://www.orientalaromatics.com/documents/corporate-governance/policies/NomNRemPol.pdf  

c. VIGIL MECHANISM/WHISTLE BLOWER POLICY:

The Company has a vigil mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The objective of the Policy is to explain and encourage the directors and employees to report genuine concerns or grievances about unethical behavior, actual or suspected fraud or violation of the companys Code of Conduct or Ethics Policy.

The Vigil Mechanism may be accessed on the Companys website at www.orientalaromatics.com at the link: http://www.orientalaromatics.com/documents/corporate-governance/policies/vigil-mechanism.pdf

d. MATERIAL SUBSIDIARY POLICY:

Pursuant to the provisions of Regulation 16(1)(c) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has adopted a Policy for determining Material Subsidiaries laying down the criteria for identifying material subsidiaries of the Company.

The Company does not have any Material subsidiary.

The Policy may be accessed on the website of the Company at the link: http://www.orientalaromatics.com/documents/corporate-governance/policies/POLMatSubsidiary.pdf

e. RISK MANAGEMENT:

We firmly believe that efficient monitoring and management of risks are essential for the Company to achieve its strategic objectives. To accomplish this, we have implemented a robust Business Risk Management framework that enables us to identify, assess, and evaluate business risks and opportunities. Our framework is designed to foster transparency, mitigate any adverse impacts on our business objectives, and enhance our competitive advantage.

i. Risk Management Committee:

The Company has formed Risk Management Committee (RMC) to determine Key Risks, and to ensure that appropriate methodology, processes and systems are in place to monitor and evaluate risks associated with the business of the Company. The members may refer Corporate Governance report for Composition and Terms of reference of the Committee.

ii. Risk Management Policy:

The Company has adopted Risk Management Policy in compliance with the provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, which promotes a proactive approach in analysis, reporting and mitigation of key risks associated with the business in order to ensure a sustainable business growth. It provides the Risk Management framework which is designed to protect and add value to the organization and its stakeholders through supporting the organizations objectives by improving decision making, planning and prioritization by comprehensive and structured understanding of business activity, volatility and project opportunity/threat.

The Risk Management Framework adopted by OAL provides comprehensive view of risk management to address risks inherent to strategy, operations, finance and compliance and their resulting organizational impact. The Risk Management framework comprises of:

Risk management process; and

Risk management organization structure

The Risk management process adopted by OAL has been tailored in accordance with the business processes of the organization. Risk Management Committee periodically reviews the Risk management Policy of the Company so that the Management can control the risk through properly defined network. The responsibility for identification, assessment, management and reporting of risks and opportunities primarily rests with the business managers as they are best positioned to identify the opportunities and risks they face, evaluate these and manage them on a day to day basis. The Risk Management Committee provides oversight and reports to the Board of Directors. Broadly categorizing, the process consists of the following stages/steps:

- Establishing the Context

- Risk Assessment (identification, analysis & evaluation)

- Risk Treatment (mitigation plan)

- Monitoring, review and reporting

- Communication and consultation

The Risk management organization structure including the key roles and responsibilities is summarized as follows:

Board of Directors:

The Board, oversees the establishment and implementation of an adequate system of risk management across the company.

Risk Management Committee:

- Risk Management Committee is chaired by Independent Director. The Committee seeks to identify the key business risks.

- It developes risk response processes and assesses adequacy of responses for the key risks identified through the risk management framework

- Ensures the implementation of risk mitigation plans

- Monitors the Key Risk Indicators (KRIs) of the Enterprise and Functional Level Key Risks.

- Prepares and Updates the Corporate Level Key Risk register and present half yearly reports to the Audit Committee/Board.

Site Level Risk Management Committee:

The Committee sets the risk management procedures and coordinates with risk unit owners in reporting key risks to the Risk Management Committee.

Risk Unit Owners:

Risk unit owners in consultation with Officer in charge at a plant/unit assess the risk by determining its probability of occurrence and its impact with an objective of reporting key risks to the Site Level Risk Committee.

The Risk Unit owners are responsible for preparing and consolidating the report and the same is reviewed by the Site Level Risk Committee.

iii. Key Risks & Description:

- Financial Risks:

The Company is exposed various types of risks, including market risk, credit risk, forex risk and liquidity risk. These risks are inherent in our business operations and require diligent management to ensure the Companys stability and success.

- Operational Risks:

The Company is exposed to operational risks including supply chain disruptions, high energy costs risk, production risks including shortage of manpower, Logistics issues, quality assurance, Leakage, Spillage, Fire, Explosion etc that form an inherent part of our business environment. We recognize that operational uncertainties can arise, leading to potential disruptions and challenges. We are committed to actively managing these risks to safeguard our operations, ensure business continuity, and deliver on our commitments to stakeholders.

- Cyber Risks:

The Company is exposed to significant risks associated with data loss from cyber attacks, including hardware failure, data corruption, hacking, and data leakage. We recognize the critical importance of safeguarding our data assets and protecting the confidentiality, integrity, and availability of sensitive information.

- Environment, Health & Safety Risks:

The Company is exposed to Environment, Health & Safety Risks i.e to address climate change related risks with an aim to reduce carbon emissions and preserve nature, to containment of infectious diseases, to ensure containment of safety hazards i.e leakage, spillage, fire, explosion and toxic release from tank due to improper handling and storage of flammable material etc.

We are committed to proactively managing these risks and integrating responsible practices into our operations.

- Macroeconomic risk:

The Company is exposed to change in government policies and regulatory framework of the industry in which the Company operates. Macroeconomic and business conditions also impacts the Companys operations at large. The macroeconomic environment has become more volatile and uncertain due to externalities, such as geopolitical tensions resulting in disrupted supply chains and increased prices of commodities. Further, inflationary pressures can exacerbate this impact, lowering demand across the consumer-segment industry.

- Competition Risk:

The widespread applications and high growth prospects of the industry create competitive pressures in India as well as globally. Rapidly and constantly evolving consumer demands require the Company to keep pace with appropriate innovations and keep competition at bay. The Companys risk management strategies focus on the un-predictability of these elements and seek to minimise the potential adverse effects of these risks on its operational & financial performance The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

The risk-related information outlined above in this section is not exhaustive.

f. DIVIDEND DISTRIBUTION POLICY:

Pursuant to Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has approved and adopted a Dividend Distribution Policy which endeavours for fairness, consistency and sustainability while distributing profits to the shareholders. The dividend recommended is in accordance with the Dividend Distribution Policy of the Company.

The Policy is available on the Companys website www.orientalaromatics.com at http://www.orientalaromatics.com/documents/corporate-governance/policies/DivDistPolicy.pdf

g. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE:

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘POSH Act) and Rules made thereunder, the Company has formed Internal Committees (‘IC) at all its workplaces to address complaints pertaining to sexual harassment in accordance with the POSH Act. The Company has a detailed policy for prevention of sexual harassment which ensures a free and fair enquiry process. While maintaining the highest governance norms, the Company has appointed external committee member who has prior experience in the areas of women empowerment and prevention of sexual harassment.

Your Directors state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. To build awareness in this area, the Company conducted awareness session for all the employees.

22. AUDITORS AND AUDITORS REPORTS:

a. STATUTORY AUDITORS:

At the Companys 46th Annual General Meeting held on 24th September, 2018, M/s Bagaria & Co LLP (Reg. No. 113447W/W-100019), Chartered Accountants were appointed as statutory Auditors of the Company for a period of 5 years till the conclusion of 51st Annual General Meeting. Their Tenure of 5 years gets completed at the ensuing AGM.

M/s. Lodha & Company, Firm Registration No. 301051E had completed tenure of 10 years prior to the appointment of M/s Bagaria & Co. LLP. Their cooling off period of 5 years is over. It is therefore now proposed to appoint M/s. Lodha & Company, Firm Registration No. 301051E, as the Statutory Auditors of the Company for a period of five years, from the conclusion of 51st ensuing Annual General Meeting until the conclusion of 56th Annual General Meeting. The aforesaid auditors are eligible for re-appointment and have communicated their consent to act as such. The proposal regarding the appointment of the aforesaid auditor is placed for your approval, The Board of directors recommends their re-appointment. The Auditors Report to the shareholders for the year under review does not contain any qualification, reservation, disclaimers or adverse remarks.

b. SECRETARIAL AUDITOR:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. Shreyans Jain & Co., Practicing Company Secretaries, to undertake the Secretarial Audit of the Company for the FY 2022-23. The Report of the Secretarial Audit carried out is annexed herewith as "Annexure C". The Secretarial Audit report, as issued by the auditors in Form MR-3 does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

The Board has on the recommendation of the Audit Committee re-appointed M/s. Shreyans Jain & Co., Practicing Company Secretaries, as Secretarial Auditor, for conducting Secretarial Audit of the Company for the FY_2023-24.

c. COST AUDITOR:

Pursuant to the provisions of Section 148(2) of the Companies Act, 2013 read with the Companies (Cost Records and Audit), Amendment Rules 2014, the Board had appointed M/s V. J. Talati & Co, Cost Accountants as cost auditors to conduct the audit of Cost accounting records for the FY 2022-23 The Cost Audit report for the FY 2021-22 was filed with Ministry of Corporate Affairs on 29th August, 2022.

The Board has on the recommendation of the Audit Committee, re-appointed M/s V. J. Talati & Co., Cost Accountants to conduct the audit of the cost accounting records of the Company for FY 2023-24 at a remuneration of 1,45,000/- plus Service Tax & re-imbursement of out–of– pocket expenses. The remuneration is subject to the ratification of the Members in terms of Section 148 read with Rule 14 of the Companies (Audit and Auditors) Rules, 2014 and is accordingly placed for your ratification.

23. REPORTING OF FRAUDS

There was no instance of fraud during the year under review, which required the Statutory Auditors to report to the Audit Committee and / or Board under Section 143(12) of the Act and Rules framed thereunder.

24. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

During the year under review, your Company has transferred a sum of 4,27,596 (Rupees Four Lakh Twenty-Seven Thousand Five Hundred and Ninety-Six only) to Investor Education and Protection Fund, in compliance with the provisions of Section 125 of the Companies Act, 2013. The said amount represents dividend for the FY 2014-15 which remained unclaimed by the members of the Company for a period exceeding 7 years from its due date of payment.

As per the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, as amended (‘IEPF Rules), the Company has uploaded the information in respect of the unclaimed dividends as on 31.03.2022 on the website of the Company at www.orientalaromatics.com and the weblink is: http://www.orientalaromatics.com/unclaimed-dividend.php Pursuant to the provisions of Section 124 of the Act read with the IEPF Rules, all the shares on which dividends remain unpaid or unclaimed for a period of seven consecutive years or more shall be transferred to the demat account of the IEPF Authority as notified by the Ministry of Corporate Affairs. Accordingly, the Company has transferred 72,070 Equity Shares of face value 5/- per share to the demat account of the IEPF Authority during FY 2022-23.

The Company had sent individual notice to all the Members whose shares were due to be transferred to the IEPF Authority and had also published newspaper advertisements in this regard. The details of such shares transferred to IEPF are uploaded on the website of the Company at http://www.orientalaromatics. com/unclaimed-dividend-iepf/List-of-shareholders-whose%20shares-are-to%20be-transfered-to-IEPF-on-29-10-2023.pdf The Company has appointed a Nodal Officer and Deputy Nodal Officer under the provisions of IEPF, the details of which are available on the Companys website at https://www.orientalaromatics.com/investorrelations.php

25. INSURANCE:

The Companys buildings, plant & machinery and inventories have been adequately insured. Loss of profit with respect to both factories has also been adequately insured.

26. ENVIRONMENTAL COMPLIANCE AND SAFETY:

Your Company places a strong emphasis on pollution control, environmental protection and sustainability throughout its manufacturing process. By maximizing recovery, conserving water, minimizing e_uents and emissions, your company is actively working towards reducing its environmental impact. Having policies in place for sustainable environment practices, energy consumption and local pollution, further demonstrates our commitment to environmental stewardship. As required by the local authorities the Company submits necessary analytical reports. This ensures transparency and accountability in companys environmental practices.

Your Company has compliance certification of Environmental Management Systems (EMS) ISO 14001:2015. This certification validates your companys efforts in establishing and maintaining an effective environmental management system. It helps in achieving the intended outcomes of the system, enhancing environmental performance, achieving environmental objectives and fulfilling compliance obligations. By implementing an EMS, your company is demonstrating its commitment to continuous improvement in environmental performance and sustainable practices.

Overall, your companys focus on pollution control, environmental protection, and sustainability, as well as its compliance with environmental regulations, positions it as a responsible and environmentally conscious organization.

27. LISTING OF SECURITIES:

The Equity Shares of the Company are listed at BSE Limited (BSE) and NSE. The Shares are under compulsory dematerialization list of the Securities & Exchange Board of India. As on 31st March 2023, total 32776638 shares representing 97.39% of Companies Equity Share Capital have been dematerialized. The Company has paid Annual Listing fees for the FY 2023-24 to the stock exchanges where it is listed.

28. INDUSTRIAL RELATIONS:

The relations with the employees of the Company remained peaceful and cordial during the year under review.

29. ANNUAL RETURN:

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on 31st March, 2023 is available on the Companys website at the link the Companys website at the link http://www.orientalaromatics.com/documents/inspection-documents/Temp.pdf

30. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS AND OUTGO:

As required by the Companies (Accounts) Rules, 2014, the relevant information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgoings respectively, is given in the "Annexure- D" to this report.

31. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1), Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached herewith as "Annexure-E".

32. GREEN INITIATIVE:

Your Company has considered and adopted the initiative of going green minimizing the impact on the environment. To support the companys ‘Green Initiative, members who have not yet registered their email addresses are requested to register the same with their DPs in case the shares are held by them in electronic form and with our Registrar and Share Transfer Agent- M/s Link intime India Private Limited (RTA) in case the shares are held by them in physical form.

33. ACKNOWLEDGEMENT:

The Directors would like to extend their sincere gratitude to the Companys customers, vendors, and investors for their unwavering confidence and patronage. We are deeply appreciative of the continuous support received from financial institutions, business associates, regulatory and governmental authorities, whose cooperation, support, and guidance have been instrumental in our success.

The Directors express their utmost appreciation for the dedicated efforts and contributions of every employee including the workmen at our manufacturing plants, who have demonstrated unwavering support and resilience during these challenging times. It is through the collective efforts of our stakeholders and employees that we continue to thrive and achieve our goals.

For and on behalf of the Board of Directors

Dharmil A. Bodani Satish Kumar Ray
Chairman and Managing Director Executive Director-Operations
DIN: 00618333 DIN:07904910

Place: Mumbai

Dated: 30th May, 2023

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