Notice Statutory Reports Company Overview Financial Statements 1 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 Rudolf Atul Chemicals Ltd Annual Report 2018-19
2 The logo of Rudolf Atul Chemicals Ltd (RACL) signifies cooperation between two companies, one headquartered in Germany and the other in India. RACL is scripted in the same colour used by the Rudolf Group in its logo and the two flowing pieces of fabric in the same colours used by Atul Ltd in its logo. The first two letters of the logo depict garnering the strengths of the two companies and the two pieces of fabric, which also resemble the wings of a bird flapping them in unison, connotes harmony between the two partners, all to serve customers with world-class products. Forward looking statements In this Annual Report, we have shared information and made forward looking statements to enable investors to know our product portfolio, business logic and direction and thereby comprehend our prospects. Such statements that we make are based on our assumptions. We have tried wherever possible to identify such statements by using words such as ‘anticipate’, ‘believe’, ‘estimate’, ‘intend’, ‘plan’, ‘project’ or words of similar substance in connection with any discussion of future performance. We cannot guarantee that these forward looking statements will be realised although we believe we have been prudent in our assumptions. The actual results may be affected because of uncertainties, risks and even inaccurate assumptions. If uncertainties or known or unknown risks materialise or if underlying assumptions prove inaccurate, actual results may vary materially from those anticipated, believed, estimated, intended, planned or projected. We undertake no obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise. 03 Corporate identity 04 Purpose and Values 06 Board of Directors 07 Directors’ Report 11 Annexure to the Directors’ Report 20 Management Discussion and Analysis 22 Corporate Governance Report 32 Notice 34 Performance trend 36 Independent Auditor’s Report 42 Financial Statements Contents Reach high, for stars lie hidden in you. Dream deep, for every dream precedes the goal. ˜ Rabindranath Tagore
Notice Statutory Reports Company Overview Financial Statements 3 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 Corporate identity Rudolf Atul Chemicals Ltd is a 50-50 joint venture company of Rudolf GmbH and Atul Ltd, engaged in manufacturing and marketing of textile chemicals in India. The Company is effectively leveraging the strengths of Rudolf and Atul in serving its customers by becoming a total solution provider and is thereby helping both the partners to participate in the growing marketplace. About Rudolf GmbH Incorporated and headquartered in Germany, Rudolf GmbH has 24 subsidiary companies and joint venture companies in all the continents so as to effectively service local customers. The Group is engaged in the business of ‘Speciality’ textile chemicals and offers a full range of technically proven textile chemicals - its motto is ‘quality makes friends’. It has an excellent brand image in international markets - its brands stand for extraordinary functional finishes and finishing processes. About Atul Ltd Incorporated and headquartered in India, Atul Ltd is a diversified company belonging to Lalbhai Group. The Company meets the needs of varied industries such as Adhesive, Aerospace, Agriculture, Animal Feed, Automobile, Chemical, Composite, Construction, Cosmetic, Defence, Dyestuff, Electrical and Electronics, Flavour, Food, Footwear, Fragrance, Glass, Home Care, Horticulture, Hospitality, Paint and Coatings, Paper, Personal Care, Pharmaceutical, Plastic, Polymer, Rubber, Soap and Detergent, Sport and Leisure, Textile, Tyre and Wind Energy across the world. It manages complex chemical processes in a responsible way.
4 We are committed to significantly enhancing value for our stakeholders by: fostering a spirit of continuous learning and innovation adopting developments in science and technology providing high quality products and services, thus becoming the most preferred partner having people who practice Values and exemplify a high standard of behaviour seeking sustained, dynamic growth and securing long-term success taking responsible care of the surrounding environment improving the quality of life of the communities we operate in Catalysed by Purpose
Notice Statutory Reports Company Overview Financial Statements 5 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 In an environment where change is a way of life, continuity of Values provides stability and is fundamental to us. We have therefore formalised key Values and are committed to institutionalising them. We will seek to create an environment wherein these Values are consistently practised and nurtured and ensure that they are not compromised. Integrity Working with honesty, following the highest standards of professionalism. Integrity is when our decisions and actions remain consistent with our thoughts and words, written or spoken. Understanding How well we work with others depends on our ways to connect and this in turn is based on our level of Understanding of human relationships. This certainly does not mean that we accept poor performance, but that we do it the right way. Understanding is the external manifestation of internal realisation. Unity Working together and taking advantage of synergy while harnessing unique abilities of each of us to achieve a larger goal. Unity is the realisation that though we may work in different areas, we are finally interconnected and that interdependence is a higher order of living than independence. Though we may be many, we share a common purpose. Responsibility Delivering value and taking ownership of actions. Responsibility must also give us the realisation that what is good for the business must be in the overall good. In essence, we must work with a spirit of trusteeship for the shareholders and other stakeholders. What comes to us must be returned many times over. Excellence A drive that is more from inside than outside; it is about us seeking to continuously improve and develop an eye for innovation even in day to day work. Excellence is about excelling in everything we do and not giving up. Excellence is also a journey, not simply a destination in itself. Converged by Values
6 Dr Wolfgang Schumann Mr Ulrich Hambrecht Mr Sudhir Merchant Dr G Venugopala Rao Mr Gopi Kannan Thirukonda Mr Sujal Shah Board of Directors
Notice Statutory Reports Company Overview Financial Statements 7 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 Directors’ Report Dear Members, The Board of Directors (Board) presents the Annual Report of Rudolf Atul Chemicals Ltd together with the audited Financial Statements for the year ended March 31, 2019. 01. Financial results (` cr ) 2018-19 2017-18 Sales 82.95 75.11* Revenue from operations 83.72 75.83* Other income 0.84 0.72 Total revenue 84.56 76.55* Profit before tax 15.28 13.96 Provision for tax 4.55 4.92 Profit for the year 10.73 9.03 Balance brought forward 11.99 9.99 Transfer from comprehensive income - - Disposable surplus 22.73 19.02 Less: Dividend paid - 5.84 Dividend distribution tax (net) - 1.19 Balance carried forward 22.73 11.99 *Includes excise duty of ` 1.84 cr 02. Performance Sales increased by 13% from ` 73.27 cr to ` 82.95 cr mainly due to higher volumes (11%). PBT increased by 9% from ` 13.96 cr to ` 15.28cr. Theearningsper share increasedfrom ` 15.48 to ` 18.38. Cash flow from operating activities before working capital changes marginally increased by 9% from ` 13.92 cr to ` 15.20 cr and the net cash flow from operating activities increased substantially from ` 1.55 cr to ` 11.54 cr. 03. Dividend The Board recommends payment of dividend of ` 7.50 per share on 58,37,500 equity shares of ` 10 each fully paid up. The dividend will entail an outflow of ` 5.28 cr (including dividend distribution tax) on the paid-up equity share capital of ` 5.84 cr. 04. Conservation of energy, technology absorption, foreign exchange earnings and outgo Information required under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014, as amended from time to time, forms part of this Report which is given at page number 12. 05. Insurance The Company has taken adequate insurance to cover the risks to its employees, property (land and building), plant, equipment, other assets and third parties.
8 06. Risk management The Company has identified risks and has initiated a mitigation plan for the same. 07. Internal financial controls The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2019 and the Board believes that the controls are adequate. 08. Fixed deposits During 2018-19, 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 number 56. 10. Subsidiary, associate and joint venture company The Company does not have any subsidiary, associate or joint venture company. 11. Related party transactions All the transactions entered into with the related parties were in ordinary course of business and on arm’s length basis. Details of such transactions are given at page number 62. No transactions were entered into by the Company which 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 12. 13. Extract of the Annual Return This is given at page number 14. 14. Auditors Deloitte Haskins & Sells LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company at the 14th Annual General Meeting (AGM) held on August 03, 2018 until the conclusion of the 19th AGM. The relevant Notes forming part of the accounts are self-explanatory and give full information and explanation in respect of the observations made by the Auditors in their report. 15. Directors’ responsibility statement Pursuant to Section 134(5) of the Companies Act, 2013, the Directors confirm that, to the best of their knowledge and belief: 15.1 The applicable accounting standards were followed along with proper explanations relating to material departures in the preparation of the annual accounts. 15.2 The accounting policies were selected and applied consistently and judgements and estimates were made that 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, 2019 were prepared on a going concern basis. 15.5 Adequate internal financial controls to be followed by the Company were laid down and same 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 16.1.1 According to Article 88 of the Articles of Association of the Company, Mr Ulrich Hambrecht retires by rotation and being eligible offers himself for reappointment at the forthcoming Annual General Meeting scheduled on August 09, 2019.
Notice Statutory Reports Company Overview Financial Statements 9 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 16.2 Policy on appointment and remuneration is displayed on the website of the Company at http://www.racl.net.in/investors.html The salient features of the Policy are as under: 16.2.1 Appointment While recommending appointment of the Directors, the Nomination and Remuneration Committee considers the following factors: i) Qualification: well-educated and experienced in senior leadership positions in industry | profession ii) Traits: positive attributes and qualities iii) Independence: criteria prescribed in Section 149(6) of the Companies Act, 2013 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 ` 10,000 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 Managing Director This is given under para number 17.2. 16.3 Familiarisation Programs for Independent Directors The Company has Familiarisation Programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on nature of the industries in which it operates, its vision and strategy and its organisation structure. 17. Key Managerial Personnel and other employees 17.1 Appointments and cessations of Key Managerial Personnel There were no appointments | cessations of the Key Managerial Personnel during 2018-19. 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 There is no employee who falls within the criteria provided in Sections 134(3)(q) and 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Thus the disclosure of the information in respect thereof is not applicable.
10 19. Management Discussion and Analysis The Management Discussion and Analysis Report covering performance of the Company is given at page number 20. 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 Companies Act, 2013. 20.2 Report The Corporate Governance Report is given at page number 22. Details about the number of meetings of the Board held during 2018-19 are given at page number 25. The composition of the Audit Committee is given at page number 27. All the recommendations given by the Audit Committee were accepted by the Board. 20.3 Secretarial standards Secretarial standards as applicable to the Company were followed and complied with during 2018-19. 20.4 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 there under are given at page number 29. 21. Acknowledgements The Board expresses its sincere thanks to all the employees, customers, suppliers, investors, lenders, regulatory and government authorities for their support. For and on behalf of the Board of Directors Mumbai (Wolfgang Schumann) April 16, 2019 Chairman
Notice Statutory Reports Company Overview Financial Statements 11 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 Index No. Subject title Page 1. Conservation of energy, technology absorption and foreign exchange earnings and outgo 12 1.1 Conservation of energy 12 1.2 Technology absorption 12 1.3 Foreign exchange earnings and outgo 12 2. Corporate Social Responsibility 12 2.1 Policy, programs and scope 12 2.2 Committee 13 2.3 Expenditure: determination and actual spent 13 2.4 Manner in which spent 13 2.5 Implementing agencies 13 2.6 Confirmation of compliance 13 3. Extract of the Annual Return 14 3.1 Registration and other details 14 3.2 Principal business activities of the Company 14 3.3 Particulars of the holding, the subsidiary and the associate companies 14 3.4 Shareholding pattern (equity share capital break-up as percentage of total equity) 15 3.5 Indebtedness 18 3.6 Remuneration of the Directors and the Key Managerial Personnel 18 3.7 Penalties | Punishment | Compounding of offences 18 Annexure to the Directors’ Report
12 1. Conservation of energy, technology absorption and foreign exchange earnings and outgo 1.1 Conservation of energy 1.1.1 Measures taken: Careful planning of production to avoid intermittent wash, which reduces effluent generation. 1.2 Technology absorption: No major steps were taken during 2018-19 in view of very low usage of utilities in manufacturing activities. 1.3 Foreign exchange earnings and outgo: (` cr ) Particulars 2018-19 2017-18 Earnings Commission income 0.61 0.53 Outgo Import of raw materials 14.00 23.33 2 Corporate Social Responsibility 2.1 Policy, programs and scope 2.1.1 Policy The Company will help enhance the quality of life of people belonging to the marginalised sections of the society and volunteer its resources to the extent it can reasonably afford to Atul Foundation Trust (AFT) and (or) other entities under its umbrella. The Foundation will particularly undertake projects in and around the locations where the Company operates. 2.1.2 Programs and scope AFT will take up projects and | or carry out activities under three broad Programs: i) Education and Empowerment, ii) Health and Relief and iii) Infrastructure and Conservation with varied scope of work. i) Education and Empowerment a) Encourage sports b) Establish and | or support schools c) Establish and | or support colleges d) Establish and | or support vocational institutes e) Promote integrated development of tribal areas ii) Health and Relief a) Assist during natural calamities b) Enhance rural hygiene and sanitation c) Establish mobile medical care facilities d) Establish medical care centres e) Organise medical camps iii) Infrastructure and Conservation a) Develop and | or maintain rural utilities b) Develop and | or maintain rural amenities c) Protect environment d) Restore sites of historical importance e) Others
Notice Statutory Reports Company Overview Financial Statements 13 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 Please refer to the following web-link for details of policy, programs and projects: http://www.racl.net.in/pdf/RACL-CSR_Policy.pdf 2.2 Committee » Gopi Kannan Thirukonda (Chairman) » Wolfgang Schumann » Sudhir Merchant 2.3 Expenditure: determination and actual spent (` cr ) Particulars Amount Average net profit of the Company for the last three financial years 14.48 Prescribed CSR expenditure, at 2% of above 0.29 Total amount spent for the financial year 0.29 Amount unspent by the Company Nil 2.4 Manner in which spent (` cr ) No. Program Project | Activity Location Village, District (State) Outlay for the year Cumulative expenditure up to reporting period Implementing agency Budget Spent (A) (B) (C) (D) (E) (F) (G) 1. Health Improvement of hygiene through construction of toilets 5 villages, Valsad 0.29 0.29 0.92 ARDF* Total direct expenditure 0.29 0.29 0.92 *ARDF: Atul Rural Development Fund 2.5 Implementing agency 2.5.1 Atul Rural Development Fund Established in 1978, ARDF is an embodiment of the purpose of Atul towards serving the society. It is the apex trust through which all CSR initiatives of the Company are undertaken. 2.6 Confirmation of compliance The CSR Committee confirms that the implementation and monitoring of the CSR Policy is in compliance with its objectives and Policy of the Company. Managing Director Chairman CSR Committee G Venugopala Rao Gopi Kannan Thirukonda
14 3. Extract of the Annual Return Form number MGT – 9 Extract of the Annual Return as on March 31, 2019 {Pursuant to Section 92(3) of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014} 3.1 Registration and other details » Corporate identification number: U24110GJ2005PLC045564 » Registration date: February 25, 2005 » Name of the company: Rudolf Atul Chemicals Ltd » Category | Sub-category of the company: Company limited by shares » Address of the registered office and contact details: B | 18598, Survey number 33, Atul 396 020, Gujarat, India, Telephone: (+91 2632) 230000 » Whether listed company: no » Name, address and contact details of Registrar and Transfer Agent: not applicable 3.2 Principal business activities of the Company No. Name and description of main products | services National industrial classification code of the product | service % to total revenue of the Company* 1. Basic chemicals 201 100% *Business activities contributing 10% or more of the total revenue of the Company 3.3 Particulars of the holding, the subsidiary and the associate companies Not applicable
Notice Statutory Reports Company Overview Financial Statements 15 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 3.4 Shareholding pattern (equity share capital break-up as percentage of total equity) 3.4.1 Category-wise shareholding Category code Category of shareholders Number of shares held at the beginning of the year (as at April 01, 2018) Number of shares held at the end of the year (as at March 31, 2019) % change during the year Physical Demat Total % of total shares Physical Demat Total % of total shares A. Shareholding of the promoter and the promoter group 1. Indian a) Individuals | Hindu Undivided Family – – – – – – – – – b) Central Government | State Government(s) – – – – – – – – – c) Bodies corporate 29,18,750 – 29,18,750 50.00 29,18,750 – 29,18,750 50.00 – d) Financial institutions | Banks – – – – – – – – – e) Any other – – – – – – – – – Sub total (A)(1) 29,18,750 – 29,18,750 50.00 29,18,750 – 29,18,750 50.00 – 2. Foreign a) Individuals (Non-resident individuals | Foreign individuals) – – – – – – – – – b) Bodies corporate 29,18,750 – 29,18,750 50.00 29,18,750 – 29,18,750 50.00 – c) Institutions – – – – – – – – – d) Any other – – – – – – – – – Sub total (A)(2) 29,18,750 – 29,18,750 50.00 29,18,750 – 29,18,750 50.00 – Total shareholding of the promoter and the promoter group (A)=(A)(1)+(A)(2) 58,37,500 – 58,37,500 100.00 58,37,500 – 58,37,500 100.00 – B. Public shareholding 1. Institutions a) Mutual funds – – – – – – – – – b) Financial institutions | Banks – – – – – – – – – c) Central Government | State Government(s) – – – – – – – – – d) Venture capital funds – – – – – – – – – e) Insurance companies – – – – – – – – – f) Foreign institutional investors – – – – – – – – – g) Foreign venture capital investors – – – – – – – – – h) Trusts – – – – – – – – – Sub total (B)(1) – – – – – – – – –
16 Category code Category of shareholders Number of shares held at the beginning of the year (as at April 01, 2018) Number of shares held at the end of the year (as at March 31, 2019) % change during the year Physical Demat Total % of total shares Physical Demat Total % of total shares 2. Non-institutions a) Bodies corporate i) Indian – – – – – – – – – ii) Overseas – – – – – – – – – b) Individuals – – – – – – – – – i) Shareholders holding nominal share capital up to ` 1 lakh – – – – – – – – – ii) Shareholders holding nominal share capital in excess of ` 1 lakh – – – – – – – – – c) Non–resident Indians (NRI) – – – – – – – – – i) NRI repatriable – – – – – – – – – ii) NRI non–repatriable – – – – – – – – – iii) Foreign bodies – – – – – – – – – iv) Foreign nationals – – – – – – – – – d) Any other – – – – – – – – – Sub total (B)(2) – – – – – – – – – Total public shareholding (B)=(B) (1)+(B)(2) – – – – – – – – – Total (A)+(B) 58,37,500 – 58,37,500 100.00 58,37,500 – 58,37,500 100.00 – C. Shares held by custodians and against which depository receipts have been issued 1. Promoter and promoter group – – – – – – – – – 2. Public – – – – – – – – – Sub total (C) – – – – – – – – – Grand total (A)+(B)+(C) 58,37,500 – 58,37,500 100.00 58,37,500 – 58,37,500 100.00 –
Notice Statutory Reports Company Overview Financial Statements 17 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 3.4.2 Shareholding of the promoters No. Name of the shareholder Shareholding as at April 01, 2018 Shareholding as at March 31, 2019 % change in shareholding during the year Number of shares held % of total shares of the Company % of shares pledged | encumbered to total number of shares Number of shares held % of total shares of the Company % of shares pledged | encumbered to total number of shares 1. Atul Ltd 29,18,750 50.00 – 29,18,750 50.00 – – 2. IB Industriechemie Beteilingungs GmbH 29,18,750 50.00 – 29,18,750 50.00 – – Total 58,37,500 100.00 – 58,37,500 100.00 – – 3.4.3 Change in the promoters’ shareholding No. Particulars Reason for change Shareholding as at April 01, 2018 Cumulative shareholding during 2018-19 Number of shares % of total shares of the Company Number of shares % of total shares of the Company 1. Companies At the beginning of the year 58,37,500 100.00 58,37,500 100.00 Increase | Decrease during the year – – – – At the end of the year 58,37,500 100.00 58,37,500 100.00 3.4.4 Shareholding pattern of top ten shareholders (other than the Directors, the promoters and the holders of American Depository Receipts and Global Depository Receipts) No. Particulars Reason for change Shareholding as at April 01, 2018 Cumulative shareholding during 2018-19 Number of shares % of total shares of the Company Number of shares % of total shares of the Company 1. Companies At the beginning of the year – – – – Increase | Decrease during the year – – – – At the end of the year – – – – 3.4.5 Shareholding of the Directors and the Key Managerial Personnel No. Particulars Reason for change Shareholding as at April 01, 2018 Cumulative shareholding during 2018-19 Number of shares % of total shares of the Company Number of shares % of total shares of the Company 1. Companies At the beginning of the year – – – – Increase | Decrease during the year – – – – At the end of the year – – – –
18 3.5 Indebtedness Indebtedness of the Company including interest outstanding | accrued, but not due for payment: Particulars Secured loans excluding deposits Unsecured loans Deposits Total indebtedness Indebtedness at the beginning of the financial year i) Principal amount – – – – ii) Interest due, but not paid – – – – iii) Interest accrued, but not due – – – – Total i) + ii) + iii) – – – – Change in indebtedness during the financial year Addition – – – – Reduction – – – – Net change – – – – Indebtedness at the end of the financial year i) Principal amount – – – – ii) Interest due, but not paid – – – – iii) Interest accrued, but not due – – – – Total i) + ii) + iii) – – – – 3.6 Remuneration of the Directors and the Key Managerial Personnel 3.6.1 Remuneration to the Managing Director (` cr ) No. Particulars G Venugopala Rao Total amount 1. Gross salary Salary as per provisions under Section 17(1) of the Income Tax Act, 1961 0.26 0.26 Value of perquisites under Section 17(2) of the Income Tax Act, 1961 0.01 0.01 Profits in lieu of salary under Section 17(3) of the Income Tax Act, 1961 – – 2. Stock option – – 3. Sweat equity – – 4. Commission – – 5. Variable pay – – 6. Others – – 7. Total (A) 0.27 0.27 8. Overall ceiling as per the Act 0.76 0.76
Notice Statutory Reports Company Overview Financial Statements 19 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 3.6.2 Remuneration to the other Directors (` cr ) No. Particulars Wolfgang Schumann Ulrich Hambrecht Gopi Kannan Thirukonda Sudhir Merchant Sujal Shah Total amount 1. Non-executive Independent Directors a) F ee for attending the Board, Committee and other meetings – – – 0.009 0.008 0.017 b) Commission – – – 0.020 0.020 0.040 Total 1 – – – 0.029 0.028 0.057 2. Non-executive Non-independent Directors a) F ee for attending the Board, Committee and other meetings – – – – – – b) Commission – – – – – – Total 2 – – – – – – Total (B) = (1+2) – – – 0.029 0.028 0.057 Total managerial remuneration (A+B) 0.327 Overall ceiling as per the Act 1.6808 3.6.3 Remuneration to the Key Managerial Personnel other than the Managing Director (` cr ) No. Particulars Key Managerial Personnel CS CFO Total amount Rakesh Pathak Milind Phatak 1. Gross salary Salary as per provisions under Section 17(1) of the Income Tax Act, 1961 0.13 0.10 0.23 Value of perquisites under Section 17(2) of the Income Tax Act, 1961 0.01 – 0.01 Profits in lieu of salary under Section 17(3) of the Income Tax Act, 1961 – – – 2. Stock option – – – 3. Sweat equity – – – 4. Commission – – – 5. Others – – – Total (A) 0.14 0.10 0.24 3.7 Penalties | Punishment | Compounding of offences There were no penalties | punishment | compounding of offences for the year ending March 31, 2019.
20 The product portfolio of Rudolf Atul Chemicals Ltd (RACL) comprises auxiliary chemicals for textile processing. The Company offers products for preparation, colouration and finishing of apparel, home furnishing and technical textile. It offers 188 products which fall under two major application segments, process chemicals (PC) and effect chemicals (EC). The Company achieved sales of ` 83 cr, an increase of 13% over 2017-18, mainly on account of growth in volume. The PC product group grew by 20% whereas the EC product group grew by 6%. The size of the world textile chemicals market is estimated at US$ 8.7 bn and is growing at about 4%. China and India are major consumers of these products. The size of the Indian Textile Chemicals Industry is estimated at US$ 340 mn and is growing at about 6%. The size of the Textile industry in India is estimated at US$ 150 bn and is expected to reach US$ 223 bn by 2021. The sector has been posting a steady growth over the years and reportedly benefits from factors such as high availability of man-made and natural fibers, a continuously growing domestic market, design and manufacturing capabilities to cater to a range of orders and a complete value chain. India has a large workforce with skill levels across the hierarchy, with millennials accounting for 46% of its workforce in 2017. Management Discussion and Analysis
Notice Statutory Reports Company Overview Financial Statements 21 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 RACL aims to become a leading supplier in the Textile industry and is expanding its product range to cover almost all fibers and quality specifications. The Company will focus on sustainability by offering eco-friendly chemicals and introducing water saving concepts to fulfil stringent regulations and environmental initiatives. A major thrust will be given to provide a complete package for yarn, knits and terry towel processing. The Company will also focus on promotion of perfluorocarbons free chemicals, silicone softeners and products based on renewable resources to meet the increasing demand from brands to comply with zero discharge of hazardous chemicals. At the same time, the Digital and Reactive Printing industry is also growing as per fashion trend, which the Company will cater by offering complete printing package. Fluctuations in foreign exchange and volatility in prices of certain raw materials like Silicones, DASDA, Acrylates, etc may impact sales margins. Internal control systems Internal control systems of the Company are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested, certified and upgraded whenever required by the Statutory as well as the Internal Auditors covering all key areas of business. Significant audit observations and follow up actions and recommendations thereon are reported to the Senior Management and the Audit Committee for their review. Human Resources The Company continued its drive to institutionalise and upgrade its HR processes, to help build a more robust workforce capable of managing dynamic and growing business needs. The process of identification and review of key initiatives has become stronger and is continuously upgraded. The requisite training was imparted during 2018-19. Employee relations remained cordial.
22 Corporate Governance Report Conscience is a man’s best friend. It may not be his most amiable, but it is his most faithful monitor. - Gautama Buddha
Notice Statutory Reports Company Overview Financial Statements 23 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 1. Philosophy Transparency and accountability are the two basic tenets of Corporate Governance. The Company is committed to conducting business the right way which means taking decisions and acting in a way that is ethical and in compliance with the applicable legal requirements. It endeavors to continuously improve its Corporate Governance performance with a view to earn trust and respect of all its stakeholders. The Board of Directors (Board) is responsible for and is committed to good Corporate Governance and plays a critical role in overseeing how the Management serves the short and long-term interests of the shareholders and other stakeholders. 2. Board 2.1 Board business The normal business of the Board comprises: 2.1.1 Approving: i) short, medium or long-term borrowings ii) capital expenditure and operating budgets iii) commission payable to the Directors within the limit set by the shareholders iv) contracts in which the Director(s) are deemed to be interested v) creation of charge on assets in favour of lenders vi) declaration of interim dividend vii) joint ventures, collaborations, mergers and acquisitions viii) loans and investments ix) matters requiring statutory | Board consent x) sale of investments and assets xi) unaudited quarterly financial results and audited annual accounts, including segments revenue, results and capital employed 2.1.2 Monitoring: i) potential conflicts of interest of the Management, the Board Members and the shareholders, including misuse of corporate assets and abuse in related party transactions ii) implementation of performance objectives and corporate performance iii) effectiveness of the governance practises and making desirable changes iv) the Board nomination process such that it is transparent and results in diversity of experience, gender, knowledge, perspective and thoughts in the Board v) the Management and providing strategic guidance while ensuring that encouraging positive thinking does not result in overoptimism that either leads to significant risks not being recognised or exposes the Company to excessive risk. 2.1.3 Noting: i) general notices of interest of the Directors ii) minutes of the meetings of the Board and its Committees and also the resolution(s) passed by circulation 2.1.4 Recommending: i) appointment of the Statutory Auditors ii) final dividend 2.1.5 Reviewing: i) corporate strategy, major plans of action, Risk Policy, annual budgets and business plans ii) default in payment of statutory dues iii) fatal or serious accidents, dangerous occurrences and material environmental matters iv) foreign exchange exposure and exchange rate movement, if material v) the integrity of the accounting and financial reporting systems, and that appropriate systems of control are in place, in particular, systems for risk
24 management, financial and operational control, and compliance with the law and relevant standards 2.1.6 Setting: i) a corporate culture and the Values ii) well-defined mandate, composition and working procedures of the committees 2.1.7 Others: i) Acting on a fully informed basis, in good faith, with due diligence and care, and in the best interest of the Company and the shareholders ii) Aligning remuneration of the key executives and the Board Members with the long-term interests of the Company and the shareholders iii) Applying high ethical standards iv) Assigning sufficient number of the Non-executive Board Members capable of exercising independent judgement to items where there is a potential for conflict of interest v) Assisting the Executive Management by challenging the assumptions underlying strategy, strategic initiatives (such as acquisitions), risk appetite, exposures and the key areas of focus of the Company vi) Encouraging training of the Directors on a continuous basis to ensure that the Board Members are kept up-to-date vii) Exercising objective and independent judgement on corporate affairs viii) Facilitating the Independent Directors to perform their role effectively as the Board Members and also as the Members of Committees ix) Meeting the expectations of operational transparency of the stakeholders while maintaining confidentiality of information in order to foster a culture of good decision making 2.2 Appointment and tenure 2 | 3rd of the Directors (other than the Independent Directors) are rotational Directors. 1 | 3rd of rotational Directors retire in every Annual General Meeting and, if eligible, offer themselves for reappointment. The Managing Director is appointed by the Members for a period up to five years. 2.3 Composition, name, other directorships | committee memberships The Board comprises experts drawn from diverse fields | professions. It consists of six Members comprising two Independent Directors and four promoter Directors including a Chairman and a Managing Director. No. Name Directorship(s) in other company(ies)¹ Membership(s) of the Committee(s) of the Board(s)² Chairmanship(s) of the Committee(s) of the Board(s)² Chairman 1. Wolfgang Schumann – – – Managing Director 2. G Venugopala Rao – – – Non-executive Directors 3. Ulrich Hambrecht – – – 4. Gopi Kannan Thirukonda 8 4 – 5. Sudhir Merchant 2 2 2 6. Sujal Shah 7 6 4 Sudhir Merchant and Sujal Shah are Independent Directors 1Excludes Directorships in foreign companies and private limited companies 2Memberships | Chairmanships of only the Audit Committees and Stakeholders Relationship Committees of all public limited companies including the Company were considered.
Notice Statutory Reports Company Overview Financial Statements 25 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 2.4 Board meetings The Board meeting dates were normally determined well in advance. During 2018-19, the Board met four times. No. Day Date Venue 1. Friday April 20, 2018 Mumbai 2. Friday August 03, 2018 Atul 3. Friday November 16, 2018 Mumbai 4. Friday February 15, 2019 Mumbai 2.5 Attendance at the Board meetings and the AGM No. Name Board Meetings AGM on August 03, 2018 Total Attended 1. Wolfgang Schumann 4 4* Present 2. G Venugopala Rao 4 4 Present 3. Ulrich Hambrecht 4 4* Present 4. Gopi Kannan Thirukonda 4 4 Present 5. Sudhir Merchant 4 4 Present 6. Sujal Shah 4 4 Present *1 Board meeting was attended through video conference. 2.6 Appointment | Cessation » Appointed: nil » Ceased: nil » Resigned: nil 2.7 Remuneration (`) No. Name Remuneration during 2018-19 Sitting fees Salary and perquisites Commission Total Chairman 1. Wolfgang Schumann – – – – Managing Director 2. G Venugopala Rao – 26,65,215 – 26,65,215 Non-executive Directors 3. Ulrich Hambrecht – – – – 4. Gopi Kannan Thirukonda – – – 5. Sudhir Merchant 90,000 – 2,00,000 2,90,000 6. Sujal Shah 80,000 – 2,00,000 2,80,000 Sitting fees of up to ` 10,000 per meeting constitute fees paid to the Independent Directors for attending the Board, Committee and other meetings. Commission up to 1% of the net profit of the Company to the Independent Directors was approved by the Members of the Company at the AGM held on July 18, 2014 for a period of five years effective April 01, 2014. The Board approves, within the aforesaid limit, commission payable to each Independent Director.
26 3. Committees of the Board The Board has constituted the following Committees: » Audit Committee » Nomination and Remuneration Committee » Corporate Social Responsibility Committee 3.1 Audit Committee 3.1.1 Role i) Approving: a) a ppointment of the Chief Financial Officer b) transactions with related parties and subsequent modifications thereof ii) Conducting: a) pre-audit discussions with the Auditors regarding nature and scope of the audit and post-audit discussion to ascertain any areas of concern b) valuation of undertakings or assets, wherever necessary iii) Formulating: a) scope, functioning, periodicity and methodology for conducting the Internal Audit in consultation with the Internal Auditor b) Code of Conduct and related matters iv) Reviewing: a) adequacy of the internal audit function, including the structure of internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of Internal Audit b) significant transactions and arrangements entered into by the unlisted subsidiary companies c) the Auditors’ independence, performance and effectiveness of the audit process d) periodically with the Auditors, the internal control systems, the scope of audit including the observations of the Auditors and the Financial Statements before submission to the Board e) the annual Financial Statements and Auditor’s Report with the Management before submission to the Board for approval with particular reference to: - any changes in accounting policies and practices - compliance with accounting standards - disclosure of any related party transactions - going concern assumption - major accounting entries involving estimates based on exercise of judgement by the Management - matters required to be included in the Directors’ Responsibility Statement for the Directors’ Report - qualifications in the draft Audit Report - significant adjustments made in the Financial Statements arising out of audit findings f) with the Internal Auditors any significant findings and follow up thereon including findings of any internal investigations into matters where there is suspected fraud or irregularity or failure of the internal control systems of material nature and reporting such matters to the Board g) financial reporting process and the disclosure of financial information to ensure that the Financial Statements are correct, credible and sufficient h) compliance reports of all applicable laws as well as steps taken to rectify instances of non-compliances periodically i) reasons for substantial defaults, if any, in the payment to the depositors,
Notice Statutory Reports Company Overview Financial Statements 27 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 the debenture holders, the Members (in case of non-payment of declared dividends) and creditors j) the Financial Statements, in particular, investments made by unlisted subsidiary companies k) following information mandatorily: - appointment, removal and terms of remuneration of the Chief Internal Auditor - Internal Audit Reports relating to weaknesses in the internal control systems - Management Discussion and Analysis of financial condition and results of operations - management letters | letters of internal control weaknesses issued by the Statutory Auditors - statement of related party transactions submitted by the Management l) w ith the Management the statement of uses | applications of funds raised throughan issue (public issue, rights issue, preferential issue, etc), the statement of funds utilised for the purposes other than those stated v) Others a) Determining procedures for risk assessment and minimisation, and reviewing them periodically to ensure that the Executive Management controls risks through means of a properly defined framework b) Evaluating internal financial controls and risk management system c) Remuneration and terms of appointment of the Auditors and approval for payment for any other services d) Scrutinising inter corporate loans and investments e) Carrying out any other function as mentioned in the terms of reference of the Audit Committee 3.1.2 Composition The Committee comprises following Members, all having relevant experience in financial matters: No. Name Designation 1. Sudhir Merchant Chairman 2. Sujal Shah Member 3. Gopi Kannan Thirukonda Member 3.1.3 Meetings and attendance During 2018-19, four meetings were held. No. Name Total Attended 1. Sudhir Merchant 4 4 2. Sujal Shah 4 4 3. Gopi Kannan Thirukonda 4 4
28 The Statutory Auditors, the Chairman, the Managing Director, the Chief Financial Officer, the Company Secretary and the Internal Auditors are permanent invitees to the meetings. The Board notes the minutes of the Audit Committee meetings. 3.2 Nomination and Remuneration Committee 3.2.1 Role i) Devising a policy on the Board diversity ii) Formulating criteria for evaluation of the Independent Directors and the Board iii) Formulating criteria for determining qualifications, traits and independence of a Director and recommending to the Board a policy relating to the remuneration for the Directors, Key Managerial Personnel and other employees iv) Identifying persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with the criteria laid down, recommending to the Board their appointment and removal and carrying out evaluation of performance of every Director v) Recommending | determining remuneration of the Executive Director as per the policy 3.2.2 Composition The Committee comprises following Members: No. Name Designation 1. Chairman 2. Member 3. Member 4. Sudhir Merchant Sujal Shah Gopi Kannan Thirukonda Ulrich Hambrecht Member 3.2.3 Meetings and attendance During 2018-19, one meeting was held. No. Name Total Attended 1. 1 1 2. 1 1 3. 1 1 4. Sudhir Merchant Sujal Shah Gopi Kannan Thirukonda Ulrich Hambrecht 1 1 The Board notes the minutes of the Nomination and Remuneration Committee meetings. 3.3 Corporate Social Responsibility Committee 3.3.1 Role i) Formulating and recommending the Corporate Social Responsibility (CSR) Policy to the Board ii) Indicating reasons to the Board in case the amount of expenditure is less than 2% of the average net profit in a given year
Notice Statutory Reports Company Overview Financial Statements 29 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 iii) Monitoring the CSR Policy from time to time iv) Recommending the amount of expenditure to be incurred on the CSR initiatives which may not be less than 2% of the average net profit of the last three years 3.3.2 Composition The Committee comprises following Members: No. Name Designation 1. Gopi Kannan Thirukonda Chairman 2. Wolfgang Schumann Member 3. Sudhir Merchant Member 3.3.3 Meetings and attendance During 2018-19, one meeting was held. No. Name Total Attended 1. Gopi Kannan Thirukonda 1 1 2. Wolfgang Schumann 1 1 3. Sudhir Merchant 1 1 4. Company policies 4.1 Compliance Compliance certificates confirming due compliance with statutory requirements are placed at the Board Meeting for review by the Directors. A system of ensuring material compliance with the laws, orders, regulations and other legal requirements concerning the business and affairs of the Company is in place. Instances of non-compliance, if any, are also separately reported to the Board and subsequently rectified. 4.2 Code of Conduct The Code of Conduct is available on the website of the Company at http://www.racl.net.in/investors.html# All the Directors and the Senior Management personnel have affirmed their compliance with the Code of Conduct. A declaration to this effect signed by the Managing Director forms part of this report. 4.3 Prevention of Sexual Harassment of Women at Workplace Pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013, the Company has framed a Policy on Prevention of Sexual Harassment of Women at Workplace and constituted Internal Complaints Committee. Status of complaints received during 2018-19 are as under: Filed during 2018-19 Nil Disposed of during 2018-19 Nil Pending as at end of 2018-19 Nil
30 4.4 Related party transactions The Company has formulated a Related Party Transactions Policy. 5. Affirmation and disclosure There were no materially significant related party transactions, pecuniary transactions or relationships between the Company and its Directors or the Management and their subsidiary companies or relatives, among others, during 2018-19 that may have a potential conflict with the interests of the Company at large. All details relating to financial and commercial transactions where the Directors may have a pecuniary interest are provided to the Board and the interested Directors neither participate in the discussion nor vote on such matters. The Company complied with the statutory provisions, rules and regulations and in the last three years no strictures or penalties were imposed on the Company by any statutory authority. 6. Shareholders’ information 6.1 General Body meetings 6.1.1 Location and time, where last three AGMs were held: Year Location Date Time 2015-16 B | 18598, Survey number 33 Atul 396 020, Gujarat, India August 09, 2016 04:00 pm 2016-17 B | 18598, Survey number 33 Atul 396 020, Gujarat, India August 11, 2017 12:30 pm 2017-18 B | 18598, Survey number 33 Atul 396 020, Gujarat, India August 03, 2018 12:30 pm 6.1.2 Special resolutions passed in the previous three AGMs: yes 6.1.3 Resolutions passed through postal ballot: nil 6.2 Annual General Meeting 2019 Details of the 15th AGM are as under: Year Location Date Time 2018-19 B | 18598, Survey number 33 Atul 396 020, Gujarat, India August 09, 2019 1:00 pm As required, particulars of the Directors seeking reappointment | appointment are given in the Notice of the AGM. 6.3 Financial year April 01 to March 31
Notice Statutory Reports Company Overview Financial Statements 31 Rudolf Atul Chemicals Ltd | Annual Report 2018-19 6.4 Date of book closure July 13, 2019 to July 19, 2019 6.5 Date of dividend payment August 14, 2019 6.6 Location of plant Atul 369 020, Gujarat, India 6.7 Address of correspondance B | 18598, Survey number 33, Atul 396 020, Gujarat, India E-mail address: sec@racl.net.in 6.8 Tentative Board meeting dates for consideration of results for 2019-20 No. Particulars Date 1. First quarter results August 09, 2019 2. Second quarter and half-yearly results November 15, 2019 3. Third quarter results February 14, 2020 4. Fourth quarter and annual results April 17, 2020 7. Role of the Company Secretary in overall governance process All the Directors have access to the suggestions and services of the Company Secretary in ensuring an effective functioning of the Board and its Committees. The Company Secretary administers, attends and prepares minutes of the Board and the Committee proceedings in accordance with the statutory requirements as well as the norms of Corporate Governance. 8. Certification by the Chief Executive Officer and the Chief Financial Officer Dr G Venugopala Rao, Managing Director and Mr Milind Phatak, Chief Financial Officer, issued certificates to the Board. The certificates were placed before the Board at the meeting held on April 16, 2019 in which the accounts for the year ended March 31, 2019 were considered and approved by the Board. For Rudolf Atul Chemicals Ltd Mumbai (G Venugopala Rao) April 16, 2019 Managing Director
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