Amal Ltd Annual Report 2021-22
Amal Ltd | Annual Report 2020-21 The logo of Amal Ltd portrays a diya whose constituents are an earthen pot, ghee, a wick and a flame. Our actions (symbolised by the ghee) will remain within the boundary of ethics (symbolised by the earthen pot ) and we will through hard work (symbolised by the wick) achieve our purpose (symbolised by the flame). Contents A river cuts through a rock, not because of its power, but because of its persistence. ~ Jim Watkins 01 Corporate profile 38 Notice 02 Purpose 53 Performance trend 03 Values Standalone Financial Statements 04 Letter to the shareholders 55 Independent Auditor’s Report 05 Directors’ Report 66 Financial Statements 11 Annexure to the Directors’ Report Consolidated Financial Statements 19 Management Discussion and Analysis 119 Independent Auditor’s Report 20 Corporate Governance Report 128 Financial Statements 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 can 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.
1 Corporate profile Amal Ltd is engaged in manufacturing and marketing of bulk chemicals such as Sulphuric acid and Oleum and their downstream products such as Sulphur dioxide and Sulphur trioxide. The plant is located in Ankleshwar, Gujarat, India. Amal Ltd was promoted by Piramal Group in 1974-75; the controlling interest of the Company was sold to Atul Ltd in 1985-86. The Company has incorporated a wholly-owned subsidiary Amal Specialty Chemicals Ltd on October 12, 2020.
Amal Ltd | Annual Report 2021-22 Purpose 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 product 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
3 Values 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 ensured 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.
Amal Ltd | Annual Report 2021-22 Letter to the shareholders Fellow shareholders, 2021-22 may forever be remembered as amongst the most uncertain fiscal because of the pandemic and later the geopolitical conflict. Nonetheless, as we write this letter, we wish to find reasons to be hopeful – our Company wiped out the remaining carried forward loss of ` 0.29 cr which at peak was ` 56 cr. Amal Speciality Chemicals Ltd (ASCL), a 100% subsidiary, will soon commission its new manufacturing facility for 300 mt per day of H2SO4 equivalent products in Ankleshwar. Financial performance in 2021-22 declined because of low demand of finished products (particularly H2SO4 and SO3) and high input prices (particularly of Sulphur) for most of 2021-22 – sales rose by 43% to ` 45 cr; EBIDTA decreased from 41% to 14%, PBT decreased by 69% to ` 3 cr and RoCE from 35% to 11%. The Directors did not recommend dividend consequent to a stipulation in the revival scheme; it is also prudent to wait till the new investment of ` 93 cr in ASCL delivers a positive impact. During 2021-22, we adjusted the product portfolio which helped in preventing further fall in contribution margin by 1.2%. During the fiscal, we also completed further debottlenecking of the capacity of SO3, Oleum 25% and H2SO4 which will help increase contribution margin. Furthermore, we added 17 teammembers who will be required to take up responsibilities in sync with the forthcoming new manufacturing facility of Amal Speciality Chemicals Ltd. Our Company along with ASCL is expected to achieve consolidated sales of ~ ` 135 cr at full capacity utilisation. The new manufacturing facility is expected to be commissioned during the second quarter of 2022-23. Our first task will be to streamline the parameters and achieve the projections. Thereafter, we will focus on a few proposals on hand to grow our Company beyond. We will execute proposals based on market attractiveness and ability to compete. So far, 2022-23 has seen the highest price of Sulphur, the key raw material, in the last 12 years. On the other hand, it has so far been difficult to pass on the entire increase. It is therefore possible that 2022-23 may see a pressure on prices of finished products such as H2SO4, Oleum, SO3 and SO2. In our view, such a situation is unsustainable andwill change for the better. Meanwhile, team Amal is taking several actions at the workplace and marketplace to enhance performance. Our Company contributed ` 26 lakhs towards fulfilling its obligation to society – it was used for improving infrastructure of five schools and providing relief to COVID-19 patients in four hospitals. The mandate is to take up projects, no matter how small, in step with national priorities. The initiatives were implemented by Atul Foundation – you may like to see the link at the end of the letter. The concept ‘serve and grow’ is robust; it makes our Company sustainable. We are grateful to our customers for giving us an opportunity to serve and grow our Company – their expectations help us improve our standards. We recognise and appreciate every member of teamAmal who is persevering to improve performance. We value the engagement, analysis, value addition and guidance of the Non-executive Directors. In order to maintain continuity, we have inducted Mr Jyotin Mehta as an Independent Director. We again reiterate our five everlasting mandates: one – drive efficiency in manufacturing and other processes, two – become financially resilient, three – boost people productivity and remain lean in fixed costs, four – pervade R&Dand information technology in every function and five – work with customers on ideas with high potential. We believe that the abovemandates will help our Company growbetter and faster as it turns yet another page in its never-ending journey. Sincerely, (Sunil Lalbhai) (Rajeev Kumar) Chairman Managing Director www.atulfoundation.org
5 Directors’ Report Dear Members, The Board of Directors (Board) presents the annual report of Amal Ltd together with the audited Financial Statements for the year ended March 31, 2022. 01. Financial results (` lakhs) 2021-22 2020-21 Sales and other income 4,530 3,166 Profit before tax 332 1,086 Provision for tax 90 202 Profit for the year 242 885 Other comprehensive income (net of tax) (1) (1) Profit after tax 241 884 Balance brought forward (29) (913) Balance carried forward 212 (29) 02. Performance During 2021-22, sales and other income increased by 43% (increase in selling price by 30% and sales volume of 13%) from ` 3,166 lakhs to ` 4,530 lakhs. The Company reported a profit before tax of ` 332 lakhs in 2021-22 against a profit before tax of ` 1,086 lakhs in 2020-21 due to high input cost. 03. Dividend The Directors have not declared a dividend to partially meet the requirement of fund for the on-going project in Amal Speciality Chemicals Ltd, a wholly-owned subsidiary company. 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 a 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 buildings), plant, equipment, other assets and third parties. 06. Risk management Risk management is an integral part of business practices of the Company. The framework of risk management concentrates on formalising a system to deal with the most relevant risks, building on existing management practices, knowledge and structures. With the help of a reputed international consultancy firm, the Company has developed and implemented a comprehensive risk management system to ensure that risks to the continued existence of the Company as a going concern and to its growth are identified and remedied on a timely basis. While defining and developing the formalised risk management system, leading standards and practices have been considered. The risk management system is relevant to business reality, pragmatic and simple and involves the following: i) Risk identification and definition - Focuses on identifying relevant risks, creating | updating clear definitions to ensure undisputed understanding along with details of the underlying root causes | contributing factors.
Amal Ltd | Annual Report 2021-22 ii) Ri sk c lass i f i cat i on - Focuses on understanding the various impacts of risks and the level of influence on its root causes. This involves identifying various processes, generating the root causes and a clear understanding of risk inter-relationships. iii) Risk assessment and prioritisation - Focuses on determining risk priority and risk ownership for critical risks. This involves assessment of the various impacts taking into consideration risk appetite and the existing mitigation controls. iv) Risk mitigation - Focuses on addressing critical risks to restrict their impact(s) to an acceptable level (within the defined risk appetite). This involves a clear definition of actions, responsibilities and milestones. v) Risk reporting and monitoring - Focuses on providing to the Audit Committee and the Board, periodic information on risk profile evolution and mitigation plans. Roles and responsibilities Governance The Board has approved the Risk Management Policy of the Company. The Company has laid down procedures to inform the Board on i) to iv) listed above. The Audit Committee | Risk Management Committee periodically reviews the risk management system and gives its recommendations, if any, to the Board. The Board reviews and guides the Risk Management Policy. Implementation Implementationof theRiskManagement Policy is the responsibility of the Management. It ensures functioning of the risk management system as per the guidance of the Audit Committee | Risk Management Committee. The Company has a risk management oversight structure in which each sub-segment has a Chief Risk and Compliance Officer. The Management at various levels takes accoun tab i l i t y f o r r i sk i den t i f i ca t i on , appropriateness of risk analysis, and timeliness as well as adequacy of risk mitigation decisions at both individual and aggregate levels. It is also responsible for the implementation, tracking and reporting of defined mitigation plans, including periodic reporting to the Audit Committee and Board. 07. Internal financial controls The internal financial controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Financial Statements. These include those policies and procedures that: i) pertain to the maintenance of records, which in reasonable detail, accurately and fai r ly ref lect the transact ions and dispositions of the assets of the Company, ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Financial Statements in accordancewith Generally Accepted Accounting Principles and that receipts and expenditures are being made only in accordance with authorisations of the Management and the Directors of the Company, iii) p r ov i de r ea s onab l e a s s u r an c e regarding prevention or timely detection of unauthorised acquisition, use or disposition of the assets that can have a material effect on the Financial Statements. A reputed international consultancy firm has reviewed the adequacy of the internal f inancial controls with respect to the Financial Statements.
7 The Management assessed the effectiveness of the internal financial controls over financial reporting as of March 31, 2022, and the Board believes that the controls are adequate. 08. Fixed deposits During 2021-22, the Company did not accept any fixed deposits. 09. Loans, guarantees, investments and security Particulars of loans, guarantees, investments and security provided are given at page numbers 86. 10. Subsidiary, joint venture and associate entities There is no change in subsidiary, joint venture and associate entities during 2021-22. 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 99. No transactions were entered into by the Company that required disclosure in Form AOC-2. 12. Corporate social responsibility Compos i t i on o f the Co rpo rat e Soc i a l Responsibility (CSR) Committee, the CSR Policy and the CSR Report are given at page number 12. 13. Annual return Annual return for 2021-22, is available on the website of the Company at www.amal.co.in/ investors/information-for-stakeholders/annualgeneral-meeting/ 14. Auditors Statutory Auditors Deloi tte Haskins & Sel ls LLP, Char tered Accountants (DHS) were appointed as the Statutory Auditors of the Company at the 43rd Annual General Meeting (AGM) held on June 30, 2017, until the conclusion of the 48th AGM. The first term of five years of DHS is expiring at the ensuing AGM. Pursuant to Section 139 of the Companies Act, 2013 and Rules made thereunder, the Company can reappoint DHS for second term of five years. Accordingly, based on the recommendation of the Audit Committee, the Board at its meeting held on April 22, 2022, recommended the reappointment of DHS, as the Statutory Auditors of the Company for a second term of five years. DHS will hold the office for a period of five consecutive years from the conclusion of the 48th AGM of the Company till the conclusion of the 53rd AGM to be held in the year 2027, subject to the approval of the members of the Company at the ensuing AGM. DHS has given its consent to act as the Auditors and confirmed its eligibility for reappointment. The Auditor’s Report for the financial year ended March 31, 2022, does not contain any qualification, reservation or adverse remark. The report is enclosedwith the Financial Statements in this annual report. Secretarial Auditors The Board appointed SPANJ & Associates, as the Secretarial Auditors on January 21, 2022 and their report is given at page number 15. 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 In preparation of the annual accounts for the financial year ended March 31, 2022, the applicable accounting standards have been followed and there are no material departures. 15.2 The accounting policies were selected and applied consistently and judgements and estimates thus made were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period.
Amal Ltd | Annual Report 2021-22 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, 2022, were prepared on a going concern basis. 15.5 Adequate internal financial controls to be followed by the Company were laid down and they were adequate and operating effectively. 15.6 Proper systems were devised to ensure compliance with the provisions of all applicable laws and the same were adequate and operating effectively. 16. Directors 16.1 Appointments | Reappointments | Cessations 16.1.1 According to the Articles of Association of the Company, Mr Sunil Lalbhai retires by rotation and being eligible, offers himself for reappointment at the AGM scheduled on September 08, 2022. 16.1.2 Subject to the approval of the members in the AGM: a) Mr Rajeev Kumar was reappointed as the Managing Director for a period of five years, effective March 24, 2022. b) Mr Jyotin Mehta was appointed as an Independent Director for a period of five years, effective April 22, 2022. In the opinion of the Board, the Independent Directors possess integrity, experience and expertise relevant to the Company. 16.2 Policies on appointment and remuneration 16.2.1 Appointment While recommending appointment of the Directors, the Nomination and Remuneration Committee considers the following factors: i) Qual i f i cat ion: wel l -educated and experienced in senior leadershippositions 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 Sitting fees: ` 30,000 for attending a Board meeting and Audit Committee meeting, and ` 10,000 for attending any other Committee meeting. 16.3 Criteria and method of annual evaluation 16.3.1 The criteria for evaluation of performance of i) the Executive Directors, ii) the Non-executive Directors (other than Independent Directors), iii) the Independent Directors, iv) the Chairman, v) the Committees of the Board and vi) the Board as a whole are summarised in the table at the end of the Directors’ Report at page number 10. 16.3.2 The Independent Directors have carried out annual: i) r e v i ew o f pe r f o rman c e o f t he Non-independent Directors - Executive, ii) r e v i ew o f pe r f o rman c e o f t he N o n - i n d e p e n d e n t D i r e c t o r s - Non-executive, iii) review of performance of the Chairman, assessment of quality, quantity and timeliness of the flow of information to the Board and iv) review of performance of the Board as a whole. 16.3.3 The Board has carried out annual evaluation of performance of:
9 i) its committees namely Audit, Corporate Social Responsibi l i ty, Nominat ion and Remuneration and Stakeholders Relationship ii) the Independent Directors The templates for the above purpose were circulated in advance for feedback of the Directors. 16.4 Familiarisation programs for the Independent Directors The Company has familiarisation programs for its Independent Directors. It comprises, amongst others, presentations by and discussions with the Senior Management on the nature of the industries in which it operates, its vision and strategy, its organisation structure and relevant regulatory changes. 17. Key Manager ial Personnel and other employees 17.1 Appointments and cessations of the Key Managerial Personnel Mr Rajeev Kumar has been reappointed as a Managing Director for a period of five years, effective March 24, 2022, subject to approval of the members. 17.2 Remuneration The Remuneration Policy of the Key Managerial Personnel and other employees consists of the following: 17.2.1 Components: i) Fixed pay a) Basic salary b) Allowances c) Perquisites d) Retirals ii) Variable pay 17.2.2 Factors for determining and changing fixed pay: i) Existing compensation ii) Education iii) Experience iv) Salary bands v) Performance vi) Market benchmark 17.2.3 Factors for determining and changing variable pay: i) Business performance ii) Individual performance iii) Grade 18. Analysis of remuneration The information required pursuant to Sections 134(3)(q) and 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given at page number 18. The Company is not required to disclose the information required as therewere no employees dur ing 2021-22 drawing remunerat ion exceeding the limit specified. 19. Management Discussion and Analysis The Management Discussion and Analysis cover ing per formance is given at page number 19. 20. Corporate Governance Report 20.1 Statement of declarat ion given by the Independent Directors The Independent Di rectors have given declarations under Section 149(6) of the Companies Act, 2013. 20.2 Report The Corporate Governance Report is given at page number 20. Details about the number of meetings of the Board held during 2021-22 are given at page number 25. The composition of the Audit Committee is given at page number 28.
Amal Ltd | Annual Report 2021-22 All the recommendations given by the Audit Committee were accepted by the Board. 20.3 Whistleblowing Policy The Board, on the recommendation of the Audit Committee, had approved a vigil mechanism (Whistleblowing Policy). The policy provides an independent mechanism for reporting and resolving complaints pertaining to unethical behaviour, actual or suspected fraud and violation of the code of conduct of the Company and is displayed on the website of the Company at www.amal.co.in/investors/policies/ No personnel has been denied access to the Audit Committee. 20.4 Secretarial standards Secretarial standards as applicable to the Company were followed and complied with during 2021-22. 21. Acknowledgements The Board expresses its sincere thanks to all the employees, customers, suppliers, lenders, regulatory and government authorities, stock exchanges and investors for their support. For and on behalf of the Board of Directors (Sunil Siddharth Lalbhai) Atul Chairman April 22, 2022 DIN: 00045590 Evaluation of Evaluation by Criteria Non-independent Director (Executive) Independent Directors Qualification, Experience, Availability and Attendance Integrity, Commitment, Governance, Transparency, Communicat ion, Business leadership, People leadership, Investor relations Non-independent Director (Non-executive) Independent Directors Qualification, Experience, Availability and Attendance Integrity, Commitment, Governance, Independence, Communication, Preparedness, Participation and Value addition Independent Director All other Board Members Qualification, Experience, Availability and Attendance Integrity, Commitment, Governance, Independence, Communication, Preparedness, Participation and Value addition Chairman Independent Directors Qualification, Experience, Availability and Attendance Integrity, Commitment, Governance, Impartiality, Communicat ion, Business leadership, People leadership and Meeting conduct Committees Board Members Composition, Process and Dynamics Board as a whole Independent Directors Composition, Process and Dynamics
11 Annexure to the Directors’ Report No. Subject title Page 1. Conservation of energy, technology absorption and foreign exchange earnings and outgo 12 2. Subsidiary, associate and joint venture companies 12 3. Corporate social responsibility 12 3.1 Policy, programs and scope 12 3.2 Committee 13 3.3 Details of URL for disclosure of composition of CSR Committee, CSR Policy and CSR projects on the website of the Company 13 3.4 Impact assessment 13 3.5 Details of the amount available and required for set-off 13 3.6 Average net profit of the Company 13 3.7 CSR obligation 13 3.8 CSR amount spent | unspent for the financial year 14 3.9 Details of unspent amount for preceding three financial years 14 3.10 Details relating to the capital asset created or acquired through CSR spent 14 3.11 Reasons for not spending two percent of the average net profit 14 4. Secretarial Audit Report 15 5. Statement of particulars under Sections 134(3)(q) and 197(12) of the Companies Act, 2013 18
Amal Ltd | Annual Report 2021-22 1. Conservation of energy, technology absorption and 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 a part of this report. However, as per the provisions of Section 136 of the Companies Act, 2013 the report and accounts are being sent to all the members excluding the information relating to conservation of energy, technology absorption, foreign exchange earnings and outgo. 2. Subsidiary, joint venture and associate companies (` lakhs) No. Name Equity sharecapital Reserves and surplus Total assets Total liabilities Investments Revenue Profit before tax Provision for tax Profit after tax Dividend % shareholding Reporting currency Subsidiary company 1. Amal Speciality Chemicals Ltd 500 (64) 8,504 8,068 - 0 (57) 0 (57) - 100% INR 3. Corporate social responsibility 3.1 Policy, programs and scope 3.1.1 Policy The Company will volunteer its resources to the extent it can reasonably afford to contribute towards enhancing the quality of life, thereby the standard of living of people, particularly the marginalised sections of the society. Essentially, the indicative beneficiaries are the needy, who are living below the poverty line in rural or urban areas, particularly where Atul is operating. The endeavour is to uplift them through the chosen programs (mentioned below) so that they can live with dignity and self-respect. 3.1.2 Programs and scope Atul Foundation 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) Establish and | or support educational institutions b) Establish and | or support vocational institutions c) Enhance education in rural areas d) Promote integrated development of rural | tribal areas e) Promote sustainable livelihood opportunities f) Support needy and | or meritorious students ii) Health and Relief a) Eradicate hunger and malnutrition b) Establish and | or improve medical care centers c) Promote health, hygiene and sanitation d) Promote sports and fitness e) Support deserving | needy patients f) Support during natural calamities
13 iii) Infrastructure and Conservation a) Conserve natural resources b) Develop and | or improve rural utilities c) Develop and | or improve rural amenities d) Protect flora and fauna e) Protect and | or promote art and culture f) Restore sites of historical importance 3.2 Composition of the CSR Committee: No. Name of Directors Designation | Nature of Directorship Number of meetings held during the year Number of meetings attended during the year 1. Abhay Jadeja Chairman | Independent Director 1 1 2. Gopi Kannan Thirukonda Member | Non-Independent Director 1 1 3. Rajeev Kumar Member | Non-Independent Director 1 1 3.3. The URL for composition of CSR Committee, CSR Policy and CSR projects approved by the Board are disclosed on the website of the Company: www.atul.co.in/pdf/investors/policies/CSR.pdf 3.4 Impact assessment: not applicable 3.5 Details of the amount available for set-off in pursuance of Sub-rule (3) of Rule 7 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 and amount required for set-off for the financial year: (` lakhs) No. Financial year Amount available for set-off from preceding financial years Amount required to be set-off for the financial year, if any - - - - 3.6 Average net profit of the Company as per Section 135(5): ` 1,312.31 lakhs 3.7 CSR obligation: (` lakhs) a) 2% of average net profit of the Company as per Section 135(5) 26.25 b) Surplus arising out of the CSR projects or programs or activities of the previous financial years - c) Amount required to be set-off for the financial year - d) Total CSR obligation for the financial year [a)+b)+c)] 26.25
Amal Ltd | Annual Report 2021-22 3.8 a) CSR amount spent or unspent for the financial year: (` lakhs) Amount unspent Total amount spent for the financial year Total amount transferred to the Unspent CSR Account as per Section 135(6) Amount transferred to any fund specified under Schedule VII as per second proviso to Section 135(5) Amount Date of transfer Name of the fund Amount Date of transfer 26.25 - - - - - b) Details of CSR amount spent against ongoing projects for the financial year: (` lakhs) No. Name of the project Item from the list of activities in Schedule VII to the Act Local area Location of the project Amount spent for the project Amount transferred to the Unspent CSR Account for the project as per Section 135 (6) Mode of implementation- direct Mode of implementation- through agency State District Name CSR registration number 1. Support to schools in Ankleshwar promoting education Yes Gujarat Bharuch 13.40 NA No Atul Foundation CSR00000635 2. Support to disaster relief for the COVID-19 pandemic promoting health Yes Gujarat Bharuch | Vadodara | Valsad 12.85 NA No Atul Foundation CSR00000635 Total 26.25 c) Amount spent in administrative overheads: nil d) Amount spent on impact assessment: nil e) Total amount spent for the financial year [b)+c)+d)]: ` 26.25 lakhs f) Excess amount for set-off, if any: nil 3.9 a) Details of unspent CSR amount for the preceding three financial years: nil b) Details of CSR amount spent in the financial year for ongoing projects of the preceding financial year(s): nil 3.10 In case of creation or acquisition of capital asset, furnish the details relating to the asset so created or acquired through CSR spent in the financial year: nil 3.11 Specify the reason(s), if the Company has failed to spend two percent of the average net profit as per Section 135(5): not applicable Chairman CSR Committee Managing Director Abhay Jadeja DIN: 03319142 Rajeev Kumar DIN: 07731459
15 4. Secretarial Audit Report Form number MR – 3 Secretarial Audit Report For the financial year ended March 31, 2022 {Pursuant to Section 204(1) of the Companies Act, 2013 and Rule number 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014} To the members of Amal Ltd We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Amal Ltd (hereinafter called the Company). The Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts | statutory compliances and expressing my opinion thereon. Based onmy verification of the books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorised representatives during the conduct of the Secretarial Audit, we hereby report that in our opinion, the Company has, during the audit period covering the financial year ended March 31, 2022, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company as per Annexure I for the financial year ended March 31, 2022, according to the provisions of: i. The Companies Act, 2013 (Act ) and the rules made thereunder read with the notified provisions of Companies (Amendment ) Act, 2017; ii. The Securities Contracts (Regulation) Act, 1956 and the rules made thereunder; iii. The Depositories Act, 1996 and the regulations and bye-laws framed thereunder; iv. The Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of foreign direct investment, overseas direct investment and external commercial borrowings; v. The following regulations and guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act ): a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 d) The Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 e) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible Securities) Regulations, 2021 f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with clients g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 h) The Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018
Amal Ltd | Annual Report 2021-22 Other sector specific laws as applicable to the Company, including product laws, pollution laws, manufacturing laws and safety laws as per confirmations of compliances placed before the Board of Directors, for our verification carried out on test-check basis and considered as assurance for existence of proper compliance management system. However, it has been found that there were no instances requiring compliance with the provisions of the laws indicated at point (c), (d), (e) and (g) of para (v) mentioned hereinabove during the period under review. We have also examined compliance with the applicable clauses of the following: i. Secretarial standards issued by the Institute of Company Secretaries of India. ii. The Listing Agreements entered into by the Company with BSE Ltd and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended). During the period under review, the Company has complied with the provisions of the Act, rules, regulations, guidelines, standards, mentioned hereinabove and there is adequate compliance management system for the purpose of other sector specific laws. We have relied on the representations made by the Company and its officers for systems and mechanisms formed by the Company for compliances under other sector specific laws and regulations applicable to the Company. We further report that the Board of Directors of the Company is duly constituted with proper balance of the Executive Directors and the Non-executive Directors (Independent and Non-independent ). The changes in the composition of the Board that took place during the period under review were carried out in compliance with the provisions of the Act. Adequate notice was given to all the Directors to schedule the Board meetings, agenda and detailed notes on agendawere sent at least seven days in advance and a systemexists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting. Majority decision is carried through, while the views of the dissenting members are captured and recorded as part of the minutes, wherever required. We further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with the applicable laws, rules, regulations and guidelines. We further report that during the audit period, there were no specific events | actions having a major bearing on the affairs of the Company in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc, except Pursuant to the Modified Sanctioned Scheme (MS-10 and MS-13) approved by the Board of Industrial Finance and Reconstruction, the Company has redeemed 20,00,000, (0%) redeemable and non-convertible preference shares of ` 10 each issued to Atul Ltd. For SPANJ & Associates Company Secretaries (Ashish C Doshi) Partner Membership number: F 3544 Certificate of practice number: 2356 Ahmedabad UDIN: F003544D000209959 April 22, 2022 Peer review certificate number: 702 | 2020
17 Amal Ltd Annexure – I to the Secretarial Audit Report To the members of Amal Ltd Subject: Secretarial Audit Report for the financial year ended on March 31, 2022 Our report of even date is to be read along with this letter. 1. Maintenance of secretarial record is the responsibility of the Management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit. 2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial records. We believe that the processes and practices we followed provide a reasonable basis for our opinion. 3. We have not verified the correctness and appropriateness of financial records and books of accounts of the Company. 4. Wherever required, we have obtained the Management’s representation about the compliance of laws, rules and regulations and happening of events, etc. 5. The compliance of the provisions of corporate and other applicable laws, rules, regulations, standards is the responsibility of the Management. Our examination was limited to the verification of procedures on test basis. 6. The Secretarial Audit Report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the Management has conducted the affairs of the Company For SPANJ & Associates Company Secretaries (Ashish C Doshi) Partner Membership number: F 3544 Certificate of practice number: 2356 Ahmedabad UDIN: F003544D000209959 April 22, 2022 Peer review certificate number: 702 | 2020
Amal Ltd | Annual Report 2021-22 5. Statement of particulars under Sections 134(3)(q) and 197(12) of the Companies Act, 2013* No. Particulars Status Number of times If total remuneration of the Director is considered If total remuneration of the Director, excluding variable pay and commission is considered i) Ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year Sujal Shah 0.25 0.25 Abhay Jadeja 0.26 0.26 Mahalakshmi Subramanian 0.25 0.25 Rajeev Kumar 1.28 1.28 ii) Percentage increase in remuneration of the Directors, the Chief Executive Officer, the Chief Financial Officer and the Company Secretary, if any, in the financial year Directors % Sujal Shah 29% Abhay Jadeja 28% Mahalakshmi Subramanian 29% Managing Director Rajeev Kumar - Company Secretary Ankit Mankodi - iii) Percentage increase in the median remuneration of employees in the financial year 8.61% iv) Number of permanent employees on the rolls of the Company 50 v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last nancial year and i ts comparisonwith the percentile increase in the managerial remuneration and justi cation thereof and point out if there are any exceptional circumstances for increase in themanagerial remuneration Average increase for Key Managerial Personnel and for other employees was about 8.61%. There is no exceptional increase in remuneration of Key Managerial Personnel. vi) Affirmation that the remuneration is as per the Remuneration Policy of the Company It is affirmed that the remuneration is as per the Remuneration Policy of the Company. *Read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and forming part of the Directors’ Report for the year ended March 31, 2022.
19 Management Discussion and Analysis The Company manufactures bulk chemicals such as sulphuric acid and oleum and their downstream products such as sulphur dioxide and sulphur trioxide at its manufacturing site at Ankleshwar. These chemicals find their use in several industries like Dyestuff, Fertiliser, Personal Care, Petrochemical, Pharmaceutical, Textile, etc. These chemicals are generally sold locally within a radius of 150 km from the manufacturing site. During 2021-22, despite the disruptions caused by the COVID-19 pandemic, sales and other income increased by 43% from ` 3,166 lakhs to ` 4,530 lakhs. The world market for sulphuric acid is estimated at 275 mn mt per annum. Assuming demand equals production and is growing at about 3% per annum, the world market for sulphuric acid is projected to be about 300 mn mt per annum by 2025, with Fertiliser industry contributing up to 65% of the consumption. The manufacturing plant of the Company at Ankleshwar has an installed capacity of 140 mt per day of sulphuric acid (including downstreamproducts). Optimising the product mix is a key factor. The way to succeed in these products is to ensure high capacity utilisation, excellent conversion efficiency and full deployment of the by-product, steam. The Company incorporated a wholly-owned subsidiary namely, Amal Speciality Chemicals Ltd (ASCL), in 2020-21. ASCL will have a capacity to manufacture 300 mt per day of sulphuric acid (including downstream products). This will help the Company to have a higher market share. The products manufactured by the Company are commodity in nature whose prices and contributions fluctuate significantly. The price of the key raw material, sulphur, varies from month to month. The uncertainties associatedwith theCOVID-19 pandemic may have adverse impact on the demand and supply chain in the short-term, and the Company is working to minimise the impact of such aberrations to sustain the operations and identify new opportunities to grow. INTERNAL CONTROL SYSTEMS The internal control systems of the Company are commensurate with the nature of its business and size and complexity of its operations. These are routinely tested, certified and upgraded wherever 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 there on are reported to the Senior Management and Audit Committee for their review. The Company is working with reputed firms specialised in internal audit function. The combined efforts are helping the Company to introduce best practices required to manage its business. HUMAN RESOURCES The Company believes that people are the foundation on which the business is built, and this remains a key focus area. It continued with its drive to institutionalise and upgrade HR processes. In particular, it focused on improving its processes related to recruitment, training and development, performance management and succession planning in order to manage a dynamic and growing business. The training needs are identified based on self-assessment and L+1 assessment. In addition, there are certain standard courses which everyone is expected to go through, depending upon his (her) grade. Management Discussion and Analysis The Company manufactures bulk chemicals such as sulphuric acid and oleum and their downstream products such as sulphur dioxide nd sulphur trioxide at its manufacturing site at Ankleshwar. These chemicals find their use in several indu tries like Dyestuff, Fertiliser, Personal Care, Petrochemical, Pharmaceutical, Textile, etc. These chemicals are generally sold locally within a radius of 150 km from the manufacturing site. During 2021-22, despite the disruptions caused by the COVID-19 pandemic, sales and other income increase by 43% from ` 3,166 lakhs to ` 4,530 lakhs. The world mark t for sulp u ic acid is estimated at 275 n mt per annum. Assuming demand equals production and is growing at about 3% per annum, the world market for sulphuric acid is projected to be about 300 mn mt per a num by 2025, with Fertiliser industry contributing up to 65% of the consumption. The manufacturing plant of the Company at Ankleshwar has an installed capacity of 140 mt per day of sulphuric acid (including downstream products). Optimising the product mix is a key factor. The way to succeed in these products is to ensure high apacity utilisation, excellent conver on efficiency and full deployment of the by-product, steam. The Company incorporated a wholly-owned subsidiary namely, Amal Speciality Chemicals Ltd (ASCL), in 2020-21. ASCL will have a capacity to manufacture 300 t per day of sulphuric acid (including downstream products). This will help the Company to have a higher market share. The products man factured by the Compa y are commodity in nature whose prices and contributions fluctuate significantly. The price of the key raw material, sulphur, varies from month to month. The uncertainties associated with the COVID-19 pandemic may have adverse impact on the demand and supply chain in the short-term, and the Company is working to minimis the impact of such aberrations to sust in th operati s and i entify new opportunities to grow. Internal control systems The internal control systems of the Company are commensurate with the nature of its business and size and complexity of its operations. These are routinely tested, certified and upgraded wherever required by the Statutory as well as the Internal Auditor covering all key areas of business. Significant au it observations and follow-up actions and recommendations there on are reported to the senior management and Audit Committee for their review. Th Company is working with repute firms specialised in internal audit function. The combined efforts are helping the Company to introduce best practices required to manage its business. Human Resources The Company believes that people are the foundation on which the business is built, and this remains a key focus area. It continued with its drive to institutionalise and upgrade HR processes. In particular, it focused on improving its processes related to recruitment, training and evelopment, performa ce management a d succession planning in ord r to man ge a dynamic and growing business. Th training eeds are identified based on self-assessment and L+1 assessment. In addition, there are certain standard courses which everyone is expected to go through, depending upon hi (her) gra e.
Amal Ltd | Annual Report 2021-22 Corporate Governance Report The human voice can never reach the distance that is covered by the still small voice of conscience. - Mahatma Gandhi
21 1. Philosophy Transparency and accountability are the two basic tenets of Corporate Governance. Amal is proud to belong to a Group whose Founder lived his life with eternal Values and built the business enterprises on the foundation of good governance. The Company is committed to conducting business in the right way, which means taking decisions and acting in a way that is ethical and in compliance with the applicable legal requirements. It endeavours 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) appointment of the Cost Auditors 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) cost audit reports vi) creation of charge on assets in favour of lenders vii) declaration of interim dividend viii) joint ventures, collaborations, mergers and acquisitions ix) loans and investments x) matters requiring statutory | Board consent xi) sale of investments and assets xii) short, medium or long-term borrowings xiii) unaudited quarterly financial results and audited annual accounts, both consolidated and on a standalone basis, including segment revenue, results and capital employed 2.1.2. Monitoring: i) effectiveness of the governance practices and making desirable changes ii) implementation of performance objectives and corporate performance iii) potential conflicts of interest of the Management, the Board Members and the shareholders, including misuse of corporate assets and abuse in related party transactions
Amal Ltd | Annual Report 2021-22 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 over-optimism 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 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) a 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
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