About Aarti Industries Ltd

Aarti Industries Limited is one of the most competitive and highly integrated benzene-based speciality chemical company in the world. The Company is a rare instance of a global speciality chemicals company that combines process chemistry competence (recipe focus) with scale-up of engineering competence (asset utilisation). The Company has evolved as an Indian multinational selecting to manufacture out of India and servicing the varied needs of the global markets. It has a strong presence across a wide range of chemistries with base raw materials such as benzene, toluene, nitric acid, chlorine, methanol, aniline, and sulphur among others. It has pioneered in India in introducing various product value chains and introducing new chemistries. The Company has been able to effectively utilise co-products and generate value-added products due to its integrated operations across the product chains. The company globally ranks between 1st and 4th position for 75% of its speciality chemical portfolio and is considered as 'Partner of Choice' for various major global and domestic customers. It has a wide portfolio of over 200 products serving more than 700 domestic customers. The company is a strong exporter having relationships with over 300 export customers spread across the globe in 60 countries with major presence in US, Europe, China and Japan. The company serves leading consumers across the globe of Speciality Chemicals and Intermediate for Agro Chemicals, Aromatics, Dyes, Fuel Additives, Pharmaceuticals, Pigments, Polymer Additives, Printing Inks, Surfactants and various other speciality chemicals. The company operates three state-of-the-art R&D centres, one for Speciality Chemicals and the other for Pharmaceutical APIs. Aarti Industries Ltd was incorporated on September 28, 1984 as Aarti Organics Ltd. The company was promoted by Chandrakant V Gogri and Associates. In the year 1986, the company commenced commercial operations of 1,200 Tonnes Per Annum (TPA) unit for Nitro Chloro Benzenes (NCB) in Sarigram, Gujarat. In the year 1990, the company expanded the capacity of PNCB/ONCB (organics division) from 1200 TPA to 4500 TPA. During the year 1994-95, they further expanded their organics division in four phases. Also, the name of the company changed to Aarti Industries Ltd. During the year 1998-99, the company enhanced the installed capacity of PNCB/ONCB from 15,000 TPA to 22,000 TPA. During the year 1999-2000, they further increased their capacity to 30,000 TPA. In the year 2001, the company commissioned manufacturing operations at their new unit at Bharuch. They set up two R&D Centres, one at Turbhe and the other at Vapi, Gujarat. During the year 2001-02, Alchemie Organics Ltd was amalgamated with the company with effect from April 1, 2002. During the year 2002-03, the company set up a plant for production of Single Super Phosphate at Vapi and commenced commercial production. Also, Sarigam and Vapi units were awarded ISO 9002 Certification during the year. During the year 2003-04, the company expanded their Vapi unit and started producing Sulphuric Acid. Also, they completed and commissioned the captive power plant with the capacity of 6 MW. During the year 2005-06, the company increased the production capacity of Nitro Chloro Benzenes by 10000 MT to 60000 MT. Also, they increased the production capacity of Sulphuric Acid & Allied products by 50000 MT to 200000 MT. It set up a large-scale speciality chemical unit in Kutch. During the year 2006-07, the company started the Toll manufacturing of few products with applications in the specialty segments. During the year 2008-09, Surfactant Specialities Ltd and Avinash Drugs Ltd were amalgamated with the company with effect from April 1, 2008. During the year 2009-10, the company commissioned and commercialized the indigenously developed facilities for manufacturing Nitro Toluenes and its various Derivatives developed at its In-house R&D centre. They also got approval from US Food & Drug Administration for their units at Tarapur and Vapi for new range of API products. In 2011, the Company upgraded the hydrogenation unit from batch to continuous. It commenced bulk shipment for global markets. It got US FDA approval for the custom synthesis division at Vapi. Aarti Industries commissioned expanded capacity for a Pigment intermediate in Q1 FY 2013-14. In the pharmaceuticals business segment, Aarti Industries scaled up its capacities from 4 lines to 9 lines for manufacturing of APIs at its Tarapur USFDA unit during the financial year ended 31 March 2014.During Q3 Financial Year 2014-15, Aarti Industries commissioned the first phase of its NCB expansion, thereby enhancing the capacities upto 66000 MT. As a result, the production of NCB had increased in Q4 Financial Year 2014-15 to 14800 MT as compared to the quarterly average of 13500 MT for Financial Year 2013-14. Production during Financial Year 2014-15 was about 53400 MT as compared to 54230 MT for Financial Year 2013-14. The production during first nine months was lower on account of shut down taken during the year for the on-going brownfield expansion activities. Alchemie Leasing and Financing Private Limited and Gogri and Sons Investments Private Limited (Transferor Companies) were merged with Aarti Industries (Transferee Company) with effect from 1 April 2015. Pursuant to the Scheme of Amalgamation, 1,67,26,401 Equity Shares were issued to the Shareholders of the Transferor Companies and 2,19,97,705 Equity Shares being held by Transferor Companies in the Company were cancelled. During the financial year ended 31 March 2016, Aarti USA Inc. and former associate Ganesh Polychem Limited became subsidiary of Aarti Industries and other companies namely Anushakti Chemicals and Drugs Limited, Anushakti Holdings Limited, Aarti Intermediates Private Limited, Aarti Bio-Tech Limited and Perfect Enviro Control System Limited ceased to be Associate Companies.. Aarti Industries expanded its Nitro Chloro Benzene (NCB) capacity from 57,000 TPA to 75,000 TPA in November 2015. This incremental capacity will increase NCB market share in the domestic and global markets, providing adequate feedstock for downstream products (viz. Hydrogenated Products and other products) with a higher EBIDTA. During the year under review, the company expanded its PDA capacity from 250 TPM to 450 TPM and projected 1,000 TPM by Q3 FY16-17. This enhanced capacity will increase the company's presence in high-end polymers and additives, making it the only Indian source for MNCs that does not presently source this product from India.During Q1 FY16-17, Aarti Industries commercialized the calcium chloride facility at Jhagadia. The Calcium Chloride Granulation unit has a capacity of about 30000 tpa at Jhagadia. Besides this unit, the company already operates a similar unit at its unit at Kutch. These units convert the byproduct HCL into high quality Calcium Chloride Granules which is exported in global markets and finds its application into Oil Extraction and De-icing activities. In September 2016, Aarti Industries commenced commercial production of its 2nd Phase of PDA expansion from 450 tpm to 1,000 tpm. Earlier in FY2015- 16, the Company scaled-up capacity from 250 tpm to 450 tpm. This expanded capacity will strengthen the company's presence in the high growth industries of engineering polymers and additives, making it the only Indian source for MNCs who do not presently source this product from India. In September 2016, the company also commenced commercial production at Ethylation Unit in the Dahej SEZ. The Greenfield Ethylation unit has adopted Swiss Technology and has the capacity to manufacture about 8,000 - 10,000 tpa of Ethylene derivatives. Aarti is the first company in India to procure ethylene through a pipeline and operate an environment- friendly ethylation process. The initial product manufactured at this unit has applications into Herbicides (Agrochemicals), and the company plans to add other products in due course with applications majorly into Agrochemicals, catering to global Agrochemical majors. This Ethylation unit is first of its kind to be set up in India. The company expects the Ethylation Unit to reach near full utilisation within a span of 3-4 years. This unit would also enjoy the benefits as applicable to other SEZ units. On 16 December 2016, Aarti Industries completed Buyback of 12,00,000 fully paid up Equity Shares (representing up to about 1.44% of the total number of Equity shares of the Company) from all the Equity Shareholders/ Beneficial owners of the Company who held Equity Shares as on the record date i.e. 2 November 2016 on a proportionate basis through the tender offer using stock exchange mechanism at a price of Rs 800 per equity share for an aggregate amount of Rs 96 crore. During Q4FY17, Aarti Industries successfully closed USFDA facility inspection at Tarapur unit initiated in Q3FY17 and received the EIR copy. In April 2017, Aarti Industries' Board approved an investment of Rs 75 crore to set up a world class R&D, scale-up and innovation complex equipped with the state-of-the-art equipment and analytical tools. The new complex would comprise an R&D centre, a scale-up facility consisting of a kilo-lab and a pilot plant, an innovation center, dedicated labs for process safety, effluent treatment, etc. It will house over 150 scientists and engineers responsible for researching and developing breakthrough innovations, as well as for commercial scale up of various Speciality Chemicals. The complex will more than double the company's R&D capabilities and will enable the company to further strengthen its global presence in the end-user applications of Agrochemicals, Fuel Additives, Pharmaceuticals, Polymers, Rubber Chemicals, etc. It Started operations at co-generation and solar power plants. On 25 May 2017, Aart Industries incorporated a wholly owned subsidiary company in the name of Aarti Poiychem Private Limited with an initial authorized share capital of Rs 1,00,000. In June 2017, Aarti Industries signed Rs 4000 crore multi-year deal with a global agriculture company for supply of an agrochemical intermediary. The contract entails supply of a high value agrochemical intermediary, for use in herbicides, over a 10 year period. The supplies are expected to commence from FY20 and would generate expected revenues of approximately Rs 4,000 crore (approximately USD 620 million) over the contract term. The project will entail investment of about Rs 400 crore (approximately USD 62 million) by Aarti Industries. The end-use is amongst the major growth initiative of the customer and approximately US$ 1 billion is being invested for this project/initiative. The contract win highlights the company's global partner of choice positioning amongst the leading global agrochemicals, polymer, pigment and other speciality chemicals companies. On 15 March 2018, Aarti Industries completed Buyback of 8,20,383 fully paid up Equity Shares (representing up to about 1% of the total number of Equity shares of the Company) from the Equity Shareholders/ Beneficial owners of the Company who held Equity Shares as on the record date i.e. 5 January 2018 on a proportionate basis through the tender offer using stock exchange mechanism at a price of Rs 1,200 per equity share. The company's capex plan is on track with an investment of about Rs 613 crore in FY 2017-18 including an investment of Rs 55 crore for acquisition of land for expansion projects and proposed new R&D centre. Further, in respect of the Nitro toluene facility commissioned at Jhagadia during Q2 FY 2017-18, had achieved a capacity utilisation of over 40% during Q4 FY 2017-18. During FY 2017-18, Aarti Industries entered into two long-term multi-year supply contracts. First one, being a 10-year contract with a global agricultural company to supply a high value agrochemical intermediary for use in herbicides. The supplies are expected to commence from 2nd half of FY 2019-20 and would generate expected revenues of approximately Rs 4,000 crore over the contract term. The project will entail investment of about Rs 400 crore. The second one being the case where Aarti Industries had entered into a 20-year contract with a global chemical conglomerate to supply a high value speciality chemical intermediate. The supplies are expected to commence from calendar year 2020 and would generate expected revenues of approximately Rs 10,000 crore over the contract term. With this deal, the company is set to enter a new chemistry range, first-of-its-kind in India. The company will be investing US$ 35-40 million to setup a dedicated large-scale manufacturing facility for production of this intermediate and will be built on basic technology package received from the customer. As a part of the contract terms, the customer shall provide US$ 42 million as an advance to the company which shall be then adjusted against the supplies in future. This shall help the company reduce the net capital employed, enabling significant higher ROCE returns for the project. Both these units are being set up in Dahej SEZ at Gujarat. The company has already acquired the land for the said purposes and is expected to start the constructions works soon. The company expects to be able to commission the said units within the expected timelines. Since these upcoming facilities will be a 100% export-oriented, the company would also benefit from the tax benefits as applicable to the SEZ units. The Board of Directors Aarti Industries at its meeting held on 28 June 2018 approved the Scheme of Arrangement pertaining to demerger of Home & Personal Care Segment of the company into Arti Surfactants Limited and demerger of manufacturing under taking of Nascent Chemical Industries Limited into company. Aarti Industries incorporated a wholly owned subsidiary, Arti Surfactants Limited on 18 June 2018 for proposed demerger and absorption of Home & Personal Care undertaking. This demerger shall help being more focussed on this business to improve the performance. Nascent Chemicals Industries Ltd (Nascent) is an entity Incorporated in the year 1966 and having the business of manufacturing operations in Gujarat as well as Trading of Chemicals. Aarti Industries Limited (through its 100% subsidiary Aarti Corporate Services Ltd) holds 50.49% stake in Nascent. The manufacturing division of Nascent manufactures few speciality chemicals on behalf of Aarti Industries Limited under the conducting arrangement. These products are part of the integrated value chain of Speciality Chemicals of Aarti Industries Limited. During the FY2019, pursuant to the approval of the members of the Company, the Fund Raising Committee of the Board in its meeting held on March 23, 2019 approved and allotted of 53,68,647 Equity Shares of Rs 5 at a premium of Rs 1392 through Qualified Institutional Placement. As on 31 March 2019,the Company has 6 (Six) direct subsidiaries, namely, Aarti Corporate Services Limited, Alchemie Europe Limited, Innovative Envirocare Jhagadia Limited, Ganesh Polychem Limited, Aarti USA Inc., Aarti Polychem Private Limited and 2 (Two) indirect subsidiaries namely Shanti Intermediates Private Limited, Nascent Chemical Industries Limited both hold through Aarti Corporate Services Limited. During the year 2018-19, the Company has proposed a Scheme of Arrangement for demerger of its Home & Personal Care undertaking into the Aarti Surfactants Limited and merger of manufacturing undertaking of its step down subsidiary Nascent Chemical Industries Limited into Aarti Industries Limited. The said Scheme was approved by the Honorable National Company Law Tribunal (NCLT), Ahmedabad Bench vide its order dated 10th June 2019 and this become effective from the appointed date of 1st April 2018. The company has been investing into various capex programmes/projects being undertaken by the company catering to long term growth opportunities at various company's sites. The company expect some of the major projects such as expansion of chlorobenzenes capabilities from 110,000 tpa to 175000 tpa, projects at Dahej for first long term contracts and the setting up of the 4th R&D centre to commissioned in FY 2019-20, while other ongoing projects such as speciality chemical intermediates block, expansion cum debottlenecking for Pharma units and the facility catering to the third long term contract is expected to be commissioned in FY 2020-21. During the year 2018-19, the company also initiated the project for expanding its NCB capacities from 75,000 tpa to 108,000 tpa with an outlay of about Rs 150 crore. It is expected to commission this expanded capacity in FY 2020-21. With these current pipeline of projects, the company expect to invest about Rs 1000 to Rs 1200 crore in FY 2019-20 and about Rs 500 to Rs 600 crore in FY 2020-21. In FY 2020, the Company commenced operations of Aarti Research and Technology Centre (ARTC) at Mahape, Navi Mumbai. During March 2020, the Company operationalised its second speciality chemicals focused R&D facility, equipped with process safety and synthesis labs. During the FY2020, pursuant to the approval of NCLT Ahmedabad vide its order dated June 10, 2019 on the Composite scheme of Arrangement between the Company, Aarti Surfactants Limited and Nascent Chemical Industries Limited, the Board in its meeting held on July 08, 2019 approved the allotment of 448590 Equity Shares of Rs 5 each to the shareholders of Nascent Chemical Industries Limited as on July 05, 2019. Additionally, the Board in its meeting held on August 13, 2019 approved and recommended the issue of Bonus shares. The shareholders approved the issue of Bonus Shares at the Annual General Meeting of Company held on September 16, 2019. The Company allotted 8,71,17,237 fully paid up Equity Shares of face value Rs 5/- each in the proportion of 1:1 i.e. One Bonus Equity share(s) of nominal value Rs 5/- each for every 1(One) Equity share(s) of nominal value of Rs 5/- each. The Bonus shares were credited to the eligible shareholders as on the record date, i.e. September 30, 2019. The Company as on March 31, 2020 has 10 (Ten) direct subsidiaries, namely, Aarti Corporate Services Limited, Innovative Envirocare Jhagadia Limited, Ganesh Polychem Limited, Aarti Polychem Private Limited, Aarti Organics Limited, Aarti Bharuch Limited, Aarti Spechem Limited, Aarti Pharmachem Limited, Aarti USA Inc., Alchemie Europe Limited, and 2 (Two) indirect subsidiaries namely Shanti Intermediates Private Limited, Nascent Chemical Industries Limited both hold through Aarti Corporate Services Limited. Of the above subsidiaries, Aarti Organics Limited (Incorporated on November 22, 2019), Aarti Bharuch Limited (Incorporated on November 22, 2019), Aarti Pharmachem Limited (Incorporated on November 26, 2019), Aarti Spechem Limited (Incorporated on November 27, 2019), were incorporated as wholly owned subsidiary of the Company during the year. During the year 2019-20, Aarti Surfactants Limited ceased to be wholly owned subsidiary of the Company. During the FY 2021, a subsidiary viz Ganesh Polychem Limited ceased to be a subsidiary and became a jointly controlled entity w.e.f. March 17, 2021. The Company operationalized the Second Phase of the unit at Dahej SEZ, manufacturing agrochemical intermediates. It commercialized the New Chlorination Unit at Jhagadia in enhancing the Chlorination capacities from 110000 TPA to 175000 TPA. During the year 2022-23, the Company demerged its Pharma entity into a separate company, Aarti PharmaLabs Ltd., and resultantly, the demerger was effective from July 1, 2021. Through demerger of the Scheme, Aarti Pharmachem Limited and Aarti USA Inc. ceased to be subsidiaries of the Company. Further, Augene Chemical Private Limited was incorporated as Wholly Owned Subsidiary (WOS) of the Company effective on May 18, 2023. During the year 2023, the Company commercialised two speciality chlorination units at Jhagadia.

Aarti Industries Ltd Chairman Speech

Dear Stakeholders,

It gives me immense pleasure to share our performance for the year gone by and our aspirations for the journey ahead.

The previous year was no walk in the park. We faced rising energy prices, inflation, and a challenging business environment. Global economic challenges, including the aftermath of the pandemic, the Russia-Ukraine conflict, and supply-side shocks, made things even more complicated. Despite all these hurdles, the Indian economy has steadily recovered. India's GDP grew by a strong 7.2% in FY23, setting the stage for a return to pre-pandemic growth levels. This growth story is nothing short of incredible, with India's manufacturing prowess gaining global recognition and a shift in the supply chain in our favour.

Over the past decade, the speciality chemical industry has experienced exponential growth. It's a crucial contributor to initiatives like Make in India and Atmanirbhar Bharat Abhiyaan, positioning itself as a significant player on the global stage. With rapid economic growth, an expanding working class populace, rising incomes, strong talent pool and lower skilled-labour costs, India has the potential to become a key player in the global chemicals industry. As global companies seek to diversify their supply chains,

India's compelling value proposition and changing geopolitical landscape make it an attractive destination.

The sector is becoming a reliable supplier for global companies looking to de-risk their operations through a China+1 and Europe+1 strategy. The speciality chemicals segment in India is performing robustly with strong market attractiveness and projected significant long-term growth rates. With favourable policy reforms expected to stimulate demand for various chemicals, the industry will benefit from India's strong macroeconomic indicators and crucial role in building blocks and raw materials for major sectors. This truly seems like the 'Golden Decade' for the Indian chemicals industry.

Despite a challenging external environment and a slowdown in some of end-use industries, we reported a resilient performance in FY 2022-23. Our revenue increased by 17% to Rs.7,283 crores, with a Profit after Tax (PAT) of Rs.545 crores. We concluded the year with an impressive EBITDA of Rs.1,089 crores, showcasing the robustness of our business model. Our exports constituted nearly half of our total revenue, and the share of value-added products saw significant growth.

During FY 2022-23, we accomplished two significant milestones. First, we successfully completed the demerger of our pharmaceutical business into a separate entity named Aarti Pharmalabs. This strategic move will help us achieve operational efficiencies. Second, we forged a long-term strategic arrangement with Deepak Fertilisers and Petrochemicals to supply Nitric Acid, a key raw material for our operations. This arrangement guarantees a reliable and uninterrupted supply, mitigating potential disruptions in our supply chain and also meets our needs for backward integration.

While we remain on a stable and strong long term growth trajectory, we are witnessing significant headwinds in FY 2023-24, which would have an impact on our performance for the year. Globally, the demand outlook for a short term, has been impacted primarily due to significant inventory corrections across various sectors including Agrochemicals and also on account of macro recessionary trends which is being witnessed across various discretionary applications. As a result, the margins for various products would also be impacted in FY 2023-24 (especially in H1 FY 2023-24, with progressive improvements to come in H2 FY 2023-24).

Looking ahead, we are excited about the opportunities in the Indian chemicals sector. We have defined strategic focus areas to fulfil our vision of building Aarti 4.0. Our commitment to manufacturing excellence, research and development, customer relationship management, and sustainability positions us well for future growth. Our strategy emphasises agility, collaboration, and challenging the status quo.

We are expanding our portfolio of value-added products, establishing multipurpose plants, and venturing into sustainable chemistries and sunrise sectors. We have initiated the construction of multipurpose plants and are introducing the Chlorotoluenes value chain. Our capacity expansion initiatives, such as NCB expansion, Acid Revamp, Nitrotoluene and Ethylation expansion are on track and will be commissioned gradually over the next two years.

With our R&D and innovation capabilities, we are also exploring new chemical value chains and developing value- added products with immense potential. During the last fiscal year, we invested over Rs.1,300 crores towards growth initiatives, and we plan to invest around Rs.3,000 crores over the next couple of years. We will focus on building niche products and chemistries, including Chlorotoluene and various downstream products, which will help us in import substitution and export opportunities for global markets. We are also venturing into sustainable chemistries and sunrise sectors, such as battery chemicals, high-end polymers, and innovative materials, which will likely shape the future of the chemicals industry.

ESG (Environmental, Social, and Governance) is our top priority and we integrate ESG principles into our operations and strategy, fostering inclusivity, diversity, and ethical business practices. Our industry is facing varied physical and transition risks related to ESG such as climate change, water risk, occupational health and safety risk, data privacy risk to name a few. We prioritise minimising our environment footprint through energy efficiency, responsible waste management, and sustainable sourcing. We have made significant strides to reduce emissions, conserve energy, and optimise water usage across our operations by taking targets and tracking them on a regular interval.

We foster a diverse, inclusive, safe, incident and injury free workplace, supporting social well-being and empowerment by involving employees in engagement initiatives, providing training on safety and social perspective, conducting safety perception and employee engagement surveys to understand the pulse of the employees and work for strengthening safety culture and ensuring workforce engagement in Aarti Industries Limited. In our recent employee engagement survey by a leading global analytics and advice firm, we achieved a remarkable 100% participation rate and a significant increase in engagement scores across all key areas. Our safety survey, conducted by a top safety consulting company, also received a strong response, including participation from contractual employees. To ensure data privacy of our own data and customers' data, we are making our IT infrastructure secure and protected. Our governance practices ensure integrity, compliance, and transparency.

We strongly believe in growing while giving back to society. We continue to invest in uplifting local communities, supporting marginalised sections, and ensuring inclusive development with healthcare, education, environmental protection initiatives, etc. During FY 2022-23, we spent approximately Rs.15 crores on CSR initiatives. We remain responsive and resilient by staying at the forefront of emerging sustainability trends, regulations, and best practices.

I sincerely express my gratitude to our stakeholders, including shareholders, for their unwavering support.

Our employees have played a vital role in achieving our objectives, while the guidance of our esteemed Board members has been invaluable. We thank everyone for being part of our prosperous journey. We are confident of seizing the abundant opportunities and accelerating our growth trajectory while pursuing sustained value creation.

Best Regards,

Chairman and Managing Director.

Aarti Industries Ltd Company History

Aarti Industries Limited is one of the most competitive and highly integrated benzene-based speciality chemical company in the world. The Company is a rare instance of a global speciality chemicals company that combines process chemistry competence (recipe focus) with scale-up of engineering competence (asset utilisation). The Company has evolved as an Indian multinational selecting to manufacture out of India and servicing the varied needs of the global markets. It has a strong presence across a wide range of chemistries with base raw materials such as benzene, toluene, nitric acid, chlorine, methanol, aniline, and sulphur among others. It has pioneered in India in introducing various product value chains and introducing new chemistries. The Company has been able to effectively utilise co-products and generate value-added products due to its integrated operations across the product chains. The company globally ranks between 1st and 4th position for 75% of its speciality chemical portfolio and is considered as 'Partner of Choice' for various major global and domestic customers. It has a wide portfolio of over 200 products serving more than 700 domestic customers. The company is a strong exporter having relationships with over 300 export customers spread across the globe in 60 countries with major presence in US, Europe, China and Japan. The company serves leading consumers across the globe of Speciality Chemicals and Intermediate for Agro Chemicals, Aromatics, Dyes, Fuel Additives, Pharmaceuticals, Pigments, Polymer Additives, Printing Inks, Surfactants and various other speciality chemicals. The company operates three state-of-the-art R&D centres, one for Speciality Chemicals and the other for Pharmaceutical APIs. Aarti Industries Ltd was incorporated on September 28, 1984 as Aarti Organics Ltd. The company was promoted by Chandrakant V Gogri and Associates. In the year 1986, the company commenced commercial operations of 1,200 Tonnes Per Annum (TPA) unit for Nitro Chloro Benzenes (NCB) in Sarigram, Gujarat. In the year 1990, the company expanded the capacity of PNCB/ONCB (organics division) from 1200 TPA to 4500 TPA. During the year 1994-95, they further expanded their organics division in four phases. Also, the name of the company changed to Aarti Industries Ltd. During the year 1998-99, the company enhanced the installed capacity of PNCB/ONCB from 15,000 TPA to 22,000 TPA. During the year 1999-2000, they further increased their capacity to 30,000 TPA. In the year 2001, the company commissioned manufacturing operations at their new unit at Bharuch. They set up two R&D Centres, one at Turbhe and the other at Vapi, Gujarat. During the year 2001-02, Alchemie Organics Ltd was amalgamated with the company with effect from April 1, 2002. During the year 2002-03, the company set up a plant for production of Single Super Phosphate at Vapi and commenced commercial production. Also, Sarigam and Vapi units were awarded ISO 9002 Certification during the year. During the year 2003-04, the company expanded their Vapi unit and started producing Sulphuric Acid. Also, they completed and commissioned the captive power plant with the capacity of 6 MW. During the year 2005-06, the company increased the production capacity of Nitro Chloro Benzenes by 10000 MT to 60000 MT. Also, they increased the production capacity of Sulphuric Acid & Allied products by 50000 MT to 200000 MT. It set up a large-scale speciality chemical unit in Kutch. During the year 2006-07, the company started the Toll manufacturing of few products with applications in the specialty segments. During the year 2008-09, Surfactant Specialities Ltd and Avinash Drugs Ltd were amalgamated with the company with effect from April 1, 2008. During the year 2009-10, the company commissioned and commercialized the indigenously developed facilities for manufacturing Nitro Toluenes and its various Derivatives developed at its In-house R&D centre. They also got approval from US Food & Drug Administration for their units at Tarapur and Vapi for new range of API products. In 2011, the Company upgraded the hydrogenation unit from batch to continuous. It commenced bulk shipment for global markets. It got US FDA approval for the custom synthesis division at Vapi. Aarti Industries commissioned expanded capacity for a Pigment intermediate in Q1 FY 2013-14. In the pharmaceuticals business segment, Aarti Industries scaled up its capacities from 4 lines to 9 lines for manufacturing of APIs at its Tarapur USFDA unit during the financial year ended 31 March 2014.During Q3 Financial Year 2014-15, Aarti Industries commissioned the first phase of its NCB expansion, thereby enhancing the capacities upto 66000 MT. As a result, the production of NCB had increased in Q4 Financial Year 2014-15 to 14800 MT as compared to the quarterly average of 13500 MT for Financial Year 2013-14. Production during Financial Year 2014-15 was about 53400 MT as compared to 54230 MT for Financial Year 2013-14. The production during first nine months was lower on account of shut down taken during the year for the on-going brownfield expansion activities. Alchemie Leasing and Financing Private Limited and Gogri and Sons Investments Private Limited (Transferor Companies) were merged with Aarti Industries (Transferee Company) with effect from 1 April 2015. Pursuant to the Scheme of Amalgamation, 1,67,26,401 Equity Shares were issued to the Shareholders of the Transferor Companies and 2,19,97,705 Equity Shares being held by Transferor Companies in the Company were cancelled. During the financial year ended 31 March 2016, Aarti USA Inc. and former associate Ganesh Polychem Limited became subsidiary of Aarti Industries and other companies namely Anushakti Chemicals and Drugs Limited, Anushakti Holdings Limited, Aarti Intermediates Private Limited, Aarti Bio-Tech Limited and Perfect Enviro Control System Limited ceased to be Associate Companies.. Aarti Industries expanded its Nitro Chloro Benzene (NCB) capacity from 57,000 TPA to 75,000 TPA in November 2015. This incremental capacity will increase NCB market share in the domestic and global markets, providing adequate feedstock for downstream products (viz. Hydrogenated Products and other products) with a higher EBIDTA. During the year under review, the company expanded its PDA capacity from 250 TPM to 450 TPM and projected 1,000 TPM by Q3 FY16-17. This enhanced capacity will increase the company's presence in high-end polymers and additives, making it the only Indian source for MNCs that does not presently source this product from India.During Q1 FY16-17, Aarti Industries commercialized the calcium chloride facility at Jhagadia. The Calcium Chloride Granulation unit has a capacity of about 30000 tpa at Jhagadia. Besides this unit, the company already operates a similar unit at its unit at Kutch. These units convert the byproduct HCL into high quality Calcium Chloride Granules which is exported in global markets and finds its application into Oil Extraction and De-icing activities. In September 2016, Aarti Industries commenced commercial production of its 2nd Phase of PDA expansion from 450 tpm to 1,000 tpm. Earlier in FY2015- 16, the Company scaled-up capacity from 250 tpm to 450 tpm. This expanded capacity will strengthen the company's presence in the high growth industries of engineering polymers and additives, making it the only Indian source for MNCs who do not presently source this product from India. In September 2016, the company also commenced commercial production at Ethylation Unit in the Dahej SEZ. The Greenfield Ethylation unit has adopted Swiss Technology and has the capacity to manufacture about 8,000 - 10,000 tpa of Ethylene derivatives. Aarti is the first company in India to procure ethylene through a pipeline and operate an environment- friendly ethylation process. The initial product manufactured at this unit has applications into Herbicides (Agrochemicals), and the company plans to add other products in due course with applications majorly into Agrochemicals, catering to global Agrochemical majors. This Ethylation unit is first of its kind to be set up in India. The company expects the Ethylation Unit to reach near full utilisation within a span of 3-4 years. This unit would also enjoy the benefits as applicable to other SEZ units. On 16 December 2016, Aarti Industries completed Buyback of 12,00,000 fully paid up Equity Shares (representing up to about 1.44% of the total number of Equity shares of the Company) from all the Equity Shareholders/ Beneficial owners of the Company who held Equity Shares as on the record date i.e. 2 November 2016 on a proportionate basis through the tender offer using stock exchange mechanism at a price of Rs 800 per equity share for an aggregate amount of Rs 96 crore. During Q4FY17, Aarti Industries successfully closed USFDA facility inspection at Tarapur unit initiated in Q3FY17 and received the EIR copy. In April 2017, Aarti Industries' Board approved an investment of Rs 75 crore to set up a world class R&D, scale-up and innovation complex equipped with the state-of-the-art equipment and analytical tools. The new complex would comprise an R&D centre, a scale-up facility consisting of a kilo-lab and a pilot plant, an innovation center, dedicated labs for process safety, effluent treatment, etc. It will house over 150 scientists and engineers responsible for researching and developing breakthrough innovations, as well as for commercial scale up of various Speciality Chemicals. The complex will more than double the company's R&D capabilities and will enable the company to further strengthen its global presence in the end-user applications of Agrochemicals, Fuel Additives, Pharmaceuticals, Polymers, Rubber Chemicals, etc. It Started operations at co-generation and solar power plants. On 25 May 2017, Aart Industries incorporated a wholly owned subsidiary company in the name of Aarti Poiychem Private Limited with an initial authorized share capital of Rs 1,00,000. In June 2017, Aarti Industries signed Rs 4000 crore multi-year deal with a global agriculture company for supply of an agrochemical intermediary. The contract entails supply of a high value agrochemical intermediary, for use in herbicides, over a 10 year period. The supplies are expected to commence from FY20 and would generate expected revenues of approximately Rs 4,000 crore (approximately USD 620 million) over the contract term. The project will entail investment of about Rs 400 crore (approximately USD 62 million) by Aarti Industries. The end-use is amongst the major growth initiative of the customer and approximately US$ 1 billion is being invested for this project/initiative. The contract win highlights the company's global partner of choice positioning amongst the leading global agrochemicals, polymer, pigment and other speciality chemicals companies. On 15 March 2018, Aarti Industries completed Buyback of 8,20,383 fully paid up Equity Shares (representing up to about 1% of the total number of Equity shares of the Company) from the Equity Shareholders/ Beneficial owners of the Company who held Equity Shares as on the record date i.e. 5 January 2018 on a proportionate basis through the tender offer using stock exchange mechanism at a price of Rs 1,200 per equity share. The company's capex plan is on track with an investment of about Rs 613 crore in FY 2017-18 including an investment of Rs 55 crore for acquisition of land for expansion projects and proposed new R&D centre. Further, in respect of the Nitro toluene facility commissioned at Jhagadia during Q2 FY 2017-18, had achieved a capacity utilisation of over 40% during Q4 FY 2017-18. During FY 2017-18, Aarti Industries entered into two long-term multi-year supply contracts. First one, being a 10-year contract with a global agricultural company to supply a high value agrochemical intermediary for use in herbicides. The supplies are expected to commence from 2nd half of FY 2019-20 and would generate expected revenues of approximately Rs 4,000 crore over the contract term. The project will entail investment of about Rs 400 crore. The second one being the case where Aarti Industries had entered into a 20-year contract with a global chemical conglomerate to supply a high value speciality chemical intermediate. The supplies are expected to commence from calendar year 2020 and would generate expected revenues of approximately Rs 10,000 crore over the contract term. With this deal, the company is set to enter a new chemistry range, first-of-its-kind in India. The company will be investing US$ 35-40 million to setup a dedicated large-scale manufacturing facility for production of this intermediate and will be built on basic technology package received from the customer. As a part of the contract terms, the customer shall provide US$ 42 million as an advance to the company which shall be then adjusted against the supplies in future. This shall help the company reduce the net capital employed, enabling significant higher ROCE returns for the project. Both these units are being set up in Dahej SEZ at Gujarat. The company has already acquired the land for the said purposes and is expected to start the constructions works soon. The company expects to be able to commission the said units within the expected timelines. Since these upcoming facilities will be a 100% export-oriented, the company would also benefit from the tax benefits as applicable to the SEZ units. The Board of Directors Aarti Industries at its meeting held on 28 June 2018 approved the Scheme of Arrangement pertaining to demerger of Home & Personal Care Segment of the company into Arti Surfactants Limited and demerger of manufacturing under taking of Nascent Chemical Industries Limited into company. Aarti Industries incorporated a wholly owned subsidiary, Arti Surfactants Limited on 18 June 2018 for proposed demerger and absorption of Home & Personal Care undertaking. This demerger shall help being more focussed on this business to improve the performance. Nascent Chemicals Industries Ltd (Nascent) is an entity Incorporated in the year 1966 and having the business of manufacturing operations in Gujarat as well as Trading of Chemicals. Aarti Industries Limited (through its 100% subsidiary Aarti Corporate Services Ltd) holds 50.49% stake in Nascent. The manufacturing division of Nascent manufactures few speciality chemicals on behalf of Aarti Industries Limited under the conducting arrangement. These products are part of the integrated value chain of Speciality Chemicals of Aarti Industries Limited. During the FY2019, pursuant to the approval of the members of the Company, the Fund Raising Committee of the Board in its meeting held on March 23, 2019 approved and allotted of 53,68,647 Equity Shares of Rs 5 at a premium of Rs 1392 through Qualified Institutional Placement. As on 31 March 2019,the Company has 6 (Six) direct subsidiaries, namely, Aarti Corporate Services Limited, Alchemie Europe Limited, Innovative Envirocare Jhagadia Limited, Ganesh Polychem Limited, Aarti USA Inc., Aarti Polychem Private Limited and 2 (Two) indirect subsidiaries namely Shanti Intermediates Private Limited, Nascent Chemical Industries Limited both hold through Aarti Corporate Services Limited. During the year 2018-19, the Company has proposed a Scheme of Arrangement for demerger of its Home & Personal Care undertaking into the Aarti Surfactants Limited and merger of manufacturing undertaking of its step down subsidiary Nascent Chemical Industries Limited into Aarti Industries Limited. The said Scheme was approved by the Honorable National Company Law Tribunal (NCLT), Ahmedabad Bench vide its order dated 10th June 2019 and this become effective from the appointed date of 1st April 2018. The company has been investing into various capex programmes/projects being undertaken by the company catering to long term growth opportunities at various company's sites. The company expect some of the major projects such as expansion of chlorobenzenes capabilities from 110,000 tpa to 175000 tpa, projects at Dahej for first long term contracts and the setting up of the 4th R&D centre to commissioned in FY 2019-20, while other ongoing projects such as speciality chemical intermediates block, expansion cum debottlenecking for Pharma units and the facility catering to the third long term contract is expected to be commissioned in FY 2020-21. During the year 2018-19, the company also initiated the project for expanding its NCB capacities from 75,000 tpa to 108,000 tpa with an outlay of about Rs 150 crore. It is expected to commission this expanded capacity in FY 2020-21. With these current pipeline of projects, the company expect to invest about Rs 1000 to Rs 1200 crore in FY 2019-20 and about Rs 500 to Rs 600 crore in FY 2020-21. In FY 2020, the Company commenced operations of Aarti Research and Technology Centre (ARTC) at Mahape, Navi Mumbai. During March 2020, the Company operationalised its second speciality chemicals focused R&D facility, equipped with process safety and synthesis labs. During the FY2020, pursuant to the approval of NCLT Ahmedabad vide its order dated June 10, 2019 on the Composite scheme of Arrangement between the Company, Aarti Surfactants Limited and Nascent Chemical Industries Limited, the Board in its meeting held on July 08, 2019 approved the allotment of 448590 Equity Shares of Rs 5 each to the shareholders of Nascent Chemical Industries Limited as on July 05, 2019. Additionally, the Board in its meeting held on August 13, 2019 approved and recommended the issue of Bonus shares. The shareholders approved the issue of Bonus Shares at the Annual General Meeting of Company held on September 16, 2019. The Company allotted 8,71,17,237 fully paid up Equity Shares of face value Rs 5/- each in the proportion of 1:1 i.e. One Bonus Equity share(s) of nominal value Rs 5/- each for every 1(One) Equity share(s) of nominal value of Rs 5/- each. The Bonus shares were credited to the eligible shareholders as on the record date, i.e. September 30, 2019. The Company as on March 31, 2020 has 10 (Ten) direct subsidiaries, namely, Aarti Corporate Services Limited, Innovative Envirocare Jhagadia Limited, Ganesh Polychem Limited, Aarti Polychem Private Limited, Aarti Organics Limited, Aarti Bharuch Limited, Aarti Spechem Limited, Aarti Pharmachem Limited, Aarti USA Inc., Alchemie Europe Limited, and 2 (Two) indirect subsidiaries namely Shanti Intermediates Private Limited, Nascent Chemical Industries Limited both hold through Aarti Corporate Services Limited. Of the above subsidiaries, Aarti Organics Limited (Incorporated on November 22, 2019), Aarti Bharuch Limited (Incorporated on November 22, 2019), Aarti Pharmachem Limited (Incorporated on November 26, 2019), Aarti Spechem Limited (Incorporated on November 27, 2019), were incorporated as wholly owned subsidiary of the Company during the year. During the year 2019-20, Aarti Surfactants Limited ceased to be wholly owned subsidiary of the Company. During the FY 2021, a subsidiary viz Ganesh Polychem Limited ceased to be a subsidiary and became a jointly controlled entity w.e.f. March 17, 2021. The Company operationalized the Second Phase of the unit at Dahej SEZ, manufacturing agrochemical intermediates. It commercialized the New Chlorination Unit at Jhagadia in enhancing the Chlorination capacities from 110000 TPA to 175000 TPA. During the year 2022-23, the Company demerged its Pharma entity into a separate company, Aarti PharmaLabs Ltd., and resultantly, the demerger was effective from July 1, 2021. Through demerger of the Scheme, Aarti Pharmachem Limited and Aarti USA Inc. ceased to be subsidiaries of the Company. Further, Augene Chemical Private Limited was incorporated as Wholly Owned Subsidiary (WOS) of the Company effective on May 18, 2023. During the year 2023, the Company commercialised two speciality chlorination units at Jhagadia.

Aarti Industries Ltd Directors Reports

Your Directors present this Fortieth Annual Report of your Company ("the Company" or "Aarti Industries Limited") together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2023.

Your Company reported Gross Total Income at Rs. 7,226 Crores for FY 2022-23 as against Rs. 6,820 Crores for FY 2021-22. Similarly, the exports for the year were at Rs. 3,517 Crores for FY 2022-23 as against Rs. 2,950 Crores for FY 2021-22.

Likewise, the Consolidated Total income from operations for FY 2022-23 was at Rs. 7,283 Crores as compared to Rs. 6,871 Crores for FY 2021- 22 and exports for FY 2022-23 was Rs. 3,573 Crores v/s '3,007 Crores for FY 2021-22.

In accordance with the provisions of Companies Act, 2013, Regulation 33 of the Listing Regulations, and applicable Accounting Standards, the Audited Consolidated Financial Statements of the Company for the FY 2022-23, together with the Auditors' Report, form part of this Annual Report.

Your Company has transferred '55 Crores to the General Reserve (Previous Year: Rs.129 Crores).

As on March 31, 2023, the Company has 6 (Six) direct subsidiaries, namely, Aarti Corporate Services Limited, Innovative Envirocare Jhagadia Limited, Aarti Polychem Private Limited, Aarti Bharuch Limited, Aarti Spechem Limited and Alchemie (Europe) Limited, and 2 (Two) indirect subsidiaries namely Shanti Intermediates Private

Limited and Nascent Chemical Industries Limited both hold through Aarti Corporate Services Limited.

During the year, the Hon'ble National Company Law Tribunal (NCLT), Ahmedabad Bench vide its order dated September21,2022approved the Scheme of Arrangement ("Scheme") between Aarti Industries Limited and Aarti Pharmalabs Limited and their respective shareholders under the provisions of Section 230-232 of Companies Act, 2013. Pursuant to the Scheme, Aarti Pharmachem Limited and Aarti USA Inc. ceased to be subsidiaries of your Company.

Further, the Ministry of Corporate Affairs has approved incorporation of Wholly Owned Subsidiary (WOS) of your Company, Augene Chemical Private Limited, bearing CIN:U20299GJ2023PTC141303 on May 18, 2023. The Registered Office of the Company is situated at Gujarat.

The Company does not have any material subsidiary whose net worth exceeds 10% of the consolidated net worth of the Company in the immediately preceding accounting year or has generated 10% of the consolidated income of the Company during the previous Financial Year. A policy on material subsidiaries had been formulated and is available on the website of the Company and the web link thereto is: https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=A8DuSuG1AT8OIQL33MM

During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of the Companies Act, 2013, we have prepared consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report.

Further a statement containing salient features of the financial statement of our Subsidiaries/Jointly controlled entity in the prescribed format AOC-1 is included in the Report as Annexure-A and forms an integral part of this Report.

Your Company's Equity Share Capital as on March 31, 2023 was as follows:

During the year 2022-23, there was no change in the authorized and paid up share capital of the Company.

The State of your Company's affairs is given in the Management Discussion and Analysis, which forms part of this Annual Report.

I n accordance with the prevailing provisions of the Section 149 of the Companies Act, 2013 read with Regulation 17 of the Listing Regulations, as amended from time to time, as on March 31, 2023, the Board of Directors, comprises Sixteen Directors (with Six Executive Directors, Two Non-Executive NonIndependent and Eight Independent Directors).

At the 39th AGM held on September 26, 2022, Shri Rajendra V. Gogri (DIN: 00061003) was re-appointed

as the Managing Director of the Company for a period of five years w.e.f. July 1, 2023.

During the year, Smt. Hetal Gogri Gala (DIN: 00005499) had conveyed her intention to step down as an Executive Director since she had taken up executive role as 'Vice Chairperson and Managing Director of 'Aarti Pharmalabs Limited' effective from October 17, 2022, however, she continues to be a 'Non-Executive Director' of the Company.

Shri Narendra Jagannath Salvi (DIN: 00299202) had conveyed his intention to step down as an Executive Director since he had taken up executive role as the 'Managing Director' of 'Aarti Pharmalabs Limited' effective from October 17, 2022, however, he continues to be a 'Non-Executive Director' of the Company.

In accordance with the regulatory requirements Shri Narendra J. Salvi retires by rotation in ensuing 40th Annual General Meeting. However, vide his letter dated June 21, 2023, he conveyed his intention to retire and requested the Board not to consider his re-appointment stating the reason 'Preoccupation'. The Board of Directors in its meeting held on June 28, 2023, took it on record and considered as 'not to fill up' the vacancy thereby caused.

In accordance with the regulatory requirements Shri Kirit R. Mehta (DIN: 00051703) also retires by rotation in the ensuing 40th Annual General Meeting. However vide letter dated June 21,2023 he conveyed his intention to retire due to health related reasons and requested the Board not to consider his re-appointment. The Board of Directors in its meeting held on June 28, 2023, took it on record and considered to 'fill up' the vacancy thereby caused.

Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard-2 on General Meetings, a brief profile of the Directors proposed to be appointed /re-appointed is made available, as an Annexure to the Notice of the Annual General Meeting.

Further, based on recommendation of Nomination and Remuneration Committee, the Board of Directors in its meeting held on June 28, 2023, appointed Prof. Aniruddha B. Pandit (DIN: 02471158) and Shri Shekhar S. Khanolkar (DIN: 02202839) as Additional Directors in the category of Independent Directors and Shri Ajay Kumar Gupta (DIN: 08619902) as Additional Director in the category of Executive Director, all with effect from June 29, 2023. Their appointments are subject to approval of the Members at the ensuing AGM of the Company. The brief resume regarding their appointment is given in the Notice.

Pursuant to the provisions of Regulation 34(3) read with Schedule V to the Listing Regulations, the Company has obtained a Certificate from CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company, certifying that none of the Directors of the Company have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India or by the Ministry of Corporate Affairs or by any such statutory authority. The said Certificate is annexed to the Corporate Governance Report of the Company for the Financial Year 2022-23.

During the year under review, there was no change in the Key Managerial Personnel of the Company.

In accordance with Section 149(7) of the Companies Act, 2013, all Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the Listing Regulations.

In the opinion of the Board of Directors, the Independent Directors fulfil the conditions specified in the Companies Act, 2013 read with the rules made thereunder as well as Listing Regulations and are independent from Management, hold the highest degree of integrity and possess expertise in their respective fields with enormous experience.

All the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

All the Independent Directors of the Company have enrolled their names in the 'Independent Directors Data Bank' maintained by Indian Institute of Corporate Affairs ("IICA").

The Company has a Familiarisation programme for its Independent Director which is imparted at the time of appointment of an Independent Director on Board as well as annually. During the year, the Independent Directors of the Company were familiarised and the details of familiarisation programmes imparted to them are placed on the website of the Company and the web link thereto is: https://www.aarti-industries. com/Upload/PDF/Familiarisation-Programme- FY-2022-23.pdf

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. That in the preparation of the annual financial statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year and of the profit and loss of the company for that period;

c. That the Directors had taken proper and sufficient care 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;

d. That Directors have prepared the annual accounts on a going concern basis;

e. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Board of Directors met eight (8) times during the Financial Year under review. The details of the number of meetings of the Board and its Committees held during the Financial Year 2022-23 and the attendance of each Director/Member at these meetings are provided in the Corporate Governance Report forming part of the Annual Report. The intervening gap between the Board meetings was within the period prescribed under the Companies Act, 2013 and the Listing Regulations.

During the year, the Company has declared an Interim Dividend of '1/- (@ 20%) each per share.

Your Board of Directors recommend a Final Dividend of '1.50 (@ 30%) per share subject to approval of the Shareholders at the ensuing 40th AGM, aggregating to a total Dividend of Rs.2.50 (@ 50%) per share (of Rs.5 each) for the financial year 2022-23, resulting in a total payout Rs.90.63 Crores (Previous Year: Rs.126.88 Crores).

The Dividend payout is in accordance with the Dividend Distribution Policy which is available on the website of the Company.

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the top 1000 listed companies shall formulate a Dividend Distribution Policy. Accordingly, the policy was adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/or retaining profits earned by the company. A policy is available on the website of the Company and the web link thereto is: https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=b22bcY6v1CAOIQL33MM

Your Company through, Aarti Foundation and Dhanvallabh Charitable Trust - Our CSR arms undertake community interventions to enhance the lives of the communities. Besides our direct involvement, we partner with numerous implementing agencies to carry out need assessment and make impactful interventions. Our Focus areas during the year has been;

• Education & Skill Development

• Childcare & Healthcare Facilities

• Women Empowerment & Livelihood Opportunities

• Cluster & Rural Development

• Disaster Relief & Rehabilitation

• Eradication of Hunger & Poverty

• Water Conservation & Environment

• Research & Development work for upliftment of Society

The detailed policy on Corporate Social Responsibility is available on the website of the Company on the web link thereto is:

https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=rOxVNykXxlkOIOL33MM

A brief note on various CSR initiatives undertaken during the year including the composition of the CSR Committee is presented in this Annual report. The CSR annual report is annexed as Annexure-B and forms an integral part of the Report.

The details of the composition of the Audit Committee, terms of reference, meetings held, etc. are provided in the Corporate Governance Report, which forms part of this Report. During the year there were no cases where the Board had not accepted any recommendation of the Audit Committee.

The Company has established a Vigil Mechanism and Whistle Blower Policy for its Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud, actual or suspected leak of UPSI or violation of Company's Code of Conduct. It also provides for adequate safeguards against the victimisation of employees and allows direct access to the chairperson of the audit committee in exceptional cases The said policy has been posted on the website of the Company and the web link thereto is:

https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=ZMPluse33MMnrACtosYOIOL33MM

The Company affirms that no person has been denied access to the Audit Committee Chairman.

The Company has a Policy on Materiality of Related Party Transaction and dealing with Related Party Transaction which is uploaded on the Company's website at the web- link given below:

https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=TNJu6Gnbr7sOIQL33MM

All related party transactions that were entered into during the FY 2022-23 were on arm's length basis and were carried out in the ordinary course of the business.

There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other Designated Persons which may have potential conflict with interest of the Company at large.

The related party transactions are approved by the Audit Committee. Omnibus approval is obtained for the transactions which are foreseen and repetitive in nature. A statement of related party transactions is presented before the Audit Committee on a quarterly basis, specifying the nature, value and terms and conditions of transactions. A report of factual findings arising out of the accepted procedures carried out in regard to transactions with Related Parties is given by the Statutory Auditors on quarterly basis and the same is placed before the Audit Committee.

The details of related party transactions are provided in the accompanying financial statements.

Since all related party transactions entered into by the Company were in ordinary course of business and were on an arm's length's basis, Form AOC-2 is not applicable to Company.

Your Company continues to manage its treasury operations efficiently and has been able to borrow funds for its operations at competitive rates. During the Financial Year, your Company had dual rating for its Commercial Papers (CPs) Programme of Rs.400 Crores, which are revalidated from time to time:

During the Financial Year, the Company has issued CPs amounting to '875 Crores in various tranches, out of which CPs amounting to '475 Crores were listed on BSE Limited. Further, CPs amounting to '800 Crores were redeemed during the Financial Year and the Company has not defaulted on payment of any dues to the Investors.

Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013 [(i.e., deposits within the meaning of Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014)], during the Financial Year 2022-23.

Particulars of loans given, investments made, guarantees given and securities provided during the year under review and as covered under the provisions of Section 186 of the Companies Act, 2013 have been disclosed in the notes to the standalone financial statements forming part of the Annual Report.

The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in an Annexure and forms part of this report.

I n terms of Section 136(1) of the Companies Act, 2013, the Report and the Accounts are being sent to the Members excluding the aforesaid Annexure. Any Member interested in obtaining a copy of the Annexure may write to the Company Secretary at the Registered Office of the Company for a copy of it.

Employees being our key stakeholders, the HR initiatives and policies revolve around garnering the opportunities to serve our employees better. In an attempt to devise a seamless succession planning process through VTS (Vertical Talent Strategy), we developed VTS for 23 Verticals, identifying high-potential employees and successors for critical roles. Our Talent Management team worked along with the verticals to create action plans for building a talent growth pipeline. Moving ahead in our journey of being a 'Preferred employer of Choice', we received 100% participation in Voice 3.0-our employee engagement survey.

Following the excellent execution of Vertical Action Plans, Voice 3.0 also saw positive scores in many areas of employee engagement. The phenomenal scores in Voice 3.0 are also accredited to Metamorphosis sessions. These sessions have empowered employees by fostering a belief in long-term goals, belongingness, and leadership among executives and thus driving engagement.

In FY 23 we onboarded 1921 bright minds. Towards our strategy to groom internal talent and ensure career growth opportunities for them, we drove internal growth from 23% to 44% in FY 22-23 through Navodaya and Talent Spotting and we target 70% growth in FY 23-24. A state-of-the-art infrastructure has been developed in Mumbai and Vadodara to ensure employee comfort.

To further upskill and train employees in different areas of effectiveness, a robust training calendar and upskilling programs have been implemented (Eklavya, Kshitij, Utkarsh, Nipun, New FTM, GTD, NICMAR, ME, SKV, etc.). We have also developed a long-term incentive plan (PSOP) for employees

Aarti Industries Limited Performance Stock Option Plan 2022 ("PSOP 2022") was approved by the shareholders through Postal Ballot on October 29, 2022, under which stock options would be granted to the eligible employees, in compliance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021.

Further, pursuant to the PSOP 2022, the Company has granted 80,142 options to eligible employees as per the recommendation of the Nomination and Remuneration Committee, at its meeting held on May 6, 2023.

Your Company has received a certificate from CS Sunil M. Dedhia (COP No. 2031), of Sunil M. Dedhia & Co. Company Secretary in Practice and the Secretarial Auditor of the Company that PSOP 2022 has been implemented in accordance with the provisions of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the resolution passed by the shareholders. Any request for inspection of the said Certificate may please be sent to investorrelations@ aarti-industries.com

There are no other material changes and commitments affecting the financial position of the Company occurred between the end of the Financial Year to which these financial statements relate and the date of the report.

Pursuant to the applicable provisions of the Companies Act, 2013 read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ('the Rules') all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the rules, the shares on which Dividend has not been paid and claimed by the Shareholders for seven consecutive years or more shall be transferred to the Demat account of the IEPF Authority. Accordingly, the Company has transferred the unclaimed and unpaid dividends of '46,80,672/-. Further, 48,654 corresponding shares were transferred as per the requirement of the IEPF Rules.

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return as on March 31,2023 is available in prescribed format on the Company's website on www.aarti-industries.com

Corporate Governance essentially involves balancing the interests of a Company's stakeholders. The Company continues to nurture a culture of good governance practices across functions, offices and manufacturing facilities.

Your Company has complied with the mandatory Corporate Governance requirements stipulated under the Listing Regulations. The separate Report on Corporate Governance is annexed hereto forming part of this report. The requisite certificate from Gokhale & Sathe, Chartered Accountants is attached to the Report on Corporate Governance.

Pursuant to Regulation 34 read with Schedule V to the Listing Regulations, Management's Discussion and Analysis for the year under review is presented in a separate section forming part of the Annual Report.

The Listing Regulations mandate the inclusion of the Business Responsibility & Sustainability Reporting as part of the Annual Report for top 1000 listed entities based on market capitalisation. BRSR for the year under review, as stipulated under Regulation 34 (f) of Listing Regulations read with SEBI Circular No. SEBI/HO/CFD/ CMD-2/P/CIR/2021/562 dated May 10, 2021 is in a separate section forming part of the Annual Report. The non-financial sustainability disclosures have been independently assured by TUV Nord.

Pursuant to the provisions of Companies Act, 2013 and the Listing Regulations, a structured questionnaire was prepared after taking into consideration various aspects of the Board's functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, obligations and governance.

The performance of the Committees and Independent Directors were evaluated by the entire Board of Directors except for the Director being evaluated. The performance evaluation of the Chairman, NonIndependent Directors and Board as a whole was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the outcome of evaluation and the process followed thereof.

Pursuant to Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations, your Company has in place a Nomination and Remuneration Policy which lays down a framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management of the Company. The policy also lays down criteria for selection and appointment of Board Members. The said policy has been posted on the website of the Company and the web link thereto is: https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=pTvbr0JryL0OIQL33MM

The details of this policy are given in the Corporate Governance Report.

Your Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. The Company aims to use risk management to take better informed decisions and improve the probability of achieving its strategic and operational objectives.

In compliance with Regulation 21 of Listing Regulations, your Company has a Risk Management Committee consisting of Shri Rajendra Gogri (Chairman), Shri Rashesh Gogri, Shri Bhavesh R. Vora, Smt. Hetal Gogri Gala, Shri Renil Gogri, Shri Narendra J. Salvi, Shri Chetan Gandhi and Shri Ajaykumar Gupta. The Committee through its risk management framework continuously identifies, evaluates and takes appropriate measures to mitigate/ minimise various elements of risks. The Risk Management Committee meets periodically to ensure that appropriate methodologies, processes and systems are in place to monitor and evaluate risks associated with the business of the Company and also to monitor and oversee the implementation of the Risk Management Policy.

The said policy has been posted on the website of the Company and the web link thereto is: https://www.aarti-industries.com/investors/ GetReport Rs.strcont id=dCIEPn8aX6wOIQL33MM

The Company with its sheer focus committed to achieve 100% compliance. We have adopted a third-party managed IT-based Compliance Management System. It has a repository of all applicable regulations and requisite compliances. It has an in-built alert system that sends alerts to the users and intimates concerned personnel about upcoming compliances. Last year, we added a module on 'License Management' into our compliance management system. Newly added licence management system helps us in tracking the validity and renewal process of all applicable licences. We initiate the licence renewal process well in advance to avoid any delays.

Sustainability & Safety is very important for Chemical Industry in general and very critical for Aarti Industries in particular, that is the reason our strategic statement is 'Sustainability for Sustainable Growth'. We at Aarti Industries Limited (AIL), are committed to maintain the world-class standards of health, safety, environment protection, security, human rights, product safety & quality and processes while conducting all our business operations, services, and expansion activities.

We believe that Safety is not one person's job but it is for all the employees of the company from operators to Directors. In the Chemical Industry the most important thing for safety is the 'Operational Discipline'.

To enable the Best Safety culture, ALL has created an unique concept of Aarti Engaging Leaders, committed to live by Aarti Values of Care, Integrity and Excellence and enabling everyone to listen and speak powerfully.

Health and Safety at ALL has been enhanced through following interventions:

• Several Process Initiative Common (PICs) with specific objectives to enhance safety and sustainability across the organisation

• Robust Management governance through Apex sustainability council and sub councils for ensuring progress in various domains of sustainability

• Safety audit framework

Aarti Industries Ltd Company Background

Aarti Industries Ltd Company Management

Aarti Industries Ltd Listing Information

Aarti Industries Ltd Finished Product