chandrakant v. gogri - aartigroup.com v. gogri chairman ... haresh k. chheda ... by merger of...

Board of DirectorsChandrakant V. GogriChairman

Rajendra V. GogriVice Chairman & Managing Director

Shantilal T. ShahVice Chairman

Independent Directors:

Ramdas M. GandhiLaxmichand K. JainVijay H. PatilHaresh K. ChhedaPrem Chandra Sethi (w.e.f. 23rd September, 2008)K. V. S. Shyam Sunder (w.e.f. 23rd September, 2008)Bhavesh B. Vora (w.e.f. 23rd September, 2008)Sunil M. Dedhia (w.e.f. 30th July, 2009)

Whole-time Directors:

Parimal H. DesaiManoj M. ChhedaRashesh C. GogriHetal Gogri GalaKirit R. Mehta

Company SecretaryMona Patel

Auditors

M/s. Parikh Joshi & Kothare, 49/2341, M.H.B. Colony, Gandhi Nagar, Bandra (East), Mumbai-400 051.

Registrar & Transfer Agent

M/s. Sharepro Services (India) Pvt. Ltd.Samhita Complex, Gala No. -52 to 56, Bldg. No.-13 A-B,Near Sakinaka Telephone Exchange,Andheri-Kurla Road, Sakinaka, Mumbai - 400 072.Phone No.: 022-67720300 /67720400Fax No. 022-28591568

BankersBank of BarodaUnion Bank of IndiaState Bank of IndiaABN Amro BankStandard Chartered BankHDFC Bank Ltd.Export-Import Bank of IndiaIDBI Bank Ltd.Citi Bank N.A.Axis Bank Ltd.

Plot Nos. 801, 801/23, GIDC Estate, Phase IIIVapi - 396 195, Dist. Valsad, Gujarat.

Udyog Kshetra, 2nd Floor, L.B.S. Marg, Mulund-Goregaon Link Road, Mulund (W), Mumbai - 400 080.

Visit us at www.aartigroup.com

Contents

Corporate Information 1

Chairman’s Message 2

Financial Highlights 4

Notice 6

Directors’ Report & Management Discussion & Analysis 11

Report on Corporate Governance 20

Auditors’ Report 29

Balance Sheet 32

33

Schedules 34

Notes Forming Part of Accounts 42

Balance Sheet Abstract 54

Cash Flow Statement 55

Statement of Interest in Subsidiaries 56

Auditors’ Report on Consolidated Accounts 57

Consolidated Financial Statements 58

Details of Subsidiary Companies 77

Proxy Form and Attendance Slip

Corporate Information

Corporate Information1

Chairman’s MessageDear Shareowners,It gives me great pleasure to address you in this landmark year for your Company. Your continued support and faith in your Company has helped it reach this far. With a vision to emerge as a leading player in the global chemical segment, your Company started off its operations in September 1984 as a small venture promoted by a group of technocrats and is in its Silver Jubilee year. On the eve of the completion of 25 years, I wish to present you a brief snapshot of our operations and achievements over the time.

Starting its manufacturing activity from a small unit at Sarigam, Gujarat, your Company in its journey of past 25 years had setup various global size manufacturing units with state-of-the-art technologies. These manufacturing units are situated at Vapi, Sarigam & Jhagadia in the state of Gujarat, at Tarapur &

Dombivali in the state of Maharashtra and at Silvassa. These units manufacture various Basic Chemicals, Speciality Chemicals,

FMCG, Pigments & Paints, Polymers, Dyes, Rubber Chemicals, etc. In all the company manufactures over 150 products on a regular basis, positioning itself as a unique entity capable of supplying basket of products to various Domestic as well as Global Customers & MNCs. As at 31st March 2009, the Company had invested over Rs 622 Crores in its various Global Scale manufacturing

needs of its loyal and diverse customer bases consisting of over 600 domestic and over 300 export customers. As a matter of fact, your Company has also been selected and approved as a “Preferred Supplier” by various Global Customers and MNCs. Exports accounts around 40% of its total revenue. The combined efforts of Production Team & R&D initiatives coupled with customized delivery solutions have enabled the Company to be amongst the leading manufacturers in its range of

a market leader in India and also globally ranks at 1st – 5th position for more than 75% of its top 50 products. While the top 50 products of the Company contribute around 80% of Company’s revenues, the contribution from the top-

different end-user industry provides for an ideal insulation for any downturn in a particular market segment.Your Company had commissioned in the year 2003-04 a 6 MW Steam based Captive Power Plant at its Sulphuric Acid Division to meet part of the Company’s power requirements. The Company had been pioneer in India to commercialise the Greener Hydrogenation process based on Swiss Technology. The manufacturing units of the Company are of Global Scale & Size

Pharmaceuticals sector and Contract Research & Manufacturing activities during last couple of years. The Company had setup units dedicated to the efforts at CRAMs catering to the high value specialized contract research activities in the Global Markets.The Company had also set-up a State-of-Art Facility at Tarapur to cater to the needs of the regulated markets. The unit had been approved by the USFDA Authorities during the last year. The products cater to the high value life style drugs markets and are poised for rapid growth in coming years. By merger of erstwhile Surfactant Specialities Ltd into Aarti Industries Ltd in the year 2008-09, your Company had added a set of Personal Care and Oral Care based products to its existing product portfolio.Research and Development:Your Company has its own in-house Research and Development (R & D) Centre, which is recognized by the Department

The R&D Centre is well supported & well equipped with various advanced analytical instruments and also has a Pilot Plant capable of handling various reactions at Pilot Scale. Over the years, our in-house R&D team had developed & successfully commercialized various new products, a variety of chemical reactions, engineered lots of manufacturing and process improvements to enhance the yield and optimize on the energy & utilities consumption by use of indigenous technologies & resources. Our capabilities of innovating, developing and improving the chemical technologies has been well appreciated by our global clients,

Human ResourcesIn the Silver Jubilee year, your Company’s human assets count stands at over 1250. Your Company is proud of its dedicated and loyal employees who have been a catalyst in its growth. We inspire & continuously support growth of people by providing opportunities & level playing ground. While a lot of companies across the globe resorted to trimming of their workforces in the current economic meltdown, your Company had remained focused on its growth strategy and had increased its workforce and, as always, has continued to have cordial relations with its workforce. While appreciating the efforts of the personnel at each level of operations, your Company in its Silver Jubilee year had held small celebration events at various locations and had felicitated the employees working therein.

Chairman’s Message2

Corporate Social Responsibility (CSR): In keeping with the philosophy of “Rebuilding Lives”, your Company has served many social causes in the society that it belongs to. The allocation of time, efforts and resources towards meeting the social causes has kept pace with the growth that your Company has achieved over the period of its existence. Besides making contributions to various organisations & trusts and to institutions providing housing, medical, education, rural development, social upliftment, etc, Your Company has been involved in various projects to contribute towards the society.Some of the CSR initiatives that your Company has embarked upon are:

earthquake on Kutch, Gujarat in January 2001.

Earthquake, Cyclone-hit Orissa, Indonesia Earthquake, Tsunami Victims, Bihar Flooding, etc.

Associations with Institute of Chemical Technology (ICT)Your Company’s success is incomplete without acknowledging the contributions from ICT (erstwhile known as University Department of Chemical Technology), which is a premier institute in India imparting education on Chemical technology. The Company’s three Promoter-Directors viz, the Chairman Mr. Chandrakant Gogri, our Vice Chairman & Managing Director Mr. Rajendra Gogri and our Director Mr. Parimal Desai had graduated from ICT. We have been collaborating with ICT and its faculty from time to time for our various projects. We have contributed in various on going activities and for the improvement/up-gradation of the infrastructure at ICT.Performance Highlights & Outlook:

the highlights that stand testimony to your Company’s performance are as follows:

registering an annual turnover of Rs. 1535.75 Crores for the year posting a quantum jump of over 60% as compared to last year. Exports, while registering a growth of around 56%, crossed Rs. 500 Crores and ended the year at Rs.

To cater to the growing demand of Basic Chemicals, the Company had developed Nitro Toluenes & its derivatives which shall be commercialized shortly. The Company is also expanding & upgrading its Hydrogenation technology which shall facilitate the increase in volumes and also for introduction of new Speciality Chemicals. Thus with the steps of capacity expansion, introduction of new products combined with the growth in the Pharmaceutical activities and FMCG products, we target the Company to maintain the growth momentum in coming years.Value Creation to Shareholders:

Company has consistently rewarded shareholders with dividends and has generally maintained a dividend payout ratio of around

For a Shareholder having invested for 100 shares @ Rs. 46/- per share in our Public Issue in 1991-92 and if he would have stayed invested till date, then by now his 100 shares had become 1200 shares (by virtue of couple of Bonus and Split declared earlier). Further he would have also received around Rs. 18190/- as dividends, i.e. approx 4 times his initial investment amount. Considering the average market price of Rs. 42.5 for the month of August 2009, the 1200 shares are now worth around Rs. 51000/- i.e. a growth of 11 times over the initial investment. Thus the shareholder having invested Rs. 4600/- in 1991-92 has got a cumulative return of around 15 times in last 17 years.

heights in the years to come.AcknowledgementI would also like to take a moment and thank all our Shareholders, Employees, Auditors, Government Authorities, Financial Institutions, Banks, Suppliers, Customer and other business associates for their regular support to the Company, without which it would not have been possible for us to reach these landmarks. We value your commitment and strive to give you our best.

With best wishes,Sincerely yours,

Sd/-C. V. GogriChairman

Chairman’s Message 3

Financial Highlights

Financial Highlights(Rupees in Lakhs)

Particulars Financial Year Ended on31/03/2002 31/03/2003 31/03/2004 31/03/2005 31/03/2006 31/03/2007 31/03/2008 31/03/2009

Total income 34584.68 47432.01 51159.01 68805.76 79095.60 76412.00 96049.00 153804.056482.90 7170.98 7643.99 9183.19 11420.30 8928.90 11950.44 24208.51

Interest 1584.28 1377.60 946.01 1354.32 2040.04 2888.40 3882.89 8936.32Depreciation 1611.48 1168.27 1691.82 2006.19 2218.69 2563.40 2749.61 3871.07Extra - ordinary loss Nil Nil Nil Nil Nil Nil Nil Nil

3287.14 4105.04 5006.16 5822.68 7161.57 3477.09 5317.93 11401.12

(& Deferred tax)2674.90 2955.78 3576.68 4425.30 4906.44 2621.00 3667.08 8446.32

Dividend % 20 65 75 101$ 39 16 30 60Pay out 242.70 788.77 910.12 1225.63 1420.00 582.47 1092.14 2194.91Per Share Dividend (in Rs.) 2.00 6.50 7.50 8.70 2.80 0.80 1.50 3.00Equity Capital 1213.49 1213.49 1213.49 3640.47 3640.47 3640.47 3640.47 3684.75Reserve & Surplus 11263.37 13333.68 16090.52 16938.52 20040.85 22029.41 24606.30 30345.01Networth 12375.13 14456.36 17228.65 20395.38 23528.73 25545.90 28123.80 34091.58Total Borrowings 12275.94 15378.60 20418.75 22491.24 30041.62 33744.59 42930.71 48257.41Gross Block 20423.23 22606.79 27858.39 31102.58 37721.52 45110.41 48403.24 62206.76Less: Depreciation 7585.85 8921.31 10504.61 12488.09 14768.02 17376.69 20375.67 25530.65Net Block (Fixed Assets)

12837.38 13685.48 17353.77 18614.49 22953.50 27733.71 28027.57 36676.11

Capital work-in-progress

268.35 351.73 201.72 1862.28 2797.52 1797.64 3396.87 854.76

Investments 696.17 1754.14 813.25 2433.11 2474.21 2606.65 2618.48 1527.79Current Assets 17884.03 21169.93 26527.28 33576.88 42825.12 44948.57 56858.64 64980.65Less: Current Liabilities 5941.04 5833.24 5576.06 11629.72 14693.37 14339.56 15879.97 17169.59Net Working Capital 11942.98 15336.69 20951.22 21947.16 28131.75 30609.00 40978.66 47811.06Face Value per share (Rs.) 10 10 10 10 5 5 5 5Book Value per share (Rs.) 101.98 119.13 141.97 56.03 32.32 35.08 38.63 46.26EPS (Basic & Diluted) (Rs.) 23.06 24.39 30.02 12.78* 6.74# 3.60 5.04 11.46Bonus Shares (Ratio) Nil Nil Nil 2:01 Nil Nil Nil Nil

Consolidated Financial Highlights(Rupees in Lakhs)

Particulars Financial Year Ended on31/03/2002 31/03/2003 31/03/2004 31/03/2005 31/03/2006 31/03/2007 31/03/2008 31/03/2009

Consolidated Sales 35978.79 49688.20 54731.43 71016.00 80634.56 76558.31 96212.96 155225.29

(& Deferred Tax)2400.97 2570.55 4180.86 4792.77 5532.13 2529.71 4086.94 8706.64

Consolidated EPS (Basic & Diluted) (Rs.)

21.43 20.50 34.37 13.17* 7.60# 3.47 5.61 11.81

*Refers to post bonus value.

#Refers to post bonus & post split of shares into face value of Rs. 5/- each

$Dividend % is based on pre bonus equity of 12.13 crores.

4

(Rup

ees

in C

rore

s)

Total Income Export

790.96

341.61

764.12

303.57

960.49

376.50

1538.04

588.44

0

200

400

600

800

1000

1200

1400

1600

2005-06 2006-07 2007-08 2008-09

20.00

0.00

40.00

60.00

80.00

100.00

120.00

2005-06 2006-07 2007-08 2008-09

(Rup

ees

in C

rore

s) 71.62

49.06

34.7726.21

36.67

53.17

114.01

84.46

PBT PADT

Total Income & Export

Net Worth & Book Value

# Refers to post bonus and post split of shares into a face value of Rs. 5/- each

Earning Per Share & Consolidated EPS

Dividend Payout

Gross Block & Net Block

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

(Am

ount

in R

upee

s)

2005-06 2006-07 2007-08 2008-09

Earning Per Shares Consolidated EPS

3.60 3.47

5.045.61

11.46 11.81

6.74#7.60

5.00

0.00

10.00

15.00

20.00

25.00

30.00

2005-06 2006-07 2007-08 2008-09

(Pay

out %

)

14.20

25.64

5.82

17.70

10.92

25.04

21.9524.39

Amount %

Gross Block Net Block

622.07

100.00

0.00

200.00

300.00

400.00

500.00

600.00

700.00

2005-06 2006-07 2007-08 2008-09

(Rup

ees

in C

rore

s)

377.22

451.10484.03

229.54 227.34280.28

366.76

Net worth Book Value

(Rup

ees

in C

oror

es)

Net

Wor

th

(Am

ount in Rs.)

Book V

alue

235.29255.46

281.24

340.92

32.3235.08

38.63

46.26

220

260

300

340

380

420

2005-06 2006-07 2007-08 2008-0920

25

30

35

40

45

50

5

Notice

Notice:Notice is hereby given that the Twenty Sixth Annual General Meeting of the Members of AARTI INDUSTRIES LIMITED will

Gujarat, on Monday, the 12th day of October, 2009, at 11.00 a.m. to transact the following business:

ORDINARY BUSINESS

ended on that date and the Reports of the Directors’ and Auditors’ thereon.

3. To appoint a Director in place of Shri Manoj M. Chheda, who is liable to retire by rotation and, being eligible, offers himself for re-appointment.

4. To appoint a Director in place of Shri Kirit R. Mehta, who is liable to retire by rotation and, being eligible, offers himself for re-appointment.

5. To appoint a Director in place of Shri Chandrakant V. Gogri, who is liable to retire by rotation and, being eligible, offers himself for re-appointment.

6. To appoint a Director in place of Shri Laxmichand K. Jain, who is liable to retire by rotation and, being eligible, offers himself for re-appointment.

SPECIAL BUSINESS

Ordinary Resolution:

“RESOLVED THAT Shri Prem Chandra Sethi, be and is hereby appointed as a Director of the Company.”


“RESOLVED THAT Shri K.V.S. Shyam Sunder, be and is hereby appointed as a Director of the Company.”


“RESOLVED THAT Shri Bhavesh R. Vora, be and is hereby appointed as a Director of the Company.”


“RESOLVED THAT Shri Sunil M. Dedhia, be and is hereby appointed as a Director of the Company.”

Plot Nos. 801, 801/23,GIDC Estate, Phase III, Sd/-Vapi-396195, MONA PATELDist. Valsad, Gujarat COMPANY SECRETARY

Place: MumbaiDate: 12th September, 2009

6

Notice

Notes:1. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY(S) TO ATTEND AND

VOTE (ON POLL) INSTEAD OF HIMSELF AND A PROXY(S) NEED NOT BE A MEMBER OF THE COMPANY. THE INSTRUMENT APPOINTING A PROXY MUST BE DEPOSITED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF MEETING.

2. The Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of the Special Business at Item Nos. 8, 9, 10 and 11 above is annexed hereto and forms part of the Notice.

to attend and vote at the meeting.

4. The Register of Members and Share Transfer Books of the Company will remain closed from 5th October, 2009 to 12th October, 2009 (both days inclusive).

5. All documents referred to in the accompanying notice and explanatory statement are open for inspection at the registered

AGM.

6. The Members are requested to note:

(i) Change of Address /Bank details: Members holding shares in physical form are requested to inform M/s. Sharepro Services (India) Private Limited, immediately of any change in their address and bank details. Members holding shares in dematerialized form are requested to intimate all changes with respect to their address, bank details,

(ii) Section 109A of the Companies Act, 1956 provides for Nomination by the Shareholders of the Company in the prescribed Form No. 2B for shares held in physical form. Blank forms will be supplied by the Company on request. Members holding shares in demat form may contact their respective Depository Participants for recording of nomination.

(iii) Queries on accounts may please be sent to the Company 10 days in advance of the Annual General Meeting so that the answers may be made available at the meeting.

(iv) The Company has transferred unclaimed amounts of dividends up to 31st March, 2001 and unclaimed amounts of Interim dividend declared for the year 2001-02 to the Investor Education and Protection Fund as required under Sections 205A and 205C of the Companies Act, 1956.

Brief resume of Directors seeking re-election/re-appointment are as under:

Particulars Shri Chandrakant V. Gogri Shri Kirit R. MehtaDate of birth and age 16.08.1946 (63 years) 02.08.1948 (61 years)Appointed on 28.09.1984 18.09.2000

B.E. (Chem), (UDCT, Mumbai), DBM B.ComExperience and expertise in After graduation, while working as plant engineer and

later as project engineer, he gained valuable experience in chemical manufacturing before venturing on his own. A varied experience encompassing Projects, Operations, Process Development and Local & International Marketing, in the Chemical Industry. Further, his business acumen & flair for finance has stood the test of time during the growth of the AARTI GROUP. He is one of the main Promoter of the Company. He is Chairman and Member of the Board of Directors of various Aarti Group Companies. His business acumen, entrepreneurial zeal and organizational skill has been very much helpful to the Company to grow.

Shri Kirit R. Mehta has wide experience in dealing with various Government authorities at Vapi, Sarigam and Jhagadia at Gujarat and Tarapur in Maharashtra where Company’s manufacturing units are located. He was the President of Federation of Industries Association Gujarat, Executive Member of Gujarat Chamber of Commerce and Industries, the President of Sarigam Industries Association and the President of Vapi Industries Association.

7

Notice

Directorships held in other (excluding foreign) Companies

Aarti Drugs Ltd.Aarti Healthcare Ltd.Aarti Corporate Services Ltd.Crystal Millennium Realtors Pvt. Ltd.

Ganesh Polychem Ltd.Anushakti Chemicals and Drugs Ltd.Shanti Intermediates Pvt. Ltd.Amrey Enterprises Pvt. Ltd.

Membership(s)/Chairmanship(s) of Committees across Public Companies

Remuneration Committee:Aarti Industries Ltd. – ChairmanAarti Drugs Ltd. – ChairmanShareholders Grievance Committee:Aarti Industries Ltd. – ChairmanAarti Drugs Ltd. – ChairmanShare Transfer Committee:Aarti Industries Ltd. – ChairmanAarti Drugs Ltd. – ChairmanFinance Committee:Aarti Industries Ltd. – Chairman

Shareholders Grievance Committee:Aarti Industries Ltd. – MemberFinance Committee:Aarti Industries Ltd. – Member

Number of shares held in Company

1453668 600

Particulars Shri Manoj M. Chheda Shri Laxmichand K. JainDate of birth and age 23.10.1962 (46 years) 02.03.1941 (68 years)Appointed on 25.11.1993 29.01.1990

B.Com B.E. (Chem), USAExperience and expertise in Shri Manoj M. Chheda has wide experience of over 22

years in purchase and marketing of Chemicals. He is a Whole-time Director of the Company since November 1993.

He is an Environmental Expert with over 42 years of experience in the industry. He is an Independent Director of the Company.


No other Directorship No other Directorship


Audit Committee:Aarti Industries Ltd. – MemberShareholders Grievance Committee:Aarti Industries Ltd. – Member

Audit Committee:Aarti Industries Ltd. – MemberRemuneration Committee:Aarti Industries Ltd. – Member


637740 13350

Particulars Shri Prem Chandra Sethi Shri K.V.S. Shyam Sunder Date of birth and age 19.10.1944 (64 years) 29.07.1942 (67 years)Appointed on 23.09.2008 23.09.2008

B.Com, CAIIB B.Com, ACAExperience and expertise in Shri Prem Chandra Sethi was an Executive Director in

Vijaya Bank from March, 2003 to October, 2004. He has more than 46 years experience in banking sector. He has worked as a General Manager and Deputy General Manager for many years.

Shri K.V.S. Shyam Sunder is a fellow member of the Institute of Chartered Accountant of India and a seasoned banker with over 30 years of enriched banking experience. He is also a Partner in Singrodia Goyal & Co. He is an expert in Corporate & Retail banking, Risk Management, Credit Rating, Reviewing & Monitoring System and loan policies.

8

Notice


Jyoti Structures Ltd.IDBI Capital Market Services Ltd.Indiabulls Asset Management Company Ltd.

Ladderup Finance Ltd.Liners India Ltd.Ladderup Wealth Management Pvt. Ltd.Ladderup Corporate Advisory Pvt. Ltd.


Audit Committee:Jyoti Structures Ltd. – MemberAarti Industries Ltd. – MemberIDBI Capital Market Services Ltd. – MemberRemuneration Committee:Jyoti Structures Ltd. – Member

Audit Committee:Ladderup Finance Ltd. – MemberAarti Industries Ltd. – MemberShareholders Grievance Committee:Ladderup Finance Ltd. – Chairman


NIL NIL

Particulars Shri Bhavesh R. Vora Sunil M. DedhiaDate of birth and age 13.09.1967 (41 years) 20.06.1965 (44 years)Appointed on 23.09.2008 30.07.2009

B.Com, ACA ACA, FCSExperience and expertise in Shri Bhavesh R. Vora is a Practicing Chartered

Accountant, with more than 22 years of experience in working in the field of Stock Brokers’ Audits, Compliances, Derivatives, Futures & Options, Accounting Standards and Internal & Management Audit areas.

He is a Practicing Company Secretary and has over 19 years of experience in


Aarti Drugs Ltd. Aarti Drugs Ltd. Anushakti Chemicals & Drugs Ltd.Professional Realtors Pvt. Ltd.


Audit Committee:Aarti Industries Ltd. – MemberAarti Drugs Ltd. – MemberShareholders Grievance Committee:Aarti Drugs Ltd. – Member

Audit Committee Anushakti Chemicals & Drugs Ltd. – Member


NIL NIL



9

Notice

Annexure to the NoticeExplanatory Statement pursuant to Section 173(2) of the Companies Act, 1956

Item No. 8

Shri Prem Chandra Sethi, Ex-Executive Director of Vijaya Bank and having meritorious career of 40 years in Bank of Baroda was appointed as an Independent Director by the Board of Directors on 23rd September, 2008, pursuant to Section 260 of the

section 257 of the Companies Act, 1956. Brief resume of the said Director is given at the end of notes to Notice.

Your Directors recommend the resolution at Item No. 8 for your approval.

Except Shri Prem Chandra Sethi, none of the Directors is, in any way, concerned or interested in the said resolution.

Item No. 9

Shri K.V.S. Shyam Sunder, Chartered Accountant, with over 30 years experience in Banking Sector was appointed as an Independent Director by the Board of Directors on 23rd September, 2008, pursuant to Section 260 of the Companies Act, 1956.

Act, 1956. Brief resume of the said Director is given at the end of notes to Notice.


Except Shri K.V.S. Shyam Sunder, none of the Directors is, in any way, concerned or interested in the said resolution.

Item No. 10

Shri Bhavesh R. Vora, Practicing Chartered Accountant with over 22 years experience was appointed as an Independent Director

to the date of ensuing Annual General Meeting. The Company has received a notice in writing alongwith cash deposit from

Brief resume of the said Director is given at the end of notes to Notice.


Except Shri Bhavesh R. Vora, none of the Directors is, in any way, concerned or interested in the said resolution.

Item No. 11

Shri Sunil M. Dedhia, Practicing Company Secretary with over 19 years experience was appointed as an Independent Director

date of ensuing Annual General Meeting. The Company has received a notice in writing alongwith cash deposit from a Member Brief resume

of the said Director is given at the end of notes to Notice.


Except Shri Sunil M. Dedhia, none of the Directors is, in any way, concerned or interested in the said resolution



10

Directors’ Report

Directors’ Report & Management Discussion & AnalysisTO THE MEMBERS OF AARTI INDUSTRIES LIMITED

Your Directors are pleased to present this Twenty Sixth Annual Report and the Audited Statement of Accounts for the year ended 31st March, 2009.

FINANCIAL RESULTS(Rs. in Lakhs)

2008 - 09 2007 - 08

Gross Sales and other Sales Income: 153575 95909Less: Excise Duty 8877 6276Net Sales: 144698 89633Less : (Increase)/ Decrease in Stock 423 (3197) Consumption of Raw Materials 75950 49055 Staff Cost 3017 2139 Other Expenditure 41084 29768Total Expenditure: 120474 77765

24224 11868Add: Other Income 229 140Less: Non Operating Expenses 244 57

24209 11951Less: Interest 8936 3883 Depreciation 3871 2750

11402 5318Less: Provision for Taxation - Current 2401 956 Provision for Taxation - Deferred 554 695

8447 3667

(Net off adjustment on account of Amalgamation)20911 19665

Add: Prior Year’s Adjustments (114) 329244 23335

AppropriationsTransfer to Debenture Redemption Reserve 2000 NilTransfer to General Reserve 850 400Interim Dividend 1311 728Proposed Dividend 884 364Tax on Dividend 373 186Balance carried to Balance Sheet 23826 21657Earning Per Share (Basic & Diluted) (Rs.) 11.46 5.04

DIVIDENDYour Company had declared and paid Interim Dividend of Rs. 1.80 ps. (@ 36%) per share (of Rs. 5/- each). Your Directors are pleased to recommend Final Dividend of Rs. 1.20 ps. (@ 24%) per share (of Rs. 5/- each) for the year 2008-09. The total amount of Dividend pay-out for the year would be Rs. 21.95 Crores as compared to Rs. 10.92 Crores for the previous year.

11

Directors’ Report

OPERATIONS

time ever crossed the level of Rs. 1000 Crores turnover and eventually registering the annual turnover of

the level of Rs. 100 Crores and reported at Rs. 114 Crores.The Turnover has increased by around 60% from Rs. 959.09 Crores last year to Rs. 1535.75 Crores in the year 2008-09.

Specialities Ltd. merged with the Company w.e.f. from 1st April, 2008.

tax (& Deferred Tax) surged from Rs. 40.87 Crores to Rs. 87.07 Crores posting a jump of over 113%. Earning per Share

has also increased from Rs. 6.70 Crores to Rs. 13.09 Crores, posting growth of over 95%.EXPORTSExports have increased from Rs. 376.50 Crores (2007-08) to Rs. 588.44 Crores (2008-09) (inclusive of Export through

AMALGAMATIONSurfactant Specialities Ltd. and Avinash Drugs Ltd. with the Company Amalgamated w.e.f. from

CHEMICAL INDUSTRY - STRUCTURE AND DEVELOPMENTAcross the world, organic Chemicals Industry is following the model of globalization, consolidation, innovation and cost reduction. With the shifting of Chemical Business from Developed Countries to Asia (especially India & China) has boosted the growth of Asian Chemical Industries. Taking the cue from the global markets, the Indian Manufacturers had been expanding in the streams of Chemicals and Pharmaceuticals, placing Indian made chemicals in a strategic position in the Global Markets. This had surged the growth of Indian made Chemicals steeply in the recent past.There was a substantial contraction in International Demand especially for the products going into housing/ real-estate, automobile and electronics from the Third and Fourth quarter of the year 2008-09, due to credit freezing, Inventory Correction and demand contraction. But the demand started picking up from the First quarter of the year 2009-10 for most of the product on the signs of recovery/stability of global economy.OPPORTUNITIES, THREAT AND OUTLOOK The Chinese currency has strengthened against the US Dollar by approximately 2.57% visa-vis Indian currency weakened approximately 27% against US Dollar. This has increased the competitiveness of Indian Chemicals Industry, at international level. Further during the time of World Olympics in China, the production of all chemicals in China was discontinued temporarily, which had boosted the volumes growth of the Indian Chemicals in the Global Markets. Lots of the temporary volumes had eventually been converted into long term orders for the Indian made products.There is an increase in demand for Basic Chemical due to shifting of chemical manufacturing industry to India and also due to continuous growth of Indian economy. To meet the same your Company is expanding the Basic Chemical range by introducing Nitro Toluenes and its Derivatives.Your Company is planning to expand its Hydrogenation Capacity by upgrading technology and increase in volume and introduction of new Speciality Chemicals.The Company continuously strives, through research in its recognized R&D Centre, to device various measures for cost reduction & yield improvements in its existing range of products. The Company has also introduced new products through

The Company had obtained the approval from the US Foods & Drug Administration (generally known as USFDA) for its manufacturing unit at Tarapur which in turn shall increase the Company’s sales volume from the US markets. Further, the Pharmaceutical businesses in other markets are also poised for strong growth in coming years.

12

Directors’ Report

We had witnessed the record surge in commodities, metals, etc. and probably the worst fall ever in the same. We had

defaults, and lots more. Even the lending rates had peaked up as compared to the rates prevailing in last several years.

prevailing liquidity/credit crisis. With macro-economies now stabilizing the Company expects the interest rate to soften up and thus expects a lower interest costs going forward.

Pigments, FMCG, Agrochemicals, Pharmaceuticals, Polymers, etc. While some of the sectors were impacted due to the recession, the other sectors such as parts of FMCG, Agrochemicals, Pharmaceuticals had performed better and thus the diversity in the product base has helped the Company in the current Global Slowdown. With the Amalgamation of erstwhile Surfactant Specialities Ltd., your Company shall be able to add-up new products and newer applications to its existing product–mix. Surfactant Specialities had envisaged to emerge as a one step solution provider for surfactants and speciality. It has a fully automated state of art manufacturing facilities capable of manufacturing various Surfactants and Speciality chemicals with application to Personal Care and Oral Care sectors and presently supplies its range to the major FMCG companies in India. Hence the Amalgamation would add the value to AIL by increasing the product mix and also to do value addition on high-end Specialties Chemicals sector.

Product Portfolio, the Company expects to continue its growth momentum going forward

SEGMENT-WISE PERFORMANCE(Rs. in Lakhs)

Sr.No.

Particulars Financial Year 2008-2009

Financial Year 2007-2008

(A) Primary Segments : Business Segments Segment Revenue a) Basic Chemicals 36,089 23,423b) Specialty Chemicals 111,219 67,303c) Agro Chemicals 5,857 4,024d) Pharmaceuticals 10,025 8,395Total 163,190 103,146Less: Inter-segment Revenue 9,615 7,236Net Sales / Incomes From Operations 153,575 95,909Segment Results

Interest from each Segment a) Basic Chemicals 7,468 3,286b) Specialty Chemicals 15,647 7,198c) Agro Chemicals 1,493 904d) Pharmaceuticals (1,027) 570Total (A) 23,581 11,958Less: Interest 8,936 3,883 Other Un-allocable Expenditure Net of Income 3,244 2,757Total (B) 12,180 6,640

11,401 5,318 (B) Secondary Segment : Geographical Segments

a) India 95,359 58,585b) Out of India 58,216 37,324Total 153,575 95,909

Segment Capital Employed

Fixed Assets used in the Company’s business or Liabas the Fixed Assets and services are used interchangeably between segments. The Company believes that it is currently not practicable to provide segment disclosures relating to capital employed.

13

Directors’ Report

RISKS AND CONCERNS

Deepening of recessions had slow down the pace of growth world over. Your Company perceives risks or concerns common to industry such as regulatory risks, exchange risk, high raw-material cost and other commercial & business related risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has clearly laid down policies, guidelines and procedures that form part of internal control systems, which provide for automatic checks and balances. Your Company has maintained a proper and adequate system of internal controls. This is to ensure that all Assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorised, recorded and reported diligently. Your Company’s internal control systems are commensurate with the nature and size of its business operations. The internal Auditors’ Reports are regularly reviewed by the Audit Committee of the Board.

DIRECTORS’ RESPONSIBILITY STATEMENT

As required u/s. 217(2AA) of the Companies Act, 1956 (the Act):

(i) That in the preparation of the Annual Accounts for the Year ended 31st March, 2009, the applicable Accounting Standards had been followed along with proper explanation for material departures, if any;

(ii) 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

with the provisions of the Act for safeguarding the Assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That Directors’ have prepared the Annual Accounts on a going concern basis.

SUBSIDIARY COMPANIES

On an application made by the Company under Section 212(8) of the Companies Act, 1956, the Central Government vide

Account of the Subsidiary Companies and other documents to be attached under Section 212(1) of the Act to the Annual Report of the Company. Accordingly, the said documents are not being attached with the Balance Sheet of the Company. A gist of

Companies are open for inspection by any Member/Investor and the Company will make available these documents/details upon request by any Member of the Company or to any Investor of its Subsidiary Companies who may be interested in obtaining the same. Further, the Annual Accounts of the Subsidiary Companies will also be kept for inspection by any Investor

CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in presenting Consolidated Financial Statements which form part of the Annual Report and Accounts.

DIRECTORS

Shri Prem Chandra Sethi, Shri K.V.S. Shyam Sunder and Shri Bhavesh R. Vora has been appointed as Additional Directors

as such up to the date of the ensuing Annual General Meeting. The Company has received notices in writing alongwith cash deposits from Members proposing their candidature for appointment as Director under Section 257 of the said Act together with requisite cash deposit thereof.

In accordance with the provisions of the Companies Act, 1956, and the Articles of Association of the Company, Shri Chandrakant V. Gogri, Shri Manoj M. Chheda, Shri Laxmichand K. Jain and Shri Kirit R. Mehta retire by rotation and being eligible, offer themselves for re-appointment.

14

Directors’ Report

Meeting.

CORPORATE GOVERNANCE

Your Company has complied with the mandatory Corporate Governance requirements stipulated under Clause 49 of the Listing Agreement. Report on Corporate Governance is annexed hereto forming part of this report.

DISCLOSURE OF PARTICULARS

Information as per the requirements of Section 217(1)(e) of the Companies Act 1956, read with Rule 2 of Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, relating to Conservation of Energy, Research & Development, Technology Absorption, Foreign Exchange Earnings and Outgo are annexed hereto forming part of this Report.

ENVIRONMENTAL, SAFETY AND HEALTH

Your Company is committed to ensure sound Safety, Health and Environmental (SHE) performance related to its activities, products and services. The Company is taking continuous steps and also developing environment friendly processes for

of the designed SHE Management System is done on a continuous basis. The Company is committed to strengthen pollution prevention and waste abatement practices and strives to provide a safe and healthy environment.

CORPORATE SOCIAL RESPONSIBILITY

Your Company is committed to actively contribute to the social and economic development of the Country. The Company has been contributing for the social development and for the needed community affected by various natural calamities. In the case of the Bihar Flooding not only did the Company had contributed for the relief work for those affected, but even the employees & your directors had contributed their part of salary ranging from one day to one month for the cause. Apart from this the employees also volunteered to collect various essential items and clothing for the needy people of Bihar.

Your Company believes that investing in the rural educations as a major contribution to the growth of economy and with these principles; the Company (including the Associate Companies) had contributed to the formation of Tulsi Vidya Mandir at Kutch, Gujarat. During the last year the school had over 430 students from neighboring villages and was proud to announce over 82% pass rate in last SSC results as against the state average of around 56%. Your Company expects to continue its

PERSONNEL

As required by the Provision of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules 1975, as amended up-to-date, the names and the other particulars of the Employees are set out in the Annexure to the Directors’ Report. However, as per the Provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Reports and Accounts are being sent to all the Shareholders of the Company excluding the aforesaid information. Any Shareholder interested in

AUDITORS

M/s. Parikh Joshi & Kothare, Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for re-

COST AUDITORS

The Report of Ms. Ketki Visariya, Cost Accountant, in respect of Audit of the Cost Accounts of the Company will be submitted to the Central Government in due course. She has been re-appointed as the Cost Auditor of the Company subject to approval of the Government of India to conduct Cost Audit of prescribed Chemicals manufactured by the Company for the year 2009-10.

INDUSTRIAL RELATIONS & HUMAN RESOURCES

AARTI INDUSTRIES LTD on completion of 25th years stands with more than 1200 employees and workers who are constantly contributing not only their skills but also heart and soul. In this period of global meltdown and season of layoff, the Company

15

Directors’ Report

has not laid off or put cut in its work force. The Company trusts and believes that its work force will help the Company to meet

ACKNOWLEDGEMENT

The Board of Directors places on record its sincere appreciation for the dedicated services rendered by the employees of the Company at all levels and the constructive co-operation extended by the staff. Your Directors would like to express their

suppliers, other business associates and last but not the least the Shareholders.

FOR AND ON BEHALF OF THE BOARDSd/-

Place: Mumbai CHANDRAKANT V. GOGRIDated: 12th September, 2009 CHAIRMAN

CAUTIONARY STATEMENTStatement in the Annual Report describing the Company’s objectives, projections, expectations and estimates regarding future performance may be “Forward Looking Statements” and are based on currently available information. The Management believes these to be true to the best of its knowledge at the time of preparation of this Report. However, these statements are subject to certain future events and uncertainties, which could cause actual results to differ materially from those which may be indicated in such statements.

16

Directors’ Report

Annexure to Directors’ ReportADDITIONAL INFORMATION AS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988.

1. CONSERVATION OF ENERGY

a) Energy Conservation Measures taken

-tion and also to improve the yields.

- Energy Audit are conducted on regular basis to monitor the generations and consumption of energy. The rec-ommendations for reduction of transmissions losses, consumption losses, updation of systems, etc are being implemented. At various location, old equipments have been replaced / upgraded by the newer and modern equipments to optimize the energy consumption and improve yield.

emissions by use of more greener gases.

b) Additional Investments & Proposals, if any, being implemented for Reduction of Consumption of Energy:-

Implementation of Clean Development Mechanism Project, which will lead to higher recovery of Heat and thus result in reduction of emission of green house gases.

c) The adoption of energy conservation measures indicated above result in savings in the cost of production.

d) Total energy consumption and energy consumption per unit of Production:

I. POWER AND FUEL CONSUMPTION

Particulars2008-09 2007-08

1. Electricitya) Purchased Units (KWH) 58,647,294 41,301,760

Total Amount (Rs.) 331,463,962 222,339,788 Cost/Unit (Rs.) 5.65 5.38

b) Own Generation through: (i) Diesel Generator Units 4,301,433 1,878,827

Total Amount (Rs.) 47,426,554 20,283,969 Cost/Unit (Rs.) 11.03 10.80 (ii) Through Steam Turbine /Generator 16,974,200 21,387,417 Total Amount (Rs.) 47,985,464 55,914,188 Cost /Unit (Rs.) 2.83 2.612. Coal/Lignite

Quantity (Kgs.) 144,862,394 113,366,695Total Amount (Rs.) 415,384,731 285,771,924Average rate (Rs.) 2.87 2.52

3. Furnace Oil/L.D.OQuantity (Ltrs.) 4,833,089 3,666,799Total Amount (Rs.) 153,815,479 91,458,635Average Rate (Rs.) (per. Ltr.) 31.83 24.94

4. Natural GasQuantity (SCM) 1,445,221 214,254Total Amount (Rs.) 15,759,257 2,578,035Average Rate (Rs.) (Per SCM) 10.90 12.03

17

Directors’ Report

II. CONSUMPTION PER UNIT OF PRODUCTION

Since the Company manufactures different types of products and its intermediates, it is not practicable to give consumption per unit of production.

2. RESEARCH AND DEVELOPMENT (R&D)

The R&D activities of the Company are carried out in the areas of bulk drugs, APIs, specially chemicals and inter-mediate chemicals.

The Company’s R&D Centers at Vapi are showing satisfactory progress in their activities of development of new -

facturing facilities based on the new developments in R&D.

c) Future Plan of Action:

d) The Company has incurred the following expenditure in Research and Development:

Expenditure on R & D (Rs. in Lakhs)

(a) Capital 18.64

(b) Revenue 137.06

(c) Total 155.70

(d) Total R&D Expenditure as a percentage of total turnover 0.10%

3. TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

a) Efforts, in brief, made towards technology absorption, adaptation and innovation:

Forward Integration for downstream products and expansion also with in house technology.

Continuous endeavour to improve product quality and process yields.

Lower project costs for expansion

Value addition

Exports of higher value–added products resulting in increased foreign exchange earning.

c) Information regarding technology imported during the last 5 years: NIL

18

Directors’ Report

4. TOTAL FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs. in Lakhs)Current

YearPrevious

yearExport Sales (FOB) 55569 35529Dividend Nil 3Total Foreign Exchange earned 55569 35532CIF value of Imports:Raw Material 20010 7124Stores & Spares 51 30Capital Goods 582 301Fuel 269 526Commission on Export Sales 261 154Import of goods for resale 1859 1710Expenses in foreign currency 348 287Total Foreign Exchange used 23380 10132

FOR AND ON BEHALF OF THE BOARD

Sd/-

Place: Mumbai CHANDRAKANT V. GOGRIDated: 12th September, 2009 CHAIRMAN

19

Corporate Governance

Report on Corporate GovernanceYour Company has complied in all respects with the applicable Corporate Governance Code as per Clause 49 of the Listing Agreement with the Stock Exchanges except in respect of constitution of Board of Directors, which was complied with, on 30th July, 2009 upon obtaining necessary Central Government permission for increase in number of Directors. A Report on the Corporate Governance compliance is furnished below :

(I) COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE:

Your Company is committed to the adoption and adherence to Corporate Governance Practices, which shall ensure that all the concerned parties associated with the Company obtain requisite information which would help them to make informed decision. Such Corporate Governance Practices help enhancement of long-term Shareholder value and interest of other Stakeholder. The Board fully appreciates the need of increased awareness for responsibility, transparency and professionalism and focus for effective control and management of the Organization. The Company has adequate number of Independent Directors and also has formed various committees for overview of the organization.

(II) MANDATORY REQUIREMENTS:

1. BOARD OF DIRECTORS

(a) The Constitution of the Board and other relevant details are given below:

Aarti Industries Limited (AIL) Board presently consists of 16 Directors out of which 10 (Ten) are Non-Executive (including the Chairman who is Non-Executive) and 8 (Eight) Directors are Independent Directors. Except Managing Director, the other Directors are liable to retire by rotation. Company have increased number of Directorship from 12 (Twelve) to 16 (Sixteen) by appointing 4 (Four) Independent Directors on Board for compliance of Clause 49 of Listing Agreement. For the purpose of increase in number of Directorship on Board, Company have taken all necessary approval from Registrar of Companies and other authorities.

Name of Director Category No. of other Directorship*

No. of Committee Membership in Companies**

No. of Board MeetingsAttended

Attendanceat last AGM

Chairman MemberChandrakant V. Gogri Chairman

Non-Executive3 2 None 7 Yes

Rajendra V. Gogri Vice Chairman and MD 5 None 1 6 YesShantilal T. Shah Vice-Chairman

Non Executive2 None 2 7 Yes

Parimal H. Desai Executive 1 1 1 6 YesManoj M. Chheda Executive None None 2 5 YesRashesh C. Gogri Executive 2 None None 5 YesHetal G. Gala Executive 2 None None 7 NoKirit R. Mehta Executive 3 None 1 3 YesRamdas M. Gandhi Independent 4 5 2 6 YesLaxmichand K. Jain Independent None None 1 7 YesVijay H. Patil Independent 2 None 1 1 NoHaresh K. Chheda Independent None None 1 6 YesPrem Chandra Sethi$ Independent 3 None 3 2 N.AK.V.S. Shyam Sunder$ Independent 2 1 2 3 N.ABhavesh R. Vora$ Independent 1 None 3 2 N.ASunil M. Dedhia# Independent 2 None 1 N.A N.A

* This excludes Directorships held in Private Limited and Overseas Companies and AIL. ** Includes Audit Committee and the Shareholders Grievance Committee only.$ Appointed as Additional Directors on 23rd September, 2008.# Appointed as Additional Director on 30th July, 2009.

20


(b) Board Meetings:

During the Year 2008-09, total Seven Board Meetings were held on 29.05.2008, 19.06.2008, 31.07.2008, 23.09.2008, 23.10.2008, 29.01.2009 and 7.02.2009.

(c) Code of Conduct

Aarti Industries Limited Code of Conduct laid down by the Board of Directors is applicable to all the Directors and Senior Management of the Company. The Code of Conduct is posted on the Company’s web site. All the Board Members

ended 31st March, 2009. A declaration to this effect, duly signed by the Managing Director is annexed hereto.

2. COMMITTEES

(a) Audit Committee

The Audit Committee has been constituted as per Section 292A of the Companies Act, 1956 and the guidelines set out in the Listing Agreement with the Stock Exchanges. The role and terms of reference of the Audit Committee

and internal audit systems, accounting policies and practices, related party transactions, performance of Internal and Statutory Auditors, adequacy of internal audit function, discussions with Internal and Statutory Auditors and Cost Auditors.

During the year 2008-09, Eight Audit Committee Meetings were held on 29.05.2008, 31.07.2008, 04.08.2008, 12.08.2008, 23.10.2008, 16.12.2008, 29.01.2009 and 27.02.2009.

The composition of the Audit Committee and other relevant details are given below:

Name of Director Category Profession No. of meetings attended

Shri R. M. Gandhi IndependentChairman

Solicitor 8

Shri R. V. Gogri Vice Chairman & Managing Director, Executive

Industrialist 8

Shri P. H. Desai Executive Industrialist 8Shri L. K. Jain Independent Environmental Consultant 7Shri H. K. Chheda Independent Chartered Accountant 7Shri V. H. Patil Independent Advocate 1Shri P. C. Sethi* Independent Banker 1Shri K.V. S. Shyam Sunder* Independent Chartered Accountant 1Shri B. R. Vora* Independent Chartered Accountant 1Shri M. M. Chheda* Executive Industrialist 1

* Became Member w.e.f. 7th February, 2009

Vice-Presidents and General Managers from various divisions of the Company, as and when required and Internal auditors, Cost Auditors, Statutory Auditors of the Company and Company Secretary who acts as Secretary to the Audit Committee attended the Audit Committee Meetings to respond to queries raised at the Committee Meetings.

(b) Shareholders’ Grievance Committee

Terms of Reference of the Committee inter-alia covers reviewing status of approval of transfer/transmission of

21


During the year 2008-09, Four Shareholders’ Grievance Committee Meetings were held on 13.06.2008, 05.09.2008, 15.12.2008 and 12.03.2009.

The composition of the Shareholders’ Grievance Committee and other relevant details are given below :

Name of Director Category No. of meetings attended

Shri C. V. Gogri Chairman, Non-Executive 4

Shri S. T. Shah Vice Chairman, Non-Executive 4

Shri M. M. Chheda Executive 4

Shri K. R. Mehta Executive 4

(c) Shareholders’ complaints

During the year, 40 complaints were received. All the complaints were resolved to the satisfaction of the Shareholders. No request for Share Transfers or Dematerialization was pending for approval as on 31st March, 2009.

3. SUBSIDIARY COMPANIES

The Company does not have any material Non-listed Indian Subsidiary Company and hence it is not required to have an Independent Director of the Company on the Board of such Subsidiary Company. The Audit Committee reviews

minutes of Subsidiary Companies are placed before the Board of Directors of the Company and the Directors are informed

4. DISCLOSURES

(a) The Code of Conduct for the Directors and the senior management of the Company have been laid down by the Board. The Code has been posted on the website of the Company.

(b) The Company has been continuously complying with the requirements of Stock Exchanges, SEBI and other statutory authorities on all matters related to capital markets during the last three years. No penalties or strictures have been imposed on the Company by the said authorities relating to the above.

interests of the Company at large. Transactions with Related Party have been disclosed in the schedule ‘P’ - Notes to Accounts to the Annual Accounts in the Annual Report.

(d) Directors periodically review and assess risks and measures to minimize the risks.

been made in following the same.

5. OUTSTANDING CONVERTIBLE/REDEEMABLE INSTRUMENTS

(a) 30,25,000 convertible warrants issued by the Company on 31st July, 2008 with each of the said warrants convertible into 1 Equity Share of Rs. 5/- each at a price of Rs. 35.65/- ps. per share are outstanding to be converted into Equity Shares at the option of the warrant holders, on or before 31st January, 2010. If the warrant holders exercise their right to convert warrants into Equity Shares, the Equity Share capital of the Company would increase accordingly.

(b) During the year Company have issued 1000 (One Thousand) Secured Redeemable Non-Convertible Debenture under Debentures Trusteeship of IDBI Trusteeship Services Ltd. for 7 (Seven) year term, aggregating Rs. 100 Crores (Ten

Exchange).

6. REMUNERATION OF DIRECTORS

The Remuneration payable to the Directors is considered and approved by the Remuneration Committee constituted in accordance with the Corporate Governance Code and the Provisions of the Companies Act, 1956, having due regard to

22


the relevant factors. Non-executive Directors are paid Sitting fees at the rate of Rs. 5000/- for each of the meetings of the Board or Committee thereof attended by them. The details of remuneration paid / payable to each Director for the year ended 31st March, 2009 are as under:

(Amount in Rupees)Name of Director

Relationship with other Director(s)

Category Salary and other Per-

quisites

Comm-ission

SittingFees

TotalRemu-

nerationShri C. V. Gogri Brother of Shri R.V. Gogri and

Father of Shri R. C. Gogri and Smt. Hetal G. Gala

Non-Executive Chairman, Promoter

- - 151000 151000

Shri R. V. Gogri Brother of Shri C.V. Gogri Vice-Chairman & MD, Promoter

1860000 1747840 - 3607840

Shri R. M. Gandhi – Non- Executive,Independent

- - 74000 74000

Shri S. T. Shah – Non-Executive,Promoter

- - 151000 151000

Shri P. H. Desai – Executive Director, Promoter

1540000 546200 - 2086200

Shri L.K. Jain – Non-Executive,Independent

- - 74000 74000

Shri H. K. Chheda – Non-Executive,Independent

- - 65000 65000

Shri Vijay H. Patil – Non-Executive,Independent

- - 10000 10000

Shri M. M. Chheda – Executive Director, Promoter

1540000 546200 - 2086200

Shri R. C. Gogri Son of Shri C. V. Gogri and Brother of Smt. Hetal G. Gala

Executive Director, Promoter

1540000 1310880 - 2850880

Smt. Hetal G. Gala Daughter of Shri C. V. Gogri and Sister of Shri R. C. Gogri

Executive Director, Promoter

1540000 1310880 - 2850880

Shri Kirit R. Mehta – Executive Director 792000 - - 792000Shri Prem Chandra Sethi

– Non- Executive, Independent

- - 15000 15000

Shri K.V.S. Shyam Sunder

– Non- Executive, Independent

- - 20000 20000

Shri Bhavesh R. Vora

– Non- Executive,Independent

- - 15000 15000

Shri Sunil M. Dedhia – Non- Executive,Independent

NA NA NA NA

(a) Comm

of 180 days.

(d) The Non-executive Directors, apart from receiving Directors’ Remuneration by way of sitting fees, approved by the

relationship or transactions with the Company.

23


Shares held by Non-Executive Directors in the Company as on 31st March, 2009

Name Number of shares held % of total shareholdingShri C. V. Gogri 1453668 2.00Shri R. M. Gandhi 15000 0.02Shri S. T. Shah 1479316 2.03Shri L. K. Jain 13350 0.02Shri H. K. Chheda 2000 0.00Shri V. H. Patil 7200 0.01Shri P.C. Sethi* Nil NilShri K.V.S. Shyam Sunder* Nil NilShri B.R. Vora* Nil NilShri S.M. Dedhia** Nil Nil

* Appointed as Additional Director w.e.f. 23rd September, 2008.

** Appointed as Additional Director w.e.f. 30th July, 2009.

7. GENERAL BODY MEETINGS:Details of last three Annual General Meetings are as under:

Year Day, Date & Time Venue Special Resolutions passed for2006 Saturday, 30.09.2006,

11.00 a.m.Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396195, Dist. Valsad, Gujarat

Nil

2007 Monday, 24.09.2007, 11.00 a.m.

Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396195, Dist. Valsad, Gujarat

Nil

2008 Saturday, 19.07.2008, 11.00 a.m.

Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396195, Dist. Valsad, Gujarat

Issuing Preferential Convertible Warrants to Promoter / Promoter Group Companies and other persons.

Note: During the last year, no Resolution was put through postal ballot.

8. MEANS OF COMMUNICATION: The Quarterly results were published in following Newspapers:

Financial Results for the quarter ended

Newspapers

30.06.2008 The Economic Times in (English) and (Gujarati) edition published from Mumbai and Ahmedabad.

30.09.2008 The Economic Times in (English) edition and (Gujarati) edition published from Mumbai and Business Standard in (English) edition and Loksatta Jansatta in (Gujarati) edition published from Ahmedabad.

31.12.2008 The Economic Times in (English) edition published from Mumbai and The Economic Times in (Gujarati) edition published from Mumbai and Ahmeda-bad and Times of India in (English) edition published from Surat.

31.03.2009 The Economic Times in (English) edition published from Ahmedabad and The Economic Times in (Gujarati) edition published from Mumbai and Ahmedabad and The Times of India in Ahmedabad Split Edition

as Annual Report, Quarterly Financial Statements, Shareholding Pattern, Report on Corporate Governance are being

Exchanges.

24


9. GENERAL SHAREHOLDERS INFORMATION:

(a) The day, date, time & venue of the 26th Annual General Meeting:

Day Date Time VenueMonday 12th October, 2009 11.00 a.m. Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi-396195,

Dist. Valsad, Gujarat

(b) Financial Calendar:

Financial Year 1st April to 31st MarchAdoption of Quarterly Resultsfor the quarter ending : June, 2008September, 2008December, 2008March, 2009

4th /5th week of July, 20083rd /4th week of October, 20084th /5th week of January, 20094th /5th week of May, 2009

Dates of Book Closure (Both days inclusive) 5th October, 2009 to 12th October, 2009

(c) Listing on Stock Exchanges:

Stock Exchange Stock Codes/SymbolNational Stock Exchange of India Limited AARTIINDBombay Stock Exchange Limited 524208

(d) Liquidity of Shares:The Shares of the Company are traded under ‘B’ category at Bombay Stock Exchange Ltd. The Shares are also traded regularly at the National Stock Exchange of India Ltd.

(e) Listing Fees and Annual Custodial Fees:The Company has paid the Annual Listing Fees of the Stock Exchanges and Annual Custodial Fees of the Depositories for the year 2008-2009.

(f) Dematerialization status:Equity Shares of the Company are traded compulsorily in Dematerialized Form and available for trading in the Depository Systems of both NSDL and CDSL. Security Code No. with NSDL and CDSL is - ISIN No. INE-769A01020. As on 31st March, 2009, 61804716 Equity Shares representing 84.89 % of the Paid-up Share Capital of the Company are held in dematerialized form.

(g) Share Transfer Agents & Address for Correspondence: M/s. Sharepro Services (India) Pvt. Ltd. Samhita Complex, Gala No.-52 to 56, Bldg No.-13 A-B, Near Sakinaka Telephone Exchange, Andheri-Kurla Road, Sakinaka, Mumbai-400072. Telephone-022-67720300/67720400 Fax No.-022-28591568

The shareholder’s are requested to address all their communications/suggestions/ grievances to the Share Transfer Agents at the above address.

Smt. Mona Patel, Company Secretary 222, Udyog Kshetra, 2nd Floor, Mulund-Goregaon Link Road, Mulund (West), Mumbai 400 080.

In accordance with thee-mail ID- [email protected].

25


(i) Share Transfer System

Share Transfer Committee comprising of Shri C.V. Gogri, Shri R.V. Gogri, Shri S.T. Shah and Shri R.C. Gogri meets every fortnightly for approval of the transfer, dematerialization etc.

Reports on Share Transfer/Transmission are placed before the Shareholders’ Grievances Committee and the Board from time to time.

10. MARKET PRICE DATA:

Month Bombay Stock Exchange National Stock ExchangeHigh (Rs.) Low (Rs.) Volume High (Rs.) Low (Rs.) Volume

April 2008 37.25 29.65 1509174 37.50 26.30 1331905May 2008 36.50 30.30 1432389 36.35 30.25 1109141June 2008 37.30 30.10 1787181 37.75 29.10 1881130July 2008 49.70 31.50 3803745 49.90 30.55 2941090August 2008 50.40 44.55 2681081 49.95 44.15 2492548September 2008 48.85 36.75 727814 49.00 37.05 552505October 2008 42.00 30.90 553126 42.00 31.00 386250November 2008 34.00 26.20 234478 34.00 26.50 117173December 2008 34.90 27.65 214371 34.10 28.00 185145January 2009 33.00 28.20 236057 33.55 28.00 234476February 2009 30.00 26.00 214346 31.00 26.10 106788March 2009 29.80 26.25 174893 30.00 26.10 148009

11. SHAREHOLDING PATTERN AS ON 31ST MARCH, 2009:

Category No. of Shares %Promoters – Indian 34261097 47.05Bodies Corporate 1264590 1.74Banks, Financial Institutions 215114 0.30Mutual Funds 6521432 8.96FII/NRI/OCB 630371 0.86Public 29916820 41.09Total 72809424 100.00

AIL Sensex

0.005.00

10.0015.0020.0025.0030.0035.0040.0045.0050.00

Apr

- 0

8

May

-08

Jun

-08

Jul -

08

Aug

-08

Sep

-08

Oct

-08

Nov

-08

Dec

-08

Jan

-09

Feb

-09

Mar

-09

Pric

e

0.002000.004000.006000.008000.0010000.0012000.0014000.0016000.0018000.00

Sen

sex

Aarti Industries Ltd. - Sensex Aarti Industries Ltd - Nifty

AIL Nifty

Apr

- 0

8

May

- 0

8

Jun

- 08

Jul -

08

Aug

- 0

8

Sep

- 0

8

Oct

- 0

8

Nov

- 0

8

Dec

- 0

8

Jan

- 09

Feb

- 0

9

Mar

- 0

9

Pric

e

Nift

y

0

10

20

30

40

50

0.00

1000.00

2000.00

3000.00

4000.00

5000.00

6000.00

26


Distribution of Shareholding as on 31st March, 2009

No. of Shares Shareholders SharesNumber % Number %

Less than 1000 18316 81.648 5440833 7.4731001-2000 2682 11.956 3613934 4.9642001-4000 624 2.782 1830079 2.5144001-6000 267 1.190 1364467 1.8746001-8000 94 0.419 659702 0.9068001-10000 75 0.334 701621 0.96410001-20000 141 0.629 1965680 2.700Above 20001 234 1.043 57233108 78.607TOTAL 22433 100.00 72809424 100.00

12. REGISTERED OFFICE: Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi-396 195, Dist. Valsad, Gujarat.13. PLANT LOCATIONS:

a) Plot Nos. 801, 801/23, 802, 803/1-2-3, GIDC Estate, Phase III, Vapi – 396 195, Dist. Valsad, Gujarat, b) Plot No. 902, GIDC Estate, Phase II, Vapi – 396 195, Dist. Valsad, Gujarat, c) Plot Nos. 752-753-754 Sarigam Industrial Area, Sarigam, Tal. Umargaon, Dist. Valsad, Gujarat. d) Plot Nos. 758/1, 758/2, Jhagadia Mega Estate, Village Kapalsadi, Tal. Jhagadia, Dist. Bharuch - Gujarat.e) Plot No. K-18, MIDC, Tarapur, Dist. Thane, Maharashtra.f) Plot No. E50, MIDC, Tarapur, Dist. Thane, Maharashtra.

14. CEO/CFO CERTIFICATION:

time Director (CFO) was placed at the meeting of the Board of Directors held on 12th September, 2009 .

(III)NON-MANDATORY REQUIREMENTS:REMUNERATION COMMITTEE:The Terms of Reference of the Committee is to review and recommend/approve remuneration payable to the Managerial Personnel.During the year 2008-09, meeting of the Remuneration committee was held on 08.05.2008.

The composition of the Remuneration Committee and other relevant details are given below:

Name of Director Category No. of meetings attendedShri C. V. Gogri Chairman, Non-executive 1Shri R. V. Gogri Executive 1Shri R. M. Gandhi Independent 1Shri L. K. Jain Independent 1Shri V. H. Patil Independent 0


Place: Mumbai CHANDRAKANT V. GOGRIDated:12th September, 2009 CHAIRMAN

Board of Directors in terms of Clause 49 of the Listing Agreement made with the Stock Exchanges.


RAJENDRA V. GOGRIPlace: Mumbai VICE CHAIRMAN & Dated:12th September, 2009 MANAGING DIRECTOR

27


CERTIFICATE

To the Members of Aarti Industries Ltd. Mumbai

We have examined the compliance of conditions of corporate governance by Aarti Industries Ltd., for the year ended on 31st March, 2009, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchanges.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions of

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above-mentioned Listing Agreement except in respect of constitution of Board of Directors relating to proportion of Independent Directors, which was complied with on 30th July, 2009 upon obtaining necessary Central Government permission for increase in number of Directors.

We state that no investor grievance is pending for a period exceeding one month against the Company as per the records maintained by the Shareholders/ Investors Grievance Committee.

or effectiveness with which the management has conducted the affairs of the Company.

For PARIKH JOSHI & KOTHARE CHARTERED ACCOUNTANTS

Sd/(YATIN VYAVAHARKAR)

PARTNERM. No. 33915

Place : MumbaiDated: 12th September, 2009

28

Auditors’ Report

Auditors’ ReportTO THE MEMBERS OF AARTI INDUSTRIES LTD.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those Standards require

material misstatement. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in

reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government of India in terms of subsection (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure a statement on the matters

4. Further to our comments in the Annexure referred to above, we report that:

(i) We have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit;

(ii) In our opinion, the Company has kept proper books of account as required by law so far as appears from our examination of those books and proper returns adequate for the purposes of our audit have been received from two divisions (Avinash Drugs and Surfactant Specialities) not visited by us.

(iii) The report on accounts of these two divisions audited by the concerned divisional auditors have been forwarded to us and have been dealt with by us in preparing this report.

account;

comply with the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956;

(vi) On the basis of written representations received from the directors, as on 31st March, 2009, and taken on record by

being appointed as a director in terms of clause (g) of sub-section (1) of section 274 of the Companies Act, 1956;

(vii) In our opinion and to the best of our information and according to the explanations given to us, the said accounts give the information required by the Companies Act, 1956, in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India;

(a) in the case of the Balance Sheet, of the state of affairs of the Company as at 31st March, 2009; and

(c) in the case of the Cash Flow Statement, of the Cash Flows for the year ended on that date;

For PARIKH JOSHI & KOTHARECHARTERED ACCOUNTANTS

Sd/-(YATIN R. VYAVAHARKAR)

PARTNERPlace: Mumbai, M. No. 33915Date: 12th September, 2009

29

Auditors’ Report

Annexure to The Auditors’ Report(This is the Annexure referred to in our Report to the Members of AARTI INDUSTRIES LTD of even date)In terms of the information and explanations given to us and the books and records examined by us in the normal course of audit and to the best of our knowledge and belief, we state as under:The nature of the Company’s business during the year has been such that clause (xiii) pertaining to Chit Funds etc, and clause (xiv) pertaining to Dealing/Trading in Securities etc., of paragraph 4 of the Companies (Auditor’s Report) Order, 2003, are not applicable to the Company.(i) The Company has maintained proper records showing full particulars including quantitative details and situation of its

disposed of during the year, which will affect its status as a going concern.

in relation to the size of the Company and the nature of its business. The Company is maintaining proper records of

however, the same have been properly dealt with the books of account.(iii) (a) The Company has granted loans, secured or unsecured to two Companies, covered in the register maintained

under section 301 of the Companies Act, 1956. The maximum amount involved during the year was Rs. 259.32 Lakhs and the year-end balance of the loans given was Rs. 119.30 Lakhs.

(b) In our opinion, the rate of interest and other terms and conditions on which the loans have been given to the companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(c) The Company has received the principal amount and interest as stipulated.(d) There were no overdue amounts of principal or interest. (e) The Company has taken loans from four Companies covered in the register maintained under section 301 of the

Companies Act, 1956. The maximum amount involved during the year was Rs. 574.85 Lakhs and the year-end balance of the loans taken was Rs. 350.44 Lakhs

(f) In our opinion, the rate of interest and other terms and conditions on which the loans have been given by or taken from the companies listed in the register maintained under section 301 of the Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(g) The Company is regular in repaying the principal amount as stipulated and has been regular in the payment of the interest

(iv) In our opinion, there are adequate internal control procedures commensurate with the size of the Company and the

no continuing failure to correct major weaknesses in internal control.

transactions that need to be entered into a register in pursuance of section 301 of the Act have been so entered. (b) In our opinion, each of these transactions have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

(vi) The Company has accepted deposits from the public. In our opinion, the directives issued by the Reserve Bank of India and the provisions of sections 58A and 58AA of the Act and the rules framed there under, where applicable, have been complied with. National Company Law Tribunal has not passed any order in respect of public deposits accepted by the Company.

(vii) In our opinion, the Company has an internal audit system commensurate with its size and nature of its business.(viii) The Company has maintained cost records as required under Section 209(1)(d) of the Companies Act, 1956. We have

not, however, carried out a detailed examination of such records.(ix) (a) The Company is regular in depositing undisputed statutory dues including Provident Fund, Investor Education

and Protection Fund, Employees’ State Insurance, Income-tax, Sales-tax, Wealth Tax, Custom Duty, Excise Duty, Cess and any other statutory dues with the appropriate authorities,

30

Auditors’ Report

(b) The following statutory dues have not been deposited on account of dispute:

Sr. No. Nature of Disputed Statutory Dues Amount in Rs. Forum where the dispute is PendingA. Income Tax Dues

A.Y. 2005-06 2,41,87,626 CIT X (APPEALS)TOTAL 2,41,87,626

B. Central Excise Dues1. RKS/ 250/ DAMAN/ 2003/105/2005 1,72,066 Appeal Filed by Commissioner

In High Court , Mumbai2. V/CH28.29/3.43/DEM/2002 14,94,708 Appeal Filed with CESTAT3. V/CH28/15.5/OA/06 dated 05.09.06 15,22,006 Appeal Filed by Commissioner Appeal , Vapi4. 11/DEM/VAPI/2007 15,00,831 Appeal Filed with CESTAT5. O-IO No. 20/OA/Adj./BA-Addl/2009 35,37,783 Appeal Filed with Commissioner6. F.No.-V/Adj/SCN/15-29/Alchemie/ -Th-

1/07/2915 (13.06.2007) 42,04,897

on 12.6.20087. C.Ex/R-III/K-III/Alchemie/SCN/07

(13.06.2007) 1,03,247

on 24.12.20088. Order Sr No42/DIVANK-II/ST/2008- 09

Dated 02.01.09 4,41,332

TOTAL 1,29,76,870

(x) The Company has no accu

(xii) The Company has not granted loans and advances on the basis of security by way of pledge of shares, debentures or other securities.

terms and conditions of such guarantee are not, prima facie, prejudicial to the interests of the Company.(xiv) Term loans availed by the Company were, prima facie, applied for the purposes for which the loans were obtained.(xv) On an overall basis, the funds raised on short-term basis have, prima facie, not been used for long term investment.(xvi) The Company has made preferential allotment of convertible share Warrants during the year to parties and companies

covered in the register, maintained under section 301 of the Companies Act, 1956, at prices, which in our opinion are not prejudicial to the interests of the Company.

(xvii) During the period covered by our audit, the Company has privately placed 1,000 Non-Convertible Debentures of Rs. 10,00,000/- each aggregating to Rs 100 Crores. The Company had also created charge by way of hypothecation on

(xviii) The Company has raised money by preferential issue of partly paid convertible share warrants during the year, and we

the same have been made by the Company. (xix) During the audit carried out by us, any fraud on or by the Company has not been noticed or reported during the year.

For PARIKH JOSHI & KOTHARE CHARTERED ACCOUNTANTS

Sd/- (YATIN R. VYAVAHARKAR) PARTNERPlace: Mumbai M. No.33915Date:12th September, 2009

31

Standalone Accounts

Balance Sheet as at 31st March, 2009 (Amount in Rupees)

Schedule As at 31st March, 2009

As at 31st March, 2008

SOURCES OF FUNDSSHAREHOLDERS’ FUNDS:Share Capital A 364,047,120 364,047,120 Share Capital pending allotment upon Amalgamation A-1 4,428,245 NILEquity Share Warrants B 10,784,125 NIL Reserves and Surplus C 3,034,500,665 2,460,630,806

3,413,760,155 2,824,677,926

LOAN FUNDS:Secured Loans D 4,344,047,511 3,881,127,539 Unsecured Loans E 481,693,429 411,943,626

4,825,740,940 4,293,071,165 DEFERRED TAX LIABILITY 452,072,942 396,707,942 TOTAL 8,691,574,037 7,514,457,033

APPLICATION OF FUNDSFIXED ASSETS: FGross Block 6,220,676,300 4,840,324,072 Less : Depreciation 2,553,064,896 2,037,567,016 Net Block 3,667,611,404 2,802,757,056 Capital Work-in-Progress 85,475,800 339,687,366 INVESTMENTS G 152,779,169 261,848,157 CURRENT ASSETS, LOANS AND ADVANCES H 6,498,370,959 5,685,864,106 LESS : CURRENT LIABILITIES AND PROVISIONS I 1,717,265,087 1,587,997,787 NET WORKING CAPITAL 4,781,105,872 4,097,866,319 MISCELLANEOUS EXPENDITURE:(To the extent not written-off or adjusted)Pre-operative Expenses 2,761,792 2,761,792 Deferred Revenue Expenditure 1,840,000 9,536,343 TOTAL 8,691,574,037 7,514,457,033 NOTES ON ACCOUNTS P

As per our Report of even date

For PARIKH JOSHI & KOTHARE FOR AND ON BEHALF OF THE BOARDCHARTERED ACCOUNTANTS

Sd/- Sd/- Sd/-CHANDRAKANT V. GOGRI RAJENDRA V. GOGRI SHANTILAL T. SHAH

Sd/- CHAIRMAN VICE-CHAIRMAN AND VICE-CHAIRMANYATIN R. VYAVAHARKAR MANAGING DIRECTOR

PARTNER Sd/-PLACE: MUMBAI MONA PATELDATE:12th September, 2009 COMPANY SECRETARY

32

Standalone Accounts

st March, 2009(Amount in Rupees)

Schedule For the Year ended 31st

March, 2009

For the Year ended 31st

March, 2008INCOME:Gross Sales and Other Sales Income (Note: 7) 15,357,482,543 9,590,941,963Less: Excise Duty 887,699,905 627,614,932 Net Sales and Other Sales Income 14,469,782,638 8,963,327,031Other Income J 22,922,532 14,025,061 Increase/(Decrease) in Inventory (42,314,660) 319,669,774 TOTAL 14,450,390,510 9,297,021,866EXPENDITURE:Manufacturing Expenses K 10,154,140,340 6,730,377,800Purchase of Goods Traded In 922,263,333 760,187,906

L 136,890,704 87,108,076 Selling and Distribution Expenses M 791,854,996 518,593,115 Interest and Financial Charges N 893,631,929 388,289,344 Non-Operating Expenses and Losses O 24,390,415 5,710,643 TOTAL 12,923,171,717 8,490,266,884

1,527,218,793 806,754,982 Less : Depreciation 387,107,062 274,961,270

1,140,111,731 531,793,712 Less : Provision For Taxation 236,600,000 93,000,000

3,514,500 2,585,671 899,997,231 436,208,041

Less : Provision for Deferred Tax 55,365,000 69,500,000 844,632,231 366,708,041

(deducting Rs. 7,46,05,397/- on Amalgamation) 2,091,079,465 1,966,451,900

Less : Prior Years’ Adjustment for others (Note: 12) 11,384,485 (300,000)2,924,327,211 2,333,459,941

Less : Transfer to Debenture Redemption Reserve 200,000,000 NIL Less : Transfer to General Reserve 85,000,000 40,000,000

2,639,327,211 2,293,459,941Less : Dividend (Interim) 131,056,963 72,809,424 Less : Proposed Dividend (Final) 88,434,088 36,404,712 Less : Tax on Dividend 37,302,504 18,560,943 Balance Carried Forward to Balance Sheet 2,382,533,656 2,165,684,862Earning Per Share (Basic & Diluted) (Note: 16) 11.46 5.04 NOTES ON ACCOUNTS PAs per our Report of even date



Sd/- CHAIRMAN VICE-CHAIRMAN AND VICE-CHAIRMANYATIN R. VYAVAHARKAR MANAGING DIRECTOR

PARTNER Sd/-PLACE: MUMBAI MONA PATELDATE: 12th September, 2009 COMPANY SECRETARY

33

Standalone Accounts

SchedulesSchedules Forming Part of The Balance Sheet as at 31st March, 2009 (Amount in Rupees)



SCHEDULE ‘A’ - SHARE CAPITAL:

AUTHORISED CAPITAL

12,50,00,000 Equity Shares of Rs. 5/- Each 625,000,000 450,000,000

(As on 31st March, 2008 - 9,00,00,000 Equity Shares of Rs. 5/- Each)

ISSUED, SUBSCRIBED & PAID-UP

7,28,09,424 Equity Shares of Rs. 5/- Each Fully Paid-up 364,047,120 364,047,120

(As on 31st March, 2008 - 7,28,09,424 of Rs. 5/- Fully Paid-up)

NOTES : of the above shares -

[a] 6,22,28,216 (As at 31st March, 2008 - 6,22,28,216) have been issued as fully paid-up Bonus Shares

[b] 30,00,000 (As at 31st March, 2008 - 30,00,000) have been issued to Shareholders of Sal-vigor Laboratories Ltd. Pursuant to its Merger with the Company

[c] 16,62,638 (As at 31st March, 2008 - 16,62,638) have been issued to Shareholders of Maha-val Organic Ltd. Pursuant to its Merger with the Company

[d] 10,25,050 (As at 31st March, 2008 - 10,25,050) have been issued to Shareholders of Alchemie Organics Ltd. Pursuant to its Merger with the Company

TOTAL 364,047,120 364,047,120

SCHEDULE ‘A-1’ - SHARE CAPITAL PENDING ALLOTMENT UPON AMALGAMATION:

8,85,649 Shares are to be issued and allotted to shareholders of erstwhile Surfactant Specialities Ltd. and Avinash Drugs Ltd. as per the terms of the scheme of Amalgama-tion sanctioned by the Honorable High Courts at Ahmedabad and Mumbai vide their order dated 1st September, 2009 & 7th August, 2009, respectively.

4,428,245 Nil

TOTAL 4,428,245 Nil

SCHEDULE ‘B’ - EQUITY SHARE WARRANTS

Upfront consideration at,

Rs. 3.57/- per Warrant received towards Preferential Allotment of 30,25,000 Equity Share Warrants of Rs. 5/- Each.

These warrants are to be converted into 30,25,000/- Equity Shares of Rs. 5/- each at a premium of Rs. 30.65/- Equity Shares on exercise of option by the Warrant holders on or before 31st January, 2010.

10,784,125 NIL

TOTAL 10,784,125 NIL

34

Standalone Accounts

SCHEDULE ‘C’ - RESERVES & SURPLUS (Amount in Rupees)

As at 1st April, 2008

Adjustment on Amalgamation

Addition Deduction As at 31st March, 2009

CAPITAL RESERVES:

Capital Reserve 208,167 NIL NIL NIL 208,167

State Investment Subsidy 5,181,799 NIL NIL NIL 5,181,799

Amalgamation Reserve 41,167,485 66,487,765 NIL NIL 107,655,250

Forfeiture Reserve 18,456,460 NIL NIL NIL 18,456,460

Debenture Redemption Reserve NIL NIL 200,000,000 NIL 200,000,000

Capital Redemption Reserve NIL 5,533,300 NIL NIL 5,533,300

TOTAL 65,013,911 72,021,065 200,000,000 NIL 337,034,976

REVENUE RESERVES:

General Reserve 229,932,033 NIL 85,000,000 NIL 314,932,033

TOTAL 229,932,033 NIL 85,000,000 NIL 314,932,033

PROFIT AND LOSS ACCOUNT 2,165,684,862 (74,605,397) 844,632,231 553,178,040 2,382,533,656

TOTAL 2,460,630,806 (2,584,332) 1,129,632,231 553,178,040 3,034,500,665

PREVIOUS YEAR 2,202,941,384 NIL 425,164,501 167,475,079 2,460,630,806



SCHEDULE ‘D’ - SECURED LOANS

LONG TERM LOANS

Non Convertible Debentures [Note 3(a)] 1,000,000,000 NIL

From Scheduled Banks [Note: 3(b)(c)] 513,999,324 764,135,291

External Commercial Borrowing [Note: 3(d)] 478,057,816 495,568,794

WORKING CAPITAL LOAN

From Scheduled Banks [Note: 3(e)] 2,351,990,371 2,621,423,454

TOTAL 4,344,047,511 3,881,127,539

SCHEDULE ‘E’ - UNSECURED LOANS

From Fixed Deposits 10,314,466 9,819,466

From Banks 400,000,000 400,000,000

From Others 71,378,963 2,124,160

TOTAL 481,693,429 411,943,626

35

Standalone Accounts

SchedulesSC

HE

DU

LE ‘F

’ - F

IXE

D A

SSE

TS(A

mou

nt in

Rup

ees)

PA

RTI

CU

LAR

SG

R O

S S

B

L O

C K

D E

P R

E C

I A

T I

O N

N E

T

B L

O C

K

As on

01

.04.

2008

Addi

tions

on

Amal

gam

a-tio

n

Addi

tions

Dedu

ctio

nsAs

on

31.0

3.20

09As

on

01.0

4.20

08Ad

ditio

ns on

Am

alga

ma-

tion

For

Apri

l 08

-Mar

09

Adju

st-

men

tsDe

duct

ions

Upt

o31

.03.

2009

As o

n 31

.03.

2009

As on

31

.03.

2008

Leas

ehol

d La

nd 1

28,8

36,7

77

677

,961

2

6,40

1,46

9 N

IL15

5,91

6,20

725

4,69

921

9,13

61,

469,

627

8,40

4,89

7N

IL10

,348

,359

145,

567,

848

128,

582,

078

Free

hold

Lan

dN

IL 4

,762

,000

N

ILN

IL4,

762,

000

NIL

NIL

NIL

NIL

NIL

NIL

4,76

2,00

0N

IL

Build

ing

345

,502

,462

4

5,84

0,18

1 5

1,99

2,75

1 N

IL44

3,33

5,39

492

,243

,664

11,

076,

022

17,6

38,8

17N

ILN

IL12

0,95

8,50

332

2,37

6,89

125

3,25

8,79

8

Plan

t & M

a-ch

iner

y4,

238,

170,

791

349

,365

,219

72

4,99

0,01

7 8

,023

,312

5,

304,

502,

715

1,84

9,74

7,81

8 1

06,0

20,6

17

325,

654,

189

NIL

1,

970,

625

2,27

9,45

1,99

93,

025,

050,

716

2,38

8,42

2,97

3

Furn

iture

,

Equi

pmen

t

76,

140,

572

6,4

56,5

70

12,

492,

293

NIL

95,0

89,4

3558

,706

,998

3,1

35,6

05

5,56

7,21

4N

ILN

IL67

,409

,817

27,6

79,6

1817

,433

,574

Vehi

cles

51,

673,

470

2,1

07,8

33

4,5

32,3

76

NIL

58,3

13,6

7936

,613

,837

747

,737

5,

177,

326

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36

Standalone Accounts

SCHEDULE ‘G’ - INVESTMENTS Listed Companies (Valued at cost) (Amount in Rupees)Name of the Company Number of Units / Shares (All Fully Paid-up)

As at 31stMar, 2009

at cost

As at 31stMar, 2008

at cost

OpeningBalance

Nos.

AcquisitionsDuring the

yearNos.

DisposalsDuring

the yearNos.

ClosingBalance

Nos.Investment - (Quoted) in Equity Shares:Reliance Industries Ltd. 240 NIL NIL 240 12,000 12,000Reliance Natural Resources Ltd. 240 NIL NIL 240 NIL NILReliance Communication Ltd. 240 NIL NIL 240 NIL NILReliance Capital Ltd. 12 NIL NIL 12 NIL NILReliance Infrastructure Ltd. 18 NIL NIL 18 NIL NILAtul Ltd. 50 NIL NIL 50 1,111 1,111Deepak Nitrite Ltd. 150 NIL NIL 150 10,722 10,722Dharamsi Morarji Ltd. 100 NIL NIL 100 680 680Hindustan Organic Chemicals Ltd. 100 NIL NIL 100 1,450 1,450 Rashtriya Chemical & Fertilizers Ltd. 100 NIL NIL 100 1,530 1,530 Bank of Baroda Ltd. 16260 NIL 16260 NIL NIL 3,739,800Bayer Crop Science Ltd. 10 NIL NIL 10 1,313 1,313 Union Bank of India Ltd. 4541 NIL 4541 NIL NIL 499,510 TOTAL 28,806 4,268,116Trade Investments - (Quoted) in Equity Shares:Aarti Drugs Ltd. 851059 NIL NIL 851059 13,632,209 13,632,209TOTAL 13,632,209 13,632,209Trade Investments - (Unquoted) in Associate Company:Surfactant Specialities Ltd. 3510396 NIL 3510396 NIL NIL 35,289,860Anushakti Chemicals & Drugs Ltd. 6030000 3618000 801510 8846490 73,198,460 85,051,600Nascent Chemical Industries Ltd. 293920 NIL 293920 NIL NIL 7,223,200Ganesh Polychem Ltd. 1000000 NIL NIL 1000000 10,000,000 10,000,000TOTAL 83,198,460 137,564,660Investments - (Unquoted) in Equity Shares:Aarti Biotech Ltd. 419600 NIL 419600 NIL NIL 2,401,500Ichalkaraji Janata Sahakari Bank Ltd. 1020 NIL NIL 1020 51,000 51,000Damanganga Saha Khand Udyog Mandali Ltd. 61 NIL NIL 61 122,000 122,000Perfect Enviro Control Systems Ltd. 343840 NIL 343840 NIL NIL 3,458,968Bharuch Eco Aqua Infra Ltd. (partly paid) 102230 NIL NIL 102230 1,325,500 1,325,500Dispo Dyechem Ltd. 40000 NIL NIL 40000 1,000,000 1,000,000Dilesh Roadlines Pvt. Ltd. 114000 NIL NIL 114000 1,140,000 1,140,000Indusken Pharmaceuticals Pvt. Ltd. 200000 NIL NIL 200000 2,000,000 2,000,000U.K.I.P. Co-Op. Soc. Ltd. 35 NIL NIL 35 1,800 1,800TOTAL 5,640,300 11,500,768

Schedules

37

Standalone Accounts

SchedulesName of the Company Number of Units / Shares (All Fully Paid-up)

As at 31stMar, 2009

at cost

As at 31stMar, 2008

at cost

OpeningBalance

Nos.


yearNos.

DisposalsDuring

the yearNos.

ClosingBalance

Nos.Investments - (Unquoted) in Subsidiary Companies:Aarti Corporate Services Ltd. 2023840 840 NIL 2024680 17,290,800 17,274,560Aarti Healthcare Ltd. 3060000 66000 NIL 3126000 30,434,620 30,434,620 Shanti Intermediates Pvt. Ltd. 5550 NIL 5550 NIL NIL 7,270,500Alchemie Europe Ltd. 40000 NIL NIL 40000 2,553,974 2,553,974Avinash Drugs Ltd. 370000 NIL 370000 NIL NIL 36,794,150TOTAL 50,279,394 94,327,804Investments in (quoted) Bonds:UTI BOND 6.75% Tax Free 5546 NIL 5546 NIL NIL 554,600TOTAL NIL 554,600

152,779,169 261,848,157TOTAL 152,779,169 261,848,157Aggregate Market Value of Quoted Investments :(in Rs.)As on 31.03.2009 3,24,01,299/- As on 31.03.2008 5,12,08,407/-

(Amount in Rupees)

38

Standalone Accounts

Schedules

(Amount in Rupees)As at 31st

March, 2009 As at 31st

March, 2008SCHEDULE ‘H’ - CURRENT ASSETS, LOANS AND ADVANCES

A. CURRENT ASSETS (Note: 4):1 Stock In Trade:

Raw Materials 703,995,646 671,509,301 Fuel 35,558,163 37,083,357 Work-in-Process 682,349,827 597,723,453 Finished Goods 549,769,395 638,701,507 Packing Materials 9,323,254 9,310,182 Stores and Spares 28,422,181 16,942,017

2,009,418,466 1,971,269,8172. Sundry Debtors (Unsecured)

(a) Outstanding for more than six months - Considered Good 407,581,024 247,783,242 - Considered Doubtful 1,996,400 1,996,400 (b) Others - Considered Good 2,258,145,832 1,742,529,800

2,667,723,256 1,992,309,442Less : Provision for Doubtful Debts 1,996,400 1,996,400

2,665,726,856 1,990,313,0423. Cash and Bank Balances

Cash on hand 6,353,360 8,685,602 Bank balance with Scheduled BanksIn Current Account 17,373,413 37,801,075 In Deposit Accounts 36,514,886 29,406,502

60,241,659 75,893,179 B. LOANS AND ADVANCES (Notes: 4 & 6)

(Unsecured and considered good)Advances & Loan to Subsidiaries NIL 6,847,203 Balances with Custom, Port Trust, Excise & Sales Tax Authorities 392,337,759 425,304,961 Capital Advances 69,383,158 22,608,648 Advances recoverable in cash or kind or for value to be received 349,759,658 450,139,775 Advance Tax and Tax deducted at Source 951,503,403 743,487,481

1,762,983,978 1,648,388,068TOTAL 6,498,370,959 5,685,864,106

SCHEDULE ‘I’ - CURRENT LIABILITIES AND PROVISIONSA. CURRENT LIABILITIES:

Sundry Creditors (Note: 13) 722,964,810 897,823,547 Interest Accrued but not due on Loans 16,952,657 12,438,608 Unclaimed Dividend # 8,235,417 6,770,578

748,152,884 917,032,733 B. PROVISIONS:

Provision for Taxation 834,050,000 596,400,000 12,714,171 8,295,671

Proposed Dividend 88,434,088 36,404,712 33,913,944 29,864,671

969,112,203 670,965,054 TOTAL 1,717,265,087 1,587,997,787# There is no amount due & outstanding to be credited to Investor Education & Protection Fund

39

Standalone Accounts

Schedules

(Amount in Rupees) For the Year

ended 31st March, 2009


March, 2008SCHEDULE 'J' - OTHER INCOMEDividend Received From -

- Trade Investments 2,266,706 9,230,000 - Non Trade Investments 161,407 110,413 - Subsidiaries NIL 329,624

Insurance Claim Received 1,503,312 NIL 704,212 327,700

15,245,201 NIL Lease Rent 628,525 693,478 Other Income 2,413,169 3,333,846 TOTAL 22,922,532 14,025,061

SCHEDULE 'K' - MANUFACTURING EXPENSESConsumption of Raw Materials 7,595,015,512 4,905,453,574Consumption of Packing Materials 174,968,374 128,238,075 Consumption of Stores and Spares 143,783,872 85,220,194 Freight, Cartage and Transport 404,907,944 309,864,548 Fuel 584,959,467 379,808,594 Power 331,463,962 222,339,788 Water Charges 39,776,540 37,309,791 Excise Duty Paid 104,543,133 69,093,054 Processing Charges 56,828,335 59,868,599 Staff Costs (Note: 8) 232,322,766 170,623,726 Other Manufacturing Expenses 288,479,035 214,819,086 Repairs and Maintenance - Building 9,443,081 4,228,771

- Plant & Machinery 100,920,413 73,383,083 Insurance Charges 17,628,746 20,297,625 Research & Development Expenses (Note: 9) 10,731,949 9,743,193 Factory Administration Expenses 58,367,211 40,086,099 TOTAL 10,154,140,340 6,730,377,800

SCHEDULE 'L' - OFFICE AND ADMINISTRATIVE EXPENSESStaff Cost (Notes: 8 & 11) 69,395,709 43,471,908 Rent 6,157,594 5,141,835 Rates & Taxes 3,824,607 3,216,857 Traveling and Conveyance 22,629,741 11,724,970 Auditors' Remuneration (Note: 10) 756,065 635,303 Legal and Professional Charges 7,841,917 4,796,476 Postage, Telegram and Telephone 5,388,042 4,027,089 Printing and Stationery 3,072,736 2,505,635 Other Administrative Expenses 17,824,293 11,588,003 TOTAL 136,890,704 87,108,076

40

Standalone Accounts

Schedules

(Amount in Rupees) For the Year

ended 31st March, 2009


March, 2008

SCHEDULE 'M' - SELLING AND DISTRIBUTION EXPENSESAdvertisement and Sales Promotion 15,908,083 13,657,875 Export Freight (Air and Sea) 244,419,329 163,337,537 Freight and Forwarding 275,213,682 222,099,710 Commission 38,461,530 24,830,861 Insurance Charges on Export 7,858,227 4,739,544 Sample Testing and Analysis Charges 2,191,484 705,614 Bad Debts Written Off 63,118,498 NIL Sales Tax / Vat Paid 78,063,747 42,599,137 Discount 63,563,160 47,101,248 Sundry Balances Written Off/(Back) 3,057,256 (478,411)TOTAL 791,854,996 518,593,115

SCHEDULE 'N' - INTEREST AND FINANCIAL CHARGESInterest on Debentures 74,481,161 NIL Interest on Term Loans 229,707,538 70,553,202 Interest on Working Capital (Note: 5) 531,884,178 292,151,534 Bank Charges 57,559,052 25,584,608 TOTAL 893,631,929 388,289,344

SCHEDULE 'O' - NON-OPERATING EXPENSESDonations 7,613,467 2,848,003 Deferred Revenue Expenses Written Off 8,105,791 2,862,640 Loss on sale of Assets 18,432 NIL Loss on sale of Investment 8,652,725 NIL TOTAL 24,390,415 5,710,643

41

Standalone Accounts

Schedule ‘P’ - Notes Forming Part of the Accounts for the Year ended 31st March, 2009

PART ‘A’The Board of Directors of the Company had approved Financial Statements for the year ended 31st March, 2009, at its Meeting held on 28th May, 2009 without considering the effect of the proposed amalgamation of Avinash Drugs Ltd. and Surfactant Specialities Ltd. with the Company, pending approval of the scheme by the Hon’ble High Courts of Mumbai and Gujarat. The Said Financial Statements were approved mainly for compliance of the Listing Agreements of the Bombay Stock Exchange and National Stock Exchange.Pursuant to the approval of the scheme of amalgamation by the Hon’ble High Courts of Mumbai and Gujarat on 7th August, 2009 and 1st September, 2009 respectively the amalgamation became effective with effect from 1st April, 2008, fresh Financial Statements as at 31st March, 2009 have been drawn up as per the decision taken by the Board of Directors of the Company.

PART ‘B’1. SIGNIFICANT ACCOUNTING POLICIES:

(a) Recognition of Income and Expenditure:

accepted accounting principles in India and the Provisions of the Companies Act, 1956. (b) Fixed Assets and Depreciation:

(1) Fixed Assets Fixed Assets are stated at cost of acquisition (net of CENVAT/VAT) inclusive of all expenditure of capital nature

such as, inward freight, duties & taxes, installation and commissioning expenses, appropriate borrowing costs and incidental expenses related to acquisition.

(2) DepreciationDepreciation is provided on Reducing Balance Method:

(i) in respect of Assets installed at one plant out of four plants taken on lease at the rate prescribed under Schedule XIV of the Companies Act, 1956.

prescribed under Schedule XIV of the Companies Act, 1956. Leasehold Land is amortized over the period of lease. Depreciation on Computers and Vehicles is provided on

Straight Line Method at 40% and 15% respectively, based on Management’s estimate of useful life of these assets. Depreciation on Fixed Assets other than Lease hold Land and those mentioned above are provided under

Product/Process Development Expenses are amortized over the estimated useful life of the product. Impairment loss, if any, is provided to the extent, the carrying amount of assets exceeds their recoverable

amount. Recoverable amount is higher of net selling price of an assets or its value in use. Value in use is present

at the end of its useful life.(c) Investments:

(i) Current investments are stated at lower of cost and fair market value.(ii) Long-Term investments are stated at cost less provision for permanent diminution in value if any, of investments.

(d) Valuation of Inventories:Inventories are valued at Cost or Net Realizable Value whichever is lower. Inventories have been valued on the following basis:

i) Raw materials, packing material, stores and spares - At cost on Weighted Average Basis.- At cost on FIFO basis in respect of Surfactant

Specialties Division.ii) Work-in-Process - At cost plus appropriate allocation of overheads.iii) Finished Goods - At cost plus appropriate allocation of overheads or

net realizable value, whichever is lower.

42

Standalone Accounts

(f) Foreign Currency Transactions:Foreign currency transactions are accounted at the rates prevailing on the date of the transaction. The exchange

the contracts.(g) Research and Development:

(h) Operating Lease:

relate.(i) Deferred Revenue Expenditure:

Deferred Revenue Expenditure is amortized over the period of the agreement on pro rata basis.(j) Deferred Tax:

and reversal of timing differences of earlier years. Deferred Tax is measured on the basis of Tax Rates and Tax Laws enacted or substantively enacted at the Balance Sheet.Deferred Tax Assets are recognized only if there is reasonable certainty of their realization except in case of Deferred Tax Assets on unabsorbed depreciation and carried forward business losses, which are recognized only if there is virtual certainty of their realization.

(k) Borrowing Costs:Borrowing cost directly related to the acquisition or construction of an asset is capitalized as part of the cost of that

(l) Provision and Contingent Liabilities:Provisions are recognized when the Company has a legal and constructive obligation as a result of a past event, for

obligation.Contingent Liabilities are disclosed when the Company has a possible obligation or a present obligation and it is

PART ‘C’2. CONTINGENT LIABILITIES:

(a) Claims against the Company not acknowledged as Debts Rs. 1,29,76,870 (Rs. 8,31,80,012 as on 31.03.2008).(b) In respect of Letters of Credit, Bank Guarantees issued and Bills discounted by the Company’s Bankers

Rs. 21,51,12,504 (Rs. 21,78,17,000 as on 31.03.2008).(c) Estimated amount of Contracts remaining to be executed on capital account and not provided for, net of advances,

Rs. 1,74,75,778 (Rs. 3,33,51,162 as on 31.03.2008).3. SECURED LOANS:

Security for Loans taken from Banks:(a) In case of the Non Convertible Debentures of Rs. 100,00,00,000 (previous year NIL) are secured/to be secured by

way of joint equitable mortgage of the Company’s immovable properties situated at Sarigam, Vapi and Jhagadia, in the State of Gujarat and, further by way of hypothecation of all moveable plant & machinery, machinery spares, tools and accessories and other movables, both present and future (except book debts) wherever situated, subject to charges created and/or to be created in favour of the Company’s Bankers on Current Assets for securing borrowings

installments commencing from the end of the 3rd year from the date of allotment of these debentures.

43

Standalone Accounts

(b) Out of the total Term Loan of Rs. 51,39,99,324/- outstanding Term Loans aggregating to Rs. 48,06,49,063/- (Rs. 76,08,68,347/- as on 31.03.2008) from Banks subject to (c) and (d) below, are secured by way of joint equitable mortgage of the Company’s immovable properties situated at Sarigam, Vapi and Jhagadia, in the State of Gujarat and, further by way of hypothecation of all moveable plant & machinery, machinery spares, tools and accessories and other movables, both present and future (except book debts) wherever situated, subject to charges created and/or to be created in favour of the Company’s Bankers on Current Assets for securing borrowings for Working Capital Requirements. Term Loans aggregating to Rs. 31,56,49,063 (Rs. 46,97,81,015 as on 31.3.2008) are also personally guaranteed by three Directors of the Company. The balance Term Loan of Rs. 3,03,29,218, being the Term Loan of erstwhile Surfactant Specialities Ltd., is secured by exclusive charge by way of hypothecation of all present & future

all Building and Structures thereon and Plant & Machinery attached to earth or permanently fastened to anything attached to earth.

(c) In case of vehicle loans from banks/NBFC of Rs. 30,21,043/- (Rs. 32, 66,943/- as on 31.03.2008) against hypothecation of the vehicles.

(d) External Commercial Borrowing (ECB) of JPY 1202.50 Million equivalent to Rs. 47,80,57,816/- (Rs. 49,55,68,794/- as on 31.03.2008) availed from ABN AMRO Bank N.V. Singapore are secured / to be secured by way of joint equitable mortgage of the Company’s immovable properties situated at Sarigam, Vapi and Jhagadia, in the State of Gujarat and, further by way of hypothecation of all moveable plant & machinery, machinery spares, tools and accessories and other movables, both present and future (except book debts) wherever situated, subject to charges created and/or to be created in favour of the Company’s Bankers on Current Assets for securing borrowings for Working Capital Requirements.

(e) Out of the total Working Capital Loans of Rs. 2,35,19,90,371/- loans from Scheduled Banks, aggregating are secured to Rs. 2,28,56,63,272/- (Rs. 2,62,14,23,454/- as on 31.03.2008) by Hypothecation of Raw Materials, Stock-In-Process, Semi-Finished Goods, Finished Goods, Packing Materials and Stores and Spares, Bills Receivables and Book Debts and all other moveable, both present and future. Further, by way of joint Equitable Mortgage of the Company’s immoveable properties situated at Sarigam, Vapi and Jhagadia, in the State of Gujarat, ranking second to that of Banks mentioned in (a) above. These loans are personally guaranteed by three Directors of the Company. The Balance Working Capital Loan of Rs. 6,63,27,099/- being the Working Capital Loan of erstwhile Surfactant Specialities Ltd.,

secured by way of mortgage in respect of Company’s factory Land together with all Building and Structures thereon and Plant & Machinery attached to earth or permanently fastened to anything attached to earth.

4. In the opinion of the Board, except as otherwise stated, the Current Assets and Loans and Advances have a value on realization at least equal to amounts at which they are stated in the Balance Sheet.

5. Interest received of Rs. 79,34,995/- (Tax Deducted at Source Rs. 11,78,017/-) [Previous Year Rs. 1,45,26,229/- (Tax Deducted at Source Rs. 29,83,322/-)] is netted off against interest paid on Working Capital.

6. Sundry Debtors, Loans and Advances include amounts due from –

Enterprises in which Directors are interested as Partners/Directors (Amount in Rupees)

For more than six months Others

Alchemie LaboratoriesNIL 37,09,506

(NIL) (73,10,595)

Shanti Intermediates Pvt. Ltd.NIL 94,82,041

(NIL) (44,38,946)7. Sales and other sales incomes are inclusive of conversion charges amounting to Rs. 3,07,79,681/- (previous

Rs. 49,77,914/- (previous year Rs. Nil)

44

Standalone Accounts

8. Staff Costs(Amount in Rupees)



Salaries, Wages and Bonus 24,57,46,367 17,79,00,418

Contribution to PF and Other Funds 1,36,27,354 1,12,63,723

Workmen and Staff Welfare Expenses 1,98,37,168 1,02,10,325

Total 27,92,10,889 19,93,74,466

9. Revenue Expenditure of Rs. 1,37,05,566/- (Previous year Rs. 1,24,60,308/-) [including depreciation of Rs. 29,73,617/-

and Loss Account for the year. Capital Expenditure includes Rs. 18,63,833/- (Previous Year Rs. 16,68,904/-) towards Fixed Assets purchased for Research & Development activities at the Company’s recognized R&D center.

10. Auditors’ Remuneration includes:



As Auditor:

Audit Fees 4,91,000* 4,50,000

In Other Capacity :

1,40,289 71,364

Other Matters 36,000 30,000

Service Tax 74,420 65,813

Out of pocket expenses 14,356 18,126

Total 7,56,065 6,35,303*includes Rs. 41,000/- paid to Branch auditors

11. Directors’ Remuneration includes :



A. Managing Director and Whole-time Directors

a. Salary 72,00,000 58,80,000

b. Commission 1,16,70,000 54,62,000

c. Contribution to PF 9,45,587 7,72,668

d. Ex - Gratia/Super Annuation Fund 15,70,000 13,72,000

e. House Rent Allowance 10,32,000 10,32,000

f. Value of perquisites 90,000 2,02,500

Total Remuneration (excluding Sitting Fees) 2,25,07,587 147,21,168

activities at the Company’s recognized R&D center and does not include contribution to Group Gratuity Fund, Group

45

Standalone Accounts

(Amount in Rupees)Particulars Financial Year

2008-09Financial Year

2007-081,55,05,58,794 81,22,16,982

Add: Directors’ Remuneration 1,08,37,587 92,59,168Loss on sale of Assets 18,432 NilLoss on sale of Investment 86,52,725 Nil

1,57,00,67,538 82,14,76,150Less: Depreciation as per Sec. 350 of the Companies Act, 1956. 38,71,07,062 27,49,61,270

7,04,212 3,27,7001,52,45,201 Nil

40,30,56,475 27,52,88,970TOTAL 1,16,70,11,063 54,61,87,180

1,16,70,000 54,62,000

12. Prior years’ adjustment includes:

Prior Period Expenses 1,13,84,485 NilPrior Period Income Nil 3,00,000

13. There are no Micro and Small Enterprise, to whom the Company owes dues, which are outstanding for more than 45 days as at 31st March, 2009. This information as required to be disclosed under the Micro, Small and Medium Enterprise

available with the Company.

14. Segment Reporting : (Rupees in Lakhs)

Sr.No.



(A) Primary Segments : Business Segments Segment Revenue a) Basic Chemicals 36089 23423b) Speciality Chemicals 111219 67303c) Agro Chemicals 5857 4025d) Pharmaceuticals 10025 8395Total 163190 103146Less : Inter Segment Revenue 9615 7236Net Sales / Income From Operations 153575 95909Segment Resultsa) Basic Chemicals 7468 3286b) Speciality Chemicals 15647 7198c) Agro Chemicals 1493 904d) Pharmaceuticals (1027) 570Total ....(a) 23581 1195

46

Standalone Accounts

Less : Interest 8936 3883 Other Unallocable Expenditure Net of Income 3244 2757 Total ....(b) 12180 6640 TOTAL PROFIT BEFORE TAX (a) - (b) 11401 5318

(B) Secondary Segment : Geographical Segment a) India 95359 58585 b) Out of India 58216 37324Total 153575 95909

Segmental Capital Employed :

segments, as the Fixed Assets and services are used interchangeably between segments. The Company believes that it is currently not practicable to provide segment disclosures relating to Capital Employed.

15. Related Party Disclosure under Accounting Standard (AS: 18)

1. Aarti Healthcare Limited 3. Aarti Corporate Services Limited

2. Alchemie (Europe) Limited

transactions during the year. 1. Ganesh Polychem Limited 2. Anushakti Chemicals & Drugs Limited

III. Following are the Enterprises/Firms over which controlling individuals/key Management Personnel, of the

which there were transactions during the year 1. Alchemie Pharmachem Pvt. Ltd. 2. Alchemie Dyechem Pvt. Ltd.

3. Gogri & Sons Investments Pvt. Ltd. 4. Alchemie Leasing and Financing Pvt Ltd.

5. Alchemie Laboratories 6. Alchemie Industries

7. Crystal Millennium Realtors Pvt. Ltd. 8. Shanti Intermediates Pvt. Ltd.

9. Nascent Chemical Industries Ltd.

Management Personnel.

Sr. No. Name Status

1. Shri Chandrakant V. Gogri Director

2. Shri Rajendra V. Gogri Director

3. Smt. Hetal Gogri Gala Director

4. Shri Rashesh C. Gogri Director

5. Shri Shantilal T. Shah Director

6. Shri Parimal H. Desai Director

7. Shri Kirit R. Mehta Director

8. Shri Manoj M. Chheda Director

The following transactions were carried out during the year with the related parties in the ordinary course of business

47

Standalone Accounts

(A) Details relating to parties referred to in items I, II and III above.

Sr.No.

Description of Transaction Year Subsidiary Companies

Associated Other related Enterprises/

Firms [I] [II] [III]

(Rs.) (Rs.) (Rs.) 1 Sales of Finished Goods CY 485,076,731 387,452,567 48,150

PY 491,295,487 194,514,537 - 2 Purchases of Raw Materials / Finished Goods CY - 1,000,590,867 1,535,650

PY - 605,983,819 - 3 Other Manufacturing Expenses CY 32,599,874 - 78,273,723

PY 53,942,358 12,555,747 33,136,870 4 Rent paid CY 30,000,000 - 18,700,000

PY 30,000,000 12,000,000 3,000,000 5 Other Income CY - - -

PY 329,624 9,230,000 - 6 Sale of Investments CY 17,806,827 - -

PY - - - 7 Sale of Fixed Assets CY - 504,788 1,679,060

PY 260,000 1,179,459 - 8 Purchase of Fixed Assets CY - 1,306,081 -

PY 572,000 - - 9 Inter-corporate Deposits taken / (Repaid) during the

year CY - - 34,345,101

PY (106,409) - (2,018,932) 10 Inter-corporate Deposits given / (Received back) dur-

ing the year CY - (15,502,764) 2,700,000

PY - (10,750,000) - 11 Interest Expense on the Inter-corporate Deposits

taken CY - - 897,773

PY - - - 12 Interest Income on the Inter-corporate Deposits placed

/ unsecured loans CY - 1,890,124 1,140,503

PY 751,884 10,466,756 - 13 Equity Contribution / (Disposal) in cash or in kind

made during the year CY 16,240 (11,853,140) (14,493,700)

PY 517,450 - - 14 CY - 8,184,610 1,410,540

PY - - - 15 Outstanding items pertaining to the related parties at

the Balance Sheet - date : Receivable / (Payable) CY 471,565,368 52,300,804 46,750,326

PY 510,805,989 294,721,919 6,669,896

48

Standalone Accounts

(B) Details relating to persons referred to in item IV above* 31-03-2009

Rs. 31-03-2008

Rs. a. Directors’ Remuneration including perquisites 10,837,587 9,259,168 b. Commission to Directors 11,670,000 5,462,000 c. Sitting Fees 302,000 256,000 d. Rent paid 5,625,225 4,723,195 e. Travelling Expenses 4,487,976 3,172,117 f . Telephone Expenses 460,221 517,931

TOTAL 33,383,009 23,390,411

* Excluding the payments made to Independent Directors as per Accouting Standard Interpretation 21 issued by the Institute of Chartered Accountants of India.

16. Earning Per Share (EPS) :

PARTICULARS 2008 – 09 2007 – 08(Rs.) 84,46,32,231 36,67,08,041

No. of Equity Shares* (Nos.) 7,36,95,073 7,28,09,424Basic & Diluted EPS (Rs.) 11.46 5.04

* Includes 8,85,649 Shares are to be issued and allotted to shareholders of erstwhile Surfactant Specialities Ltd. and Avinash Drugs Ltd. as per the terms of the scheme of Amalgamation sanctioned by the Honorable High Courts at Ahmedabad and Mumbai vide their order dated 1st September, 2009 & 7th August, 2009, respectively.

present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which

a. Gratuity Gratuity(Funded) (Funded)

2008-09 2007-081,91,05,548 15,081,078

Current Service Cost 22,84,175 1,929,427Interest Cost 16,88,058 1,352,710Actuarial(gain)/ loss 6,30,532 232,739

(5,77,994) (203,249)2,31,30,319 18,392,705

b. Reconciliation of opening and closing balances fair value of plan assetsFair value of plan assets at beginning of the year 90,17,515 8,060,323Expected return of plan assets 14,08,211 667,187Actuarial (gain)/ loss (3,32,825) 112,110Employer Contribution 89,94,890 381,144

(5,77,994) (203,249)Fair value of plan assets at year end 1,85,09,797 9,017,515Actual return on plan assets 10,75,386 779,297

c. Reconciliation of fair value of assets and obligations Fair value of plan assets 1,85,09,797 9,017,515Present value of obligation 2,31,30,319 18,392,705Amount Recognized in Balance Sheet 46,20,522 9,375,190

49

Standalone Accounts

d. Expenses recognized during the year Current Service cost 22,84,175 1,929,427Interest cost 16,88,058 1,352,710Expected return on plan assets (14,08,211) (667,187)Actuarial (gain)/ loss 9,63,358 120,630Net Cost 35,27,380 2,735,580

e. Investment DetailsL.I.C. Group Gratuity (Cash Accumulation) Policy 100%

Investedwith L.I.C.

100% Invested with

L.I.C.f. Actuarial assumptions

Mortality Table (L.I.C.) 1994-96 1994-96 (Ultimate) (Ultimate)

Discount rate (per annum) 7.75% 8%Expected rate of return on plan assets (per annum) 8% 8%Rate of escalation of in Salary (per annum) 5% 5%

promotion, other relevant factors’ including supply and demand in the employment market. The above information

Leave Encashment:Leave Encashment liability amounting to Rs. 98,36,225/- (Previous year Rs. 70,87,650/-) has been provided in the Accounts.

18. Derivatives Instruments:The Company uses Forward Exchange Contract to hedge against its Foreign Exchange exposures relating to underlying

Speculative purposes.The Company had hedged in aggregate an amount of Rs. 39,50,00,000/- (Previous Year Rs. 80,96,00,000/-) out of its Trade related operations (Exports & Imports) aggregating to Rs. 8,13,35,21,412/- (Previous Year Rs. 4,74,55,99,145/-).The Company had hedged its currency risks to the tune of Rs. 50,00,00,000/- (Previous Year Rs. 70,00,00,000/-) in respect of

19. Additional information pursuant to the Provisions of Paragraph 3, 4C, 4D and Part II of Schedule VI to the Companies Act, 1956

Auditors, it being a matter requiring technical knowledge)

i) Licensed Capacity : Not applicableii) Installed Capacity : (on triple shift basis)

Nitro Chloro Benzenes 60,000 MT per annumSulphuric Acid & allied Products (equivalent) 2,00,000 MT per annum

iii) Production:PRODUCT QUANTITY (in Kgs.)Nitro Chloro Benzenes (N.C.B.s) 3,20,53,561

(2,59,01,164)Ortho Phenylene Diamine (O.P.D.A.) 4,53,244

(4,42,356)Sulphuric Acid & allied Products (equivalent) 16,32,10,720*

(17,26,83,267)Quinalphos 4,39,200

(3,44,250) *includes 3,78,37,732 Kgs. (previous year 5,39,10,959 Kgs.) of Sulphuric Acid 98%, exclusive of Captive Consumption.

50

Standalone Accounts

(B) Opening, Closing Stock and Sales of Finished Goods:

Opening Stock Closing Stock SalesQty. (Kgs.) Amount (Rs.) Qty. (Kgs.) Amount (Rs.) Qty. (Kgs.) Amount (Rs.)

N.C.B.s 14,15,162 5,98,13,833 14,22,907 3,89,30,776 3,20,45,816 1,89,26,55,056(2,78,020) (92,68,654) (14,15,162) (5,98,13,833) (2,47,64,012) (1,10,88,53,289)

O.P.D.A. 15,883 34,47,882 71,410 1,07,15,041 3,97,717 12,61,84,882(45,678) (73,31,776) (15,833) (34,47,882) (4,72,201) (10,44,98,808)

Sulphuric Acid 19,60,227 1,70,83,235 14,88,419 20,98,679 3,83,09,540 37,17,58,308(4,88,913) (9,82,727) (19,60,227) (1,70,83,235) (5,24,39,645) (32,79,26,244)

Quinalphos 22,050 52,37,096 24,525 61,62,162 4,36,725 16,07,96,898(11,925) (27,03,994) (22,050) (52,37,096) (3,34,125) (9,48,28,432)

Others * 55,31,19,461 * 49,18,62,737 * 12,48,61,62,619(*) (37,66,68,475) (*) (55,31,19,461) (*) (7,85,46,76,291)

Total 63,87,01,507 54,97,69,395 15,03,75,57,763#(39,69,55,626) (63,87,01,507) (9,49,07,83,064)

mentioned in Note No. 7 above. * Quantities cannot be aggregated.

(C) Raw Materials consumed :

Qty. (Kgs.) Amount (Rs.)Benzene 3,42,57,423 1,39,10,70,127

(3,07,53,914) (1,34,96,25,186)Concentrated Nitric Acid 3,06,54,580 38,41,47,094

(2,78,51,233) (32,66,20,706)Chlorine 3,70,41,700 10,85,26,095

(3,28,16,900) (16,06,39,572)Sulphur 4,60,39,642 93,26,48,505

(5,42,64,658) (47,59,38,081)Others * 4,77,86,23,691

(*) (2,59,26,30,029)TOTAL 7,59,50,15,512

(4,90,54,53,574)* Quantities cannot be aggregated.

(D) Purchase of items traded in:

Qty. (Kgs.) Amount (Rs.)OCPNA 18,06,200 16,73,35,578

(6,24,393) (6,29,03,994)MPDSA 3,82,500 8,31,38,500

(3,12,000) (4,32,34,000) Methanol 50,20,455 7,13,47,239

(35,26,887) (4,89,41,805)PNA 21,55,489 18,18,51,036

(14,57,999) (9,16,41,606) FAST RED B BASE 2,65,200 8,01,55,708

(4,44,300) (10,78,58,166)Others * 33,84,35,272

(*) (40,56,08,335)Total 92,22,63,333

(76,01,87,906) * Quantities cannot be aggregated.

51

Standalone Accounts

(E) Value and percentage of Raw Materials, Stores and Spares consumed:

Raw Materials : Percentage (%) Amount (Rs.)Indigenous 68.66 5,21,48,34,427

(86.72) (4,25,40,59,162)Imported 31.34 2,38,01,81,085

(13.28) (65,13,94,412)Total 100.00 7,59,50,15,512

(100.00) (4,90,54,53,574)Stores and Spares: Indigenous 96.44 13,86,69,624

(96.46) (8,22,04,952)Imported 3.56 51,14,248

(3.54) (30,15,242)Total 100.00 14,37,83,872

(100.00) (8,52,20,194)Fuel:Indigenous 85.93 50,26,58,496

(88.18) (33,49,00,338)Imported 14.07 8,23,00,971

(11.82) (4,49,08,256)Total 100.00 58,49,59,467

(100.00) (37,98,08,594)

(F) C.I.F. Value of Imports: (Amount in Rupees)

Capital Goods 5,81,97,456(3,00,87,856)

Raw Materials 2,00,09,88,145(71,24,20,478)

Stores and Spares 51,14,248(30,15,242)

Fuel 2,69,37,600(5,25,89,256)

(G) Expenditure in Foreign Currency: (Amount in Rupees)

Commission on Export Sales 2,60,70,107(1,53,55,044)

Import of Goods for Resale 18,59,27,610(17,10,33,923)

Other Expenses 3,47,56,720(2,86,98,546)

(H) Earnings in Foreign currency: (Amount in Rupees)

F.O.B.Value of Export sales 5,55,69,30,138(3,55,29,20,334)

Dividend [Alchemie (Europe) Ltd.] Nil(3,29,624)

52

Standalone Accounts

20. Scheme of Amalgamation:A. Pursuant to the Scheme of Amalgamation of Avinash Drugs Ltd. (ADL) & Surfactant Specialities Ltd. (SSL)

with the Company sanctioned by the High Courts of Mumbai & Gujarat on 7th August, 2009 & 1st September, 2009, respectively, the assets & liabilities of ADL & SSL were vested in the Company with retrospective effect from 1st April, 2008. The Scheme has, accordingly been, given effect to in these statement of accounts.

B. The Amalgamation has been accounted for under the “pooling of interest” method and accordingly, the difference aggregating to Rs. 6,64,87,765/- being the net assets taken over less the paid up value of the shares of the Company to be issued and other reserves assumed, has been shown as Amalgamation Reserve.

C. Pending completion of the relevant formalities of transfer of certain assets and liabilities acquired pursuant to the scheme, such assets and liabilities remain in the name of the Amalgamating Companies.

with those of the previous year.21.

Signatures to Schedules ‘A’ to ‘P’As per our report of even date


Sd/- Sd/- Sd/-(YATIN R .VYAVAHARKAR) CHANDRAKANT V. GOGRI RAJENDRA V. GOGRI

PARTNER (CHAIRMAN) (VICE CHAIRMAN & MANAGINGDIRECTOR)

Sd/- Sd/-SHANTILAL T. SHAH MONA PATEL

(VICE CHAIRMAN) (COMPANY SECRETARY)Place: MUMBAI.Date: 12th September, 2009

53

Standalone Accounts

Part IV

I. Registration Details

Registration No. 7301 State Code 4

Balance Sheet Date 31st March, 2009

II. Capital Raised during the year (Amount in Rs. Thousands)

Public Issue NIL Right Issue NIL

Bonus Issue NIL Private Placement NIL

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousands)

Total Liabilities 10,408,533 Total Assets 10,408,533

Sources of Funds

Paid–up Capital 368,475* Reserves & Surplus 3,034,501

Secured Loan 4,344,048 Unsecured Loans 481,693

Application of Funds

Net Fixed Assets 3,667,611 Investments 152,779

Net Current Assets 4,781,106 Misc. Expenditure 4,602

Capital Work-in-Progress 85,476 Accumulated Losses NIL

IV Performance of Company (Amount in Rs. Thousands)

Turnover 15,357,483 Total Expenditure 12,923,172

1,140,112 899,997

Earning Per Share in Rs. (Basic & Diluted)

11.46 Dividend Rate (%) 60%

V. Generic Names of Three Principal Products of Company (as per monetary terms)

ITEM CODE NO. (ITC CODE) PRODUCTION DESCRIPTION

1 29049005 PARA NITRO CHLORO BENZENE

2 29049004 ORTHO NITRO CHLORO BENZENE

3 28070001 SULPHURIC ACID

4 38081021 QUINALPHOS

* Includes Shares issued as per the scheme of amalgamation.

FOR AND ON BEHALF OF THE BOARD

Sd/- Sd/- Sd/- CHANDRAKANT V. GOGRI RAJENDRA V. GOGRI SHANTILAL T. SHAH CHAIRMAN VICE CHAIRMAN & VICE CHAIRMAN MANAGING DIRECTOR

Sd/- MONA PATELPLACE : MUMBAI COMPANY SECRETARY DATE: 12th September, 2009

54

Standalone Accounts

Cash Flow Statement For The Year Ended 31st March, 2009 (Rs. in Lakhs)Sr. No. Particulars For The Year

Ended 31stMarch, 2009

For The YearEnded 31st

March, 2008A. Cash Flow From Operating Activities :

11,401.11 5,317.94Adjustments For:

Add: Interest Paid 8,936.32 3,882.89Depreciation 3,871.07 2,749.61Expenses Amortised 76.96 28.63Loss on Sale of Assets 0.18 0.00Loss on Sale of Investment 86.53 0.00

24,372.17 11,979.07Less: (152.45) 0.00

(7.04) (3.28)Prior Year Adjustment (113.84) 3.00Dividend Received From Other Investments (1.61) (1.10)Dividend Received From Associate Investments (22.67) (92.30)Dividend Received From Subsidiaries Investments 0.00 (3.30)Lease Rent Received (6.29) (6.93)

24,068.27 11,875.16Adjustments For :

Add/(Less): (Increase) / Decrease In Trade And Other Receivables (4,453.34) (6,003.89)Increase / (Decrease) In Trade Payables (3,214.16) (35.32)(Increase) / Decrease In Inventories 878.61 (4,936.64)Cash Generated From Operations 17,279.38 899.31

Less: Direct Taxes Paid (2,407.92) (1,060.25)Net Cash From Operating Activites 14,871.46 (160.94)

B. Cash Flow From Investing ActivitiesAddition To Fixed Assets / CWIP (7,116.45) (4,743.28)Sale / Written-off of Fixed Assets 60.52 76.37(Increase) / Decrease in Other Investments 76.51 (6.64)(Increase) / Decrease in Associate Investments 333.66 0.00(Increase) / Decrease in Subsidiary Investments 25.60 (5.18)Dividend Received From Other Investments 1.61 1.10Dividend Received From Associate Investments 22.67 92.30Dividend Received From Subsidiaries Investments 0.00 3.30Lease Rent Received 6.29 6.93Net Cash From Investing Activities (6,589.58) (4,575.10)

C. Cash Flow From Financing ActivitiesProceeds From Long Term Borrowings 10,824.05 4,972.07Repayment Of Long Term Borrowings (4,314.63) (4,346.37)Proceeds / (Repayments) Of Other Borrowings (4,684.66) 8,749.93Repayment Of Share Application Money (0.85) 0.00Proceeds From Equity Share Warrants 107.84 0.00Interest Paid (8,936.32) (3,882.89)Dividend Paid (1,674.61) (728.09)

(8,679.18) 4,764.65(397.31) 28.61

Cash And Cash Equivalents (Opening Balance) 758.93 730.32Cash And Cash Equivalents (Received On Amalgamation) 240.80 0.00Cash And Cash Equivalents (Closing Balance) 602.42 758.93

Notes: i) Amounts of the previous year have been regrouped and rearranged wherever necessary.

Surfactant Specialities Ltd. and Avinash Drugs Ltd. as they are non cash transactions.

As per our Report of even date FOR AND ON BEHALF OF THE BOARD

FOR PARIKH JOSHI & KOTHARE Sd/-CHARTERED ACCOUNTANTS RAJENDRA V. GOGRI

Sd/- VICE-CHAIRMAN & (YATIN R. VYAVAHARKAR) MANAGING DIRECTOR

PARTNERPLACE: MUMBAIDATE:12th September, 2009

55

Statement Pursuant to Section 212 of the Companies Act, 1956Name of the Company Aarti Health Care

Ltd.Aarti Corporate Services Ltd.

Alchemie Europe Ltd.

ShantiIntermediates Pvt. Ltd. (Subsidiary of Aarti Corporate Services Ltd. )

Companies ended on31st March, 2009 31st March, 2009 30th November, 2008 31st March, 2009

Date From which they become Subsidiary Companies

15th September, 1994 24th February, 1995 23rd April,1998 14th June, 2006

a. Number of shares held by Aarti Industries Ltd. with its nominees in the Subsidiaries at the end of

Companies

31,26,000 Equity Shares of the face value of Rs.10/- each fully paid up.

20,24,680 Equity Shares of the face value of Rs.10/- each fully paid up.

40,000 Equity Shares of the face value of 1 Pound each fully paid up.Equivalent to Rs. 31,56,000 on 30.11.08

5550 Equity Shares of the face value of Rs.100/-each fully paid up through AartiCorporate Services Ltd.

b. Extent of interest of Holding

year of the Subsidiary Companies

52.10% 100% 80% 82.04%

The net aggregate amount of the

so far as it concerns the Members of the Holding Company.

a. Not dealt with in the Holding Company’s accounts

31st March, 2009 on 30th November, 2008

Rs. (33,58,447) Rs. 17,25,941 3770 Pound equivalent to Rs. 2,90,026 on 30-11-2008

Rs. 1,94,656

of the Subsidiary Companies since they became the Holding Company’s Subsidiaries

Rs. 3,89,01,386 Rs. 88,27,040 Pound 12,249 equivalent to Rs. 9,42,316 on 30-11-2008

(Rs. 2,80,366)

b. Dealt within holding Company’s accounts:

31st March, 2009.NIL NIL NIL NIL

Subsidiary Companies since they became the Holding Company’s Subsidiaries

NIL NIL NIL NIL

Material changes during the last date

of the Holding Co.

N.A. N.A. N.A. N.A.

Statement of Interest in Subsidiaries

FOR & ON BEHALF OF THE BOARD

Sd/- Sd/- Sd/- Sd/- CHANDRAKANT V. GOGRI RAJENDRA V. GOGRI SHANTILAL T. SHAH MONA PATEL

CHAIRMAN VICE CHAIRMAN & MD VICE CHAIRMAN COMPANY SECRETARY

PLACE : MUMBAI DATE : 12th September, 2009

56

Consolidated Accounts

AUDITORS’ REPORT TO THE BOARD OF DIRECTORS OF AARTI INDUSTRIES LTD. ON THE CONSOLIDATED FINANCIAL STATEMENTSWe have examined the attached consolidated balance sheet of AARTI INDUSTRIES LIMITED and its subsidiaries as at 31st

accepted auditing standards in India. These Standards require that we plan and perform the audit to obtain reasonable

reporting framework and are free of material misstatements. An audit includes, examining on a test basis, evidence supporting

provides a reasonable basis for our opinion.

been audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts included in respect of the subsidiaries and associates, is based solely on the report of the other auditors.

of Accounting Standard 21: Consolidated Financial Statements and Accounting Standard 23: Accounting for Investments in Associates in Consolidated Financial Statements, issued by the Institute of Chartered Accountants of India and on the basis

On the basis of the information and explanation given to us and on the consideration of the separate audit reports on individual

that:

(a) the Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of AARTI INDUSTRIES LTD. and its subsidiaries and associates as at 31st March, 2009 and

INDUSTRIES LTD. and its subsidiaries and associates for the year then ended.

LTD. its subsidiaries and associates for the year then ended.

For PARIKH JOSHI & KOTHARECHARTERED ACCOUNTANTS

Sd/-(YATIN R. VYAVAHARKAR)

PARTNERPlace: Mumbai M. No. 33915Date: 12th September, 2009

57


Consolidated Balance Sheet as at 31st March, 2009 (Amount in Rupees)

Particulars Schedule As at 31stMarch,

2009

As at31st March,

2008 SOURCES OF FUNDSSHAREHOLDERS’ FUNDS:Share Capital A 364,047,120 364,047,120 Share Capital pending allotment upon Amalgamation A-1 4,428,245 -Share Application Money - 85,000 Equity Share Warrant B 10,784,125 - Reserves and Surplus C 3,368,228,805 2,678,227,907

3,747,488,295 3,042,360,027 LOAN FUNDS :Secured Loans D 4,344,047,511 3,881,127,539 Unsecured Loans E 491,771,398 430,947,717 DEFERRED TAX LIABILITY 452,311,855 397,024,951

5,288,130,764 4,709,100,207 Total 9,035,619,059 7,751,460,234 APPLICATION OF FUNDSFIXED ASSETS:Gross Block F 6,625,896,753 5,267,726,159 Less : Depreciation 2,706,335,111 2,187,239,119 Net Block 3,919,561,642 3,080,487,040 Capital Work-in-Progress 88,342,725 333,090,967 Investments G 405,492,210 314,709,469 Deferred Tax Assets 49,206,181 67,667,706 Current Assets, Loans and Advances H 6,420,399,575 5,629,617,958 Less : Current Liabilities and Provisions I 1,852,120,886 1,683,852,968 Net Working Capital 4,568,278,689 3,945,764,990 Miscellaneous Expenditure(To the extent not written off or adjusted)Pre-operative Expenses 2,897,612 203,719 Deferred Revenue Expenditure [Note : 11] 1,840,000 9,536,343 Total 9,035,619,059 7,751,460,234 Notes To Accounts PAs per our Report of even dateFor PARIKH JOSHI & KOTHARE FOR AND ON BEHALF OF THE BOARDCHARTERED ACCOUNTANTS


Sd/- CHAIRMAN VICE-CHAIRMAN AND VICE-CHAIRMAN(YATIN R. VYAVAHARKAR) MANAGING DIRECTOR


58


Consolidated Profit and Loss Account for the year ended on 31st March, 2009 (Amount in Rupees)

Particulars Schedule For the year ended 31st March, 2009

For the year ended 31st March, 2008

INCOME:Gross Sales and Other Sales Income 15,500,293,709 9,616,386,293 Less: Excise Duty 887,699,905 627,614,932 Net Sales and Other Sales Income 14,612,593,804 8,988,771,361 Interest on Loan 2,500,060 2,729,550 Other Income J 22,234,824 4,909,565 Increase/(Decrease) in Inventory (23,849,092) 338,998,230

14,613,479,596 9,335,408,706 EXPENDITURE:Manufacturing Expenses K 10,124,482,895 6,689,739,517 Purchase of Goods Traded In 918,311,304 720,443,578

L 160,940,096 91,925,776 Selling and Distribution Expenses M 902,355,404 572,898,300 Interest and Financial Charges N 894,869,537 389,052,652 Non-Operating Expenses and Losses O 24,458,315 5,778,543

13,025,417,551 8,469,838,366 1,588,062,045 865,570,340

Less : Depreciation 401,346,650 285,976,437 1,186,715,395 579,593,903

Less : Provision For Taxation [Note : 13(a)] 238,781,142 97,806,357 3,521,700 2,587,671

944,412,553 479,199,875 Less : Provision for Deferred Tax [Note : 13(b)] 73,748,429 70,506,176

870,664,124 408,693,699 2,355,749,872 2,094,525,428

Add/(Less) : Adjustment on Amalgamation (31,240,366) -Less : Provision for Taxation for earlier years (113) 149,645 Less : Prior Years’ Adjustment for others 11,384,485 (300,000)

3,183,789,258 2,503,369,482 Less : Transfer to General Reserve 85,345,188 40,000,000 Less : Transfer to Debenture Redemption Reserve 200,000,000 - Add: Transfer from (to) Consolidation Reserve 9,912,974 7,018,843

2,908,357,044 2,470,388,325 Less : Dividend (Interim) 131,056,963 72,809,424 (Final) 88,434,088 36,075,088 Less : Tax on Dividend 37,302,504 18,560,943

130,930,081 66,972,678 48,934 (9,072)

Add/(Less): Minority Interest (Prior Period) (55,477,973) (10,315,184) 12,528,629 12,067,712

Less: Currency Fluctuation on consolidation 8,463,812 32,862,755 Add/(Less): Currency Fluctuation on conversion of Financial Statements 2,610,080 1,089,047 Balance Carried Forward to Balance Sheet 2,708,682,170 2,355,749,872

As per our Report of even dateFor PARIKH JOSHI & KOTHARE FOR AND ON BEHALF OF THE BOARDCHARTERED ACCOUNTANTS


Sd/- CHAIRMAN VICE-CHAIRMAN AND VICE-CHAIRMAN(YATIN R. VYAVAHARKAR) MANAGING DIRECTOR


59


Schedules – Consolidated Financial StatementsSchedules Forming Part of the Balance Sheet as at 31st March, 2009 (Amount in Rupees)

As at As at31st March, 2009 31st March, 2008

SCHEDULE ‘A’ – SHARE CAPITAL:AUTHORISED CAPITAL:12,50,00,000 Equity Shares of Rs. 5/- Each 625,000,000 450,000,000 (As on 31st March, 2008 - 9,00,00,000 Equity Shares of Rs. 5/- each)ISSUED, SUBSCRIBED & PAID-UP:7,28,09,424 Equity Shares of Rs. 5/- Each Fully Paid-up 364,047,120 364,047,120(As on 31st March, 2008 - 7,28,09,424 of Rs. 5/- Fully Paid-up)

NOTES : of the above Shares -[a] 6,22,28,216 (As at 31st March, 2008 - 6,22,28,216)

have been issued as Fully Paid Bonus Shares

[b] 30,00,000 (As at 31st March, 2008 - 30,00,000)have been issued to shareholders of Salvigor Laboratories Ltd.pursuant to its Merger with the Company

[c] 16,62,638 (As at 31st March, 2008 - 16,62,638)have been issued to shareholders of Mahaval Organic Ltd.pursuant to its Merger with the Company

[d] 10,25,050 (As at 31st March, 2008 - 10,25,050)have been issued to shareholders of Alchemie Organics Ltd.pursuant to its Merger with the Company

TOTAL 364,047,120 364,047,120

SCHEDULE ‘A-1’ - SHARE CAPITAL PENDING ALLOTMENT UPON AMAL-GAMATION:

8,85,649 Shares are to be issued and allotted to shareholders of erstwhile Surfactant Specialities Ltd. and Avinash Drugs Ltd. as per the terms of the scheme of Amalgamation sanctioned by the Honorable High Courts at Ahmedabad and Mumbai vide their order dated 1st September, 2009 &7th August, 2009, respectively.

4,428,245 Nil

TOTAL 4,428,245 Nil

SCHEDULE ‘B’ – EQUITY SHARE WARRANTS

Upfront consideration at,

Rs. 3.57/- per warrant received towards Preferential Allotment of 30,25,000 Equity Share Warrants of Rs. 5/- each

10,784,125 NIL

These warrants are to be converted into 30,25,000/- Equity Shares of Rs. 5/- each at a premium of Rs. 30.65/- Equity Shares, on exercise of option by the Warrants holders on or before 31st January, 2010

TOTAL 10,784,125 NIL

60


SCHEDULE ‘C’ – RESERVES & SURPLUS (Amount in Rupees)

PARTICULARS Consolidated As at 31st

March, 2008

Addition On Amalgamation

Addition Deduction Adjustment on Consolidation

ConsolidatedAs at 31st

March, 2009

CAPITAL RESERVES :

Capital Reserve 208,167 5,533,300 - - - 5,741,467

State Investment Subsidy 5,181,799 - - - - 5,181,799

Amalgamation Reserve 41,167,485 66,487,765 - - - 107,655,250

Capital Reserve - On Consolidation [Note: 3(e)]

4,495,433 - 1,757,076 151,054 - 6,101,455

Forfeiture Reserve 18,456,460 - - - - 18,456,460

Debenture Redemption Reserve - - 200,000,000 - - 200,000,000

TOTAL 69,509,344 72,021,065 201,757,076 151,054 - 343,136,431

REVENUE RESERVES :

General Reserve 229,925,663 - 85,000,000 - 6,370 314,932,033

RBI Reserve u/s 45(IC) 111,952 - 345,188 - 24,236 481,376

TOTAL 230,037,615 - 85,345,188 - 30,606 315,413,409

Consolidation Reserve 22,931,076 - - 9,912,974 (12,021,307) 996,795

PROFIT AND LOSS ACCOUNT 2,355,749,872 (31,240,366) 1,014,166,306 629,993,642 - 2,708,682,170

TOTAL 2,678,227,907 40,780,699 1,301,268,570 640,057,670 (11,990,701) 3,368,228,805

PREVIOUS YEAR 2,355,652,872 - 541,432,608 228,770,547 9,912,974 2,678,227,907

As at 31st

March, 2009As at 31st

March, 2008SCHEDULE ‘D’ - SECURED LOANSLONG TERM LOANS:Non Convertible Debentures 1,000,000,000 NILFrom Scheduled Banks 513,999,324 764,135,291External Commercial Borrowing 478,057,816 495,568,794

WORKING CAPITAL LOAN:From Scheduled Banks 2,351,990,371 2,621,423,454

TOTAL 4,344,047,511 3,881,127,539

SCHEDULE ‘E’ - UNSECURED LOANSFixed Deposits 10,314,466 9,819,466From Banks 400,000,000 400,000,000From Others 81,406,932 21,078,251Security deposit from C & F Agents 50,000 50,000

TOTAL 491,771,398 430,947,717

Schedules - Consolidated Financial Statements

61


SCH

EDU

LE ‘F

’ - FI

XED

ASS

ETS

(Am

ount

in R

upee

s)

ASS

ETS

GR

OSS

BLO

CK

DEP

REC

IATI

ON

NET

B

LOC

K

As o

n

01-0

4-20

08

Con

soli-

date

d Ad

just

men

t

Add

ition

s on

Am

alga

-m

ation

Add

ition

s du

ring t

he

year

Ded

uctio

ns

durin

g the

ye

ar

As o

n 31

-03-

2009

As o

n

1-04

-200

8Co

nsoli

date

d Ad

just

men

t A

dditi

ons

on A

mal

ga-

mat

ion

For

the y

ear

Adju

st-

men

ts

Ded

uc-

tions

du

ring

the y

ear

Upt

o 31

.03.

2009

A

s on

31.0

3.20

09

Tech

nica

l Kno

who

w

757

,430

(7

57,4

30)

757

,430

-

- 7

57,4

30

757

,430

(7

57,4

30)

757

,430

-

- -

757

,430

-

Leas

ehold

Lan

d 1

37,2

38,5

05

(677

,961

) 6

77,9

61

27,

007,

759

- 1

64,2

46,2

64

473

,835

(2

19,1

36)

219

,136

1

,469

,627

8,

404,

897

- 1

0,34

8,35

9 1

53,8

97,9

05

Free

hold

Lan

d -

- 4

,762

,000

-

- 4

,762

,000

-

- -

- -

--

4,7

62,0

00

Build

ing

395

,609

,037

(8

,702

,620

) 4

5,84

0,18

1 5

4,99

4,83

0 -

487

,741

,428

1

03,8

90,0

95

(5,8

38,3

04)

11,

076,

022

19,

117,

727

- -

128

,245

,540

3

59,4

95,8

88

Plan

t & M

achi

nery

4,4

37,06

5,866

(11,0

61,0

47)

349,

365,

217

737,

861,

957

8,0

23,3

12 5

,505

,208

,681

1,9

03,3

28,8

74

(12,

706,

731)

106

,020

,617

3

36,8

68,0

86

-1,

970,

625

2,331

,540,2

21 3

,173

,668

,460

Furn

iture

, Fix

ture

8

6,93

3,68

4 (1

,527

,044

) 6

,456

,570

1

2,68

9,99

0 -

104

,553

,200

6

5,71

0,37

8 (2

,108

,009

) 3

,135

,605

6

,409

,601

-

- 7

3,14

7,57

5 3

1,40

5,62

5

Vehi

cles

53,

352,

119

(395

,855

) 2

,107

,833

4

,532

,376

-

59,

596,

473

37,5

52,4

72 (2

20,8

35)

747

,737

5

,295

,559

-

- 4

3,37

4,93

3 1

6,22

1,54

0

Oth

er T

angi

ble

Asse

ts

[Alc

hem

ie E

urop

e Lt

d.]

443

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(3

79,5

38)

- 2

,778

,712

-

2,8

42,8

40

392,

811

(379

,537

)-

586

,162

-

- 5

99,4

36

2,2

43,4

04

Proc

ess D

evelo

p-m

ent &

Pat

ent

96,

549,

801

- -

157,

999,

440

- 2

54,5

49,2

41

67,4

11,7

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0,90

9,84

7 -

- 1

18,3

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17

136

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Prod

uct D

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p-m

ent a

nd R

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5

5,65

7,76

3 (1

4,01

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- -

41,

639,

196

7,7

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54

(7,7

21,4

54)

--

--

- 4

1,63

9,19

6

Goo

dwill

on C

onso

li-da

tion

4,1

18,2

88

(4,1

18,2

88)

- -

- -

- -

- -

- -

- -

5,26

7,726

,159

(41,6

38,35

0)40

9,96

7,19

2 99

7,86

5,06

4*

8,0

23,3

12 6

,625

,896

,753

2,1

87,2

39,1

19

(29,

951,

436)

121

,956

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420

,656,6

09**

8,

404,

897

1,97

0,62

5 2,7

06,33

5,111

3,9

19,5

61,6

42

PRE

VIO

US

YEAR

4,9

10,56

1,903

-

-36

7,16

4,08

5 9

,999

,829

5,2

67,7

26,1

59 1

,854

,901

,626

-

- 3

33,2

37,7

52

- 9

00,2

58 2

,187,2

39,11

9 3,

080,

487,

040

Adj

ustm

ent f

or D

epre

ciat

ion

duri

ng th

e ye

ar:

Amor

tisat

ion

of P

aten

t of A

arti

Hea

lthca

re L

td.

19,3

09,9

60

401,

346,

649

Cur

rent

yea

r dep

reci

atio

n in

clud

es R

s. 2

9,73

,617

/- (P

revi

ous

year

Rs.

27,

17,1

15/-)

on

Asse

ts d

eplo

yed

for R

esea

rch

& D

evel

opm

ent.

Purs

uant

to th

e Sc

hem

e of

Am

alga

mat

ion

with

Avi

nash

Dru

gs L

td. a

nd S

urfa

ctan

t Spe

cial

ities

Ltd

. the

Gro

ss v

alue

of F

ixed

Ass

ets t

aken

over

of R

s. 4

0,99

,67,

192/

- and

corr

espo

ndin

g de

prec

iatio

n of

Rs

. 12,

19,5

6,54

7/- a

s on

1st

Apr

il, 2

008

are

incl

uded

in A

dditi

ons

on A

mal

gam

atio

n un

der “

Gro

ss B

lock

” and

“Dep

reci

atio

n” re

spec

tivel

y.

*Inc

lude

s R

s. 4

4,11

,257

/- ad

ditio

ns to

Fix

ed A

sset

s of

Sur

fact

ant S

peci

aliti

es L

td.

**In

clud

es R

s. 9

,64,

401/

- of A

vina

sh D

rugs

Ltd

. & R

s.1,

87,8

8,46

5/- o

f Sur

fact

ant S

peci

aliti

es L

td.

62


Schedules - Consolidated Financial StatementSCHEDULE ‘G’ - INVESTMENTSListed Companies (Valued at cost) (Amount in Rupees)Name of the Company Number of Units / Shares ( All fully paid up )

OpeningBalance

Nos.


yearNos.

DisposalsDuring

the yearNos.

ClosingBalance

Nos.

As at 31st

Mar, 2009 at cost

As at 31st

Mar, 2008 at cost

(A) Investments in (Quoted ) Bonds:UTI BOND 6.75% Tax Free 5546 NIL 5546 NIL NIL 554,600

- 554,600 Investment - (Quoted) in Equity shares:Reliance Industries Ltd. 240 NIL NIL 240 12,000 12,000 Atul Ltd. 50 NIL NIL 50 1,111 1,111 Deepak Nitrite Ltd. 150 NIL NIL 150 10,722 10,722 Dharamshi Morarji Ltd. 100 NIL NIL 100 680 680 Hindustan Organic Chemicals Ltd. 100 NIL NIL 100 1,450 1,450 Rashtriya Chemical & Fertilizers Ltd. 100 NIL NIL 100 1,530 1,530 Bank of Baroda 16260 NIL 16260 NIL NIL 3,739,800 Union Bank Of India 4541 NIL 4541 NIL NIL 499,510 Bayer Crop Science Ltd. 10 NIL NIL 10 1,313 1,313 Reliance Natural Resources Ltd. 240 NIL NIL 240 NIL NILReliance Communication Venture Ltd. 240 NIL NIL 240 NIL NILReliance Capital Ltd. 12 NIL NIL 12 NIL NILReliance Energy Ltd. 18 NIL NIL 18 NIL NIL

28,806 4,268,116 Trade Investments (Quoted) in Equity shares:Aarti Drugs Ltd. 851059 NIL NIL 851059 13,632,209 13,632,209

13,632,209 13,632,209 Trade Investments (Unquoted) in Equity shares:U.K.I.P. Co-op. Soc. Ltd. 35 NIL NIL 35 1,800 1,800

1,800 1,800 Investments (Unquoted) in Equity shares:Aarti Biotech Ltd. 419600 NIL NIL 419600 505,535 2,401,500 Ichalkaraji Janata Sahakari Bank Ltd. 1020 NIL NIL 1020 51,000 51,000 Damanganga Saha Khand Udyog Mandali Ltd. 61 NIL NIL 61 122,000 122,000 Perfect Enviro Control Systems Pvt. Ltd. 343840 NIL NIL 343840 1,397,052 3,458,968 Bharuch eco aqua infra Ltd. (partly paid) 102230 NIL NIL 102230 1,325,500 1,325,500 Dispo Dyechem Ltd. 40000 NIL NIL 40000 1,000,000 1,000,000 Dilesh Roadlines Pvt. Ltd. 189000 305000 NIL 494000 4,940,000 1,890,000 Aarti Intermediate Ltd 22125 NIL NIL 22125 22,125 22,125 Amrey Enterprices Pvt. Ltd. 4900 NIL NIL 4900 49,000 49,000 Indusken Pharmaceuticals Pvt. Ltd. 200000 NIL NIL 200000 2,000,000 2,000,000 SBPP Bank Ltd. 783 NIL NIL 783 78,275 78,275

11,490,487 12,398,368 Investment in Partnership Firm:Alchemie Industries 241823 NIL 241823 NIL - 241,823 TOTAL (A) 25,153,302 31,096,916

63


Schedules - Consolidated Financial Statement(Amount in Rupees)

a b cName of the Company Numbers Orginal

Investment As on

01-04-08

Addition During The

year

Additions to cost as on

01-04-08

Share of Deduction Additions to cost as On

31-03-09

ConsolidatedAdjustment

As at 31st

Mar, 2009 at cost

As at 31st

Mar, 2008 at cost

(B) Investments in Associate Companies (un-quoted) in Equity SharesNascent Chemical Industries Ltd.

293920 7,223,200 13,328,584 9,202,273 4,231,028 734,800@ 12,698,501 7,223,200 26,027,085 16,425,473

(Associate of 100% Subsidiary)Ganesh Polychem Ltd. 1000000 10,000,000 - 39,275,311 29,569,157 - 68,844,468 - 78,844,468 49,275,311 Surfactant Specialities Ltd

3510396 35,289,860 - (7,568,688) - - (7,568,688) (27,721,172) - 27,721,172

Anushakti Chemicals and Drugs Ltd.

8846490 85,051,600 - 105,138,999 97,129,896 - 202,268,895 11,853,140 * 275,467,355 190,190,599

TOTAL (B) 380,338,908 283,612,555

@ Dividend Received* Amount reversed on buyback of sharesGRAND TOTAL (A)+(B) 405,492,210 314,709,470

Aggregate Market Value of Quoted Investments : (in Rs.) As on 31-03-2009 32,401,299 As on 31-03-2008 51,208,407

64


Schedules - Consolidated Financial Statement (Amount in Rupees)


As at 31stMarch, 2008

SCHEDULE ‘H’- CURRENT ASSETS, LOANS AND ADVANCES[Note: 14 ]CURRENT ASSETS :InventoriesRaw Materials 704,049,171 677,124,169 Fuel Stock 35,558,163 31,517,817 Work-in-Process 682,349,827 595,501,144 Finished Goods 600,586,689 670,731,044 Packing Materials 9,323,254 9,310,182 Stores and Spares 28,422,181 16,942,017

2,060,289,285 2,001,126,373 Sundry Debtors (Unsecured)(a) Outstanding for more than six months

- Considered Good 411,139,865 247,783,242 - Considered Doubtful 1,996,400 1,996,400

(b) Others - Considered Good 2,249,702,187 1,507,084,285 2,662,838,452 1,756,863,927

Less : Provision for Doubtful Debts 1,996,400 1,996,400 2,660,842,052 1,754,867,527

(c) Interest Receivable 612,440 574,969 2,661,454,492 1,755,442,496

Cash and Bank BalancesCash on hand 6,465,379 8,727,125 Bank balance with Scheduled Banks:In Current Account 31,460,072 59,437,610 In Deposit Accounts 36,517,886 29,430,502

74,443,337 97,595,237 LOANS AND ADVANCES :(Unsecured and considered good)Balances with Custom, Port Trust, Excise & Sales Tax 392,337,759 425,304,961 AuthoritiesLoan to Corporate Bodies 6,330,000 22,208,291 Loan to Other 206,572 2,900,000 Capital Advances 69,383,158 22,608,648 Advances recoverable in cash or kind --or for value to be received 202,011,468 557,063,504 Deposits 1,286,212 1,757,929 Advance Tax and Tax deducted at Source 952,657,292 743,610,519

1,624,212,461 1,775,453,852 TOTAL 6,420,399,575 5,629,617,958

65


SCHEDULE ‘K’ - MANUFACTURING EXPENSESConsumption of Raw Materials 7,595,015,035 4,905,460,792 Consumption of Packing Materials 174,970,796 128,363,902 Consumption of Stores and Spares 149,222,023 88,415,548 Freight, Cartage and Transport 404,957,950 309,938,801 Fuel 585,006,647 379,835,666 Power 335,177,854 225,363,312 Water Charges 39,873,095 37,406,002 Excise Duty Paid 104,543,133 69,093,054 Processing Charges 41,275,315 41,757,189 Staff Costs 234,531,548 170,623,726 Other Manufacturing Expenses 234,302,866 161,229,994 Repairs and Maintenance - Building 9,443,081 4,228,771

- Plant & Machinery 102,356,644 74,357,170 Wages 7,099,020 4,209,670 Insurance Charges 17,628,746 20,316,668 Research & Development Expenses 10,731,949 9,743,193 Factory Administration Expenses 59,037,233 40,086,099 R & D Expenses Written Off 19,309,960 19,309,960 TOTAL 10,124,482,895 6,689,739,517

Schedules - Consolidated Financial Statements (Amount in Rupees)


As at 31stMarch, 2008

SCHEDULE ‘I’ - CURRENT LIABILITIES & PROVISIONCURRENT LIABILITIES:Sundry Creditors 763,437,479 956,210,326 Interest Accrued but not due on Loans 16,952,657 12,438,608 Unclaimed Dividend # 8,235,417 6,770,578 Minority Interest 84,932,863 29,826,402

873,558,416 1,005,245,914 PROVISION:Provision for Taxation [Note: 13(a)] 843,328,000 604,038,000 Provision for FBT 12,737,831 8,299,671 Proposed Dividend 88,434,088 36,404,712

34,062,551 29,864,671

978,562,470 678,607,054 TOTAL 1,852,120,886 1,683,852,968 # There is no amount due & outstanding to be credited to Investor Education & Protection Fund

For the year ended 31st

March, 2009


March, 2008SCHEDULE 'J'- OTHER INCOMEDividend Received From: a) Trade Investments 1,531,906 122,158 b) Non Trade Investments 173,152 NIL Interest received 2,992 413,109

704,212 327,700 15,245,201 NIL

Lease Rent 628,525 693,478 Other Income 2,445,524 3,353,120 Insurance Claim Received 1,503,312 NIL TOTAL 22,234,824 4,909,565

66




March, 2009


March, 2008SCHEDULE 'L' - OFFICE AND ADMINISTRATIVE EXPENSESStaff Cost [Note: 16] 71,121,795 47,831,082 Profession Tax 4,500 6,000 Rent 6,757,488 5,141,835 Rates,Taxes & Fees 3,526,673 3,583,138 Travelling expenses 22,699,086 11,724,970 General expenses 19,485 93,962 Repairs & maintenance 53,446 55,803 Exchange Difference & Charges 19,526,084 (4,313,741)Auditors' Remuneration [Note: 15] 818,228 710,404 Bank charges 583,144 834,011 Legal and Professional Charges 8,186,580 5,259,698 Postage, Telegram and Telephone 5,533,325 4,129,859 Printing and Stationery 3,112,623 2,556,215 Other Administrative Expenses 18,062,210 12,295,340 Service Tax NIL 10,321 Insurance 935,429 2,006,879 TOTAL 160,940,096 91,925,776

SCHEDULE 'M' - SELLING AND DISTRIBUTION EXPENSESAdvertisement and Sales Promotion 15,908,083 13,657,875

Export Freight (Air and Sea) 244,419,329 163,337,537

Freight and Forwarding 275,213,682 222,099,710

Commission 41,536,241 24,830,861

Insurance Charges on Export 7,858,227 4,739,544

Sample Testing and Analysis Charges 2,191,484 705,614

Sales Tax/Vat Paid 78,141,309 42,747,515

Discount 63,563,160 47,101,248

Sundry Balances Written Off/(Back) 3,074,191 162,896

Storage 110,387 383,181

Carriage 106,919,115 53,132,319

Bad Debts written off 63,118,498 NIL

Other Selling Expenses 301,698 NIL

TOTAL 902,355,404 572,898,300

67




March, 2009


March, 2008SCHEDULE 'N' - INTEREST AND FINANCIAL CHARGESInterest on Debentures 74,481,161 NIL

Interest on Term Loans 229,707,538 70,553,202

Interest on Working Capital 533,120,928 292,904,418

Bank Charges 57,559,910 25,595,032

TOTAL 894,869,537 389,052,652

SCHEDULE 'O' - NON-OPERATING EXPENSESDonations 7,613,467 2,848,003

Pre-operative Expenses Written Off 67,900 67,900

Deferred Revenue Expenses Written Off 8,105,791 2,862,640

Loss on Sale of Assets 18,432 NIL

Loss on Sale of Shares 8,652,725 NIL

TOTAL 24,458,315 5,778,543

68


Schedule ‘P’ - Notes Forming Part of Consolidated Financial Statements For The Year Ended 31st March, 2009The Parent Company had adopted Financial Statements for the year ended 31st March, 2009, at the Board Meeting held on 28th May, 2009, without considering the effect of the proposed amalgamation of Avinash Drugs Ltd. (Subsidiary) and Surfactant Specialities Ltd. (Associate) with itself pending approval of the scheme by the Hon’ble High Court of Mumbai and Gujarat. These Financial Statements were adopted in compliance of the Listing Agreements of the Bombay Stock Exchange and National Stock Exchange.

Pursuant to the approval of the scheme of amalgamation by the Hon’ble High Courts of Mumbai and Gujarat on7th August, 2009 and 1st September, 2009 respectively, the amalgamation has been incorporated in the books of accounts of the Parent Company as of 1st April, 2008, the appointed date and fresh Financial Statements as at 31st March, 2009 have been drawn up on that basis as per the decision taken by the Board of Directors of the Parent Company. Consequently, fresh Consolidated Financial Statements, have also been drawn up to incorporate the changes necessitated by the Amalgamation.

1. Background

Consolidated Financial Statements include the Accounts of the Parent Company, Aarti Industries Limited and the following Subsidiary Companies, post Amalgamation:

Name of the Subsidiary Country of Incorporation Proportion of Ownership Interest (%)

Indian Subsidiary

a. Aarti Healthcare Ltd. India 52.10%

b. Aarti Corporate Services Ltd. India 100%

c. Shanti Intermediates Pvt. Ltd. (Through

its Holding Company: Aarti Corporate

Services Ltd.) India 82.04%

Foreign Subsidiary

d. Alchemie (Europe) Ltd. United Kingdom 80.00%

informative disclosures and a guide to better understanding of the consolidated position of the Companies. Recognizing

fairly present the needed disclosures.

3. Principles of Consolidation:

a. These Consolidated Financial Statements are prepared using the Financial Statements of the Parent Company post Amalgamation and the Indian Subsidiary Companies drawn up to the same reporting date except the Foreign Subsidiary Company, Alchemie (Europe) Ltd.

b. The accounting period of the Foreign Subsidiary ends on 30th November and it is not practical to draw up its

consolidation.

by adding together like items of Assets, Liabilities, Income and Expenses. All intra group transactions, unrealized

between Aarti Industries Ltd. and Alchemie (Europe) Ltd. of the period from 1st December, 2008 to 31st March, 2009 amounting to Rs. 79,85,633/- which could not be eliminated due to inconsistency in the reporting period of the

to ‘Consolidation Reserve’.

policies for like transactions and other events in similar circumstances.

69


e. The excess of the share of the Parent Company in the Net Assets over the carrying costs to the Parent Company of

and in the converse case it is recognized as Goodwill.f. The effect of the sale of the entire holding in Shanti Intermediates Pvt. Ltd. to Aarti Corporate Services Ltd., which

became a hundred per cent Subsidiary of the Parent Company and the Amalgamation of the Subsidiary: Avinash Drugs Ltd. and Associate: Surfactant Specialities Ltd. with the Parent Company, has been dealt with in the Consolidated Financial Statements.

g. In case of associates, where the Parent Company directly or indirectly through subsidiaries holds more than 20% of equity, investments in associates are accounted for using equity method in accordance with Accounting Standard 23 (AS-23) “Accounting for Investment in Associates in Consolidated Financial Statements”.

h. Net loss attributable to the minority interest borne by the group in previous years, is recovered. The Consolidated

has been added to the carrying cost of Investment.4. Research and Development

Expenditure on Research and Development is included as part of Fixed Assets and Depreciation is provided on the same basis as for other Fixed Assets.

5. Revenue Recognitiona. The accounts are prepared on accrual basis of accounting under the going concern assumption, except where otherwise

stated.b. In the case of foreign subsidiary sales are excluding Value Added Tax.

6. Foreign Currency TransactionsAssets and Liability accounts of the Foreign Subsidiary are translated into Indian Rupees as per the requirements of the Accounting Standard 11 “Accounting for the Effects of Changes in Foreign Exchange Rates”.

7. Fixed AssetsThe Fixed Assets of the Parent Company and other Subsidiaries are stated at cost of acquisition (net of CENVAT/VAT) inclusive of all expenditure of capital nature such as, inward freight, duties and taxes, installation and commissioning expenses, appropriate borrowing costs and incidental expenses related to acquisition.

8. Depreciationa. Depreciation is provided on tangible Fixed Assets (with the exception of land) at the rates adopted in the accounts

of the Parent and respective Subsidiaries on straight-Line Method basis, except as stated in item (b).b. In the case of the Parent Company Assets installed at one Plant taken on lease, Depreciation is provided under the

Written Down Value Method.c. Leasehold Land Premium is amortized over the period of Lease in case of the Parent Company and Patents and

Product Development expenses are amortized over the product’s estimated useful life in the case of the Parent and one Subsidiary i.e. Aarti Healthcare Ltd.

9. Investmentsa. Current Investments if any, are stated at lower of cost and Fair Market Value.b. Long-Term Investments are stated at cost less provision for permanent diminution in value if any, of investments.

10. InventoriesInventories have been valued on the following basis:Nature of Goods Method of Valuationa. Raw Materials, packing materials, stores and spares At cost on weighted average basis b. Work-in-process At cost plus appropriate allocation of overheadsc. Finished Goods At cost plus appropriate allocation of overheads or net realizable value, whichever is lower

70


11. Deferred Revenue Expenditure

Deferred Revenue Expenditure is amortized over the period of ten years on pro–rata basis.

12. Borrowing Costs

Interest on Term Loans directly related to the acquisition, construction or erection of Fixed Assets is capitalized.

13. Taxation

in accordance with the applicable tax regulations.

b. Deferred Tax is recognized on timing difference in the case of the individual Companies and is disclosed in the

14. Current Assets and Loans and Advances

In the opinion of the Board, except as otherwise stated, the Current Assets and Loans and Advances have a value on realization at least equal to amounts at which they are stated in the Balance Sheet.

15. Remuneration to Auditors

Particulars By the Parent Company (Rs.)

By the Subsidiary Companies (Rs.)

As AuditorAudit Fees 4,91,000* 62,163

(4,50,000) (72,983)Other Matters 1,76,289 NIL

(1,01,364) (1,500)Service Tax 74,420 NIL

(65,813) (618)Out of Pocket Expenses 14,356 NIL

(18,126) (NIL)

Total Auditors’ Remuneration7,56,065 62,163

(6,35,303) (75,101)

*includes Rs. 41,000/- paid to Branch Auditors

16. Directors’ Remuneration

Sr. No. Particulars By the Parent Company (Rs.)

By the Subsidiary Companies (Rs.)

(a) Salary 72,00,000 NIL(58,80,000) (NIL)

(b) Commission 1,16,70,000 NIL(54,62,000) (NIL)

(c) Contribution to P.F. 9,45,587 NIL(7,72,668) (NIL)

(d) Ex-Gratia 15,70,000 NIL(13,72,000) (NIL)

(e) House Rent Allowance 10,32,000 NIL(10,32,000) (NIL)

(f) Value of Perquisites 90,000 NIL(2,02,500) (NIL)

Total Remuneration (excluding sitting fees) 2,25,07,587 NIL(1,47,21,168) (NIL)

71


Research & Development activities at the Company’s recognized R & D center and does not include contribution to Group

17. Contingent Claims Sr. No.

Particulars On the Parent Company (Rs.)

On the Subsidiary Companies (Rs.)

(a) Claims not acknowledged as Debts 1,29,76,870 NIL (8,31,80,012) (NIL)

(b) Letter of credit and Bank Guarantees issued by the Company’s Bankers 21,51,12,504 NIL(21,78,17,000) (NIL)

(c) Guarantees given for other Companies NIL NIL(47,00,00,000) (NIL)

(d) Contracts remaining to be executed on Capital Account and not provided for (Net of Advances)

1,74,75,778 NIL(3,33,51,162) (NIL)

18. Related Party Disclosures

List of R

(I) Associate Companies.

a. Ganesh Polychem Ltd.

b. Nascent Chemical Industries Ltd. (Associate of 100% Subsidiary)

c. Anushakti Chemicals and Drugs Ltd.

(II) Following are the Company / Firms over which controlling individuals / Key Management Personnel along with

during the year.

a. Gogri and Sons Investments Pvt. Ltd.

b. Alchemie Dyechem Pvt. Ltd.

c. Alchemie Pharmachem Ltd.

d. Alchemie Leasing and Financing Pvt. Ltd.

e. Alchemie Financial Services Ltd.

f. Alchemie Laboratories

g. Alchemie Industries

h. Crystal Millennium Realtos Pvt. Ltd.

i. Argenta Chemicals Pvt. Ltd.

j. Anushakti Chemicals and Drugs Ltd.

k. Aarson Crop Care Pvt. Ltd.

l. Amarjyot Chemicals Pvt. Ltd.

m. Rupal Drugs Ltd.

n. Dhaval Realtors Pvt. Ltd.

o. Suyash Laboratories Ltd.

72


(III) Following are the individuals who own directly / indirectly 20% or more voting power in the Company or have

AS-18.Sr. No. Name Status1. Shri Chandrakant V. Gogri Director2. Shri Rajendra V. Gogri Director3. Shri Shantilal T. Shah Director4. Shri Parimal H. Desai Director5. Shri Manoj M. Chheda Director6. Shri Rashesh C. Gogri Director7. Smt. Hetal Gogri Director8. Shri Kirit R. Mehta Director

The following transactions were carried out during the year with the related parties in the ordinary course of business.

(A) Details relating to parties referred to in items I, II and III above.

Sr.No.

Description of Transaction Year Associated Other related Enterprises/ Firms

[I] [II] (Rs.) (Rs.)

1 Sales of Finished Goods CY 387,452,567 48,150 PY 194,514,537 -

2 Purchases of Raw Materials / Finished Goods CY 1,000,590,867 1,535,650 PY 605,983,819 -

3 Other Manufacturing Expenses CY - 78,273,723 PY 12,555,747 33,136,870

4 Rent paid CY - 18,700,000 PY 12,000,000 3,000,000

5 Other Income CY - 2,532,415 PY 9,230,000 2,760,424

6 Sale of Investments CY - - PY - -

7 Sale of Fixed Assets CY 504,788 1,679,060 PY 1,179,459 -

8 Purchase of Fixed Assets CY 1,306,081 - PY - -

9 Inter-corporate Deposits taken / (Repaid) during the year CY - 50,016,820 PY - (6,006,112)

10 Inter-corporate Deposits given / (Received back) during the year CY (15,502,764) 2,700,000 PY (10,750,000) -

11 Interest Expense on the Inter-corporate Deposits taken CY - 897,773 PY - -

12 Interest Income on the Inter-corporate Deposits placed / CY 1,890,124 1,140,503 unsecured loans PY 10,466,756 -

13 Equity Contribution / (Disposal) in cash or in kind made CY (11,853,140) 6,412,127 during the year PY - (1,500,000)

14 CY 8,184,610 1,410,540 PY - -

15 Outstanding items pertaining to the related parties at the CY 52,300,804 72,389,194Balance Sheet date: Receivable / (Payable) PY 294,721,919 29,941,135

73


(B) Details relating to persons referred to in item IV above* 31st March, 2009

(Rupees)31st March, 2008

(Rupees) a. Directors’ Remuneration including perquisites 10,837,587 9,259,168 b. Commission to Directors 11,670,000 5,462,000 c. Sitting Fees 302,000 256,000 d. Rent paid 5,625,225 4,723,195 e Travelling Expenses 4,487,976 3,172,117 f Telephone Expenses 460,221 517,931

TOTAL 33,383,009 23,390,411

* Excluding the payments made to Independent Directors as per Accounting Standard Interpretation 21 issued by the Institute of Chartered Accountants of India.

19. Consolidated Segment Reporting(Amount in Rupees)

Sr.No.

Particulars Year Ended on

Year Ended on

31st March, 09 31st March, 08 (A) Primary Segments : Business Segments

Segment Revenue a) Basic Chemicals 3,608,923,660 2,367,783,890 b) Speciality Chemicals 11,264,672,067 6,730,294,405 c) Agro Chemicals 585,679,778 402,450,943 d) Pharmaceuticals 1,002,491,155 839,486,663 Total 16,461,766,660 10,340,015,901 Less : Inter Segment Revenue 961,472,951 723,629,608 Net Sales / Incomes From Operations 15,500,293,709 9,616,386,293 Segment Results

Interest From Each Segment a) Basic Chemicals 746,838,931 255,779,985 b) Speciality Chemicals 1,586,042,574 719,848,299 c) Agro Chemicals 149,255,495 90,381,799 d) Pharmaceuticals (102,677,636) 57,006,428 Total (A) 2,379,459,364 1,123,016,511 Less : Interest 894,869,537 389,052,652 Other Unallocable Expenditure Net Off Unallocable Income 297,874,432 154,369,956Total (B) 1,192,743,969 543,422,608

(A) - (B) 1,186,715,395 579,593,903 (B) Secondary Segment : Geographical Segments

a) India 9,535,882,910 5,883,932,449 b) Out of India 5,964,410,799 3,732,453,844 Total 15,500,293,709 9,616,386,293

Segment Capital Employed:

is currently not practicable to provide segment disclosures relating to Capital employed.

74


20. TREATMENT OF SUBSIDIARIES AND ASSOCIATES IN CONSOLIDATION

(a) During the year, Parent Company Aarti Industries Limited increased its holding in Aarti Corporate Services Limited to 100% Also, during the year, the Parent Company transferred the entire holding of 82.04% in Shanti Intermediates Private Limited to its subsidiary Aarti Corporate Services Limited. Consequent to such transfer Aarti Corporate Services Limited has become the holding Company of Shanti Intermediates Private Limited. The effect of this changes on Goodwill, Capital Reserve and Minority Interest has been recognized in the Consolidated Financial Statements.

During the year, the Parent Company transferred its entire holding of 49% in one of its associates Nascent Chemical Industries Limited to Aarti Corporate Services Limited and it is treated as associate through Aarti Corporate Services Limited for the purpose of consolidation.

(Amount in Rupees) Sr.No.

Name of Associates Ownership Interest

%

Opening Original

Investment

Additional Investment during the

Year

Total Original

Investment As on

31/03/09

Carrying cost of

Investment as on

01/04/08

Adjustment Consolidation Adjustment

Share of

(loss) of the year

Carrying cost of

Investment As on

31/03/091 Ganesh Polychem Ltd 32.11 10,000,000 - 10,000,000 49,275,311 - - 29,569,157 78,844,468

2 Nascent Chemical Industries Ltd.(Associate of 100% subsidiary)

49.00 7,223,200 13,328,584 20,551,784 16,425,473 734,800 @ (7,223,200) 4,231,028 26,027,085

3 Surfactant Specialities Ltd. 42.57 35,289,860 - 35,289,860 27,721,172 - (63,011,032) - -

4 Anushakti Chemicals & Drugs Ltd.

48.99 85,051,600 - 85,051,600 190,190,599 11,853,140 * - 97,129,896 275,467,355

TOTAL - 137,564,660 13,328,584 150,893,244 283,612,555 12,587,940 (70,234,232) 130,930,081 380,338,908

@ Dividend Received * Amount reversed on buyback of shares.

21. Earning Per Share (EPS):

Particulars Financial year 2008-09

Financial year2007-08

(Rs.) 87,06,64,124 40,86,93,699No. of Equity Shares* (Nos.) 7,36,95,073 7,28,09,424Basic & Diluted EPS (Rs.) 11.81 5.61* Includes 8,85,649 Shares are to be issued and allotted to shareholders of erstwhile Surfactant Specialities Ltd. and Avinash Drugs Ltd. as per the terms of the scheme of Amalgamation sanctioned by the Honorable High Courts at Ahmedabad and Mumbai vide their order dated 1st September, 2009 & 7th August, 2009, respectively.

22. .Signatures to Schedules ‘A’ to ‘P’

As per our Report of even date


Sd/- Sd/- Sd/- Sd/-YATIN R. VYAVAHARKAR CHANDRAKANT V. GOGRI RAJENDRA V. GOGRI SHANTILAL T. SHAH

PARTNER CHAIRMAN VICE-CHAIRMAN AND VICE-CHAIRMANMANAGING DIRECTOR

Sd/-PLACE: MUMBAI MONA PATELDATE: 12th September, 2009 COMPANY SECRETARY

75


Consolidated Cash Flow Statement For The Year Ended 31st March, 2009(Rs. in Lakhs)

Sr. No. Particulars For The Year Ended 31st

March, 2009

For The Year Ended 31st

March, 2008A. Cash Flow From Operating Activities :

11867.15 5795.94Adjustments For:

Add: Interest Paid 8948.69 3890.53Depreciation 4013.47 2859.76Expenses Amortised 50.02 29.31Consolidation Adjustments 463.78 1026.43Loss on Sale of Assets 0.18 0.00

Less: (152.45) 0.00(7.04) (3.28)

Prior Year Adjustment (113.84) 3.00Dividend Received on Other Investments (17.05) (1.22)

25052.91 13600.47Adjustments For :

Add/(Less): (Increase) / Decrease in Trade And Other Receivables (4102.35) (6521.30)Increase / (Decrease) in Trade Payables (2815.10) 563.06(Increase) / Decrease in Inventories 672.04 (5108.30)Cash Generated From Operations 18807.50 2533.93

Less: Direct Taxes Paid (2424.71) (1052.44)Net Cash From Operating Activities 16382.79 1481.49

B. Cash Flow From Investing ActivitiesAddition To Fixed Assets / CWIP (7111.88) (5658.71)Sale / Written off of Fixed Assets 60.52 100.00(Increase) / Decrease in Other Investments 68.99 (6.51)(Increase) / Decrease in Associate Investments (1101.58) (577.43)Dividend Received on Other Investments 17.05 1.22Net Cash From Investing Activities (8066.90) (6141.43)

C. Cash Flow From Financing ActivitiesProceeds From Long Term Borrowings 10824.04 4972.08Repayment of Long Term Borrowings (4,314.63) (4346.37)Proceeds / (Repayments) of Other Borrowings (4773.92) 8772.80Payment of Share Application Money (0.85) 0.00Proceeds From Equity Share Warrants 107.84 0.00Interest Paid (8948.69) (3890.53)Dividend Paid (1,674.61) (728.09)Net Cash From/(Used) in Financing Activities (8780.82) 4779.89Net Increase / (Decrease) in Cash And Cash Equivalents (A+B+C) (464.93) 119.95Cash and Cash Equivalents (Opening Balance) 975.95 856.00Cash and Cash Equivalents (Received on Amalgamation) 233.41 0.00Cash and Cash Equivalents (Closing Balance) 744.43 975.95

Notes: i) Amounts of the previous year have been regrouped and rearranged wherever necessary.

Surfactant Specialities Ltd as they are non cash transactions.

As Per Our Report Of Even Date FOR AND ON BEHALF OF THE BOARD.FOR PARIKH JOSHI & KOTHARE Sd/- CHARTERED ACCOUNTANTS RAJENDRA V. GOGRI

Sd/- VICE CHAIRMAN AND(YATIN R. VYAVAHARKAR) MANAGING DIRECTOR

PARTNER

PLACE : MUMBAI DATE : 12th September, 2009

76

Details of Subsidiary Companies[As per the exemption letter of the Ministry of Company Affairs, Government of India]

(Rs. in Lakhs)

Name of the Subsidiary Company AARTI HEALTH CARE LTD.

AARTI CORPORATE SERVICES LTD.

ALCHEMIEEUROPE LTD.

SHANTI INTERME-DIATES PVT. LTD.

31st March, 2009 31st March, 2009 30thNovember, 2008 31st March, 2009Reporting Currency INR INR GBP# INRCapital 600.00 202.47 42.48 6.77Reserves 682.21 104.78 3.54 28.05

1777.32 22.29 3273.80 246.193059.52 112.76 3319.82 280.22

Investment - 216.78 - 0.78Total Income 625.88 25.32 6300.92 155.65

135.50 25.01 (26.68) 1.67Provisions for tax 199.97 7.75 - 0.07

(64.46) 17.26 (25.38) 2.37Proposed Dividend and tax thereon - - - -

basis of appropriate exchange rate as per applicable Accounting Standard. The base rate for conversion of operating expense was 72.59 as on 31st March, 2009.

Details of Subsidiary Companies77

Aarti Industries Limited

Aarti Industries Limited

Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396 195, Dist. - Valsad, Gujarat.

ATTENDANCE SLIPI hereby record my presence at the Annual General Meeting held at Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396 195, Dist. - Valsad, Gujarat on Monday, the 12th day of October, 2009 at 11.00 a.m.(1) L.F.NO. (2) * Depository : NSDL/CDSL (3) * DP. ID (4) * CLIENT ID

(* FOR SHARES HELD IN ELECTRONIC FORM)(5) FULL NAME OF THE SHAREHOLDER : (IN BLOCK LETTERS)(6) NO. OF EQUITY SHARES HELD: (7) SIGNATURE OF THE SHAREHOLDER

OR PROXY ATTENDING :

(PLEASE GIVE FULL NAME OF THE 1ST JOINTHOLDER)

MR./MRS./MISS (TO BE USED ONLY WHEN FIRST NAMED SHAREHOLDER IS NOT ATTENDING)

NOTE : PLEASE FILL IN THIS ATTENDANCE SLIP AND HAND IT OVER AT THE ENTRANCE OF THE HALL.

Regd. Off.: Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396 195, Dist. - Valsad, Gujarat.

PROXY FORMI /We , o f

in the District of being

a member / members of the above named Company hereby appoint of

in the District of

or failing him of in the District of or failing him of in the

District of as my / our proxy to vote for me / us on my / our behalf at the Annual

General Meeting of the Company to be held on Monday, the 12th day of October, 2009 at 11.00 a.m. and at any adjournment thereof.

Signed this day of , 2009

Signature

L.F.No. * Depository : NSDL/CDSL * DP. ID * Client ID

(* For Shares held in Electronic Form)No. of Share(s) held Notes :(1) A Member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself.(2) A proxy need not be a Member.(3) The completed form should be deposited at the Registered Office of the Company, Plot Nos. 801, 801/23, GIDC Estate, Phase III, Vapi - 396195,

Dist. - Valsad, Gujarat not less than 48 hours before the time for holding the meeting.

AFFIXRe. 1/-

REVENUESTAMP

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