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Hester Biosciences Ltd.

BSE: 524669 Sector: Health care
NSE: HESTERBIO ISIN Code: INE782E01017
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OPEN 1381.95
CLOSE 1366.60
VOLUME 1472
52-Week high 1482.00
52-Week low 692.85
P/E 41.06
Mkt Cap.(Rs cr) 1,148
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Hester Biosciences Ltd. (HESTERBIO) - Director Report

Company director report

Your Directors are pleased to present the 30th Annual Report with theAudited Accounts of the Company for the year ended 31 March 2017.

FINANCIAL RESULTS:

(Rs.in million)

Particulars

Standalone

2016-17 2015-16
Total income 1239.42 1017.64
Profit before depreciation and tax 384.47 305.81
Less: Depreciation 55.09 57.32
Profit before tax 329.38 248.49
Less: Provision for tax 72.36 29.86
Deferred tax 7.63 27.00
Income tax of earlier year 0.96 (0.60)
Net Profit after tax 248.43 192.23
Balance of profit and loss account 421.39 285.64
Interest capitalisation - 10.50
Profit available for appropriation 669.82 488.37
Less: Dividend on equity shares 45.09 34.88
Less: Dividend distribution tax 9.18 7.10
Less: Transfer to general reserve 30.00 25.00
Balance carried to balance sheet 585.55 421.39
Earnings per share (basic/diluted) 29.20 22.60

RESULTS OF OPERATIONS Sales

Your Company posted a turnover of 1232.16 million in the financial year ended on 31March 2017 as compared to 1008.92 million in the previous year.

Profitability

Your Company's Profit Before Tax for the year ended 31 March 2017 was recorded at329.38 million as compared to 248.49 million in the previous year.

Earnings Per Share

EPS was at 29.20 as on 31 March 2017 as against 22.60 as on 31 March 2016.

Transfer to Reserves

30 million is proposed to be transferred to the General Reserve and 585.55 million isproposed to be retained in the surplus.

Net Worth

The Company's net worth as on 31 March 2017 was at 1197.37 million as compared to1003.21 million as on 31 March 2016.

DIVIDEND

During the year your Directors declared and paid interim dividend of 3.00 per equityshare for the financial year 2016-17. The resolution to pay interim dividend was passed inthe meeting held on 20 October 2016. Further your Directors have recommended a finaldividend payment of 2.30 per equity share for the financial year 2016-17 making a totalof 5.30 per equity share for the financial year as compared to 4.10 per equity share forthe last year. This final dividend is subject to approval by the shareholders at theensuing AGM.

The total dividend appropriation (excluding dividend tax) for the current year is45086384.50 as against 34878146.50 in the earlier year resulting in a pay-out of18.15 per cent of the stand-alone profit and is in line with the dividend policy adoptedby the Company.

SHARE CAPITAL

The paid-up equity share capital as on 31 March 2017 stood at 85.07 million.

REVIEW OF OPERATIONS

The financial year saw an increase in sales by 22 per cent and an increase in netprofit after tax by 29 per cent.

The mandate for improving the bottom line was well regarded.

The business verticals continued to be:

1. Poultry vaccines

2. Poultry health products

3. Large animal vaccines

4. Large animal health products

The poultry vaccine division witnessed a growth of 19.62 per cent an increase in salesto 1022.42 million from 854.70 million in the previous year. The growth which was higherthan budgeted mainly came from sales through our distributor network across the country.Our growth being more than the growth of the poultry industry has improved our marketshare in India.

The poultry health products division witnessed a growth of 9.20 per cent an increasein sales to 36.80 million as compared to sales of 33.70 million in the previous year. Thisgrowth was below our budgeted figures mainly due to delay in the launch of new products.We have launched a few products in the last quarter which would show results in thisfinancial year.

Overall poultry divisions jointly grew at 19.22 per cent.

The large animal vaccine division achieved sales of 68.23 million as against 21.30million in the previous year registering a growth of 220 per cent. We launched theBrucella Abortus Live Vaccine besides penetrating the market with the PPR vaccine.

The large animal health products division saw a growth of 15.43 per cent an increasein sales to 83.80 million from 72.60 million. The year went in setting controls to ensurea strong foundation in terms of collection policies and rationalisation of Stock KeepingUnits. The positive impact is expected to be seen in this year.

Overall large animal divisions jointly grew at 61.84 per cent.

Exports grew by 44 per cent; an increase in sales to 144.31 million from 100.20 millionin the previous year. The exports comprised mainly of poultry and large animal vaccines.In the year 2016-17 we received registration approvals for 22 poultry vaccines in threecountries.

Domestic sales grew by 21 per cent.

The launch of the diagnostics division which was slated for February 2017 gotpostponed to June 2017. This delay was due to getting regulatory approvals. With thisdivision now launched we hope to generate sales as well as have a captive consumption ofdiagnostic kits.

The Nepal plant commenced it sales by executing an order for PPR vaccine valuing 13.10million for supplies to Africa.

During the year CARE has upgraded our credit rating as follows:

• Long-term rating ‘A- ("A" Minus)' from ‘BBB+'

• Short-term rating ‘A2' from ‘A3'

We continue to hold the following certifications:

1. WHO - GMP

2. GLP (Good Laboratory Practices)

3. ISO 9001:2008

4. ISO 14001:2004

5. OHSAS 18001:2007

6. DSIR approved R&D centre

CONSOLIDATED FINANCIAL STATEMENTS

The Group's consolidated total income from operations is 1230.40 million and netprofit after minority interest is 234.48 million for the financial year FY2016-17 ascompared to the Group's consolidated total income from operations of 1008.92 million andnet profit after minority interest of 191.96 million for the previous financial yearFY2015-16. Consolidated financial results include the financial results of HesterBiosciences Nepal Private Limited the Subsidiary of Hester Biosciences Limited.

In accordance with the Accounting Standard - AS-21 on Consolidation of FinancialStatements and as provided under the provisions of the Companies Act 2013 (hereinafterreferred to as "Act") read with Schedule III to the Act and Rules madethereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the audited Consolidated Financial Statements are provided in the Annual Reportwhich show the financial resources assets liabilities incomes profits and otherdetails of the Company its subsidiary Company after elimination of minority interest asa single entity.

SUBSIDIARY JOINT-VENTURE AND ASSOCIATE COMPANIES

As on 31 March 2017 your Company has one subsidiary Company namely Hester BiosciencesNepal Private Limited.

Further there has been no material change in the nature of business of the subsidiary.

During the year Leruarua Vetcare (Proprietary) Limited Botswana ceases to be anAssociate Company due to buyback of entire shareholding by the Associate Company.

The audited financial accounts of the Subsidiary Company will be available forinspection during business hours at our registered office. Further the financialhighlights of Subsidiary are part of this Annual Report as Annexure-2 as prescribed inForm AOC-1.

As provided under section 129(3) of the Companies Act 2013 and Rules made thereunder astatement containing the salient features of the financial statements of its subsidiariesin the format prescribed under the rules is attached to the financial statements. Thepolicy relating to material subsidiaries as approved by the Board may be accessed on theCompany's website at the link: https://www.hester.in/corporate-governance/policy fordeterminingmaterialsubsidiaries.pdf

The performance of the Subsidiary Company is as under:

Hester Biosciences Nepal Private Limited (HBNPL)

HBNPL is a subsidiary of Hester Biosciences Limited.

HBL holds 65 per cent stake in HBNPL hence becoming a subsidiary of Hester BiosciencesLimited. HBNPL is in the business of manufacturing veterinary vaccines in Nepal.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointment and Resignation ofDirectors

During the year Ms. Priya Gandhi resigned as an alternate Director of Mr. Ravin Gandhias on 7 May 2016. Further

Ms. Nina Gandhi was appointed as an Alternate Director of Mr. Ravin Gandhi from 7 May2016.

None of the Directors of the Company is disqualified for being appointed as Director asspecified in Section 164 (2) of the Companies Act 2013.

The terms and conditions of appointment are placed on the website of the Company:www.hester.in

Retirement by rotations

In accordance with the provisions of Section 152 (6) of the Act and in terms of theArticles of Association of the Company Mr. Sanjiv Gandhi Director (DIN - 00024548) willretire by rotation at the ensuing Annual General Meeting and being eligible offershimself for reappointment. The Board recommends his re-appointment.

Profile of Directors seeking appointment/re-appointment

As required under Regulation 36 (3) of the SEBI (LODR) Regulations 2015 particularsof Directors seeking appointment/re-appointment at the ensuing Annual General Meeting areannexed to the notice convening 30th Annual General Meeting.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director underSection 149 (7) of the Companies Act 2013 that they meet the criteria of independencelaid down in Section 149 (6) of the Companies Act 2013. The terms and conditions of theIndependent Directors are incorporated on the website of the Company as per Regulation46(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 at:https:// www.hester.in/information/termsandconditions-ofappointmentofindependentdirectors.pdf

Training of Independent Directors

To familiarise the new inductees with the strategies operations and functions of ourCompany the executive directors/senior managerial personnel make presentations to theinductees about the Company's strategies operations product and service offeringsorganisation structure finance human resources technology quality and facilities.Further the Company has devised a Familiarisation Program for Independent Directors asper Regulation 46 (2) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and the same has been placed on the website of the Company at:https://www.hester.in/familiarisation- programme-independent-directors2016-17.pdf

Key Managerial Personnel

Mr. Rajiv Gandhi CEO & Managing Director Mr. Jigar Shah Chief Financial Officerand Ms. Amala Parikh Company Secretary of the Company are the Key Managerial Personnel asper the provisions of the Companies Act 2013. There is no change in Key ManagerialPersonnel during the year.

The Board of Directors had on recommendation of Nomination and Remuneration Committeere-appointed Mr. Rajiv Gandhi as CEO & Managing Director of the Company for the threeyears starting from 1 April 2017 by passing resolution in the meeting dated 20 October2016. The members of the Company had approved the reappointment of Mr. Rajiv Gandhi as CEO& Managing Director by postal ballot and results of the Postal Ballot Process wasdeclared on 22 December 2016.

Board Evaluation

Pursuant to the provisions of the Act and the SEBI Regulations the Board has carriedout the annual performance evaluation of all the Independent Directors. Further all theIndependent Directors have reviewed the performance of all non-Independent Directors andthe Board of Directors as a whole in their meeting held on 19 January 2017. The criteriaapplied in the evaluation process are explained in the Corporate Governance Report.

Nomination and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy on selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report whichis a part of this Annual Report.

Directors' Responsibility Statement

As stipulated in Section 134(3)(c) read with 134(5) of the Companies Act 2013Directors' subscribe to the "Directors' Responsibility Statement" and confirmthat:

a) In preparation of annual accounts for the year ended 31 March 2017 the applicableaccounting standards have been followed and no material departures have been made from thesame;

b) The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for that year;

c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) The Directors had prepared the annual accounts for the year ended 31 March 2017 ongoing concern basis;

e) The Directors had laid down the internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

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

Board of Director Meetings

The Board consists of eight members as on 31 March 2017 four of whom are Promoters andNonIndependent Directors and the remaining four are Independent Directors.

Regular meetings of the Board are held at least once in a quarter inter-alia toreview the quarterly half yearly and annual financial results of the Company. AdditionalBoard meetings are convened to discuss and decide on various business policies strategiesand other businesses.

During the year under review the Board of Directors of the Company met six times: 7May 2016 29 June 2016 29 July 2016 20 October 2016 19 January 2017 and 22 March 2017.

Committees of Board of Directors

Your Company has several Committees which have been established as part of bestcorporate governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders' Grievances and Relationship Committee

• Corporate Social Responsibility Committee

• Management Committee

• Share Transfer Committee

A detailed note on the committees with respect to composition meetings powers andterms of reference is provided under the corporate governance report section in thisAnnual Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE ("CSR")

The CSR Committee is responsible for indicating the activities to be undertaken by theCompany monitoring the implementation of the framework of the Corporate SocialResponsibility Policy and recommending the amount to be spent on CSR activities.

Corporate Social Responsibility (CSR) Committee and Statutory Disclosures with respectto CSR Committee and an Annual Report on CSR Activities forms part of this Directors'Report as Annexure-1.

PUBLIC DEPOSITS

During the period under review the Company has not accepted deposits from shareholdersand public falling within the ambit of Section 73 of the Companies Act 2013 and rulesmade thereunder.

FINANCE

The working capital requirement and all capital expenditures were funded throughinternal accruals. During the year the company has raised the finance through workingcapital demand loan (unsecured) facility from Yes Bank Limited.

INSURANCE

Assets of your Company are adequately insured against various perils.

VIGIL MECHANISM

The Company has established a vigil mechanism and accordingly framed a Whistle BlowerPolicy. The policy enables the employees to report instances of unethical behaviouractual or suspected fraud and violation of Company's Code of Conduct to the management.Further the mechanism adopted by the Company encourages the Whistle Blower to reportgenuine concerns or grievances and also provide for adequate safeguards againstvictimisation of the whistle blower who avails of such mechanism and offers direct accessto the Chairman of the Audit Committee in exceptional cases. The functioning of vigilmechanism is reviewed by the Audit Committee from time to time. No whistle blower has beendenied access to the Audit Committee of the Board. The Whistle Blower Policy of theCompany is available on the website of the Company.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

During the year under review there were no incidences of sexual harassment reportedin terms of the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and Regulations 17 to 27 and 46 of the SEBI (LODR) Regulations 2015. A separatesection on detailed report on Corporate Governance practice followed by the Company underSEBI (LODR) Regulations 2015 along with a certificate from Practicing Company Secretaryconfirming the compliance forms a part of this report.

The Board of Directors supports the basic principles of corporate governance and laysstrong emphasis on transparency accountability and integrity.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your attention is drawn to the perception and business outlook of the management foryour company for the current year and for the industry in which it operates including itsposition and perceived trends in near future. The Management Discussion and AnalysisReport as required under Regulations 34 of the SEBI (LODR) Regulations 2015 with theStock Exchanges is attached and forms part of this Directors' Report.

AUDITORS

Statutory Auditors and their report

Apaji Amin & Co. LLP Chartered Accountants Ahmedabad (Firm Registration No.100513W/W100062) who is the statutory auditor of your Company; hold Office until theconclusion of the 30th AGM to be held in the year 2017 subject to ratification of itsappointment at every AGM. The Members year on year will be requested to ratify itsappointment as Auditor and to authorise the Board of Directors to fix their remuneration.

The Board has duly reviewed the Statutory Auditor's Report for the year ended on 31March 2017 and the observations and comments appearing in the report are self-explanatoryand do not call for any further explanation/ clarification by the Board of Directors asprovided under section 134 of the Companies Act 2013.

Internal Auditors and their report

Naresh J. Patel & Co. Chartered Accountants Ahmedabad has been the internalauditor of the Company for the FY 2016-17. The Internal Auditor is appointed by the Boardof Directors of the Company on a yearly basis based on the recommendation of the AuditCommittee. The Internal Auditor reports and its findings on the internal audit of theCompany to the Audit Committee on a quarterly basis. The scope of internal audit isapproved by the Audit Committee.

The Board has appointed Naresh J. Patel & Co. Chartered Accountants Ahmedabad forthe FY 2017-18 as an Internal Auditor of the Company in the Board meeting held on 8 May2017 after obtaining its willingness and eligibility letter for appointment as InternalAuditor of the Company.

Cost Auditors and their report

Pursuant to provisions of Section 148 read with Companies (Audit & Auditors) Rules2014 and other applicable provisions if any of the Companies Act

2013 the Board of Directors had on recommendation of the Audit Committeere-appointed Kiran J. Mehta &

Co. Cost Accountants Ahmedabad as the Cost Auditor of the Company for the financialyear 2016-17 on the remuneration terms as approved by the members at the last AnnualGeneral Meeting held on 29 July 2016.

The Cost Audit report for the financial year 2015-16 was filed within the due date. Thedue date for submission of the Cost Audit Report for the financial year 2016-17 is within180 days from 31 March 2017.

The Board has appointed Kiran J. Mehta & Co. Cost Accountants Ahmedabad for theFY 2017-18 as a Cost Auditor of the Company in the Board meeting held on 8 May 2017 afterobtaining its willingness and eligibility letter for appointment as Cost Auditor of theCompany. As required under the Act and Rules made thereunder the remuneration payable tothe Cost Auditors is required to be placed before the Members in a general meeting forratification. Accordingly a resolution seeking ratification by members for theremuneration payable to Kiran J. Mehta & Co. is included in the Notice convening 30thAnnual General Meeting of the Company.

Secretarial Auditor and their report

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules

2014 the Board of Directors had appointed Mr. Tapan Shah Practicing CompanySecretary to undertake the Secretarial Audit of the Company for the FY 2016-17.

The Secretarial Audit Report for the FY 2016-17 is annexed to this Directors' Report asAnnexure-7. The Board of Directors has duly reviewed the Secretarial Auditor's Report andthe observations comments appearing in the report are self-explanatory and do not callfor any further explanation/clarification by the Board of Directors as provided undersection 134 of the Act.

Accordingly the Board of Directors has appointed Mr. Tapan Shah Practicing CompanySecretary to undertake the Secretarial Audit of the Company for the FY 2017-18 in theBoard Meeting held on 8 May 2017.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

EXTRACT OF ANNUAL RETURN

Pursuant to Sub-section 3(a) of Section 134 and Subsection (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of Companies (Management and Administration) Rules2014 the extract of the Annual Return as at 31 March 2017 in Form MGT-9 forms part ofthis Annual Report as Annexure-3.

CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the related party transactions that were entered during the financial year were inthe ordinary course of business of the Company and were at arm's length basis. There wereno materially significant related party transactions entered by the Company with itsPromoters Directors

Key Managerial Personnel or other persons which may have potential conflict with theinterest of the Company.

All Related Party transactions are placed before the Audit Committee for approvalwherever applicable. Prior omnibus approval for normal business transactions is alsoobtained from the Audit Committee for the related party transactions which are ofrepetitive nature and accordingly the required disclosures are made to the Committee on aquarterly basis in terms of the approval of the Committee.

The Policy on Related Party Transactions as approved by the Board of Directors isuploaded on the website of the Company: https://www.hester.in/corporate-governance/relatedpartytransactionpolicy.pdf

All the related party transactions entered into by the Company were in the ordinarycourse of business and were on an arm's length basis as provided in Annexure-4.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Information relating to conservation of energy technology and foreign earning andoutgo as required under Section 134(3)(m) of the Companies Act 2013 forms part of thisDirectors' Report as Annexure-5.

PARTICULAR OF EMPLOYEES

The information required under section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and

Remuneration of Managerial Personnel) Rules 2014 is given in this Annual Report asAnnexure-6.

LISTING OF SECURITIES AND FEES

The Company's Equity Shares are listed on the BSE Limited (BSE) and the National StockExchange of India Limited (NSE). The Company has already paid the listing fees to both theStock Exchanges for the Financial Year 2017-18.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of financial year and the date of Directors'Report.

RISK MANAGEMENT POLICY AND FRAMEWORK

Risk management is embedded in your Company's operating framework. Your Companybelieves that managing risks helps in maximising returns. The Company's approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has its internal audit function which endeavours to make meaningfulcontributions to the organisation's overall governance risk management and internalcontrols. The function reviews and ensures sustained effectiveness of Internal FinancialControl by adopting a systematic approach to its work.

As per the provisions of Section 177 of the Companies Act 2013 (the Act) and one ofthe roles and responsibility of the Audit Committee is to review the effectiveness of theCompany's internal control system including financial controls information technologysecurity and its control. Section 143(3) of the Act provides that the Statutory Auditor'sReport shall state whether the Company has an adequate Internal Financial Control systemin place and the operating effectiveness of such controls for FY2016- 17 and beyond. Asper Section 134 of the Act Directors of listed companies based on the representationsreceived from the management are to confirm in the Directors Responsibility Statementthat Internal Financial Control are not only adequate but are also operating effectively.

For the year ended on 31 March 2017 the Board having opinion that the Company hassound Internal Financial Control commensurate with the size scale and complexity of itsbusiness operations. The Internal Financial Control operates effectively and no materialweakness exists.

The Company has a process in place to continuously monitor the same and identify gapsif any and implement new and/or improved controls whenever the effect of such gaps wouldhave a material effect on the Company's operations.

GENERAL

Your Directors state that the Company has made disclosures in this report for the itemsprescribed in section 134 (3) of the Act and Rule 8 of the Companies (Accounts) Rules2014 to the extent the transactions took place on these items during the year and nodisclosure or reporting is required in respect of the following items as there were notransactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and ESOS.

3. The Managing Director of the Company has not received any remuneration or commissionfrom any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

ACKNOWLEDGEMENT

Your Directors express their appreciation for the assistance and co-operation receivedfrom the State Bank of India various government authorities customers vendors andmembers during the year under review.

Your Directors also wish to place on record their deep sense of appreciation for thecommitted services by the executives staff and workers of the Company.

By order of the Board
Date: 8 May 2017 Rajiv Gandhi
Place: Ahmedabad CEO & Managing Director

Annual Report 2016-17 Statutory Section

Annexure-5

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION FOREIGNEXCHANGE AND OUTGO

(Pursuant to the Companies (Accounts) Rules 2014)

A. CONSERVATION OF ENERGY

i) The steps taken or impact on conservation of energy:

1) LED Street lighting - Completed in December 2016 Target:

a) Energy saving

b) Reduction in break down/ maintenance

Action: LED Street light fitting total nos. 86 replaced in December 2016.

2) New HVAC chillers- Completed in March 2017.

Target:

a) To achieve temperature in production facility

b) Savings in electricity bill.

c) Reduction of maintenance cost

d) Reduction in noise/vibrations to admin area in defined limit of 85 dB

Action:

a) Saving of electricity bill 12 to 14 per cent; saving of 1.0 to 1.05 lakh/month.

Initiatives in the Pipeline

3) Rainwater Harvesting Target: Rainwater harvesting at site

Action: Once Egg Harvest project will be completed in September 2017 Rainwaterproject work will start in October 2017; expected completion by March 2018. This will helpto recharge ground water level.

4) New reject water sump

Target: Per day approximately 30000 litres of reject water is going to ETP. OnceEgg Harvest facility will be functional ETP load will be further increased by 30000litres. To reduce load of ETP reject water sump is proposed and under construction.

Action: A new 2 lakh litres capacity sump is under construction to be functionalby June end for reject water to be treated for reuse for gardening.

ii) The steps taken by the Company for utilising alternate sources of energy:

There were no steps taken by the Company for utilising alternate sources of energy.

iii) The capital investment on energy conservation equipment: The Company has notmade any capital investment on energy conservation equipment during the year under review.

B. TECHNOLOGY ABSORPTION

i. The effort made towards technology absorption-

There were no new technologies acquired by the Company besides the on-going in-houseR&D work. The Company has a focus to develop in-house technologies and reduce thedependency on outside acquired technologies.

ii. The benefit derived like product improvement cost reduction product developmentor import substitution-

Product improvement is an on-going activity in the Company. It has been well reflectedin the financials by way of improved operating margins. The endeavour is to keep theefforts on to further reduce the operating margins.

iii. In case of imported technology (imported during the last three years reckoned fromthe beginning of the financial year)-

We have not acquired any technology from international sources during the year.

iv) THE EXPENDITURE INCURRED ON RESEARCH AND DEVELOPMENT

(Rs. in million)

Particulars FY 2016-17 FY 2015-16
Capital 51.60 9.90
Recurring 28.34 41.13
Total 79.94 51.03
Total R&D expenditure as a percentage of turnover 6.49% 5.06%

C. FOREIGN EXCHANGE EARNINGS AND EXPENDITURE

The Company is continuously focusing on supplying its products to various countries andworking to aim a larger presence in export market. The total foreign exchange earnings andexpenditure are given below:

A. EXPENDITURE IN FOREIGN CURRENCY (Rs. in million)
Particulars FY 2016-17 FY 2015-16
Purchase/Materials/Trading goods/Packing (including payment to creditors) 32.99 23.81
Travelling 6.56 6.72
Capital Expenditure (Furniture and Machinery) 23.82 1.58
Membership/Registration fees 0.67 0.19
Consultancy and Professional fees 0.17 1.21
Books & Periodicals 0.13 0.20
Others 0.09 0.48
Office maintenance 3.84 -

B. EARNING IN FOREIGN CURRENCY

Particulars FY 2016-17 FY 2015-16
F.O.B. value of exports 134.63 92.71
Other Operating Income 20.42 27.16

 

By order of the Board
Date: 8 May 2017 Rajiv Gandhi
Place: Ahmedabad CEO & Managing Director

Annexure-6

PARTICULARS OF EMPLOYEES

A. The ratio of the remuneration of each Director to the median employee's remunerationand other details in terms of Sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014:

a) The ratio of remuneration of each Director to the median employee's remuneration forthe financial year:

Sr. No. Name Designation Ratio
1 Mr. Rajiv Gandhi CEO & Managing Director 70.79: 1

b) The percentage increase in remuneration of each director Chief Financial OfficerChief Executive Officer Company Secretary or Manager if any in the financial year:

Sr. No. Name Designation Percentage (%)
1 Mr. Rajiv Gandhi CEO & Managing Director 50.61
2 Mr. Jigar Shah Chief Financial Officer -
3 Ms. Amala Parikh Company Secretary -

c) The percentage increase in the median remuneration of employees in the Financialyear: 16.68 per cent

d) The number of permanent employees on the rolls of the Company: 350 Employees

e) Average increase in the Salaries of the employees and managerial remuneration:

The average annual increase in the salaries of the employees other than managerialpersonnel was 9.16 per cent whereas the average increase in the managerial remunerationwas 50.61 per cent for the financial year.

The higher increase in managerial remuneration was on the recommendation of Nominationand Remuneration Committee considering the performance of the managerial personnel and theCompany.

The Board of Directors of the Company hereby affirmed that remuneration of all the KeyManagerial Personnel of the Company are as per the Remuneration Policy of the Company.

B. Particulars of employee in terms of Sub-section 12 of Section 197 of the CompaniesAct 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014:

There was no employee except Mr. Rajiv Gandhi CEO & Managing Director of theCompany employed throughout the financial year with salary above 1 Crore and 2 Lakh perannum or employed in part of the financial year with an average salary above 8 Lakh and 50Thousands per month. Details of Remuneration paid to Mr. Rajiv Gandhi is as under:

Name of Employee Mr. Rajiv Gandhi
Designation CEO & Managing Director
Remuneration 18 million
Nature of Employment Key Managerial Personnel
Qualification and experience of the employee B. Com. and Diploma in Marketing Management & Poultry Management. Mr. Rajiv Gandhi has over 32 years' experience in management particularly in distribution and marketing of animal health products.
Date of Commencement of employment 29 April 1987
Age 54 years
Particulars of Previous Employment -
% of Equity Shares held in the Company 11.16

Further there is no employee employed throughout the financial year or part thereofwas in receipt of remuneration in aggregate in excess of that drawn by the ManagingDirector or Whole-time Director or Manager and holds by himself or along with his spouseand dependent children not less than two per cent (2 per cent) of the equity shares ofthe Company.

By order of the Board
Date: 8 May 2017 Rajiv Gandhi
Place: Ahmedabad CEO & Managing Director