Source Natural Foods and Herbal Supplements Limited Bangalore
Your Directors are pleased to present the 22nd Annual Report of the Companytogether with Audited Financial Statements for the year ended 31st March 2017.
1. FINANCIAL RESULTS:
|Particulars ||31.03.2017 ||31.03.2016 |
|Total revenue ||1594.66 ||1093.14 |
|Profit/ (Loss) before exceptional and extraordinary items ||140.98 ||47.72 |
|and tax || || |
|Exceptional Items ||- ||- |
|Profit before extraordinary items and tax ||140.98 ||47.72 |
|Extraordinary Items ||- ||- |
|Tax expenses ||28.74 ||5.05 |
|Net Profit/ (Loss) carried to Balance Sheet ||140.44 ||42.67 |
|Earnings Per Share (Basic/ Diluted) ||2.18 ||0.66 |
The Total revenue of the Company for the year ended 31st March 2017 was Rs.1594.66 Lakhs which has increased by 45.87 % as compared to the total revenue of theprevious year of Rs. 1093.14 Lakhs. The Net Profit of the Company during the financialyear under review is Rs. 140.44 Lakhs as compared to 42.67 Lakhs during the previous year.The increase in revenue is due to entry in new market areas and sales of flagship productsof the Company. The Company has made an additional investment of Rs. 56.89 Lakhs in theFixed Assets during the year in order to augment and enhance the production activities ofthe Company.
During the year there was increase in expenses towards advertisement rapid increasein foreign expenses in order to augment the Marketing team and brand building of theCompany s products. As the benefits of these expenses will be derived over a long periodof time your Directors are optimistic for the future growth of the Company.
3. FUTURE OUTLOOK:
The Ayurveda and Herbal Supplement sector has huge potential for growth not only inIndia but all over the world. The Company has a vision to make Ayurveda and HerbalSupplements to become part of every individual s daily consumption. The Company willcontinue to contribute its might to the growth of Ayurveda and Herbal Supplements and atthe same time enhance shareholders wealth by accelerated performance.
4. RESEARCH AND DEVELOPMENT:
Ayurveda is a system of Medicine with high credentials as a Holistic Healing andwellness Science. It is concerned with the whole and complete system rather than with theanalysis or treatment of parts. It attempts to treat both the Mind and the Body. Researchand Development is a core activity in any pharma industry and through its scientificvalidation it will help to reinstate the high credentials of Ayurveda System of Medicineas a holistic Healing and wellness science.
Your Company focuses on ongoing R & D which helps it to achieve its coreobjectives so as to bring more herbal and organic products in to the existing/ new productportfolio and to add more value to the existing products and develop organic food andnutritional supplements with an optimum mix of naturally available ingredients forattaining a sustainable improvement in the Health of all age Groups.
Over the years the Company has developed a variety of products on the basis of theircontinued and in depth efforts in R & D and it also understands that combining richAyurveda wisdom with modern science will help in providing simple but effective methods ofAyurveda. Research and Development activities undertaken by the Company will also enableit to adhere to the benchmarks and standards set by the Government and other StandardInstitutes.
In order to conserve the available resources for future growth your Directors do notrecommend any Dividend for the financial year ended 31.03.2017.
6. AMOUNT TRANSFERRED TO RESERVES:
The amount to be carried to Reserves is Rs. 140.44 Lakhs.
7. CHANGE IN THE NATURE OF BUSINESS:
There is no change in nature of business of the Company during the year.
8. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OFTHE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIALSTATEMENTS RELATE AND THE DATE OF THE REPORT:
No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these financial statements relateon the date of this report.
9. SHARE CAPITAL:
The Authorised Share Capital of your Company is Rs. 90000000/- divided into9000000 Equity Shares of Rs. 10/- each. The Paid up Capital is Rs. 64369310 /-divided into 6436931 Equity Shares of Rs. 10/-each.
During the year under review there is no change in the Share Capital of the Company.
a. Provision of money by company for purchase of its own shares by employees or bytrustees for the benefit of employees:
The Company has not made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees as per Rule 16(4) of Companies(Share capital and Debentures) Rules 2014.
b. Issue of Sweat Equity Shares:
The Company has not issued any sweat equity share during the financial year inaccordance with the provisions of Section 54 of Companies Act 2013 read with Rule 8 ofthe Companies (Share Capital and Debentures) Rules 2014.
c. Issue of Equity Shares With Differential Rights:
The Company has not issued any equity shares with differential voting rights during thefinancial year as per Rule 4(4) of Companies (Share capital and Debentures) Rules 2014.
d. Issue of Employee Stock Option:
The Company has not issued any employee stock option during the financial year as perRule 12 of Companies (Share Capital and Debentures) Rules 2014.
Pursuant to the provisions of Section 152 of the Companies Act 2013 and the Articlesof Association of the Company Shri Narayanan Narasimhan retires by rotation at theconclusion of the ensuing Annual General Meeting and being eligible offers himself forre-appointment.
During the period under review pursuant to Section 161 of the Companies Act 2013 theBoard appointed Mr. Tejagna Kashmira Katpitia as Additional Director wef June 14 2017 whoshall hold office till the ensuing Annual General Meeting. Pursuant to Section 160 Act anotice has been received from a member proposing his candidature for the office of aDirector. The Board recommends his appointment as Director pursuant to Section 152 of theCompanies Act 2013.
As per Section 196 and Section 2013 of the Companies Act 2013 and the recommendationof the Nomination and Remuneration Committee Mr. Tejagna
Kashmira Katpitia has been appointed as Whole-time Director for a period of Five yearswith effect from 01.08.2017 without any remuneration. The Board recommends approval ofthe said resolution in the ensuing Annual General Meeting.
The profiles of Directors retiring by rotation and of those proposed to be appointedare given elsewhere in the Annual Report.
Mr. Nikhil Sen (Independent Director) resigned from the directorship of the Company dueto his pre-occupation wef August 12th 2017. The Board places on record itsappreciation for the services rendered by him during his tenure.
11. NUMBER OF MEETINGS OF THE BAORD:
During the financial year under review the Board met Six times on 28.05.201611.08.2016 11.11.2016 09.12.2016 13.02.2017 and 27.03.2017.
The details of the meetings of the Board are covered in the Corporate GovernanceReport annexed herewith.
12. KEY MANAGERIAL PERSONNEL:
In compliance with Section 203 of the Companies Act 2013 the following are the Keymanagerial Personnel of the Company:
|Mr. Arvind Varchaswi N. ||- Managing Director |
|Mr. Tejagna K. Katpitia ||- Whole-time Director |
|Mr. Ravi Shankar Murthy GV ||- Chief Financial Officer* |
|Mrs. Sweta Joshi ||- Company Secretary |
* Appointed with effect from 05.12.2016 and resigned on 12.08.2017
During the year under review Mr. Vijayendra R resigned as the Company Secretary andCompliance Officer of the Company. Subsequently the Board appointed Mrs. Sweta Joshi asthe Company Secretary and Compliance Officer of the Company with effect from 13.02.2017.
13. DECLARATION OF INDEPENDENT DIRECTORS:
In accordance with Section 149(7) of the Companies Act 2013 the Independent Directorsof your Company have given a Declaration that they meet the criteria of Independence asprovided in sub section (6) of Section 149 of the Act. There has been no change in termsand conditions of appointment of Independent Directors. The Policy relating to appointmentof Independent Directors is available on the website of the Company:http://www.source-natural.com
14. POLICY ON DIRECTORS APPOINTMENT ANNUAL PERFOMANCE EVALUATION OF THE BOARD ANDPOLICY ON REMUNERATION:
Pursuant to the requirement under Section 134(3) (e) and Section 178(3) of theCompanies Act 2013 the policy on appointment of Board members including criteria fordetermining qualification positive attributes independence of a director and the policyon remuneration of Directors KMP and other employees is available on the website of theCompany: http://www.source-natural.com and is attached as Annexure
1 which forms part of this report.
In a separate meeting of Independent directors performance of non-independentdirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive directors and non-executivedirectors. The same was discussed in the Board meeting that followed at which theperformance of the Board its Committees and individual directors was discussed.
In accordance with Regulation 17(10) of SEBI Listing Regulations the Board ofDirectors of the Company shall evaluate the performance of Independent Directors of theCompany. Performance evaluation of Independent Directors was done by the entire Boardexcluding the Independent Directors being evaluated.
15. PARTICULARS OF REMUNERATION TO DIRECTORS/ KMP/ EMPLOYEES:
There were no employees during the year 2016-17 covered under the provisions of Section197 of the Companies Act 2013.
The details of Remuneration paid to the Directors Key Managerial Personnel andEmployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenin Form MGT-9 forming part of the Directors Report.
A statement on the Ratio of the remuneration of each director to the medianremuneration of the employees of the Company and the related remuneration details isprovided in Annexure - 2 to this report.
16. DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the provisions under Section 134(5) of the Companies Act 2013 withrespect to Directors Responsibility Statement the Directors confirm:
a. That in the preparation of the Annual Accounts the applicable Accounting Standardshave been followed and no material departures have been made from the same; b. That theyhave selected such accounting policies and applied them consistently and made judgmentsand estimates that are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period; c. That they have taken proper and sufficient carefor the maintenance of adequate accounting records in accordance with the provisions ofthe Companies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities; d. That they have prepared the annual accountson a going concern basis; e. That they have laid down internal financial controls to befollowed by the Company and that such internal financial controls are adequate and wereoperating effectively; and f. That they have devised proper systems to ensure compliancewith the provisions of all applicable laws and that such systems were adequate andoperating effectively.
In accordance with Section 139 of the Companies Act 2013 and rules thereunder M/s.Srinaga & Giridharan Chartered Accountants were appointed as the Statutory Auditorsof the Company at 21st Annual General Meeting for a period of 5 years subjectto the ratification at every Annual General Meeting.
In view of the above the Board recommends the ratification of appointment of M/s.Srinaga & Giridharan Chartered Accountants as the Statutory Auditors of the Company.Accordingly the Company has received consent and Certificate to the effect that theirappointment is within prescribed limits under Section 141 of the Companies Act 2013.
The Audit Report for the financial year 2016-17 as certified by the Statutory Auditorsof the Company does not contain any qualification reservation or adverse remarks andtherefore does not require any explanations from the Directors.
18. SECRETARIAL AUDIT REPORT:
The Board appointed Mr. Ajay Suman Shrivastava Practicing Company Secretary to carryout Secretarial Audit for the financial year 2016-17 under the provisions of Section 204of the Companies Act 2013. The Secretarial Audit Report is annexed to this report as Annexure- 3. There are no qualifications and adverse remarks made by the Auditor in theReport.
19. MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report prepared in accordance with Schedule Vof the SEBI Listing Regulations is annexed to this report as Annexure - 4 .
20. CORPORATE GOVERNANCE REPORT:
The Company s philosophy on Corporate Governance oversees business strategies andensures fiscal accountability ethical corporate behaviour and fairness to allstakeholders comprising regulators employees investors and the society at large. TheCompany has adopted a uniform Code of Conduct for Directors Senior Management Personneland other Executive level officers to ensure proper ethical standards and further ensuredue compliance to such established standards.
The Report on Corporate Governance as per Schedule V of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 covering amongst other matters thedetails of Meetings of the Board and Committees along with Compliance Certificate onCorporate Governance received from the Statutory Auditors is attached herewith as Annexure- 5 to this report.
21. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL:
During the year under review there has been no significant and material orders passedby any regulators or courts or tribunal.
22. RISK MANAGEMENT:
The Company has comprehensive risk assessment and minimization procedure which arereviewed by the Board and the Audit Committee of the Company. The Company identifies risksand control systems to mitigate them are in place. In the opinion of the Board at presentthere are no risks which may threaten the existence of the Company
23. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS:
The Company has in place adequate internal financial controls which are commensurateand adequate with the size and scale of operations of the Company. During the year underreview such controls were tested and no reportable material weakness in the design oroperation were observed.
24. ESTABLISHMENT OF VIGIL MECHANISM:
The Company has adopted a Whistle Blower Policy and has established the necessary vigilmechanism as defined under Regulation 22 of SEBI Listing Regulations for directors andemployees to report concerns about unethical behaviour. Adequate safeguards agaisntvictimization of employees and Directors who express their concerns forms part of themechanism. The Company has also provided direct access to the chairman of the AuditCommittee on reporting issues concerning the interests of the employees and the Company.The said policy has been also put up on the website of the Company -www.source-natural.com.
25. CORPORATE SOCIAL RESPONSIBILITY (CSR):
As your Company s net worth does not exceed Rs. 500 Crores (or) Company s turnover doesnot exceed Rs. 1000 Crores or company s net profit does not exceed Rs.
5 Crores for the financial year the provisions under Section 135 of the Act read withrules made thereunder are not applicable. Hence the compliance to the initiative ofCorporate Social Responsibility is not required.
However as a good Corporate Citizen the Company aims to provide sustainable value tothe society in which it operates. Moreover your Company is focused to bring
Ayurveda into every individual s daily diet by manufacturing various Ayurvedic andherbal products thus elevating the healthcare standards in the country as a whole.
The shares of your Company are listed at BSE Limited and traded actively during theyear. Your Company has duly complied with all the applicable provisions of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
a. Extract of Annual Return:
Pursuant to the Section 92(3) of the Companies Act 2013 the extract of the AnnualReturn in Form MGT-9 is annexed to this report as Annexure - 6.
b. Conservation of Energy Technology Absorption and Foreign Exchange
Earnings and Outgo:
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 the details of conservation of energy andtechnology absorption and Foreign exchange earnings and outgo are attached as
Annexure - 7.
c. Subsidiary Holding Associate Companies:
There are no subsidiaries to your Company as on the date of report. In terms of theshareholding the Company is a subsidiary of Sriveda Sattva Private Limited.
d. Particulars of Loans Guarantees or Investments made under Section 186 of theCompanies Act 2013:
There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the details required to befurnished herein are NIL.
e. Particulars of Contracts or Arrangements made with Related Parties:
All the related party transactions are entered on arm s length basis and in theordinary course of business in compliance with the applicable provisions of the CompaniesAct 2013 and the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.
The details of the transactions with related parties are provided in the Notes to thefinancial statements.
f. Fixed Deposits:
Your Company has not accepted any Fixed Deposits from the Public within the meaning ofSection 73 to 76 of the Companies Act 2013 during the year under review.
Your Directors take this opportunity to express their gratitude for the assistance andco-operation extended by Government Authorities Bank named The State Bank of Mysore andother business associates along with our estimated Shareholders. Your Directors alsoacknowledge the support extended by the Company s employees for their dedicated services.
|Place: Bangalore || ||On Behalf of the |
|Board || || |
|Date: 12.08.2017 || || |
| ||(Arvind Varchaswi N.) ||(Sriram Chandrasekharan) |
| ||Managing Director ||Director |
| ||DIN: 00143713 ||DIN: 02213018 |