Your Directors have pleasure in presenting the 28th Annual Report togetherwith the Audited Financial Statements of the company for the year ended 31stMarch 2015.
|Particulars || ||(Rs. Crore) |
| ||FY15 ||FY14 |
|Total Revenue ||279.50 ||229.59 |
|Total Expenses ||249.26 ||209.14 |
|Profit Before Tax and Exceptional Items ||30.24 ||20.45 |
|Exceptional Items ||- ||0.01 |
|Profit Before Tax (PBT) ||30.24 ||20.44 |
|Income Tax ||10.73 ||6.87 |
|Profit After Tax (PAT) ||19.51 ||13.57 |
|EPS (in Rs.) ||5.06 ||4.37 |
The Financial Statements have been prepared in accordance with Accounting Standardsnotified under section 133 of the Companies Act 2013 read together with paragraph 7 ofthe Companies (Accounts) Rules 2014 to reflect the financial position and the results ofoperations of the Company. The Financial Statements together with the Auditorsreport is annexed and forms part of this report.
FY15 has been an exciting year for the Company as it achieved the highest ever Revenuesand Profitability in its history. Additionally there has been significant progress onstrategic initiatives and rollout of business expansion plans. Your Company reportedrevenues of Rs. 279.50 crore in FY15 compared to Rs. 229.59 crore last year registeringgrowth of 22%. Revenue growth was achieved by steady growth in volumes of shrimp feed dueto continued robust demand from farmers and stable realizations as well as sustainedcontribution from shrimp processing.
While there was some firming up in the price of agri-based raw materials the Companywas able to mitigate the impact through proactive sourcing and efficient production whichhelped to contain the rise in expenditure in line with revenue growth thereby preservingmargins.
During the year the Company provided Rs. 10.73 crore for taxation as against Rs. 6.87crore for last year. Profit after Tax for the year was Rs. 19.51 crore compared to Rs.13.57 crore in FY14 registering a year-on-year increase of 44%. This was the highest everPAT reported by the Company in its history. The earnings per share (EPS) for the yearstood at Rs. 5.06 an increase of 16% compared to Rs. 4.37 in the previous year.
DIVIDEND AND APPROPRIATIONS
Based on the Companys financial performance and considering the profitability andcash flow the Board had declared an interim dividend of 10% (` 1 per equity share) duringFY15 at the meeting held on 31st July 2014. This was subsequently paid to allthe eligible shareholders. Further the Board has recommended a final dividend of 5% (i.e.50 Paisa per equity share) at the meeting held on 21st May 2015. The same ispayable on obtaining the Shareholders approval in the ensuing Twenty Eighth AnnualGeneral Meeting. This would entail a total outflow of Rs. 6.83 Crore on account ofdividend including dividend tax for FY15.
Further Rs. 0.37 Crore was transferred to reserves during FY15.
MATERIAL CHANGES AND COMMITMENTS
At present Pinnae Feeds Limited (PFL) which is a wholly owned Subsidiary of KaramChand Thapar & Bros. (Coal Sales) Limited (Promoter of the Company) is manufacturingfeed for your Company at their state-of-the-art plant located near Nellore AndhraPradesh. Their feed manufacturing capacity is 75000 MTPA. At the meeting held on 21stMay 2015 the Board of Directors of both PFLand the Company had in-principally sanctionedthe amalgamation of PFLwith the Company. Pursuant to this on consummation of theamalgamation the feed manufacturing capacity is expected to increase from 35000 MTPA to110000 MTPA.
Apart from the increase in capacity this amalgamation is expected to lead to higherefficiencies due to economies of scale enable better negotiation in sourcing of rawmaterial and improve the availability of the Companys Products in the domesticmarket. The Company will also leverage the increased capacity to enhance its presence inhigh growth markets.
The Company is undertaking steps to diversify its revenue streams and is implementinginitiatives to drive sustained growth. In the meeting held on 21st May 2015the Board has approved setting up of Hatcheries which will ensure availability of qualityseeds to farmers and elevate the sustainability of the industry. The first unit isexpected to be commissioned in the current financial year. Your Company is also planningto revive export of processed shrimps in the ensuing financial year in a phased manner.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The members at their Meeting held on 29th September 2014 had appointed Mr.Anil Kumar Bhandari Lt. Gen. Deepak Summanwar (Retd.) Mr. Nakul Kamani and Mr. RanjitMehta as Independent Directors of the Company for a term of 5 years i.e. up to 31stMarch 2019. The Company has received declarations from all the above IndependentDirectors that they meet the criteria of independence as laid down under Section 149(6) ofthe Act and Clause 49 of the Listing Agreement.
Mrs. Jyoti Thapar retires at the forthcoming AGM and has offered herself forre-appointment. Necessary resolution for re-appointment of Mrs. Jyoti Thapar has beenincluded in the Notice convening the ensuing Annual General Meeting and details of theproposal for re-appointment are mentioned in the Explanatory Statement to the Notice.
Pursuant to the provisions of Section 203 of the Act read with the rules madethereunder the following employees were/are designated as whole-time key managerialpersonnel of the Company:
1. Mr. Ashok Nanjapa - Chief Executive Officer Till 31st July 2014
2. Mr. Ramakanth V Akula - Chief Executive Officer With effect from 1stAugust 2014
3. Mr. S.Giridhari Chief Financial Officer
4. Ms. Suguna Krishnamurthy Company Secretary Till 30th September2014
5. Mr. G.Venkatram Company Secretary With effect from 17th February2015
BOARD EVALUATION AND FAMILIARIZATION
The Company believes that stakeholder value is created through strong Board Governancewhich requires a robust evaluation mechanism. In line with this the Board has establisheda formal annual evaluation framework for measuring the performance of itself theDirectors and Board Committees. The evaluation framework envisages a three stageevaluation process wherein the Independent Directors Nomination and RemunerationCommittee and the Board are involved. During FY15 the annual evaluation process was kickstarted at the meeting of Independent Directors held on 21st February 2015.Thereafter the Nomination and Remuneration Committee and the Board completed the annualevaluation process at the meeting held on 21st May 2015.
The evaluation criteria for the Directors include parameters such as Strategic andfunctional contribution ethics values etc. Similarly for the Board as a wholeparameters such as Strategic decision making Risk Management Governance etc wereconsidered. The Committees of the Board were evaluated on the basis of their performanceas against their terms of reference.
Further details on the said evaluation have been enumerated in the Corporate GovernanceReport which is annexed to and forms part of this Report. The Company proactively keepsits Directors informed of the activities of the Company its management and operations andprovides an overall industry perspective as well as issues being faced by the industry.
MEETINGS OF THE BOARD
The meetings of the Board are scheduled at regular intervals to decide and discussbusiness performance policies strategies and other matters of significance. The Board ofDirectors of the Company met four times during the financial year. The details of variousBoard Meetings are provided in the Corporate Governance Report.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Board consists of 8 (eight) members of which 4 (four) are independent andnon-executive. The remaining 4 (four) members are non-executive Promoter Directors. Thepolicy of the Company on Directors appointment and remuneration including criteriafor determining qualifications independence and other matters as provided undersubsection (3) of Section 178 of the Companies Act 2013 and the details of employees asper Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is given as Annexure A which forms part of this report.
CORPORATE SOCIAL RESPONSIBILITY
Since inception the Company had cultivated a value system that business enterprisesare economic organs of society and thrive on societal resources; hence it is the moralobligation and duty of an enterprise to reward the society. Long before the advent of CSRon the Indian Corporate scene the Company has been contributing immensely for the causeof Education Sports and Medicare in India with an aim to benefit the disadvantaged/underprivileged sections of society. The Company follows a system of Triple Bottom Lineaccountability to measure the Companys performance and its impact on inclusive andequitable growth of the marginalized sections of society.
In continuation of that approach and to meet the requirements of the Companies Act2013 the Board has formed a Corporate Social Responsibility Committee which monitors andoversees various CSR initiatives and activities of the Company. The Board has also adopteda policy on CSR which lays down the parameters to deepen the social impact significantly.The CSR policy of the Company can be accessed at http://www.waterbaseindia.com/pdf/code_of_conduct/Corporate_Social_Responsibility_Policy.pdf. A detailed reportregarding Corporate Social Responsibility is given as Annexure B which forms part of thisreport.
ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
Information required under Section 134(3) (m) of the Act read with Rule 8(3) of theCompanies (Accounts) Rules 2014 with respect to conservation of energy technologyabsorption and foreign exchange earnings/outgo is given as Annexure C which forms part ofthis report.
EXTRACT OF ANNUAL RETURN
In accordance with section 134(3) (a) of the Act the extract of the Annual Return inForm MGT-9 is attached as Annexure D which forms part of this report.
RELATED PARTY TRANSACTIONS
All contracts and arrangements with related parties entered prior to the commencementof the Companies Act 2013 and the revised Clause 49 of the Listing Agreement wasconsidered and ratified by the Audit Committee during FY15. All the contracts andarrangements with the related parties were on arms length basis and in ordinarycourse of business. There were no materially significant contracts and arrangements withrelated parties which may have a potential conflict with the interest of the Company atlarge. To deal with Related Party Transactions in a transparent manner the Board hadapproved the policy on dealing with Related Party Transactions the text of which could beaccessed at http://www.waterbaseindia.com/pdf/code_of_conduct/Related_Party_Transaction_Policy.pdf.
The Audit Committee had granted omnibus approval for certain contracts and arrangementswith Related Parties as per the provisions contained in the Listing Agreement and in linewith the policy adopted for dealing with Related party Transactions. All transactionsarising out of such approved contract and arrangements with Related Parties were placedbefore the Audit Committee for consideration on a quarterly basis.
During FY15 the Audit Committee had approved a contract for purchase of finishedshrimp feed and reimbursement & deputation of manpower entered into with Pinnae FeedsLimited which is an entity wholly owned by Karam Chand Thapar & Bros. (Coal Sales)Limited (Promoter of the Company). As the value of transactions arising out of thecontract with Pinnae Feeds Limited exceeded the threshold limit of materiality i.e. 10% ofthe turnover of the Company in FY15 approval of the Shareholders is being sought in theforthcoming Annual General Meeting. Suitable resolution in this regard has been added inthe notice convening the 28th Annual General Meeting. Further the details oftransactions with PFLwere submitted with the Stock Exchanges on Quarterly basis along withthe Quarterly report on Compliance with Corporate Governance requirements of the StockExchange.
The details of the contract with Pinnae Feeds Limited as required under Section 13(3)(h) read with Rule 8 of the Companies (Accounts) Rules 2014 is given in form AOC-2 asAnnexure E which forms part of this report.
The Company strives to maintain high standards of Corporate Governance in allinteractions with stakeholders.
The Company has conformed to the Corporate Governance code as stipulated under theListing Agreement with the Stock Exchange. A separate section on Corporate Governancecontaining the details as required to be provided under Clause 49 of the Listing Agreementalong with a certificate from the Statutory Auditors is given as Annexure F which formspart of this report.
LOANS GUARANTEES OR INVESTMENTS
The Company has no outstanding Inter-Corporate Guarantees. The details of changes inthe Loans and Investments covered under the provisions of Section 186 of the Act are givenin the notes to the Financial Statements.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Directors affirm that:
a) The Financial Statements have been prepared in conformity with the applicableaccounting standards and requirements of the Companies Act 2013 to the extent applicableto the Company; on the historical cost convention as a going concern and on the accrualbasis. There are no material departures in the adoption of the Applicable AccountingStandard;
b) The Board of Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company as at the end of thefinancial year and of the profit and loss of the company for that period;
c) The Board of Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
d) The Board of Directors have laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and were operatingeffectively;
e) The Board of Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
MANAGEMENTS DISCUSSION AND ANALYSIS
Managements discussion and Analysis report as required under Clause 49 (VII) (D)(I) of the Listing Agreement is disclosed separately in the Annual Report.
PREVENTION OF SEXUAL HARASSMENT POLICY
The Companys policy on prevention of sexual harassment of women provides for theprotection of women employees at the workplace and for prevention and redressal of suchcomplaints. An Internal Complaints Committee has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy. There were no complaints pending for redressal atthe beginning and at the end of FY15.
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
The Company has implemented a Whistle Blower Policy whereby employees can reportmatters such as corruption misconduct fraud misappropriation of assets non-complianceto code of conduct etc. to the Audit
Committee. The policy provides for confidential and anonymous reporting to the AuditCommittee and adequate safeguards to the reporting party against retaliation. The policyalso provides direct access to the Chairman of the Audit Committee.
The details of the Whistle Blower Policy are available on the website of the Company athttp://www.waterbaseindia. com/pdf/code_of_conduct/Whistle_Blower_Policy.pdf. Furtherdetails of the Whistle Blower Policy is given as part of the Corporate Governance Report.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 read with the Companies (Acceptance of Deposits) Rules 2014.
At the Annual General Meeting held on 29th September 2014 M/s Mitra Kundu & BasuChartered Accountants were appointed as Statutory Auditors for a period of three yearsto hold office till the conclusion of the 30th Annual General Meeting i.e. AGM for FY17.As per the provisions of the Act the appointment of Statutory Auditors shall be ratifiedby the Shareholders at every Annual General Meeting till the expiry of the tenure forwhich he was appointed. The Audit Committee had considered the ratification of appointmentof the Statutory Auditors for FY16 which was approved by the Board. A suitable resolutionproposing the ratification of appointment by the Shareholders is included in the Noticeconvening the forthcoming Annual General Meeting for consideration and approval.
Further the report of the Statutory Auditors for FY15 is given along with theFinancial Statements which forms part of this report.
The Board had appointed Mr. B. Ravi Practising Company Secretary for conductingSecretarial Audit of the Company for FY15 as required by Section 204 of the Act. Thereport of the Secretarial Auditor is given as Annexure G which forms part of this report.
The Secretarial Audit report contains a qualification regarding non-submission ofAnnual Return on Foreign Liabilities and Assets for FY14 under the Foreign ExchangeManagement (Transfer or Issue of Security by a Person Resident outside India) Regulations2000 read with the relevant Master Circulars issued by the Reserve Bank of India in thisregard. The Board would like to clarify that the Company had received investments fromcertain foreign entities under the then extant Foreign Exchange Regulation Act (FERA) andthe rules/regulations laid down thereunder. The same was subject to approval of theReserve Bank of India. However these entities were later classified as Overseas CorporateBodies (OCBs) which are now not recognized for investment in India. These OCBs continue tohold shares in the Company. All other foreign holdings in the Company were not under theForeign Direct Investment route. Hence the Board would approach the Reserve Bank of Indiato ascertain the requirement to file the return under the Foreign Exchange ManagementRegulations and would take steps to file the return if required.
RISK MANAGEMENT / INTERNAL CONTROLS
The Company has adopted a Risk Management Plan for implementation of Enterprise RiskManagement (ERM) framework. As per the Companies Act 2013 and Clause 49 of the ListingAgreement the Board shall establish a Risk Management Plan/ Policy and the AuditCommittee shall evaluate the Risk Management systems periodically.
In line with this requirement the Board is responsible for initiating and institutingthe ERM framework and setting the requisite tone at the top for implementation of the ERMframework. Further the Board shall be responsible for overseeing measures for managingrisk. The Plan also envisages a key role for the Audit Committee which shall periodically(at least annually) review the adequacy of Risk Management Systems recommend improvementsif needed discuss with external consultants Internal Auditors to test the adequacy andeffectiveness of the Risk Management System.
A strong and independent Internal Audit function carries out risk focused audits acrossthe Company and enables identification of areas where risk management processes may needto be improved.
The Companys Internal Financial Controls encompass policies and proceduresadopted by the Board for ensuring the orderly and efficient conduct of business includingadherence to its policies safeguarding of its assets prevention and detection of fraudsand errors the accuracy and completeness of accounting records and the timely preparationof reliable financial information. Appropriate review and control mechanisms are built inplace to ensure that such control systems are adequate and are operating effectively.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant material orders passed by the regulators or courts ortribunals which would impact the going concern status of the company and its futureoperations.
The Board greatly appreciates the commitment and dedication of its employees across alllevels the collaborative sprit unrelenting dedication and expert thinking which has ledto the growth and success of the Company. We would like to thank all our clients vendorsinvestors bankers and other business associates for their continued support andencouragement during the year.
We also thank the Government of India Governments of Andhra Pradesh Ministry ofCommerce and Industry Ministry of Finance Customs and Excise Departments Income TaxDepartment and all other government agencies for their support during the year and lookforward to the same in the future.
| ||For and on behalf of the Board of Directors |
|Chennai 12th August 2015 ||Vikramaditya Mohan Thapar |
| ||Chairman |