Your Board of Directors ("Board") is pleased to present the 31stAnnual Report of Advanced Enzyme Technologies Limited ("Company") alongwith the Audited Financial Statements for the financial year ended March 31 2020.
The financial performance of your Company for the financial year ended March 31 2020is summarized below:
(Rs in million)
|Particulars || |
| ||Year ended March 31 2020 ||Year ended March 31 2019 ||Year ended March 31 2020 ||Year ended March 31 2019 |
|Revenue from operations ||2474 ||2221 ||4440 ||4196 |
|EBITDA ||768 ||524 ||2023 ||1819 |
|Less: || || || || |
|Finance Cost ||11 ||22 ||30 ||39 |
|Depreciation and Amortisation ||88 ||86 ||258 ||211 |
|Add: || || || || |
|Other income ||90 ||56 ||56 ||50 |
|Profit Before Tax ||759 ||472 ||1791 ||1619 |
|Less: Provision for Taxation || || || || |
|Current tax ||194 ||120 ||505 ||489 |
|Deferred tax ||(15) ||- ||(42) ||(20) |
|MAT credit entitlement || ||- || ||- |
|Tax adjustment for earlier years || ||- ||(2) ||(9) |
|Tax expenses ||179 ||120 ||461 ||460 |
|Profit for the year ||580 ||352 ||1330 ||1159 |
|Surplus Brought Forward from Previous Year ||2140 ||1849 ||5376 ||4332 |
|Amount Available for Appropriations ||2639 ||2140 ||6575 ||5376 |
|Earnings Per Share (Amount in Rs) || || || || |
|Basic ||5.19 ||3.16 ||11.58 ||9.95 |
|Diluted ||5.18 ||3.15 ||11.56 ||9.94 |
RESULTS FROM OPERATIONS Revenue - Consolidated
Your Company's revenue from operations on consolidated basis increased to Rs 4440million in the financial year 2019-20 ("FY20") from Rs 4196 million inthe financial year 2018-19 ("FY19") a growth rate of 6%. The totalrevenue comprises of International sales amounting to Rs 2537 million (FY19 - Rs 2494million) growth of 2% and Domestic sales amounting to Rs 1903 million (including ExportIncentives of Rs 24 million) (FY19 - Rs 1702 million (including Export Incentives of Rs19 million)) increase of 12%.
Your Company's domestic sales constitute about 43% of revenue from operations duringFY20 as compared to 41% of revenue from operations during FY19. International sales were57% of revenue from operations as compared to 59% of revenue from operations during FY19.
Revenue - Standalone
Your Company's revenue from operations on standalone basis increased to Rs 2474million from Rs 2221 million in the FY19 at a growth rate of 11%. The total revenuecomprises of International sales of Rs 749 million (FY19 - Rs 683 million) increase of10% and Domestic sales at Rs 1725 million (including Export Incentives of Rs 24 million)(FY19 - Rs 1538 million (including Export Incentives of Rs 19 million and excise duty))increase of 12%.
The domestic sales constitute 70% of revenue from operations during FY20 as compared to69% of revenue from operations during FY19. International sales were 30% of revenue fromoperations as compared to 31% of revenue from operations during FY19.
Profits - Consolidated
EBITDA (Earnings before interest tax and depreciation & amortisation excludingother income) during FY20 was Rs 2023 million (46%) as compared to Rs 1819 million (43%)during FY19 increase of 11%.
Profit before tax stood at Rs 1791 million (40%) during FY20 as against Rs 1619million (39%) in the previous year a growth of 11%. Profit after tax stood at Rs 1330million during FY20 as compared to Rs 1159 million during the FY19 a growth of 15%.
Profits - Standalone
EBITDA during the year under review was at Rs 768 million (31%) as compared to Rs 524million (24%) in the FY19. Profit before tax stood at Rs 759 million during FY20 ascompared to Rs 472 million in the FY19 a growth of 61%. Profit after tax stood at Rs 580million during FY20 as compared to Rs 352 million during FY19 an increase of 65%.
Pursuant to the Dividend Distribution Policy of the Company the Board recommends afinal Dividend @ 30% i.e. Rs 0.60/- per Equity Share of face value of Rs 2/- each for thefinancial year 2019-20 ("FY20") aggregating to about Rs 67 million i.e. thesame rate of final dividend of 30% (Rs 0.60 per Equity Share) as in the previous financialyear 2018-19 ("FY19"). The Dividend Distribution Policy of the Company isannexed after Board's report and forms an integral part of this Report and the said policyis available on the Company's website at www.advancedenzymes.com/investors/corporate-governance/#codes-and- policies.
The Dividend payout is subject to approval of Members at 31st Annual GeneralMeeting ("AGM") of your Company.
The Dividend Distribution Tax payable by domestic companies on declaration of dividendhas been abolished w.e.f. April 01 2020. Pursuant to this amendment and consequentialamendments brought vide Finance Act 2020 as the dividend paid by the companies istaxable in the hands of the shareholders the Company would be under an obligation todeduct tax at source ("TDS") in accordance with the provisions of the Income TaxAct 1961 (as amended from time to time).
During the FY20 your Company has not transferred any amount to the General Reserves.
EMPLOYEES STOCK OPTION PLAN
The details of Employees Stock Option Scheme 2015 [as amended] ("ESOP Scheme2015") and Employees Incentive Plan 2017 ("Plan 2017") areprovided in Annexure I and forms part of this Report. The said scheme/plan is alsopublished on the website of the Company at www.advancedenzymes.com/investors/corporate-governance.
The Nomination & Remuneration Committee in its meeting held on February 14 2017granted 220000 stock options of Rs 2/- each to its eligible employees of the Company andthe employees of subsidiaries ("Grantee"). Out of the total Optionsgranted the first tranche of 10% of stock options got vested on February 15 2018 thesecond tranche of 20% and the third tranche of 30% got vested on February 15 2019 andFebruary 15 2020 respectively as per the provisions of the Scheme. Each Option isconvertible and is equivalent to One (1) Equity Share. Based on the exercise applications& amount received from the Grantees total 29500 Equity Shares of Rs 2/- each (at anexercise price of Rs 60/- each) were allotted to such Grantees during the year underreview as follows:
|Date of Board / Security Allotment Committee meeting (Allotment Date) ||No. of shares allotted |
|1 May 24 2019 ||19100 |
|2 July 26 2019 ||8400 |
|3 February 06 2020 ||2000 |
|Total ||29500 |
In view of above the Paid-up share capital of your Company has increased as follows(as on March 31 2020)
|Particulars || |
| ||No. of shares ||Amount (Rs ) |
|At the beginning of the year ||111648975 ||223297950 |
|Allotments during the year ||29500 ||59000 |
|At the end of the year ||111678475 ||223356950 |
The third tranche of 30% of Stock Options got vested on February 15 2020 as per theprovisions of the Scheme. The Company has not received any exercise application for thesaid third tranche till the date of this report.
The Equity Shares allotted under ESOP Scheme 2015 are subject to lock in for a periodof 1 year from the date of allotment.
Employees Incentive Plan 2017:
The Members of the Company have also approved the AETL Employees Incentive Plan 2017 ("Plan2017") through trust route and related matters on May 4 2017 through PostalBallot. Your Company has received inprinciple approval from BSE Limited (BSE) and NationalStock Exchange of India Limited (NSE). As on the date of this report no Stock Options /Stock Appreciation Rights have been granted under the Plan 2017.
The financial statements of your Company for the year ended March 31 2020 are preparedin accordance with the Indian Accounting Standards ("IND AS") read withthe provisions of Section 129 and other applicable provisions if any of the CompaniesAct 2013 ("the Act") rules framed thereunder and Regulation 33 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended ("SEBIListing Regulations") and forms part of this Annual Report.
The estimates and judgments relating to the Financial Statements are made on a prudentbasis so as to reflect in a true and fair manner the form and substance of transactionsand reasonably present the Company's state of affairs profits and cash flows for the yearended March 312020.
As on March 31 2020 your Company has Eleven (11) subsidiaries as listed below:
1. Advanced Bio-Agro Tech Limited (60%) ["ABAT"];
2. Advanced EnzyTech Solutions Limited (100%) ["AESL"];
3. JC Biotech Private Limited (70%) ["JCB"];
In terms of the financial performances:
i. ABAT's revenue for FY20 was Rs 389 million (previous financial year["FY19"] - Rs 395 million) and PAT for FY20 was Rs 56 million (FY19 - Rs 55million).
ii. AESL's revenue for FY20 was Rs 91 million (FY19 - Rs 95 million) and PAT for FY20was Rs 11 million (FY19 - Rs 5 million).
iii. JCB's revenue for FY20 was Rs 424 million (FY19 - Rs 489 million) and PAT forFY20 was Rs 61 million (FY19 - Rs 98 million).
1. Advanced Enzymes USA (100%);
A. Advanced Supplementary Technologies Corporation (100% Subsidiary of Advanced EnzymesUSA);
B. Cal-India Foods International (doing Business as Specialty Enzymes andBiotechnologies) (100% Subsidiary of Advanced Enzymes USA);
C. Dynamic Enzymes Inc. (100% Subsidiary of Advanced Enzymes USA);
D. Enzyme Innovation Inc. (100% Subsidiary of Cal- India Foods International);
In terms of the consolidated financial performance of Advanced Enzymes USA the revenuefor FY20 was Rs 1937 million (FY19 - Rs 2128 million) and PAT for FY20 was Rs 700million (FY19 - Rs 823 million).
2. Advanced Enzymes (Malaysia) Sdn. Bhd. (100%) ["AEM"];
The Company acquired AEM in the year 2017 (incorporated in 2016). During the year underreview AEM was in the process of conducting trials on products and yet to generate sales.During FY20 expenditure was incurred by AEM on payment of salaries of technical personadministration and on trials on products recovered such expenses from the parent companyand write-off of inter-company liabilities resulted in a profit of about Rs 4 million(FY19 - Rs (5) million).
During the year under review the Board of your Company approved the discontinuation ofthe business and closure of AEM and to initiate the process of closure thereto since AEMwas not giving the desired results.
3. Advanced Enzymes Europe B.V. (100%) ["AEE"];
In terms of the consolidated financial performance (including its subsidiary evoxxtechnologies GmbH) AEE's revenue for FY20 was Rs 264 million (FY19 Rs 167 million) andloss of Rs 31 million for FY20 (which includes about Rs 80 million of operational gain andRs 63 million of amortization expense and finance cost of Rs 48 million) (FY19 - Rs 120million).
4. evoxx technologies GmbH (100%) [Wholly owned subsidiary of AEE] ["evoxx"]
Revenues for evoxx was Rs 264 million and had a positive impact on the bottom line byRs 21 million (which includes about Rs 45 million of operational profit and charge of Rs15 million of amortization expense and finance cost of Rs 9 million). For FY19 Revenuesfor evoxx added Rs 167 million to the topline and had negatively impacted the bottom lineby Rs 61 million (which includes about Rs 34 million of operational loss and a Rs 18million of amortization expense and a finance cost of Rs 9 million).
The Policy for determining Material Subsidiaries is available on the Company's website:www.advancedenzymes.com/ investors/corporate-governance. During the year under reviewCal-India Foods International and JC Biotech Private Limited were Material Subsidiariesbased on the criteria specified in SEBI Listing Regulations.
A separate statement containing the salient features of the financial performance ofsubsidiaries in the prescribed Form AOC-1 is annexed to the financial statements of theCompany. The Audited Consolidated financial statements together with Auditors' Report forman integral part of the Annual Report.
The individual financial statements and other reports of the Company's subsidiarieshave not been attached to the financial statements of the Company for the FY20. Pursuantto the provisions of Section 136 of the Act the financial statements of the subsidiariesand related information are uploaded on the website of your Company and can be accessed onthe weblink: www.advancedenzymes.com/investors/quarterly- updates/financial-results andalso available for inspection electronically during working hours at the registeredoffice of the Company on working days except Saturdays and Sundays upto the date of 31stAGM of the Company. Any Member desirous of conducting inspection and/or of seekinginformation on the Annual Financial Statements of the Company's subsidiaries may write andintimate in advance to the Company Secretary.
MANAGEMENT DISCUSSION AND ANALYSIS
A detailed review of the operations performance and future outlook of your CompanySubsidiaries and its Business are given in the Management Discussion and Analysis asrequired under the SEBI Listing Regulations which is provided in separate section andforms integral part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 of the Companies Act 2013 the Directors tothe best of their knowledge and belief and based on the information and explanationsprovided to them confirm that:
a. in the preparation of the annual accounts for the year ended March 31 2020 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;
b. appropriate accounting policies have been selected and applied consistently andjudgments and estimates are made reasonably and prudently so as to give a true and fairview of the state of affairs of the Company as at March 312020 and of the profit of theCompany for the year ended on that date;
c. Proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;
d. the annual accounts have been prepared on a 'going concern' basis;
e. Proper internal financial controls are devised to ensure compliance with all theprovisions of the applicable laws and that such internal financial controls are adequateand are operating effectively; and
f. Proper systems are devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
Your Company understands that controlling risks through a formal program is a necessarycomponent and an integral cornerstone of Corporate Governance. Your Company has adoptedRisk Assessment & Management policy which embeds the vision that a robust RiskManagement system ensures commensurate controls and monitoring mechanism for smooth andefficient management of Business. The Policy outlines the framework for identificationmeasurement evaluation monitoring and mitigation of various risks. The Management hasalso reviewed the Risk Management framework of the Company. The Risk Registers areprepared by the concerned departments wherein the respective risks are identified alongwith its current control activities and the mitigation plans. Thereafter the registersare reviewed.
RELATED PARTY TRANSACTIONS
During the year under review all transactions with related parties were placed beforethe Audit Committee for its approval. An omnibus approval from the Audit Committee wasobtained for the related party transactions which are repetitive in nature. All thetransactions with related parties entered into during the year under review were in theordinary course of business and on arms' length basis in accordance with the provisions ofthe Act Rules made thereunder and SEBI Listing Regulations. The Audit Committee and theBoard review all the transactions entered into pursuant to the omnibus approvals on aquarterly basis. Approval of the Members of the Company is also obtained in case anyrelated party transaction exceeds the prescribed limits and as good corporate governancepractice as there may be few transactions that may be carried out in the long-terminterest of the Company. The transactions of the Company with its wholly-ownedsubsidiaries are exempted from approval of the Members of the Company and hence suchapprovals are not obtained.
The Policy on Related Party Transactions is available on the Company's website and canbe accessed at www. advancedenzymes.com/investors/corporate-governance
As prescribed under Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) ofthe Companies (Account) Rules 2014 particulars of contracts/arrangements with relatedparties are given in Form AOC-2 annexed as Annexure II to this report.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to Section 124(6) of the Companies Act 2013 all shares in respect of whichDividend has not been paid or claimed for seven consecutive years or more shall betransferred by the company in the name of Investor Education and Protection Fund ("IEPF").In view of this your Company has transferred 4000 unclaimed Equity Shares pertaining tofinancial year 2011-2012 to the Demat account of IEPF during September 2019. The detailsof the said shares transferred are provided on the website of the Company atwww.advancedenzymes.com/ investors/shareholder-information
During the year under review the Company has transferred unclaimed Dividend of '59200 for the financial year 201112. As on March 31 2020 the total amount lying in theUnpaid Dividend accounts of the Company in respect of the last seven years is around Rs9.35 lakhs. Details of unclaimed Dividend and Shares due for transfer with due dates &procedure to claim the same are provided in the Notes to Notice for 31st AGMand briefly in the Corporate Governance Report which forms an integral part of thisReport.
Details of Nodal Officer are displayed on the Company's website at:www.advancedenzymes.com/investors/shareholder- information/
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
The Annual Report on Corporate Social Responsibility Activities has been provided inAnnexure III and forms integral part of this Report. The Composition of CSR Committee isdisclosed in the said Annual Report on CSR Activities and in the Corporate Governancereport section.
The Corporate Social Responsibility Policy may be accessed on the Company's website atwww.advancedenzymes. com/investors/corporate-governance.
POLICY ON CRITERIA FOR APPOINTMENT / REMOVAL OF DIRECTORS AND SENIOR MANAGEMENTPERSONNEL AND REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL AND EMPLOYEES
As per the Nomination & Remuneration Policy of the Company ("Policy")the Nomination and Remuneration Committee inter alia recommends the appointment ofDirectors Key Managerial Personnel (KMP) and Senior Management Personnel. The Policy laysdown the criteria for such appointments and the framework in relation to remuneration ofDirectors including Managerial Personnel KMPs and employees of the Company. TheNomination & Remuneration Committee oversees the matter of remuneration to theExecutive Directors KMPs & Senior Management Personnel and recommends to the Boardrevision if any in the remuneration of the said Directors / Personnel subject to limitsas may be approved by the Members.
The Nomination and Remuneration Policy may be accessed on the Company's website atwww.advancedenzymes. com/investors/corporate-governance.
The Board of your Company affirms that the remuneration paid to the Directors is as perthe terms laid out in the Nomination and Remuneration Policy of the Company.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review the following changes occurred in the composition of theBoard and the Key Managerial Personnel of your Company:
The Members at their 30th Annual General Meeting ("30thAGM") held on August 08 2019 approved the (i) appointment of Mr. Vilas M.Aurangabadkar (DIN: 08225986) and Mr. Vinodkumar H Jajoo (DIN: 08224980) as IndependentDirectors of your Company for a period of five years effective from January 08 2019 andFebruary 09 2019 respectively; (ii) appointment of Ms. Rasika Rathi (DIN: 08300682) as aNon-Executive Director of your Company liable to retire by rotation. The Members at 30thAGM did not approve the re-appointment of retiring Director Mrs. Savita Rathi (DIN:00365717) the then Whole-Time Director of the Company and she ceased to be the Directorof your Company with effect from August 08 2019.
The Members at the aforesaid 30th AGM by passing a special resolution alsoapproved the re-appointment of Mr. Kedar Desai (DIN: 00322581) as an Independent Directorof your Company for a second term of five years with effect from April 012019.
During the year under review based on the recommendation of the Nomination andRemuneration Committee the Board approved the appointment of Dr. Sunny Sharma (DIN:02267273) as an Additional Director (Non-Executive) with effect from November 02 2019 tohold office upto the 31st AGM. He is not related to any Directors of theCompany. The Board recommends the appointment of Dr. Sunny Sharma liable to retire byrotation and brief profile of Dr. Sunny Sharma proposed to be appointed has been providedin Notice convening the said 31st AGM of the Company ("AGM Notice").
Further based on the recommendation of the Nomination and Remuneration Committee theBoard approved the appointment of Ms. Rajshree Patel as an Additional [Independent(Woman)] Director subject to and with effect from the date of allotment of DirectorIdentification Number ("DIN") once obtained by her to hold office upto thedate of this AGM or the date upto which AGM shall be held whichever is earlier. She is notrelated to any Directors of the Company. Ms. Rajshree Patel has obtained her DIN Numberwith effect from June 12 2020. The Board recommends the appointment of Ms. Rajshree Patel(DIN: 08761022) not liable to retire by rotation for a period of three (3) yearseffective from June 12 2020 and brief profile of Ms. Patel proposed to be appointed hasbeen provided in AGM Notice.
Except as mentioned above there has been no change in the composition of Board and KeyManagerial Personnel of the Company during the year under review.
DECLARATION BY THE INDEPENDENT DIRECTORS
All Independent Directors of the Company have given the following declarations statingthat:
(i) they meet the 'criteria of Independence' as defined under Regulation 16(1) of theSEBI Listing Regulations and Section 149(6) of the Companies Act 2013 read with ScheduleIV and the relevant Rules made thereunder;
(ii) they have complied with the provisions of the Code of Conduct & Ethics of theCompany. The Independent Directors have confirmed that they are not aware of anycircumstance or situation which exist or may be reasonably anticipated that could impairor impact their ability to discharge their duties with an objective independent judgmentand without any external influence.
(iii) they have complied with the provisions of Rule 6(1) and 6(2) of the Companies(Appointment and Qualifications of Directors) Rules 2014 with regards to the registrationon the Independent Directors' databank.
None of the Directors of the Company are disqualified for being appointed as Directorsas specified in Section 164(2) of the Companies Act 2013 and Rule 14(1) of the Companies(Appointment and Qualification of Directors) Rules 2014.
The Board is of the opinion that the Independent Directors of the Company possessrequisite qualifications experience and expertise and they hold highest standards ofintegrity.
The Independent Directors of your Company have registered on the Independent Directors'Databank as per the requirements of Section 149 of the Companies Act 2013 and theapplicable rules thereto. However with respect to the proficiency test the IndependentDirectors have a timeline of one year as per the applicable provisions from the date ofregistration on the Independent Directors' Databank for taking the proficiency test andnone of the Directors have exceeded the said period of one year from the date ofregistration as on the date of this Report.
RETIREMENT BY ROTATION
In accordance with the provisions of Section 152 of the Companies Act 2013 read withRules made thereunder and the Articles of Association of the Company Mr. Mukund Kabra(DIN: 00148294) Whole-time Director retires by rotation at the 31st AGM(longest in office) and being eligible offers himself for re-appointment. Accordinglythe Board recommends the said re-appointment of Mr. Mukund Kabra at the 31stAGM and his brief profile has been provided in the AGM Notice.
AUDITORS AND AUDITORS' REPORT
Pursuant to provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 B S R & Co. LLP Chartered Accountants[Firm's Registration No: 101248W/W-100022] ("BSR") were appointed asStatutory Auditors for a term of five years to hold office from the conclusion of 27thAGM up to the conclusion of the 32nd AGM subject to ratification at every AGM.However in accordance with the amendment to the provisions of Section 139 of theCompanies Act 2013 the ratification of appointment of Statutory Auditors at every AGMhas been omitted and therefore the ratification of appointment of Statutory Auditors isnot being sought.
The Auditors' Report to the Members on the Financial Statements of the Company for theyear ended March 31 2020 does not contain any qualification reservation or adverseremark.
SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder the Board has appointed Mr. Shiv Hari Jalan Practicing Company Secretary (FCSNo. 5703 C.P.No.4226) to undertake the Secretarial Audit of the Company. The SecretarialAudit Report for the financial year 2019-20 is annexed as Annexure IV and forms anintegral part of this Report. The Secretarial Audit Report for the year ended March312020 does not contain any qualification reservation or adverse remark.
CORPORATE GOVERNANCE REPORT
The Report on Corporate Governance and the Certificate of the Practicing CompanySecretary regarding compliance of the conditions of Corporate Governance as requiredpursuant to the provisions of the SEBI Listing Regulations are enclosed as Annexure V. Adeclaration signed by the Whole-time Director affirming compliance with the Code ofConduct by the members of the Board and Senior Management Personnel also forms part ofthis Report.
BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34 of the SEBI Listing Regulations (as amended w.e.f December26 2019) top one thousand listed entities based on market capitalization (calculated ason March 31 of previous financial year) shall provide Business Responsibility Reportdescribing the initiatives taken by them from an environmental social and governanceperspective. The said report is attached as Annexure VI to this Report.
COMMITTEES OF THE BOARD
As per the Companies Act 2013 and the SEBI Listing Regulations during the year underreview the Board has four Statutory Committees viz. Audit Committee Nomination andRemuneration Committee Corporate Social Responsibility Committee and StakeholdersRelationship Committee. The details of the composition of these Committees along withnumber of meetings held and attendance at the meetings are provided in the CorporateGovernance Report which forms a part of this Report.
Your Company had adopted Whistle Blower Policy / Vigil Mechanism Policy pursuant to theprovisions of Section 177(9) of the Companies Act 2013 and the Companies (Meetings ofBoard and Its Powers) Rules 2014 and Regulation 22 of the SEBI Listing Regulations.Details on the Vigil Mechanism of your Company have been outlined in Corporate GovernanceReport which forms part of this Report.
The said Policy has been amended effective from April 012019 primarily encompassingthe amendments to the SEBI (Prohibition of Insider Trading) Regulations 2015.
The Whistle Blower Policy (as revised) may be accessed on your Company's website atwww.advancedenzymes.com/ investors/corporate-governance
MEETINGS OF THE BOARD
During the year Six (6) meetings of the Board of Directors were held. The requisitedetails of the Board Meetings and the details of the Directors present are provided in theCorporate Governance Report which forms part of this Report.
The Company has complied with all the provisions of applicable Secretarial Standardsissued by Institute of Company Secretaries of India and notified by the Ministry ofCorporate Affairs of India.
EVALUATION OF PERFORMANCE OF BOARD ITS COMMITTEES AND DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and the SEBI Listing Regulationsthe Board has undertaken an Annual Evaluation of its own performance its variousCommittees and individual Directors. The manner in which the performance evaluation hasbeen carried out has been given in the Corporate Governance Report annexed to thisReport. The Board expressed its satisfaction of the evaluation process and outcome.
The Board Evaluation policy can be accessed on your Company's website atwww.advancedenzymes.com/ investors/corporate-governance.
FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS
Pursuant to provisions of Regulation 25(7) of the SEBI Listing Regulations the detailof familiarization program is available at website of your Company at www.advancedenzymes.com/ investors/corporate-governance. Further at the time of theappointment of an Independent Director the Company issues a Letter of appointmentoutlining his / her role function duties and responsibilities. The format of the letterof appointment is available on the Company's website at: www.advancedenzymes.com/investors/corporate-governance
CODE OF CONDUCT FOR PROHIBITION OF INSIDER TRADING
Your Company has in place a Code of Conduct for Prohibition of Insider Trading (knownas the AETL Insider Trading Code w.e.f April 01 2019) which lays down the process oftrading in securities of the Company by the Designated Persons and to regulate monitorand report trading by the employees of the Company either on his/ her own behalf or onbehalf of any other person on the basis of Unpublished Price Sensitive Information.
The aforementioned amended Code is available on the website of the Company atwww.advancedenzymes.com/ investors/corporate-governance
INTERNAL CONTROL AND ITS ADEQUACY
Your Company has adopted procedures and systems for ensuring the orderly and efficientconduct of its Business including adherence to the Company's policies safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of financialdisclosures. Your Company maintains appropriate and adequate Internal Control System /Internal Financial Control commensurate to its size and nature of operations. YourCompany's Internal control systems are tested and certified by the Internal Auditors andStatutory Auditors of the Company.
The Audit Committee periodically reviews the report(s) of the independent InternalAuditors along with the adequacy and effectiveness of Internal Control systems.
SIGNIFICANT AND MATERIAL ORDERS
During the year under review there were no significant and material orders passed bythe Regulators or Courts or Tribunals impacting the going concern status and its futureoperations.
CHANGE IN THE NATURE OF BUSINESS IF ANY
There was no change in Business and in the nature of Business of your Company duringthe year under review affecting the financial position of the Company.
MATERIAL CHANGES FROM THE DATE OF END OF FINANCIAL YEAR TILL THE DATE OF THIS REPORT
Except as otherwise mentioned in this report there are no material changes andcommitments affecting the financial position of the Company which have occurred betweenthe end of the Financial year of the Company to which the Financial Statements relates andthe date of this report.
In March 2020 the World Health Organization declared COVID-19 to be a pandemic andseveral restrictions have been imposed by the Governments across the globe on the travelgoods movement and transportation considering public health and safety measures.Considering that your Company's group products are classified as an 'essential commodity'the impact of the pandemic on your Company may not be significant. As on the date of thisreport the production facilities remain operational following enhanced internal safetyguidelines.
The impact of the global health pandemic may be different from that estimated as at thedate of approval of the financial statements and the Company will continue to closelymonitor any material changes to future economic conditions.
PARTICULARS OF LOANS GIVEN INVESTMENTS MADE GUARANTEES GIVEN AND SECURITIES PROVIDED
The details of Loans and Investments under Section 186 of the Companies Act 2013 readwith the Companies (Meetings of Board and its Powers) Rules 2014 for the FY20 are givenin the Standalone Financial Statements (Note No. 55 to the Standalone FinancialStatements). Your Company has not provided any guarantee or security under Section 186 ofthe Companies Act 2013 during the year under review.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92 the Companies Act 2013 read with the rulesframed thereunder an extract of Annual Return of the Company in the Form MGT-9 isenclosed as Annexure VII to this report and is also available on the website of theCompany at www. advancedenzymes.com
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 (as amended) is furnished inAnnexure VIII and forms part of this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended("Rules") the details are disclosed in Annexure IX to this report. In terms ofSection 136(1) of the Act read with second proviso to the Rule 5 of the said Rules theAnnual Report with Annexure IX is being sent to the Members excluding the statement ofparticulars of employees under Rule 5(2) and (3) of the Rules ("Information")which forms part of this Report. The Annexure IX with the Information under Rule 5(2) and(3) is available for inspection of the Members electronically and any Member desirous ofconducting inspection and/ or obtaining a copy of the said information / Annexure maywrite to the Company Secretary.
During the year under review your Company did not invite or accept any Depositscovered under Chapter V of the Companies Act 2013 ("Act"). There were nooutstanding deposits within the meaning of Sections 73 and 74 of the Act read togetherwith the Companies (Acceptance of Deposits) Rules 2014 at the end of the year underreview or the previous financial year.
During the year under review your Company has received a long term rating of CRISILA/Stable (Reaffirmed) and a short term rating of CRISIL A1 (Reaffirmed) for outstandingBank loan facilities (outstanding facilities) by Credit Rating Information Services ofIndia Limited (CRISIL).
COST RECORDS AND AUDIT
The Company has maintained Cost records in accordance with the provisions of Section148(1) of the Companies Act 2013 ("Act") during the year under review.
The Cost Audit is applicable to the Company for the financial year 2020-21("FY21"). In terms of Section 148 of the Act read with Companies (Cost Recordsand Audits) Rules 2014 as amended and based on the recommendations of the AuditCommittee the Board of your Company has approved the appointment of M/s. Shilpa & Co.Cost Accountants Nashik (Registration No. 100558) as Cost Auditors of the Company and theremuneration payable to carry out the Cost Audit of the cost accounts of the Company forfinancial year ending March 31 2021 ("FY21"). Your Company has received thewritten consent of the Cost Auditors inter alia stating that the appointment is inaccordance with the applicable provisions of the Act and rules framed thereunder. The CostAuditors have confirmed they are free from any disqualifications to be appointed as theCost Auditors of your Company. The remuneration of Cost Auditors has been approved by theBoard and therefore the requisite resolution for ratification of remuneration of the CostAuditors by the Members has been set out in the Notice of the 31st AGM of yourCompany.
During the year under review:
a. The Whole-time Director of your Company has not received any remuneration orcommission from any of the subsidiaries.
b. Your Company has not issued Shares with Differential Rights as to Dividend Votingor otherwise.
c. Your Company has devised a policy on Prevention of Sexual Harassment to comply withthe provisions of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The said policy is hosted on the Company's website atwww.advancedenzymes.com. During the year under review there were no cases / grievancesreported or pending and the Company has complied with provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013
d. There are no details to be disclosed under Section 134(3)(ca) of the Act as therehas been no such fraud reported by the Auditors under Section 143(12) of the Act.
Your Directors acknowledge with gratitude the support received by the Company from theBanks Government Agencies/ organizations and employees of your Company.
Your Directors also acknowledge with thanks the faith reposed by the Investors in theCompany and look forward to their continued support for times to come.
For and on behalf of the Board of Directors of
Advanced Enzyme Technologies Limited
Date : June 16 2020
Place : California