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AVT Natural Products Ltd.

BSE: 519105 Sector: Industrials
NSE: AVTNPL ISIN Code: INE488D01021
BSE 00:00 | 16 May 100.75 7.75
(8.33%)
OPEN

99.90

HIGH

101.90

LOW

94.05

NSE 00:00 | 16 May 100.80 7.60
(8.15%)
OPEN

96.00

HIGH

101.80

LOW

94.05

OPEN 99.90
PREVIOUS CLOSE 93.00
VOLUME 15472
52-Week high 135.20
52-Week low 52.95
P/E 22.79
Mkt Cap.(Rs cr) 1,534
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 99.90
CLOSE 93.00
VOLUME 15472
52-Week high 135.20
52-Week low 52.95
P/E 22.79
Mkt Cap.(Rs cr) 1,534
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

AVT Natural Products Ltd. (AVTNPL) - Director Report

Company director report

Your Directors are pleased to present the Thirty Fifth Annual Report of the Companytogether with the Audited Accounts for the financial year ended March 31 2021.

FINANCIAL RESULTS

(Rs in Crores)
Particulars 2020-21 2019-20
Income from Operations 470.43 385.00
Other Income 7.15 7.32
Total Income 477.58 392.32
Profit before tax for the year 57.55 48.55
Less: Provision for taxation
Current Tax
In respect of current year 16.05 13.70
In respect of prior year Nil
Deferred Tax (0.96) (2.95)
Profit after Tax 42.46 37.80
Add: OCI classified to
Retained Earnings (0.28) (0.37)
Add: Surplus brought forward 58.43 39.26
Less: Unrealised Fair Value gains not available for appropriation (2.29) (1.62)
Total Amount available for dividend payout 98.32 75.07
Less:
Interim Dividend (30%) paid on equity shares 4.57 3.81
Tax on Interim Dividend 0.78
Transfer to General Reserve 10.00 10.00
Final Dividend on Equity Shares paid for earlier year 5.33 3.05
Tax on Final Dividend 0.62
Net Amount available for dividend payout 78.43 56.81
Surplus carried Forward to balance sheet 80.72 58.43

Proposed dividend on equity shares has not been recognized as a distribution of profitin the current year's accounts in accordance with the Indian Accounting Standard.

OPERATIONS REVIEW

The Total income increased by 21.73 % to Rs 477.58 crores in 2020-21 from Rs 392.32crores for the previous year while the Profit after Tax stood at Rs 42.46 crores asagainst Rs 37.80 crores for the previous year registering an increase of 12.33 %. WithFixed Assets of Rs 88.96 crores (previous year 2019-20 Rs 99.20 crores) our Fixed AssetTurnover ratio is healthy at 5.29 % and Return on Sales stood at 12.87%.

DIVIDEND

Dividend Distribution Policy

Pursuant to Regulation 43A of Listing Regulations the Board adopted a DividendDistribution Policy which had been placed on the website of the Company and can beaccessed at the link: http://www.avtnatural.com/policies/

Declaration of dividend

Your Directors are pleased to recommend a final dividend of Rs 0.40 per share (40%) onface value of Rs 1/- each on Equity Share Capital for the year ended 31.03.2021amounting to Rs 609.14 Lakhs. During the year the Board had declared an Interim Dividendof Rs 0.30 per share (30%) on face value of Rs 1/- each amounting to Rs 456.85 Lakhs. Theaggregate of dividend declared during the year was

Rs 0.70 per share (70 %) on face value of Rs 1/- each amounting to Rs 1065.99 Lakhs.

TRANSFER TO GENERAL RESERVE

Your directors are pleased to transfer a sum of Rs 10 crore for the year 2020-21(previous year Rs 10 crore) to the General Reserve.

FINANCE

Cash and bank balances as at 31st March 2021 was Rs 564.72 lakhs (previous year Rs1191.42 lakhs). The Company continues to focus on the judicious management of its workingcapital receivables inventories and other financial parameters and which were kept understrict check through continuous monitoring.

The outstanding term loan from Federal Bank Limited as on 31st March 2021 is Rs 10.50crore which is given in the note No.15 & 20 to the financial statements.

WINDMILL

The wind mill of the Company located at Kokkampalayam village Dharapuram Taluk ErodeDistrict Tamil Nadu generated 754823 units of electricity in the year 2020-21 against848988 units generated in 2019-20. The Company utilised the 733913 units generated ascaptive consumption during 2020-21 for its Satyamangalam factory.

BOARD MEETING

The Board of Directors met five times during the financial year. The details of theBoard meetings held have been given in the Corporate Governance report. The interveninggap between the meetings were within the period stipulated under the Companies Act 2013and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

AUDIT COMMITTEE MEETING

The Audit Committee of the Company met five times during the current financial year.The details of the Audit Committee meetings held have been given in the CorporateGovernance report. The intervening gap between the meetings were within the periodstipulated under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.

PARTICULARS OF LOANS GUARANTEE OR INVESTMENTS

The Company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013 and Schedule V of the Securities Exchange Board ofIndia (Listing Obligations and Disclosure Requirement) Regulations 2015 except the'Corporate Guarantee' given on behalf of its wholly owned subsidiary companies viz. AVTNatural Europe Limited London and to AVT Natural S.A. DE C.V. Mexico which is given inthe note No.6 to the financial statements.

The details of investments made by the Company are given in the note No.6 to thefinancial statements.

LISTING WITH STOCK EXCHANGES

The Company Shares are continued to be listed in both BSE Limited (BSE) and theNational Stock Exchange of India Limited (NSE). The Company has paid listing fees up to31st March 2022 to both the BSE Limited (BSE) and the National Stock Exchange of IndiaLimited (NSE).

DSIR APPROVAL FOR IN-HOUSE R&D FACILITY AT SOUTH VAZHAKULAM AND BANGALORE

The approvals by the Department of Scientific and Industrial Research (DSIR) New Delhifor the Company's R&D facilities situated at South Vazhakulam Aluva Kerala and theManchenahaili Village Kasabe Hobari Bangalore are valid upto 31.03.2022.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes or events that have occurred since the date of theBalance Sheet which could have any effect on the financial position of the Company

DIRECTORS & KEY MANAGERIAL PERSONNEL i) Director retiring by rotation

In accordance with the provisions of Companies Act 2013 and the Articles ofAssociation of the Company Mr. Habib Hussain Director retires by rotation at the 35thAnnual General Meeting and being eligible offers himself for re-appointment.

ii) Declaration from Independent Directors on Annual Basis

The Company has received necessary declarations from all the four Independent Directorsof the Company under Section 149 of the Companies Act 2013 stating that they meet withthe criteria of their Independence laid down in Section 149 of the Companies Act 2013 andRegulation 25(8) of the SEBI (LODR) Regulations 2015.

iii) Appointment of 'Manager'

The Board in its meeting held on 29.03.2021 has appointed Mr. B. Krishna Kumar Sr.Vice President -Operations as the 'Manager' under Section 203 (1) of the Companies Act2013 for a period of 3 (Three) years w.e.f. 01.04.2021 to 31.03.2024. Necessary resolutionis being placed before the members for their approval.

iv) Key Managerial Personnel

As on March 31 2021 the following were Key Managerial Personnel ("KMP") ofthe Company as per Sections 2(51) and 203 of the Act:

• Mr. M.N. Satheesh Kumar President and CEO

• Mr. A. Ramadas Sr. Vice President and CFO

• Mr. Sharon Josh Company Secretary

1. Mr. M.N. Satheesh Kumar President and CEO superannuated on 31st March 2021.

2. Mr. Dileepraj. P Company Secretary and Compliance officer expired on 15th October2020 and Mr. Sharon Josh was appointed as the Company Secretary and Compliance officer on10th February 2021

PERFORMANCE OF SUBSIDIARY/JOINT VENTURE / ASSOCIATES

a) AVT Natural SA DE C.V. Mexico (AVTN)

AVT Natural SA DE C.V Mexico has been established with an aim to capture market forthe Animal Nutritional products in South American market and other markets.

The paid-up capital of the Company as on 31st March 2021 was Mexican Peso (Mxn) 0.54million and there is no change therein since then. AVTN is the marketing arm of yourCompany for the animal nutrition products. The AVTN recorded sales of Rs 12.69 crores andLoss of Rs 1.22 crores for the year 2020-21

b) AVT Natural Europe Limited UK (AVTNEL)

The paid up capital of the Company as on 31st March 2021 was GBP 1.535 million andthere is no change therein since then. AVTEL is the marketing arm of your Company forde-caffeinated tea and instant tea. The AVTNEL recorded sales of Rs 95.62 crores (previousyear Rs 59 crores) and profit of Rs 3.26 crores (previous year Rs 1.15 crores) for theyear 2020-21.

Step down subsidiary Companies

AVT Natural Europe Limited London has two wholly owned subsidiaries AVT Natural NorthAmerica Inc. and AVT Tea Services North America LLC.

AVT Natural North America Inc

The paid up capital of the Company as on 31st March 2021 was USD 6000 and there is nochange therein since then. During the year the Company recorded sales of Rs 1.40 croresand profit of Rs 0.15 crores for the year 2020-21.

c) Accounts of subsidiaries

Pursuant to Section 136 of the Companies Act 2013 a copy of the audited financialstatements of AVT Natural Europe Ltd. & AVT Natural S.A. DE C.V. for the periodended 31.03.2021 shall be provided to any shareholder free of cost upon their request.The Audited financial statements are also available on the website of the Company. TheConsolidated financial statements audited by the statutory auditors of the Company havebeen attached to this Report.

Pursuant to Section 129(3) of the Companies Act 2013 a statement containing thesalient features of the financial statements of AVTN AVTNEL & its step-downsubsidiary in the prescribed Form AOC-1 is provided in the Page No. 114 of Annual report.

d) Joint Venture / Associate Company

The Company does not have any Joint Ventures / Associate Companies

e) Policy for determining material subsidiary

The Company has a Policy for determining Material Subsidiary which is hosted on itswebsite under the link www.avtnatural.com/investor_relations.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars prescribed by the Section 134 (3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 relating to Conservation of EnergyTechnology Absorption Foreign Exchange earnings and outgo are furnished in the Annexure-Ito this Report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act 2013 a CSR Committeecomprising Board of Directors was formed to recommend.

i. The policy on Corporate Social Responsibility (CSR) and ii. Implementation of theCSR Projects

Annual Report on CSR in the prescribed format is enclosed as Annexure - II. The CSRpolicy of the Company has been uploaded on the web site: www.avtnatural.com /investor_relations.

CONTENTS OF CSR POLICY

The Company's CSR projects and programs will focus on the holistic development of hostcommunities to create social environmental and economic value to society.

The Company will invest resources in any program such as skill developmentinfrastructure development women empowerment Promotion of Health Care Old age homes /day care facilities for Senior Citizens Education Swatch Bharath COVID - 19 and allother activities envisaged in the Schedule VII of the Companies Act 2013.

STATUTORY AUDITORS

Pursuant to Sections 139 and 142 of the Companies Act 2013 the members in their 31stAnnual General Meeting held on 10.8.2017 appointed M/s. PKF Sridhar & Santhanam LLPCharteredAccountants KRD Gee Gee

Crystal 7th Floor 91-92 Dr. Radhakrishanan Salai Mylapore Chennai - 600004(Firm's Registration No. 003990S / S200018) the Statutory Auditors of the Company for aperiod of 5 years till the conclusion of the 36th Annual General Meeting. In view of theamendment to the Companies Act 2013 notified by the Ministry of Corporate Affairs dated7th May 2018 no longer their appointment no longer needs to be ratified by the Members.

AUDITORS' REPORT

There are no qualifications or adverse remarks mentioned in the Auditors' report. Thenotes to accounts forming part of financial statements are self-explanatory and needs nofurther clarification.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. V. Suresh Practising Company Secretary (C.P. No.6032) Chennai - 600 018 toundertake the Secretarial Audit of the Company.

The Secretarial Audit Report in form MR-3 submitted by the Secretarial Auditors forthe financial year 2020-21 is annexed to this report as Annexure - III and forms anintegral part of this Report.

There is no secretarial audit qualification reservation or adverse remarks in theSecretarial Report for the period under review.

During the year the Company has complied with the Secretarial Standard -1 (SS-1) andSecretarial standard -2 (SS-2) issued by the Ministry of Corporate Affairs.

COST AUDIT REPORT

Cost Audit is not applicable to the Company as per the Companies (Cost Records &Audit) Rules 2014 however the cost records are maintained by the Company.

REPORTING OF FRAUD

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act 2013.

INSURANCE

The Company continues to carry adequate insurance for all assets againstunforeseeable perils.

RELATED PARTY TRANSACTIONS

All transactions entered with related parties for the year under review were at arm'slength basis and in the ordinary course of business and hence the provisions of Section188 of the Companies Act 2013 are not attracted. There were no related party transactionsexceeding 10% of the annual consolidated turnover as per the last audited financialstatements during the year.

Further there were no material related party transactions during the year under reviewwith the Promoters Directors or Key Managerial Personnel or other designated personswhich may have a potential conflict in the interest with Company at large except thepayment of remuneration to directors relative exceeding Rs 30 lakhs per annum which wasapproved by the shareholders in its meeting held on 10.08.2017. The disclosure of RelatedParty transactions to be provided under Section 134 (3)(h) of the Companies Act 2013read with Rule 8(2) of the Companies (Accounts) Rules 2014 in Form AOC -2 is given in theAnnexure - IV forming part of this report.

As per the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 allthe related party transactions were placed before the Audit Committee and also the Boardof Directors. Prior omnibus approval of the Audit Committee was obtained on yearly /quarterly basis for the transactions entered with related parties except with the whollyowned subsidiary Companies whose accounts are consolidated with the Company. Thetransactions entered into pursuant to the omnibus approval so granted has been placedbefore the Audit Committee and the Board of Directors for their approval on a quarterlybasis.

The Company has a Related Party Transaction policy and the same is hosted in thewebsite of the Company under the link www.avtnatural.com/investor_relations.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS AND COURTS

There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.

ANNUAL RETURN

The annual return of the Company has been uploaded in the web site and the same can beaccessed through web site link www.avtnatural.com/investor_relations.

STATUTORY INFORMATION

The information under Section 197 of Companies Act 2013 and pursuant to rule 5 (2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 aregiven in the Annexure - V.

The information required under Section 197 (12) of the Companies Act 2013 read withrule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 in respect of the Company have been given in the Annexure - VI.

The statement containing remuneration paid to employees and other details as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(2) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is provided in aseparate annexure forming part of this report. Further the report and the accounts arebeing sent to the members excluding the aforesaid annexure. In terms of Section 136 of theAct the said annexure is open for inspection at the Company's Registered Office duringbusiness hours of all the working days of the Company upto the date of the forthcomingAnnual General Meeting. Any member interested in obtaining a copy of the same may write tothe Company Secretary and the same will be provided free of cost to the member.

INDUSTRIAL RELATIONS

Your Company during the year under review enjoyed cordial relationship withtechnicians / workers and employees at all levels.

NOMINATION AND REMUNERATION POLICY

The Board on the recommendation of the Nomination & Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management Personnel KeyManagerial Personnel and their remuneration etc. A copy of the policy is uploaded on theweb site of the Company and the website link is www.avtnatural. com/ investor_relations.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy in place pursuant to Section177 (9) of the Companies Act 2013 and as per the Regulation 22 of SEBI

(Listing Obligations and Disclosure Requirements) Regulations 2015. The said policy isavailable on the website of the Company which can be accessed from the link - www.avtnatural.com/investor_relations. During the year no instances of unethical behavior werereported.

RISK MANAGEMENT

Pursuant to Section 134(3)(n) of the Companies Act 2013 and Regulation 21 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board of Directorshas formed a Risk Management Committee to frame implement and monitor the risk managementplan. The Committee is responsible for reviewing the risk management plan and ensuring itseffectiveness. The Committee considers the risks that impact mid to long-term objectivesof the business including those reputational in nature.

The Company has a risk policy defining risk management governance model riskassessment and prioritization process. The Risk Management Committee adopted a follow-uprisk management framework to review and monitor the key risks and their mitigationmeasures periodically and provide an update to the Board on Company's risks. The AuditCommittee has an additional oversight on financial risks and controls.

ADEQUACY OF INTERNAL AUDIT AND INTERNAL FINANCIAL CONTROL

The Company has in place adequate Internal Audit and Internal Financial Controls withreference to the financial statements which is evaluated by the Audit Committee as perPart C of Schedule II of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Apart from Statutory Audit your Company in compliance with Section 138 of theCompanies Act 2013 had engaged M/s Varma & Varma Chartered Accountants BuildingNo. 53/333 Off. Subash Chandra Bose Road Vytilla Post Kochi - 682 019 Kerala as theInternal Auditors of the Company for the financial year 2020-21. Findings and observationsof the Internal Auditors are discussed and suitable corrective actions are taken as perthe directions of the Audit Committee on an on-going basis to improve efficiency inoperations.

The Company's internal control systems are well established and commensurate with thenature of its business and the size and complexities of operations and adequate withreference to the financial statements as envisaged under the Companies Act 2013.

Your directors endorse that during the year under review there were no reportablematerial weaknesses in the present systems or operations of internal controls.

ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances environmental regulations and preservation ofnatural resources.

BOARD EVALUATION

The Board of Directors has made a formal annual evaluation of its own performance andthat of its committees individual Directors & CEO pursuant to the provisions of theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulation2015. The evaluation was done based on the evaluation criteria formulated by Nominationand Remuneration Committee which includes criteria such as fulfilment of specificfunctions prescribed by the regulatory framework adequacy of board meetings attendanceand effectiveness of the deliberations etc.

Each Board member completed a questionnaire providing feedback on the functioning andoverall level of engagement of the Board and its committees on the parameters such as thecomposition execution of specific duties contribution of new ideas / insights qualityquantity and timeliness of flow of information deliberations at the meeting independence/ non-partisan approach in decision making etc.

Independent Directors met on 10th February 2021 to review performance evaluation ofNon-Independent Directors and the entire Board of Directors including the ChairmanNon-Executive Directors etc. The Independent Directors were satisfied with the overallfunctioning of the Board flow of information to the Board its various Committees andalso of the performance of other Non-executive Directors and the Chairman of the Board

DISCLOSURE OF ACCOUNTING TREATMENT

The Company has adopted the Indian Accounting Standards (Ind AS) with effect from 1stApril 2017 the Ind AS 115 with effect from 1st April 2018 & the Ind AS 116 witheffect from 1st April 2019 and all its financial statements are made according to the saidstandards. Further in the preparation of the financial statements the Company hasfollowed the Accounting Standards referred to in

Section 133 of the Companies Act 2013. The significant accounting policies which areapplied are set out in the Notes to the Financial Statements.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report in compliance with the regulation 34 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 have been attached inthe Annexure VII to this Report.

CORPORATE GOVERNANCE

Your Company has taken adequate steps to adhere to all the stipulations laid down inRegulation 27 read with Part E of Schedule II and Schedule V of SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 on corporate Governance. The ManagementDiscussion & Analysis Report Report on Corporate Governance with Auditors'Certificate on compliance with conditions of Corporate Governance have been Annexed VIIIIX X and XI to this Report.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirementsof the Act and that an Internal Complaints Committee has been set up for redressal ofcomplaints and that all employees (permanent contractual temporary trainees) arecovered under this policy.

During the year the Company has not received any complaint under Sexual Harassment ofWomen at the Workplace (Prevention Prohibition & Redressal) Act 2013.

CAUTIONARY STATEMENT

Statements in this Directors' Report & Management Discussion and Analysis Reportdescribing the Company's objectives projections estimates expectations or predictionsmay be 'forward looking statements' within the meaning of applicable securities laws andregulations. Actual results could differ materially from those expressed or implied.Important factors that could make difference to the Company's operations include rawmaterial availability and its prices cyclical demand and pricing in the Company'sprinciple markets changes in Government regulations Tax regimes economic developmentswithin India and the countries in which the Company conducts business and other ancillaryfactors.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement under Section 134 (3) (c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement it is hereby confirmed that:

1. In the preparation of the accounts for the financial year ended 31st March 2021 theapplicable accounting standards had been followed along with proper explanation relatingto material departures;

2. The Directors have 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 of the Company for that period;

3. The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

4. The Directors have prepared the accounts for the financial year ended 31st March2021 on a 'going concern' basis.

5. The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively.

6. The directors have devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.

ACKNOWLEDGEMENT

The Directors sincerely acknowledge the contribution and support from customersshareholders farmers BSE Ltd. National Stock Exchange of India Ltd. Cameo CorporateServices Ltd. National Securities Depository Ltd. Central Depository Services Ltd. andother stakeholders for the co- operation and assistance provided to the Company.

The Directors also place on record their gratitude to the employees for their continuedsupport commitment dedication and co-operation during the year.

For and On behalf of the Board
Place : Chennai Ajit Thomas
Date : 30th June 2021 Chairman

.