To the Members
The Directors have great pleasure in presenting their 34th Report along withthe audited financial statements for the financial year ended March 312019.
Your Company has adopted the Indian Accounting Standards (IND AS) as applicable witheffect from April 1 2017 and the financials for the year ended 31st March 2019 have beenprepared in accordance with the recognition and measurement principles as laid down underIND AS and in accordance with Companies (Indian Accounting Standards) Rules 2015 (asamended) read with Section 133 of the Companies Act 2013 together with the comparativeperiod data as at and for the year ended 31st March 2018.
The financial results of the Company for the year ended 31st March 2019 are summarisedbelow:
|PARTICULARS ||CURRENTYEAR ENDED 31MARCH 2019 ||PREVIOUS YEAR ENDED 31st MARCH 2018 |
|Revenue from Operations (net) ||476030 ||428980 |
|Other Income ||605 ||831 |
|Total Income ||476635 ||429811 |
|Operating Expenditure ||431886 ||391815 |
|Profit before Interest Depreciation and Amortisation and Tax (PBDIT) ||44749 ||37996 |
|Finance Costs (net) ||8572 ||8764 |
|Depreciation and Amortisation ||20059 ||17364 |
|Profit before Taxes ||16118 ||11868 |
|Tax Expenses ||4633 ||2579 |
|Inoome tax pertaining to earlier years ||- ||205 |
|Net Profit for the Year ||11485 ||9084 |
|Other Comprehensive (Income / Expenses) ||102 ||70 |
|Total Comprehensive income ||11383 ||9014 |
|Balance Brought Forward from Previous Year ||23078 ||21389 |
|Amount Available for Appropriation ||34461 ||30403 |
|Appropriations || || |
|Interim Dividends on Equity Shares ||7762 ||6058 |
|Tax on Dividends ||1595 ||1267 |
|Transfer to General Reserve ||- ||- |
|Balance earned to Balance Sheet ||25104 ||23078 |
PERFORMANCE OF THE COMPANY
During the year your Company registered a total income of 7476635 Lakhs as against7429811 Lakhs representing an increase of 10.89 % over that of the previous year. ThePBDIT has increased from 737996 Lakhs (FY 2017-2018) to 744749 Lakhs (FY 2018-2019)representing an increase of 18%. The net profit during the year was 711485 Lakhs incomparison with previous year which stood at 79084 Lakhs resulting in an increase of26.43%.
For the Financial Year 2018-2019 your Company
1. Declared and paid first interim dividend of 72/- (200%) per fully paid up equityshare of the face value of 71 per share (ISIN INE473B01035) and 71.60 (200%) per partlypaid up equity share (ISIN IN9473B01017) of the face value of 71 per share (paid-up to theextent of 70.80 each) on 24th January 2019
2. Declared and paid the second interim dividend of 72/- (200%) per fully paid upequity share of the face value of 71 per share (ISIN INE473B01035) and 71.60 (200%) perpartly paid up equity share (ISIN IN9473B01017) of the face value of 71 per share (paid-upto the extent of 70.80 each) on 2nd May 2019.
The cash outflow on account of first interim dividend excluding dividend tax for theyear 2018-19 aggregated to 73195.53 Lakhs and the cash outflow on account of secondinterim dividend excluding dividend tax aggregated to 73195.53 Lakhs thereby resulting ina total payout of 55.65% of the net profits of the Company.
During the year 2018-19 an amount of 7358723/- being unclaimed dividend pertainingto the financial year 2011-12 (Interim dividend) was transferred to Investor Education& Protection Fund (IE&PF).
CHANGES IN SHARE CAPITAL
In the beginning of financial year 2018-19 the paid up Equity Share Capital of theCompany stood at 7 1522.02 Lakhs divided in to 152168307 Equity Shares of Re.1 each.During the year your Company raised funds through Rights Issue by issue of 9510519Equity Shares of Re. 1 each which has been partly paid at Re.0.80 per Share. Thus thepaid up Equity Share Capital of the Company after adding the receipt of money throughRights Issue stands at 7 1598.10 Lakhs.
During the year your Company has received 742226.70 Lakhs under the Rights Issue of9510519 partly paid up equity shares (the "Issue") of face value of 71 each(paid-up to the extent of 70.80 each) for cash at a premium of 7554 (paid-up to the extentof 7443.20 each) per equity share from the eligible equity shareholders of the Company(Rights Issue was made to the eligible Equity Shareholders of the Company in the ratio of1 Rights Equity Share for every 16 fully paid up Equity Shares held by such eligibleEquity Shareholders on the record date i.e. June 12018).
Out of the Issue proceeds of 742226.70 Lakhs your Company had utilised 741846 Lakhstowards full or partial repayment or prepayment of the borrowings availed by the Companyand ?380.82 Lakhs towards meeting the issue expenses. The utilisation of the proceeds hasbeen in accordance with the objects stated in the Letter of Offer dated June 062018 inrespect of the Rights Issue of the Company in compliance with Regulation 32(1) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended and there is no deviation as regards the utilisation offunds.
The selection and extent of borrowings repaid out of the issue proceeds of ?42226.70Lakhs was based on various commercial considerations including among others the costsexpenses and charges relating to the facility including interest rate of the relevantborrowing the amount of the borrowing outstanding the remaining tenor of the borrowingpresence of onerous terms and conditions under the facility levy of any prepaymentpenalties and the quantum thereof provisions of any law rules or regulations governingsuch borrowings terms of prepayment to lenders if any and mix of credit facilitiesprovided by lenders.
Your Company will make the balance Call money of ?10556.68 Lakhs as and when the Boardapproves such a Call.
TRANSFER TO RESERVES
The Company retained the entire surplus in the Profit and Loss Account and hence notransfer to General Reserve was made during the Year.
The total borrowings has decreased from ?129895.46 Lakhs to ?102790.96 Lakhs due torepayment of borrowings out of proceeds of Rights Issue.
Your Company follows the judicious management of its Short Term and Long TermBorrowings with strong relationship with various reputed Banks from whom your Company hasavailed Credit facilities at very competitive rates.
The total amount of fixed deposits (excluding interest on Cumulative Deposits) frompublic outstanding and unclaimed as at 31st March 2019 was NIL as a sum of ?0.92 Lakhsrepresenting three accounts of Fixed Deposits and ?0.61 Lakh representing two accounts ofCumulative Deposits were transferred to Investor Protection and Education Fund (IEPF)account on the expiry of seven year period during the FY 2018-19.
|(a) Accepted during the Year ||NIL |
|(b) Remained unpaid or unclaimed as at the end of the year. (Including interest thereon) ||NIL (The entire amount mentioned below has been transferred to IEPF account during FY 18-19. Principal - ?1.53 Lakhs Interest- ?0.15 Lakhs Total - ?1.68 Lakhs) |
|(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so number of such cases and the total amount involved: ||No deposit has been accepted by the Company during the year and there did not arise any default during the year. |
|i. As at 1st April 2018 ||NIL |
|ii. Maximum during April 2018 to March 2019. ||NIL |
|iii. As at 31st March 2019. ||NIL |
|(d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act ||NIL |
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the applicable provisions of the Companies Act 2013 read with the IEPFAuthority (Accounting Audit Transfer and Refund) Rules 2016 ("the IEPFRules") all the Unpaid or Unclaimed dividends are required to be transferred by theCompany to the IEPF Authority after the completion of seven years. Further according tothe Rules the Shares on which dividend has not been paid or claimed by the shareholdersfor seven consecutive years or more shall also be transferred to the demat account of theIEPF Authority. During the year the Company has transferred the unclaimed and unpaiddividends of INR 358723 and transferred 130093 shares on which dividends wereunclaimed for seven consecutive years to IEPF Authority as per the requirements of theIEPF rules. The details are provided in the Shareholder information section of this AnnualReport and are also available on our website athttps://www.hap.in/unclaimed-dividend-deposits.html
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
There were no loans and guarantees given by the Company falling under Section 186 ofthe Companies Act 2013. Particulars of investments covered under Section 186 form part ofthe notes on financial statements are provided in this Annual Report.
BOARD'S APPRECIATION TO SHRI. P. VAIDYANATHAN ON COMPLETION OF HIS MAXIMUM TENURE OF 2TERMS OF CONSECUTIVE FIVE YEARS AS AN INDEPENDENT DIRECTOR OF THE COMPANY
Your Board wishes to place on record its appreciation in this report for theassociation and support rendered by Shri. P. Vaidyanathan during his tenure as anIndependent Director who has completed his maximum tenure of two terms of 5 years each asan Independent Director pursuant to Section 149 (11) of the Companies Act 2013 at theclose of business hours on 31st March 2019.
Shri. P. Vaidyanathan was the Chairman of Audit Committee Nomination and RemunerationCommittee and Stakeholders' Relationship Committee during his tenure as an IndependentDirector of the Company.
DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointments Resignations and Changes:
With the recommendation of the Nomination and Remuneration Committee Shri.S.Subramanian was appointed as an Additional Director under the category of Non-ExecutiveIndependent Director with effect from 24th January 2019. Pursuant to the same Shri. S.Subramanian who would hold office up to the date the ensuing Annual General Meeting ofthe Company was appointed as Non-Executive Independent Director with the approval ofMembers through Postal Ballot dated 13th June 2019 to hold office as Non-ExecutiveIndependent Director of the Company for a period of 5 consecutive years with effect from24th January 2019.
Shri. S. Subramanian is a Post Graduate in Commerce and Management and he is a financeprofessional with more than 30 years of experience in the manufacturing industry includingthe dairy industry. He has expertise and knowledge in the areas of Corporate FinanceAccounting Capital Structuring Governance and Compliance matters.
Shri. S. Subramanian is not related to any of the Directors or KMPs of the Company andhe does not hold any shares in the Company.
Shri. P. Vaidyanathan who completed his maximum tenure of two terms of 5 years each asan Independent Director pursuant to
Section 149 (11) of the Companies Act 2013 at the close of business hours on 31stMarch 2019 was appointed by the Board at its Meeting held on 29th March 2019 as anAdditional Director under the category of Non-Executive Non-Independent Director witheffect from 1st April 2019 with the recommendation of the Nomination and RemunerationCommittee considering his vast experience and expertise in the field of corporate financeand whose presence in the Board was found desirable beneficial and in the best interestof the Company.
Pursuant to the same Shri. P. Vaidyanathan who would hold office up to the date ofthe ensuing Annual General Meeting of the Company was appointed as Non-ExecutiveNon-Independent Director with the approval of Members through Postal Ballot dated 13thJune 2019.
Shri. P. Vaidyanathan is a fellow member of the Institute of Chartered Accountants ofIndia and associate member of the Institute of Company Secretaries of India and theInstitute of Cost Accountants of India. He has over 30 years of experience in the financefunctions and has expertise in the field of corporate finance.
Shri. P. Vaidyanathan is not related to any of the Directors or KMPs of the Company andhe holds 900000 Equity Shares of the Company.
Dr. Chalini Madhivanan who is holding the office of Woman Independent Directorship ofthe Company will be completing her first term of 5 consecutive years as IndependentDirector on 22nd September 2019. Dr. Chalini Madhivanan was appointed as IndependentDirector with the approval of Members through Postal Ballot dated 13th June 2019 to holdthe office of Independent Director of the Company for a second term of 5 consecutive yearswith effect from 23rd September 2019.
Shri. Tammineedi Balaji who is holding the office of Independent Directorship of theCompany will be completing his first term of 5 consecutive years as Independent Directoron 22nd September 2019. Shri. Tammineedi Balaji was appointed as Independent Directorwith the approval of Members through Postal Ballot dated 13th June 2019 to hold theoffice of Independent Director of the Company for a second term of 5 consecutive yearswith effect from 23rd September 2019.
Shri. S. Narayan Company Secretary has resigned from the position of Company Secretary& Compliance Officer of the Company at the closure of business hours of 29th March2019.
Shri. G. Somasundaram was appointed as Company Secretary & Compliance Officer ofthe Company with effect from 30th March 2019 with the recommendation of the Nomination andRemuneration Committee and the approval of the Board.
As per the provisions of the Companies Act 2013 Shri. C. Sathyan Executive Directorand Shri. K.S. Thanarajan Non-Executive Non-Independent Director are liable to retire byrotation at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment. The Board of Directors recommends their re-appointment.
Brief Profile of Directors proposed to be Re-appointed:
Shri. C. Sathyan aged 40 years is the Executive Director of our Company. He wasconferred with the title of Doctor of Letters' for his entrepreneurship andphilanthropy by the International Tamil University USA. He has held various executivepositions during his career spanning over 17 years. He is in-charge of the day to dayoperations of our Company. He is the son of Shri. R.G. Chandramogan the Chairman andManaging Director of the Company. Except the Executive Directorship held in this CompanyShri. C. Sathyan does not hold any Directorship in any other Company.
Shri. K.S. Thanarajan aged 70 years is the Non-Executive Non-Independent Director ofour Company was appointed as regular Chairman of the Board in compliance with therequirement of SEBI (LODR) Regulations 2015 at the Board Meeting held on 21st June 2019.He holds a Master's Degree in economics from the University of Madras. He was in-charge ofday to day operations of the dairy division of our Company when he was in the employmentof the Company. He has been in the dairy business for more than 20 years. He is notrelated to any of the Directors of the Company. He is holding 541766 Equity Shares ofthe Company.
Your Board recommends the reappointment of Shri. C. Sathyan Executive Director andShri. K.S. Thanarajan Non-Executive Non-Independent Director who are retiring byrotation.
During the year Shri. R.G. Chandramogan was re-appointed as Managing Director of theCompany for another term of five years with effect from 1 st April 2019 and Shri. B.Thenamuthan was re-appointed as an Independent Director for a second consecutive term offive years with effect from 1st April 2019 by the Shareholders through postal ballot on7th December 2018.
Shri. R.G. Chandramogan the present Chairman and Managing Director of the Companyrelinquished his position of Chairman at the Meeting of the Board held on 21st June 2019and will continue to be the Managing Director of the Company. Shri. K.S. Thanarajan thepresent Non-Executive Non-Independent Director of the Company was appointed as a regularChairman of the Board to comply with the provisions of Regulation 17(1 B) of SEBI (LODR)Regulations 2015 as amended.
DECLARATION BY INDEPENDENT DIRECTORS
The Company has received declarations from all its Independent Directors that they meetthe criteria of Independence as laid down under section 149(6) of the Companies Act 2013and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 in respect of the financial year ended March 312019.
Independent Directors have complied with the Code for Independent Directors prescribedin Schedule IV of the Companies Act 2013.
BUSINESS RESPONSIBILITY REPORT
Your Company being among the top 500 entities based on market capitalisation has topresent the Business Responsibility Report as required under Regulation 34 (2) (f) of theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015. The Business Responsibility Report forming part of this Annual Reportelaborates the principles as prescribed by SEBI vide its Circular CIR/CFD/CMD/10/2015dated November 042015.
BOARD MEETINGS HELD DURING THE FINANCIAL YEAR
During the year under review five (5) Board Meetings were convened and held thedetails of which are given in the Corporate Governance Report. The intervening gap betweenthe Meetings was within the time period prescribed under the Companies Act 2013.
The primary five committees of the Board are Audit Committee Nomination andRemuneration Committee Stakeholders' Relationship Committee Corporate SocialResponsibility Committee and Risk Management Committee. Other than the above said primarycommittees the Board has the following additional committees also viz. Sub-CommitteeShare Transfer Committee Core Committee and Rights Issue Committee. A detailed note onthe committees is provided under the Corporate Governance Report forming part of thisBoard's Report. The composition of the Primary Committees as of 31 st March 2019(including the changes effected up to the date of this report) and their meeting dates aregiven below:
|NAME OF THE COMMITTEE ||COMPOSITION ||DETAILS OF MEETINGS HELD DURING THE YEAR |
|Audit Committee ||With the induction of Shri. S. Subramanian as an Independent Director the Committee comprised of five Non-Executive Independent Directors up to 31.03.2019. The composition was changed w.e.f. 01.04.2019 due to the redesignation of Shri. P. Vaidyanathan as a Non-Executive Non-Independent Director and inclusion of Shri. K.S. Thanarajan Non-Executive Non- Independent Director as a Member and now the Committee comprises of 4 Non-Executive Independent Directors and 2 Non-Executive Non-Independent Directors.The Chairman of the Committee is an Independent Director. ||Four meetings were held during the year on the following dates:- 21st May 2018 19th July 2018 22nd October 2018 24th January 2019 |
|Nomination and Remuneration Committee ||With the induction of Shri. S. Subramanian as an Independent Director the Committee comprised of five Non-Executive Independent Directors up to 31.03.2019. The composition was changed w.e.f. 01.04.2019 due to the redesignation of Shri. P. Vaidyanathan as a Non-Executive Non-Independent Director and inclusion of Shri. K.S. Thanarajan Non-Executive Non- Independent Director as a Member and now the Committee comprises of 4 Non-Executive Independent Directors and 2 Non-Executive Non-Independent Directors.The Chairman of the Committee is an Independent Director. ||Three meetings were held during the year on the following dates:- 22nd October 2018 24th January 2019 29th March 2019 |
|Stakeholders' Relationship Committee ||With the induction of Shri. S. Subramanian as an Independent Director the Committee comprised of five Non-Executive Independent Directors up to 31.03.2019. The composition was changed w.e.f. 01.04.2019 due to the redesignation of Shri. P. Vaidyanathan as a Non-Executive Non-Independent Director and inclusion of Shri. K.S. Thanarajan who is a Non-Executive Non-Independent Director as a Member and now the Committee comprises of 4 Non-Executive Independent Directors and 2 Non-Executive Non-Independent DirectorsThe Chairman of the Committee is an Independent Director. ||Four meetings were held during the year on the following dates:- 21st May 2018 19th July 2018 22nd October 2018 24th January 2019 |
|Corporate Social Responsibility Committee ||The Committee comprised of one Executive Director one Non-Executive Independent Director and one Non-Executive and Non-Independent Director up to 31.03.2019. With the induction of Shri. S. Subramanian as an Independent Director and redesignation of Shri. P. Vaidyanathan as Non-Executive Non-Independent Director the Committee comprised of four Members - One Executive Director One Non-Executive Independent Director and Two Non-Executive Non- Independent Directors as on the date of this report.The Chairman of the Committee is an Independent Director ||One meeting was held during the year on following date:- 14th March 2019 |
|Risk Management Committee ||The Committee comprises of one Executive Director one Non-Executive Independent Director and one Non-Executive and Non-Independent Director up to 31.03.2019. With the induction of Shri. S. Subramanian as an Independent Director and redesignation of Shri. P. Vaidyanathan as Non-Executive Non-Independent Director the Committee comprised of four Members - One Executive Director One Non-Executive Independent Director and Two Non-Executive Non- Independent Directors as on the date of this report. The Chairman of the Committee is an Independent Director ||One meeting was held during the year on following date:- 14th March 2019 |
Details of recommendations of Audit Committee which were not accepted by the boardalong with reasons
The Audit Committee generally makes certain recommendations to the Board of Directorsof the Company during their meetings held to consider any financial results (Unaudited andAudited) and such other matters placed before the Audit Committee as per the Companies Act2013 and Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 from time to time. During the year the Board of Directorshas considered all the recommendations made by the Audit Committee and has accepted andcarried out the recommendations suggested by the Committee to its satisfaction. Hencethere are no recommendations unaccepted by the Board of Directors of the Company duringthe year under review.
DETAILS OF POLICIES DEVELOPED BY THE COMPANY
(i) Nomination and Remuneration Policy
The Company has formulated the Nomination and Remuneration Policy in compliance withSection 178 of the Companies Act 2013 read along with the applicable Rules thereto andPart D of Schedule II of Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 as amended from time to time. The objective ofthis policy is to ensure:
The level and composition of remuneration is reasonable and sufficient toattract retain and motivate directors of the quality required to run the companysuccessfully;
Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
Remuneration to Directors Key Managerial Personnel and Senior Managementinvolves a balance with short and long-term performance objectives appropriate to theworking of the company and its goals
This policy is being governed by the Nomination and Remuneration Committee comprisingof members of the Board as stated above comprising of four Independent Directors and twoNon-Executive Non-Independent Directors. The policy lays down the standards to be followedby the Nomination and Remuneration Committee with respect to the appointment remunerationand evaluation of Directors and Key Managerial Personnel. Salient features of theNomination and Remuneration Policy is annexed herewith marked as Annexure A and forms partof this report. The detailed policy is hosted on the website of the Company and the weblink for same is https://www.hap.in/policies.html.
Affirmation that the remuneration is as per the remuneration policy of the company
This policy governs the criteria for deciding the remuneration for Directors and KeyManagerial Personnel. It is affirmed that the remuneration to Directors and Key ManagerialPersonnel is being fixed based on the criteria and parameters mentioned in the abovementioned policy of the Company.
The Company recognises and values the importance of a diverse board as part of itscorporate governance and success. The Company believes that a truly diverse Board willleverage differences in ideas knowledge thought perspective experience skill setsage ethnicity religion and gender which will go a long way in retaining its competitiveadvantage. The Board has on the recommendation of the Nomination and RemunerationCommittee adopted a Board Diversity Policy which sets out the approach to diversity ofthe Board of Directors.
(II) CORPORATE SOCIAL RESPONSIBILITY POLICY (CSR)
Your Company recognises that its business activities have wide impact on the societiesin which it operates and therefore an effective practice is required giving dueconsideration to the interests of its stakeholders including shareholders customersemployees suppliers business partners local communities and other organisations.
Your Company endeavors to make CSR an important agenda and is committed to itsstakeholders to conduct its business in an accountable manner that creates a sustainedpositive impact on society. Your Company satisfying the threshold as stipulated underSection 135 of the Companies Act 2013 has established the CSR Committee comprising ofmembers of the Board as stated above and the Chairman of the Committee is Non-Executiveand Independent Director. The said Committee has formulated and approved the CSR policyfor the Company with its major focus on:-
Devising meaningful and effective strategies for carrying out CSR activities andengaging with all stakeholders towards implementation and monitoring.
Make sustainable contributions to communities.
Identify socio-economic opportunities to perform CSR activities.
Focus on social welfare activities as envisaged in Schedule VII of CompaniesAct 2013.
The Policy also focuses on the constitution of CSR Committee roles andresponsibilities of CSR Committee CSR activities to be undertaken and allocation of fundsfor carrying out such CSR activities Implementation and monitoring the execution of CSRactivities for the Company. The CSR Committee shall recommend to the Board of Directors toimplement the CSR activities covering any of the areas as detailed under Schedule VII ofCompanies Act 2013. Annual Report on CSR activities as required under the provisions ofCompanies Act 2013 is annexed herewith marked as Annexure B and forms part of thisreport.
(III) RISK MANAGEMENT POLICY
The Board of Directors of your Company has adopted a Risk Management Policy whichdetails the procedures to be followed by the Company with regard to risk management. TheCompany has formed a Risk Management Committee comprising of four members of the Board whoshall evaluate and review the risk factors associated with the operations of the Companyand recommend to the Board the methods to mitigate the risk and advise from time to timevarious measures to minimise the risk and monitor the risk management for the Company.
The policy broadly defines the scope of the Risk Management Committee which comprisesof:-
Review and approve the Risk Management Policy and associated frameworksprocesses and practices of the Company.
Ensuring that the Company is taking the appropriate measures to achieve prudentbalance between risk and reward in both ongoing and new business activities.
Evaluating significant risk exposures of the Company and assess management'sactions to mitigate the exposures in a timely manner (including one-off initiatives andongoing activities such as business continuity planning and disaster recovery planning& testing).
Co-coordinating its activities with the Audit Committee in instances where thereis any overlap with audit activities (e.g. internal or external audit issue relating torisk management policy or practice).
Reporting and making regular recommendations to the Board.
(IV) WHISTLE-BLOWER POLICY - VIGIL MECHANISM
The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations. To maintain these standards the Company encourages itsemployees who have concerns about suspected misconduct to come forward and express theseconcerns without fear of punishment or unfair treatment. A Vigil (Whistle-Blower)mechanism provides a channel to the Employees and Directors to report to the managementconcerns about unethical behavior actual or suspected fraud or violation of the Code ofConduct or Policy. The mechanism provides for adequate safeguards against victimisation ofemployees and directors to avail of the mechanism and also provide for direct access tothe Chairman of the Board/Chairman of the Audit Committee in exceptional cases.
In line with the statutory requirements the Company has formulated a Whistle-BlowerPolicyA/igil Mechanism which covers malpractices and events which have taken place/suspected to have taken place misuse or abuse of authority fraud or suspected fraudviolation of Company's rules manipulations negligence causing danger to public healthand safety misappropriation of monies and other matters or activity on account of whichthe interest of the Company is or is likely to be affected and formally reported bywhistle blowers concerning its employees.
The Managing Director is responsible for the administration interpretationapplication and review of this policy. The Managing Director is also empowered to bringabout necessary changes to this Policy if required at any stage with the concurrence ofthe Audit Committee. The mechanism also provides for access to the Chairman of the AuditCommittee in required circumstances
(V) DIVIDEND DISTRIBUTION POLICY
According to the Regulation 43A of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended your company falling under top 500 listedentities based on the market capitalisation (calculated as on March 31 of every financialyear) has framed the Dividend Distribution Policy which is attached in this Annual Reportmarked as Annexure F.
EVALUATION OF BOARD COMMITTEE AND DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of Securitiesand Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 as amended an annual performance evaluation of the performance of the Board theDirectors individually as well as the evaluation of the working of the Board Committeeswas carried out based on the criteria and framework adopted by the Board.
The evaluation process for measuring the performance of Executive/Non-Executive andIndependent Directors is being conducted through a survey which contains a questionnairecapturing each Board and Committee Member's response to the survey which provides acomprehensive feedback to evaluate the effectiveness of the Board and its Committees as awhole and also their independent performance. The methodology adopted by each Director whoresponded to the survey has graded their peers against each survey item from 1 to 5 with 1marking the lower efficiency and 5 the highest efficiency which revealed more realisticdata on measuring the effectiveness of the Board dynamics flow of information decisionmaking of Directors and performance of Board and Committee as a whole.
The Independent Directors evaluation is being done by the entire Board with main focuson their adherence to the Corporate Governance practices and their efficiency inmonitoring the same. They are also being evaluated on various parameters viz. theirperformance by way of active participation in Board and Committee meetings discussing andcontributing to strategic planning fulfilment of Independence criteria as specified underSEBI (LODR) Regulations 2015 as amended and their independence from the Management etc.ensuring non participation of Independent Director being evaluated.
Apart from the above the performance of Non-Independent Directors and the Board as awhole in terms of prudent business practices adopted by them towards governance of theoperations of the Company adherence to the highest standards of integrity and businessethics exercising their responsibilities in a bona fide manner in the best interest ofthe Company and not allowing any extraneous consideration that shall impede their decisionmaking authority in the best interest of the Company was also carried out to evaluatetheir performance.
The performance evaluation of the Non-Independent Directors was carried out by theentire Board of Directors (excluding the Director being evaluated) and they have expressedtheir satisfaction with the evaluation process which considered their commitment and theexercise of their responsibilities in the best interest of the Company.
The performance of the Chairman of the Company was reviewed by the IndependentDirectors who ensured during their review that the Chairman conducted the Boardproceedings in an unbiased manner without any conflict with his personal interest at anypoint of time. It was further ascertained by the Independent Directors that the Chairmanallowed the Board Members to raise any concerns on any business of the Board during theirMeetings and addressed them in the best interest of the Company.
As per the SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2018/79 dated 10th May 2018 thefollowings details are being provided on Board evaluation.
|Observations of board evaluation carried out for the year ||There were no observations arising out of board evaluation during the year as the evaluation indicates that the Board has functioned effectively within its powers as enumerated under Companies Act 2013 and in consonance with the Articles of Association of the Company. |
|Previous year's observations and action taken. ||There were no observations during the previous year. |
|Proposed actions based on current year observations. ||As there were no observations the action to be taken does not arise. |
TRAINING AND FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS
Every Independent Director on being inducted into the Board attends an orientationprogram. To familiarise the new directors with the strategy operations and functions ofour Company the Executive Directors/Senior Managerial Personnel make presentations to theinductees about the Company's strategy operations product offerings organisationstructure human resources technologies facilities and risk management.
Further at the time of appointment of Independent Directors the Company issues aformal letter of appointment outlining his/her role functions duties andresponsibilities as a Director. The detailed familiarisation program for IndependentDirectors is hosted on the website of the Company and the weblink for same ishttps://www.hap.in/policies.html.
COMPLIANCE WITH SECRETARIAL STANDARDS
The Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2 issuedby the Institute of Company Secretaries of India relating to Meetings of the Boardof Directors' and General Meetings' respectively have been duly followed by theCompany.
NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES JOINT VENTURESOR ASSOCIATE COMPANIES DURING THE YEAR.
Your Company has no subsidiaries joint venture or associate companies and hence thedisclosure does not arise.
At the Annual General Meeting held on 24th July 2017 M/s. Deloitte Haskin & SellsLLP Chartered Accountants (Firm Registration number 117366W/W100018) were appointed asStatutory Auditors of the Company to hold office till the conclusion of Thirty SeventhAnnual General Meeting of the Company to be held in the calendar year 2022. The Companyreceived a certificate from the Auditors to the effect they are not disqualified tocontinue as Auditors.
The Notes on financial statement referred to in the Auditors' Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualification reservation adverse remark or disclaimer.
The Board has decided to pay the Audit Fee of ?60 Lakhs per annum to the StatutoryAuditors for all their services including audit of accounts tax audit etc. for thefinancial year 2019-20 excluding out of pocket expenses.
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 Shri. S. Dhanapal Senior Partner M/s. S. Dhanapal & Associates a firm ofPractising Company Secretaries to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report for the financial year 2018-2019 is annexed herewith marked asAnnexure C and forms part of this report. As required by the Listing Regulations theauditors' certificate on corporate governance is enclosed as Annexure E to the Board'sreport. The Secretarial Audit Report does not contain any qualification reservationadverse remark or disclaimer.
Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read withsub section (3) of Section 148 of the Companies Act 2013 the Company has appointed M/s.Ramachandran & Associates Cost Auditors (Firm Registration No.000799) as Cost Auditorof the Company to conduct the audit of the cost accounting records maintained by theCompany relating to those products as mandated by The Companies Act 2013 and theCompanies (Cost records and audit) Rules 2014 as amended. In this regard the unitsmanufacturing Milk Powder at Palacode Salem and Kanchipuram have been covered under CostAudit for the financial year 2019-20.
PARTICULARS OF EMPLOYEES AND REMUNERATION
Details as required under Section 197 of the Companies Act 2013 read with Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014:
(i) Details of top ten employees in terms of remuneration drawn*:
|Name of the employee ||Designation of the employee ||Remuneration received (Amount in ? Per annum) ||Nature of employment whether contractual or otherwise ||Qualifications and experience of the employee ||Date of commencement of employment ||Age of such employee ||Last employment held by such employee before joining the company ||Percentage of Equity Shares held by the Employee by himself or along with his /her spouse and dependent Children being not less than two percent of the Equity Shares of the Company ||Whether any such Employee is a relative of any Director or Manager of the Company and if so name of such Director or Manager |
|Prasanna Venkatesh J ||AVP-Marketing & Sales ||4976277 ||Permanent ||B SC. PG.D.B.A ||03.08.1998 ||54 ||Henkal SPIC ||Nil ||Nil |
|Shanmuga Priyan J ||Senior General Manager - IA& Process ||2914284 ||Permanent ||M.COM ||07.03.2001 ||41 ||First Employment in HATSUN ||Nil ||Nil |
|Jerome J ||Associate Vice President ||3588966 ||Permanent ||B.SC. ||05.08.2002 ||59 ||Rasna Pvt ltd. ||Nil ||Nil |
|Anil Kumar PA ||Vice President - QA ||5455992 ||Permanent ||M.SC. Dairy Microbiology ||25.03.2009 ||60 ||Heritage Food India Ltd. ||Nil ||Nil |
|Sam Joseph A ||Senior General Manager-sourcing ||3143220 ||Permanent ||B.E ||18.11.2009 ||45 ||Srinivasa Fine Arts Pvt Ltd. ||Nil ||Nil |
|Ratnakar P. Sundara Raj R ||AVP- Sourcing & Commercial ||5662107 ||Permanent ||B.Com. PG.D.R.M ||04.06.2010 ||58 ||Nilgiris Dairy Farms Pvt Ltd. ||Nil ||Nil |
|Ulhas Vasant Ambre ||Senior General Manager-plant ||4149342 ||Permanent ||IDD ||02.06.2012 ||47 ||Delmote Food (UAE) Fze ||Nil ||Nil |
|John Henry Neizent ||Specialist - Dairy Herd Development ||7980339 ||Permanent ||PHD in Agronomy/ Parasitology/ Nutrition ||19.01.2015 ||58 ||Brownes Dairy ||Nil ||Nil |
|Shanavaz Mohammad ||General Manager - Dl Operation ||2682696 ||Permanent ||B.Tech Dairy Techonolgy ||15.06.2016 ||43 ||Tirumala Milk Products Pvt Ltd. ||Nil ||Nil |
|Srinivasa Rao E ||General Manager -QA ||2601003 ||Permanent ||B.SC Dairy Technology Post Diploma in Dairy Technology ||07.10.2017 ||42 ||Parag Milk Foods ||Nil ||Nil |
*The Top ten Employees do not include Executive Directors as their Remuneration detailsare shown separately in the Board's Report.
(i) Details of the employees employed throughout the year and drawing remunerationwhich in the aggregate is not less than Rupees One Crore and Two Lakhs per annum duringthe financial year. - Nil
(ii) Employees employed for a part of the financial year was in receipt ofremuneration for any part of that year which in the aggregate exceeds Rupees Eight Lakhsand Fifty Thousand per month during the financial year. - Nil.
(iii) None of the employees except Managing Director and Executive Director employedthroughout the financial year or part thereof hold by himself / herself or along withhis/her spouse and dependent children more than two per cent of the equity shares of theCompany.
Details required as per Section 197 and Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014
|NAME OF DIRECTOR/KMP ||AMOUNTOF REMUNERATION PERANNUM (? in Lakhs) ||RATIO OF REMUNERATION TO MEDIAN REMUNERATION OF EMPLOYEES FOR THE FY ||% INCREASE IN REMUNERATION DURING THE FY |
|Shri. R.G. Chandramogan Managing Director ||66.81 ||34.27 ||Nil |
|Shri. C. Sathyan Executive Director ||66.06 ||33.89 ||8.63 |
|Shri. H. Ramachandran Chief Financial Officer ||58.82 ||31.32 ||4.27 |
|Shri. S. Narayan Company Secretary (Resigned w.e.f 29th March 2019) ||16.74 ||9.08 ||0.18 |
|Shri. G. Somasundaram Company Secretary (appointed w.e.f 30th March 2019) ||0.14 ||- ||- |
Percentage Increase In The Median Remuneration of Employees in The Financial Year
The median remuneration of Employees for the Financial Year 31st March 2019 wasarrived at ?16244/- per month and the median remuneration of Employees for the previousfinancial year 31st March 2018 was arrived at ?14654/- per month and accordingly therewas an increase of 10.85% in the median remuneration of employees in the financial year.
Number of Permanent Employees on The Rolls of The Company as on 31.03.2019
The Number of permanent employees on the rolls of the Company as of 31st March 2019stood at 4952 employees.
Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration
The average percentile increase was about 6.56% for all employees who went through thecompensation review cycle in the year. For the Managerial Personnel the compensationlevel remained same in respect of Managing Director and for the Executive Director CFOand the Company Secretary it has marginally increased due to annual increment based ontheir performance. The remuneration for the Managing Director and Executive Director isdetermined by the Shareholders for a defined term as stipulated under the Companies Act2013.
The compensation decisions are taken after considering at various levels of thebenchmark data and the compensation budget approved for the financial year. The Nominationand Remuneration Committee recommends to the Board of Directors any compensation revisionof the managerial personnel. In respect of Whole-time Directors the remuneration fixed forthem is finally approved by the Shareholders.
Details of pecuniary relationship or transactions of the Non-Executive Directorsvis-a-vis the company
All the Non-Executive Directors are entitled to only Sitting fees of ?50000 for everyboard meeting they attend and Sitting fee of ?10000 for every committee meeting theyattend as Members of respective committees pursuant to revision in the sitting feesapproved by the Board at its meeting held on 27th April 2017.
Shri. P. Vaidyanathan Non-Executive and Non-Independent Director held 900000 Equityshares as of 31st March 2019 in the name of P. Vaidyanathan (SHUF).
Shri. K.S. Thanarajan Non-Executive and Non-Independent Director held 541766 Equityshares as of 31 st March 2019. Other than the Sitting fees they do not have any pecuniaryrelationship or entered in to any transaction with the Company.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The term Internal Financial Controls has been defined as the policies and proceduresadopted by the company to ensure orderly and efficient conduct of its business includingadherence to company's policies safeguarding of its assets prevention and detection offrauds and errors accuracy and completeness of accounting records and the timelypreparation of reliable financial information.
Your Company has adequate and robust Internal Control System commensurate with thesize scale and complexity of its operations. To maintain its objectivity andindependence the Internal Audit reports are submitted to the Audit Committee of theBoard. The Internal Audit Department monitors and evaluates the efficacy and adequacy ofinternal control system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function process owners undertake corrective action in their respective areas andthereby strengthen the controls. Significant audit observations and recommendations alongwith corrective actions thereon are presented to the Audit Committee of the Board. TheAudit Committee also conduct discussions about Internal Control System with the Internaland Statutory Auditors and the Management of the Company and satisfy themselves on theintegrity of financial information and ensure that financial controls and systems of riskmanagement are robust and defensible.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary trainees) are covered under this policy.
The Company has not received any complaint on sexual harassment during the financialyear ended 31.03.2019.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE
During the year there are no significant and/or material orders passed by theRegulators or Courts or Tribunals impacting the going concern status and Company'soperations in future.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY WHICH HAS OCCURRED SINCE 31.03.2019 TILL THE DATE OF THIS REPORT
There have been no material changes and commitments which affect the financial positionof the company which have occurred between the end of the financial year i.e. from31.03.2019 to which the financial statements relate until the date of this report.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return in form MGT-9 is annexed herewith marked as Annexure Dand forms part of this report. You may refer our Company's websitehttps://www.hap.in/annual-report.html also.
RELATED PARTY TRANSACTIONS
As required under Regulation 23 of Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as amended the Company hasdeveloped a policy on dealing with Related Party Transactions and such policy is disclosedon the Company's website. The web link for same is https://www.hap.in/policies.html
There were no related party transactions entered into during the financial year by thecompany with the Promoters Key Managerial Personnel or other designated persons which mayhave potential conflict with the interest of the company at large other than theremuneration paid to the Executive Directors and Dividend received by them from theCompany in proportion to the shares held by them and transactions with HAP Sports Trust.
The details of Related Party Transactions are provided in the Notes to the Accounts andAOC-2 forming part of the Director's Report.
CORPORATE GOVERNANCE REPORT
The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and as stipulated under the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 as amended. A report onCorporate Governance including Management Discussion and Analysis report under Regulation34 of Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 along with a certificate from Ms. Smita Chirimar PartnerM/s. S Dhanapal & Associates a firm of Practising Company Secretaries confirming thecompliance is annexed herewith marked as Annexure E and forms part of this report
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The details on Conservation of energy technology absorption foreign exchange earningsand outgo are annexed herewith as marked as Annexure G and forms part of this report.
DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the Directors would like tostate that:
1. In the preparation of the annual accounts the applicable accounting standards havebeen followed.
2. The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit or loss of the Company for the year under review.
3. The Directors have 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 annual accounts on a going concern basis.
5. The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
6. The Directors had devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
As the members are aware your Company's shares are tradable in electronic form and theCompany has established connectivity with both the Depositories i.e. National SecuritiesDepository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In viewof the advantages of the Depository System the members are requested to avail of thefacility of dematerialisation of the Company's shares.
Industrial relations in all the units and branches of your Company remained cordial andpeaceful throughout the year.
The Directors wish to thank the business associates customers vendors bankersfarmers channel partners and investors for their continued support given by them to theCompany. The Directors would also like to thank the employees for the contributions madeby them at all levels.
For and On behalf of the Board of Directors
Chairman & Managing Director
Date: 21st June 2019