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Hester Biosciences Ltd.

BSE: 524669 Sector: Health care
NSE: HESTERBIO ISIN Code: INE782E01017
BSE 00:00 | 17 Jan 1602.00 16.85
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NSE 00:00 | 17 Jan 1603.25 9.65
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OPEN 1617.25
PREVIOUS CLOSE 1585.15
VOLUME 392
52-Week high 2044.40
52-Week low 1043.25
P/E 31.89
Mkt Cap.(Rs cr) 1,363
Buy Price 1580.75
Buy Qty 1.00
Sell Price 1641.00
Sell Qty 1.00
OPEN 1617.25
CLOSE 1585.15
VOLUME 392
52-Week high 2044.40
52-Week low 1043.25
P/E 31.89
Mkt Cap.(Rs cr) 1,363
Buy Price 1580.75
Buy Qty 1.00
Sell Price 1641.00
Sell Qty 1.00

Hester Biosciences Ltd. (HESTERBIO) - Director Report

Company director report

Your Directors are pleased to present the Thirty Second Annual Report and the AuditedFinancial Statements for the financial year ended on 31 March 2019.

FINANCIAL RESULTS:

The financial statements of the Company have been prepared in accordance with theIndian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

The standalone and Consolidated financial performance of the Company for the financialyear ended on 31 March 2019 is summarised below:

##Rs.## in Million

Standalone

Consolidated

Particulars For the year ended on 31 March 2019 For the year ended on 31 March 2018 For the year ended on 31 March 2019 For the year ended on 31 March 2018
Revenue from operations and other income 1742.84 1371.30 1852.77 1389.60
Profit before interest depreciation amortisation expenses and tax (PBIDT) 708.60 514.73 752.45 498.17
Less: Finance Cost 35.43 23.15 66.34 40.36
Less: Depreciation Amortisation Expenses 75.66 54.51 117.55 96.59
Profit before tax (PBT) 597.51 437.07 568.56 361.22
Less: Tax Expenses 158.99 131.49 161.62 130.55
Profit after tax (PAT) 438.52 305.58 406.94 230.67
Profit for the year 438.52 305.58 406.94 230.67
Attributable to:
Owners 438.52 305.58 415.67 256.21
Non-Controlling Interest - - (8.74) (25.54)
Other Comprehensive Income /(Loss) (2.38) (1.22) (2.51) (1.06)
Total Comprehensive Income 436.14 304.36 404.42 229.61
Attributable to:
Owners 436.14 304.36 413.09 255.08
Non-Controlling Interest - - (8.66) (25.47)
Opening Balance in Retained Earnings 798.95 609.09 728.97 594.88
Amount available for appropriation 1235.09 913.45 1133.39 843.47
Less: Dividend (including Dividend Distribution Tax) on equity shares 102.55 64.50 102.55 64.50
Less: Transfer to general reserve - 50.00 - 50.00
Closing Balance in Retained Earnings 1132.54 798.95 1030.84 728.97
Earnings Per Share (Basic / Diluted) (Face Value of Share ' 10 each) 51.55 35.92 47.84 27.12

RESULTS OF OPERATIONS

Sales

Your Company posted a turnover of ' 1711.87 million in the financial year ended on 31March 2019 as compared to ' 1352.53 million in the previous year.

Profitability

Your Companys' profit before tax for the year ended 31 March 2019 was recorded at '597.51 million as compared to ' 437.07 million in the previous year.

Earnings Per Share

EPS was at ' 51.55 as on 31 March 2019 as against ' 35.92 as on 31 March 2018.

Net Worth

The Companys' net worth as on 31 March 2019 was at ' 1794.36 million as compared to '1460.78 million as on 31 March 2018.

DIVIDEND

During the year your Directors declared and paid 1st interim dividend of ' 2.00 perequity share and 2nd interim dividend of ' 2.00 per equity share for the financial year2018-19.

The resolution to pay interim dividends was passed in the meeting held on 10 August2018 and 29 October 2018. Further your Directors have recommended a final dividendpayment of ' 7.00 per equity share for the financial year 2018-19 making a total of '11.00 per equity share for the financial year as compared to ' 10 per equity share for thelast year. This final dividend is subject to approval by the shareholders at the ensuingAnnual General Meeting. The total pay-out of dividend is 21.34 per cent of the stand-aloneprofit and is in line with the dividend policy adopted by the Company.

The total dividend appropriation (excluding dividend tax) for the current year is '93575515 as against ' 85068650 in the earlier year.

During the year the unclaimed dividend pertaining to the dividend for the year ended31 March 2011 was transferred to Investors Education and Protection Fund.

SHARE CAPITAL

The paid-up equity share capital as on 31 March 2019 stood at ' 85.07 million.

REVIEW OF OPERATIONS

The financial year saw an increase in sales by 27 per cent and an increase in bottomline by 44 per cent.

The growth in sales was as per forecast while the growth in bottom line was more thanthe forecast.

For better management we restructured the divisions of the company. The divisions noware follows:

• Poultry Healthcare

• Animal Healthcare

• Veterinary Social Business

The poultry healthcare division comprising of vaccines and health products witnesseda growth of 14.71 per cent an increase in sales to ' 1306.20 million from ' 1138.74million in the previous year. The growth has been more than the growth on the poultryindustry thereby indicating that we have improved our market share.

The animal healthcare division witnessed a growth of 98.70 per cent an increase insales to ' 354.85 million as against ' 178.58 million in the previous year. This growthhas come evenly between vaccines and health products. Vaccines growth has come mainlythrough government tenders while health products have given a good growth in the trademarket.

Exports sales registered a growth of 8.87 per cent an increase in sales to ' 138.26million as against ' 126.99 million in the previous year. Exports were below forecasts.

The attributable factors were mainly external. Delay in registrations and slowinternational tender movements were the main causes. Our pursuit continues to consolidateinternational business and we hope to make big strides in this financial year as well asnext year.

Our CARE credit rating was reaffirmed and assigned as follows:

• Long-term Bank Facilities rating ‘A-: Stable ("A" Minus Outlook:Stable)'

• Long-term/ Short-term Bank Facilities rating ‘A-: Stable (A" MinusOutlook: Stable)' / ‘A2'

• Short-term rating ‘A2'

We continue to hold the following certifications:

1. WHO - GMP

2. GLP (Good Laboratory Practices)

3. ISO 9001:2008

4. ISO 14001:2004

5. OHSAS 180001:2007

6. DSIR approved R&D Centre

CONSOLIDATED FINANCIAL STATEMENTS

The Groups' consolidated total income from operations is ' 1852.77 million and totalcomprehensive income attributable to owners' equity after non-controlling interest is '404.42 million for the financial year 2018-19 as compared to the Groups' consolidatedtotal income from operations of ' 1389.59 million and total comprehensive incomeattributable to owners' equity after non-controlling interest of ' 229.61 million for theprevious financial year 2017-18. Consolidated financial results include the financialresults of following entities:

1. Hester Biosciences Nepal Private Limited - Foreign Subsidiary

2. Texas Lifesciences Private Limited - Subsidiary

3. Hester Biosciences Africa Limited - Foreign Wholly-owned Subsidiary

4. Hester Bioscience Kenya Limited - Foreign Wholly-owned Subsidiary

5. Hester Biosciences Tanzania Limited - Foreign Step-down Subsidiary (Wholly-ownedSubsidiary of Hester Biosciences Kenya Limited)

In accordance with the Indian Accounting Standard (Ind AS)

- 110 Consolidation of Financial Statements and as provided under the provisions of theCompanies Act 2013 (hereinafter referred to as "Act") read with Schedule III tothe Act and Rules made thereunder and the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Audited Consolidated Financial Statements areprovided in the Annual Report which show the financial resources assets liabilitiesincomes profits and other details of the Company its subsidiary Companies afterelimination of minority interest as a single entity.

SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANIES

As on 31 March 2019 your Company has two wholly-owned subsidiary Company namelyHester Biosciences Africa Limited and Hester Biosciences Kenya Limited; and two subsidiaryCompanies namely Hester Biosciences Nepal Private Limited and Texas Lifesciences PrivateLimited.

Further there has been no material change in the nature of business of thesubsidiaries.

During the year Hester Biosciences Limited incorporated 100% wholly-owned subsidiaryHester Biosciences Kenya Limited in Kenya.

The audited financial accounts of the Subsidiary Companies will be available forinspection during business hours at our registered office. Further the financialhighlights of Subsidiaries are part of this Annual Report as Annexure-2 as prescribed inForm AOC-1.

As provided under Section 129(3) of the Companies Act 2013 and Rules made thereunder astatement containing the salient features of the financial statements of its subsidiariesin the format prescribed under the rules is attached to the financial statements. Thepolicy relating to material subsidiaries as approved by the Board may be accessed on theCompanys' website at the link:https://www.hester.in/s/Policy-for-Determining-Material-Subsidiaries-9m3y.pdf

The performances of the Subsidiary Companies as under:

Hester Biosciences Nepal Private Limited (HBNPL)

HBNPL is a subsidiary of Hester Biosciences Limited.

Hester India holds 65% stake in HBNPL hence becoming a subsidiary of HesterBiosciences Limited. HBNPL is in the business of manufacturing veterinary vaccines inNepal.

Texas Lifesciences Private Limited (Texas Lifesciences)

Teaxs Lifesciences is a subsidiary of Hester Biosciences Limited and holds 54.80%stake. Texas Lifesciences is in the business of manufacturing and supplying pharmaformulations tablets capsules powder and oral liquid for human and veterinary markets.

Hester Biosciences Africa Limited (HBAL)

HBAL is 100% wholly-owned subsidiary of Hester Biosciences Limited in Tanzania. HBALwill be in the business of manufacturing veterinary vaccines and animal health product inTanzania. HBAL may commence commercial production at the end of 2020.

Hester Biosciences Kenya Limited (HBKL)

During the year Hester Biosciences Limited incorporated a 100% wholly-owned subsidiaryin the name of Hester Biosciences Kenya Limited (HBKL) in Kenya. HBKL is in the businessof Trading of veterinary vaccines and animal health product in Kenya.

Hester Biosciences Tanzania Limited (HBTL)

During the year HBKL has incorporated and invested in wholly-owned subsidiary namelyHester Biosciences Tanzania Limited (HBTL) in Tanzania. HBTL is the step-down subsidiaryof Hester Biosciences Limited. HBTL is in the business of Trading of veterinary vaccinesand animal health product in Tanzania and other Africa region.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment and Resignation of Directors

During the year there is no appointment and resignation was done under review.

None of the Directors of the Company is disqualified for being appointed as Director asspecified in Section 164 (2) of the Companies Act 2013.

Retirement by Rotations

In accordance with the provisions of Section 152 (6) of the Act and in terms of theArticles of Association of the Company Dr. Bhupendra Gandhi (DIN: 00437907) will retireby rotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment. The Board recommends his re-appointment.

Profile of Directors seeking Appointment/Re-appointment

As required under Regulation 36 (3) of the SEBI (LODR) Regulations 2015 particularsof Directors seeking appointment/re-appointment at the ensuing Annual General Meeting areannexed to the notice convening 32nd Annual General Meeting.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director underSection 149(7) of the Companies Act 2013 and16 (b) of the Listing Regulations fromIndependent Directors confirming that they are not disqualified for continuing as anIndependent Director.

Training of Independent Directors

To familiarise the new inductees with the strategy operations and functions of ourCompany the executive directors/ senior managerial personnel make presentations to theinductees about the Companys' strategy operations product and service offeringsorganisation structure finance human resources technology quality and facilities.Further the Company has devised a Familiarisation Programme for Independent Directors asper Regulation 46 (2) of SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 and the same has been placed on the website of the Company at: https://www.hester.in/s/Policy-on-Familarization-Programme-for-the- Independent-Directors-bwm9.pdf

Key Managerial Personnel

Mr. Rajiv Gandhi CEO & Managing Director Mr. Jigar Shah Chief Financial Officerand Mr. Vinod Mali Company

Secretary of the Company are the Key Managerial Personnel as per the provisions of theCompanies Act 2013. During the year Mr. Vinod Mali appointed as Company Secretary andCompliance Officer in place of Ms. Amala Parikh who has resigned from the post of CompanySecretary of the Company with effect from 14 May 2018.

Evaluation of Performance of the Board its Committees and Individual Directors

During the year the evaluation of the annual performance of individual directorsincluding the Chairman of the Company and Independent Directors Board and Committees ofthe Board was carried out under the provisions of the Act and relevant Rules and theCorporate Governance requirements as prescribed under Regulation 17 of ListingRegulations 2015 and the circular issued by SEBI dated 5 January 2017 with respect toGuidance Note on Board Evaluation.

The Nomination and Remuneration Committee had approved the indicative criteria for theevaluation based on the SEBI Guidance Note on Board Evaluation.

The evaluation for the performance of the Board as a whole and of the Committees wereconducted by questionnaires.

In a separate meeting of Independent Directors held on 29 January 2019 performance ofNon-Independent Directors and performance of the Board as a whole was evaluated. Furtherthey also evaluated the performance of the Chairman of the Company taking into accountthe views of the Executive Directors and Non-Executive Directors.

The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of various criteria such as structure and diversity of theBoard experience of Directors strategy and performance evaluation secretarial supportevaluation of risk evaluation of performance of the management and feedback independenceof the management from the Board and other indicators. The Nomination and RemunerationCommittee reviewed the performance of the individual Directors on the basis of thecriteria such as knowledge and competency fulfillment of functions availability andattendance initiative integrity contribution and commitment independence independentviews and judgement among other components.

Nomination and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee frameda policy on selection and appointment of Directors Senior Management and theirremuneration. The Nomination and Remuneration policy has amended by the Board of Directorsin their meeting held on 29 January 2019 on Recommendation of Nomination and RemunerationCommittee. The Remuneration Policy is stated in the Corporate Governance Report which isa part of this Annual Report.

Board of Director Meetings

The Board consists of eight members as on 31 March 2019 four of whom are Promoters andNon-Independent Directors and the remaining four are Independent Directors.

Regular meetings of the Board are held at least once in a quarter inter-alia toreview the quarterly half yearly and annual financial results of the Company. AdditionalBoard meetings are convened to discuss and decide on various business policies strategiesand other businesses.

During the year under review the Board of Directors of the Company met four times: 14May 2018 10 August 2018 29 October 2018 and 29 January 2019.

Committees of Board of Directors

Your Company has several Committees which have been established as part of bestcorporate governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders' Grievances and Relationship Committee

• Corporate Social Responsibility Committee

• Management Committee

• Share Transfer Committee

A detailed note on the committees with respect to composition meetings powers andterms of reference is provided under the Corporate Governance Report section in thisAnnual Report.

Terms of References of Committees and Policies

The Board of Directors has amended the Terms of References of Audit CommitteeNomination and Remuneration Committee and Stakeholders' Grievances and RelationshipCommittee in their meeting held on 29 January 2019 on recommendation from respectivecommittee to amend the same. The Board of Directors has also made changes in some policieslike Related Party Transaction Policy

Policy for Determining Material Subsidiaries Nomination and Remuneration Policy andCode of Conduct for Board Members and Senior Management Personnel in their Meeting held on29 January 2019 as SEBI Regulations amended time to time.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE ("CSR")

The CSR Committee is responsible for indicating the activities to be undertaken by theCompany monitoring the implementation of the framework of the Corporate SocialResponsibility Policy and recommending the amount to be spent on CSR activities. Thedetails of membership of the Committee & the meetings held are detailed in theCorporate Governance Report forming part of this Report. The contents of the CSR Policyof the Company as approved by the Board on the recommendation of the CSR Committee isavailable on the website of the Company and can be accessed through the website of theCompany: www.hester.in

Corporate Social Responsibility (CSR) Committee and Statutory Disclosures with respectto CSR Committee and an Annual Report on CSR Activities form part of this Directors'Report as Annexure-1.

PUBLIC DEPOSITS

During the period under review the Company has not accepted deposits from shareholdersand public falling within the ambit of Section 73 of the Companies Act 2013 and rulesmade thereunder.

FINANCE

During the year State Bank of India has revised total credit facilities of the Companyto ' 556.80 million for working capital requirement and capital expenditures. The Companyhas raised the additional finance through Working Capital Demand Loan (unsecured) facilityfrom HDFC Bank Limited and Yes Bank Limited.

INSURANCE

Assets of your Company are adequately insured against various perils.

VIGIL MECHANISM

The Company has established a vigil mechanism and framed a Whistle Blower Policy forDirectors and employees to report concerns about unethical behaviour actual or suspectedfraud or violation of the Companys' Code of Conduct or Ethics Policy. The functioning ofvigil mechanism is reviewed by the Audit Committee from time to time. No whistle blowerhas been denied access to the Audit Committee of the Board. The Whistle Blower Policy ofthe Company is available on the Companys' website.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has formulated and adopted a policy on prevention prohibition andredressal of sexual harassment at workplace in line with the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules thereunder.

The Company always endeavours to create and provide an environment to its employees andexternal individuals engaged with the Company that is free from discrimination andharassment including sexual harassment. The Company has in place a robust policy onprevention of sexual harassment at workplace. The policy aims at prevention of harassmentof employees as well as contractors and lays down the guidelines for identificationreporting and prevention of sexual harassment.

During the year under review there were no incidences of sexual harassment reportedand received.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and Regulations 17 to 27 and 46 of the SEBI (LODR) Regulations 2015 andamendments therein. A separate section on detailed report on Corporate Governance practicefollowed by the Company under SEBI (LODR) Regulations 2015 along with a certificate fromPracticing Company Secretary confirming the compliance forms a part of this report. TheBoard of Directors supports the basic principles of corporate governance and lays strongemphasis on transparency accountability and integrity.

SECRETARIAL STANDARDS

Secretarial Standards for the Board of Directors and General Meetings (SS-1 & SS-2)are applicable to the Company.

The Company has complied with the provisions of both Secretarial Standards.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your attention is drawn to the perception and business outlook of the management foryour Company for the current year and for the industry in which it operates including itsposition and perceived trends in near future.

The Management Discussion and Analysis Report as required under Regulations 34 of theSEBI (LODR) Regulations 2015 is attached and forms part of the Annual Report.

AUDITORS

Statutory Auditor and Audit Report

Shah Karia & Associates (Firm Registration No. 131546W) Chartered AccountantsAhmedabad was appointed as a statutory auditor of your Company to hold Office until theconclusion of the 32nd AGM.

The Board of Directors of the Company has re-appointed Shah Karia & AssociatesChartered Accountants

Ahmedabad as statutory auditor of the Company in their Board meeting held on 7 May2019 subject to approval of the members in the ensuing Annual General Meeting for aperiod of one year from the conclusion of Thirty Second Annual General Meeting till theConclusion of next Annual General Meeting. The Audit Committee has considered thequalifications and experiences of the statutory auditor and has recommended theirre-appointment. Written consent of the auditor together with a certificate that theappointment if made shall be in accordance with the conditions specified in Rule 4 ofthe Companies (Audit and Auditors) Rules 2014 has been received.

The Board has duly reviewed the Statutory Auditors'

Report of Shah Karia & Associates for the year ended on 31 March 2019 and theobservations and comments appearing in the report are self-explanatory and do not callfor any further explanation/ clarification by the Board of Directors as provided underSection 134 of the Companies Act 2013.

Internal Auditor and Audit Report

Naresh J. Patel & Co. Chartered Accountants Ahmedabad has been the internalauditor of the Company for the FY 2018-19. The Internal Auditor is appointed by the Boardof Directors of the Company on a yearly basis based on the recommendation of the AuditCommittee. The Internal Auditor reports its findings on the internal audit of the Companyto the Audit Committee on a quarterly basis. The scope of internal audit is approved bythe Audit Committee.

The Board has appointed Naresh J. Patel & Co. Chartered Accountants Ahmedabad forthe FY 2019-20 as an Internal Auditor of the Company in the Board meeting held on 7 May2019 after obtaining its willingness and eligibility letter for appointment as InternalAuditor of the Company.

Cost Auditor

Pursuant to provisions of Section 148 read with Companies (Audit & Auditors) Rules2014 and other applicable provisions if any of the Companies Act 2013 the Board ofDirectors had on recommendation of the Audit Committee re-appointed Kiran J. Mehta &Co. Cost Accountants Ahmedabad as the Cost Auditor of the Company for the financialyear 2018-19 on the remuneration terms as approved by the members at the last AnnualGeneral Meeting held on 10 August 2018. The Cost Audit report for the financial year2017-18 was filed within the due date. The due date for submission of the Cost AuditReport for the year 2018-19 is within 180 days from 31 March 2019.

The Board has appointed Kiran J. Mehta & Co. Cost Accountants Ahmedabad for theFY 2019-20 as a Cost Auditor of the Company in the Board meeting held on 7 May 2019 afterobtaining its willingness and eligibility letter for appointment as Cost Auditor of theCompany.

As required under the Act and Rules made thereunder the remuneration payable to theCost Auditor is required to be placed before the Members in a general meeting forratification. Accordingly a resolution seeking ratification by members for theremuneration payable to Kiran J. Mehta &

Co. is included in the Notice convening 32nd Annual General Meeting of the Company.

Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board of Directorshad appointed Mr. Tapan Shah Practicing Company Secretary to undertake the SecretarialAudit of the Company for the FY 2018-19. The Secretarial Audit Report for the FY 2018-19is annexed to this Directors' Report as Annexure-6. The Board of Directors has dulyreviewed the Secretarial Auditors' Report and the observations and comments appearing inthe report are self-explanatory and do not call for any further explanation/clarificationby the Board of Directors as provided under Section 134 of the Act.

The Board of Directors has appointed Mr. Tapan Shah Practicing Company Secretary toundertake the Secretarial Audit of the Company for the FY 2019-20 in the Board Meetingheld on 7 May 2019.

PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS

Details of loans guarantees and investments covered under the provisions of Section186 of the Companies Act 2013 are given in the notes to the Financial Statements.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of theCompanies Act 2013 read with Rule 12 of Companies (Management and Administration) Rules2014 the extract of the Annual Return as at 31 March 2019 in Form MGT-9 is annexed tothis report as Annexure-3.

The same is available on the website of the Company and can be accessed through:www.hester.in

RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered by the Company during the previousfinancial year with the related parties were in the ordinary course of business and onarms' length basis. There were no materially significant related party transactionsentered by the Company with its Promoters Directors Key Managerial Personnel or otherpersons which may have potential conflict with the interest of the Company.

All Related Party transactions are placed before the Audit Committee for approvalwherever applicable. Prior omnibus approval for normal business transactions is alsoobtained from the Audit Committee for the related party transactions which are ofrepetitive nature and accordingly the required disclosures are made to the Committee on aquarterly basis in terms of the approval of the Committee.

The disclosure of Related Party Transactions as required under Section 134(3)(h) of theAct in Form AOC - 2 is not applicable for the current year. The Related Party Transactionstook placed during the financial year 2018-19 have placed in Notes of Financial Statementsof the Company.

The policy on Related Party Transactions as approved by the Board may be accessedthrough the web link: https:// www.hester.in/s/Related-Party-Transaction-Policy-rr76.pdf

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy technology absorption and foreign exchangeearnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 ofThe Companies (Accounts) Rules 2014 is provided in Annexure-4 and forms part of thisreport.

PARTICULAR OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given inthis Annual Report as Annexure-5.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of financial year and the date of Directors'Report.

RISK MANAGEMENT POLICY AND FRAMEWORK

Risk management is embedded in your Companys' operating framework. Your Companybelieves that managing risks helps in maximising returns. The Companys' approach toaddressing business risks is comprehensive and includes periodic review of such risks anda framework for mitigating controls and reporting mechanism of such risks. The riskmanagement framework is reviewed periodically by the Board and the Audit Committee.

INTERNAL FINANCIAL CONTROL SYSTEMS AND ITS ADEQUACY

The Company has its internal audit function which endeavours to make meaningfulcontributions to the organisations' overall governance risk management and internalcontrols. The function reviews and ensures sustained effectiveness of Internal FinancialControl by adopting a systematic approach to its work.

The Company has designed and implemented a process driven framework for InternalFinancial Controls (IFC) within the meaning of the explanation to Section 134 (5) (e) ofthe Act. For the year ended on 31 March 2019 the Board having opinion that the Companyhas sound Internal Financial Control commensurate with the size scale and complexity ofits business operations. The Internal Financial Control operates effectively and nomaterial weakness exists.

The Company has a process in place to continuously monitor the same and identify gapsif any and implement new and/ or improved controls whenever the effect of such gaps wouldhave a material effect on the Companys' operations.

CREDIT RATING

CARE Ratings Limited has reaffirmed the credit rating of "CARE A- /Stable"for long-term bank facilities and "CARE A-: Stable / CARE A2" for long-term/short-term bank facilities and assigned "CARE A2" for short-term bankfacilities of the Company.

TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) ACCOUNT

During the year the Company has transferred 20705 Equity Shares to Investor Education& Protection Fund pursuant to the provisions of Section 124(6) of Companies Act 2013read with Investor Education and Protection Fund Authority (Accounting Audit Transferand Refund) Rules 2016 ("IEPF Rules") where the dividends for the last sevenconsecutive years have not been claimed by the concerned shareholders. The Company hassent letters to shareholders to claim their unpaid dividend before the shares transferredto IEPF Account.

DIRECTORS' RESPONSIBILITY STATEMENT

As stipulated in Section 134(3)(c) read with 134(5) of the Companies Act 2013Directors' subscribe to the "Directors' Responsibility Statement" and confirmthat:

a) In preparation of annual accounts for the year ended 31 March 2019 the applicableaccounting standards have been followed and no material departures have been made from thesame;

b) The Directors had selected such accounting policies and applied them consistentlyand made judgements 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 or loss of the Company for that year;

c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

d) The Directors had prepared the annual accounts for the year ended 31 March 2019 ongoing concern basis;

e) The Directors had laid down the internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

f) The Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

GENERAL

Your Directors state that the Company has made disclosures in this report for the itemsprescribed in Section 134 (3) of the

Act and Rule 8 of the Companies (Accounts) Rules 2014 to the extent the transactionstook place on these items during the year and no disclosure or reporting is required inrespect of the following items as there were no transactions on these items during theyear under review:

1. Issue of equity shares with differential rights as to dividend voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company underany scheme save and ESOS.

3. The Managing Director of the Company has not received any remuneration or commissionfrom any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Companys' operations in future.

ACKNOWLEDGEMENT

Your Directors wish to thank all stakeholders employees Companys' bankers variousgovernment authorities members and business associates for their continued support andvaluable co-operation.

Your Directors also wish to place on record their deep sense of appreciation for thecommitted services by the executives staff and workers of the Company.

For and on behalf of Board of Directors
Date: 7 May 2019 Rajiv Gandhi Sanjiv Gandhi
Place: Ahmedabad CEO & Managing Director Director