Your Directors are pleased to present the Thirty Third Annual Report and the AuditedFinancial Statements for the financial year ended on 31 March 2020.
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 2020 is summarized below:
(Rs. in million)
|Particulars ||Standalone || ||Consolidated || |
| ||For the year ended on 31 March 2020 ||For the year ended on 31 March 2019 ||For the year ended on 31 March 2020 ||For the year ended on 31 March 2019 |
|Revenue from operations and other income ||1723.52 ||1742.84 ||1896.35 ||1852.77 |
|Profit before interest depreciation amortisation expenses and tax (PBIDT) ||556.28 ||708.60 ||617.69 ||752.45 |
|Less: Finance Cost ||50.34 ||35.43 ||73.30 ||66.34 |
|Less: Depreciation Amortisation Expenses ||93.85 ||75.66 ||130.72 ||117.55 |
|Profit before tax (PBT) ||412.29 ||597.51 ||413.26 ||568.56 |
|Less: Tax Expenses ||100.05 ||158.99 ||103.24 ||161.62 |
|Profit after tax (PAT) ||312.24 ||438.52 ||310.02 ||406.94 |
|Profit for the year ||312.24 ||438.52 ||310.02 ||406.94 |
|Attributable to: || || || || |
|Owners ||312.24 ||438.52 ||291.71 ||415.67 |
|Non-Controlling Interest ||- ||- ||18.32 ||(8.74) |
|Other Comprehensive Income /(Loss) ||(4.01) ||(2.38) ||20.48 ||(2.51) |
|Total Comprehensive Income ||308.23 ||436.14 ||330.50 ||404.42 |
|Attributable to: || || || || |
|Owners ||308.23 ||436.14 ||312.19 ||413.09 |
|Non-Controlling Interest ||- ||- ||18.32 ||(8.66) |
|Opening Balance in Retained Earnings ||1132.54 ||798.95 ||1030.84 ||728.97 |
|Amount available for appropriation ||1440.77 ||1235.09 ||1361.34 ||1133.39 |
|Less: Dividend (including Dividend Distribution Tax) on equity shares ||71.79 ||102.55 ||71.79 ||102.55 |
|Closing Balance in Retained Earnings ||1368.98 ||1132.54 ||1289.55 ||1030.84 |
|Earnings Per Share (Basic / Diluted) ||36.70 ||51.55 ||36.44 ||47.84 |
|(Face Value of Share Rs. 10 each) || || || || |
RESULTS OF OPERATIONS
During the year under review the standalone revenue from operations was Rs. 1694.25million as compared to Rs. 1711.87 million in the previous year. The consolidatedrevenue from operation was Rs. 1832.68 million in the financial year ended on 31 March2020 as compared to Rs. 1780.67 million in the previous year.
The Company achieved a standalone profit before tax of
Rs. 412.29 million as compared to Rs. 597.51 million in the previous year. Theconsolidated profit before tax was Rs. 413.26 million in the financial year ended on 31March 2020 as compared to Rs. 568.56 million in the previous year.
Earnings per share
The EPS on the standalone financials was Rs. 36.70 for the year ended on 31 March 2020as against Rs. 51.55 as on 31 March 2019. The EPS on consolidated financials was Rs. 36.44for the year ended on 31 March 2020 as against Rs. 47.84 as on 31 March 2019.
Transfer to Reserve
During the year no amount was transferred to the General Reserve. Rs. 1368.98 millionis proposed to be retained in the surplus.
The paid-up equity share capital as on 31 March 2020 stood at Rs. 85.07 million. Themembers of the Company approved the special resolution on 24 January 2020 for Issuance ofequity shares and/or equity linked securities and/or securities convertible into equityshares through Qualified Institutional Placement (QIP) or preferential allotment up to anaggregate amount of Rs. 150 Crores through the Postal Ballot process.
The Companys' standalone net worth as on 31 March 2020 was at Rs. 2030.80 million ascompared to Rs. 1794.36 million as on 31 March 2019. The Companys' consolidated net worthas on 31 March 2020 was at Rs. 2064.93 million as compared to
Rs. 1811.55 million as on 31 March 2019.
Your Directors have recommended a dividend of Rs. 6.60 (66%) per equity share on8506865 Equity Shares of Rs. 10 each fully paid-up for the financial year 2019-20amounting to
Rs. 56.15 million. The dividend if declared by the members at the ensuing AnnualGeneral Meeting ("AGM") will be paid to those shareholders whose namesregistered in the Register of Members on 28 August 2020. In respect of shares held indematerialised form it will be paid to the members whose names furnished by the NationalSecurities Depository Limited and the Central Depository Services (India) Limited asbeneficial owners. The Dividend Pay-out Ratio for the current year is 18% of standaloneprofits.
During the year the unclaimed dividend pertaining to the dividend for the year ended31 March 2012 was transferred to Investors Education and Protection Fund.
REVIEW OF OPERATIONS
Sales during the financial year remained flat as compared to the previous year.
For domestic sales reasons beyond our control forced the sales to be flat while theadditional expenses towards expanding the sales and marketing team as well as expanding tothe other geographies pulled down the bottom line. Exports showed a growth of 67%.
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" Minus Outlook: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 consolidated total income from operations is Rs. 1896.35 million and totalcomprehensive income attributable to owners' equity after non-controlling interest is Rs.330.50 million for the financial year 2019-20 as compared to the consolidated total incomefrom operations of Rs. 1852.77 million and total comprehensive income attributable toowners' equity after non-controlling interest of Rs. 404.42 million for the previousfinancial year 2018-19. Consolidated financial results include the financial results offollowing entities:
1. Hester Biosciences Nepal Foreign Subsidiary
|Private Limited: || |
|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 (Subsidiary of Hester Biosciences Kenya Limited) |
In accordance with the Indian Accounting Standard (Ind AS) - 110 Consolidation ofFinancial Statements and as provided under the provisions of the Companies Act 2013(hereinafter referred to as "Act") read with Schedule III to the Act and Rulesmade thereunder and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Audited Consolidated Financial Statements are provided in theAnnual Report which show the financial resources assets liabilities incomes profitsand other details of the Company its subsidiary Companies after elimination of minorityinterest as a single entity.
As on 31 March 2020 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. One Step-down subsidiary company namely Hester Biosciences Tanzania Limitedwhich is subsidiary of Hester Biosciences Kenya Limited. There has been no material changein the nature of business of the subsidiaries.
The business details of the subsidiary companies are as under:
Hester Biosciences Nepal Private Limited (HBNPL)
HBNPL is a subsidiary of Hester Biosciences Limited and holds 65% stake in HBNPL. HBNPLis in the business of manufacturing veterinary vaccines in Nepal.
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)
HBAL is 100% wholly-owned subsidiary of Hester Biosciences Limited in Kenya. HBKL is inthe business of Trading of veterinary vaccines and animal health product in Kenya.
Hester Biosciences Tanzania Limited (HBTL)
HBTL is subsidiary of HBKL and step-down subsidiary of Hester Biosciences Limited. HBTLis in the business of Trading of veterinary vaccines and animal health product in Tanzaniaand other Africa region.
As provided in section 136 of the Act the Balance Sheet Statement of Profit and Lossand other documents of the subsidiary companies are not being attached with the BalanceSheet of the Company. The Company have uploaded on its website the Audited FinancialStatements of the subsidiary companies and the related detailed information to any memberof the Company who may be interested to receive the same. The Financial Statements of thesubsidiary companies will also be kept open for inspection at the Registered Office of theCompany and that of the respective subsidiary companies. The Consolidated FinancialStatements presented by the Company include financial results of its subsidiary companiesand the financial highlights of subsidiaries are part of this Annual Report as Annexure-2as prescribed in Form 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 thelink:https://www.hester.in/s/Policy-for-Determining-Material-Subsidiaries-9m3y.pdf
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 annexed as Annexure -3. The Related Party Transactions tookplaced during the financial year 2019-20 have placed in Notes of Financial Statements ofthe 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
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.
COST ACCOUNTS AND RECORDS
The Company has made and maintained the cost accounts and records as specified by theCentral Government under section 148 (1) of the Act and Rules made thereunder.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Appointment Cessation and Re-appointment of Directors
During the year upon recommendation of Nomination and Remuneration Committee Ms.Sandhya Patel (DIN: 02215022) and Mr. Ashok Bhadakal (DIN: 00981201) were appointed as anAdditional Independent Directors of the Company for the period of period of 3 years witheffect from 1 April 2020 subject to approval of the members at the ensuing Annual GeneralMeeting.
Mr. Naman Patel (DIN: 05143261) and Mr. Amit Shukla (DIN: 00709322) were appointed asan Independent Directors on 15 September 2015 for a period of 5 (five) consecutive yearsi.e. up to 31 March 2020. Based on the performance evaluation and upon the recommendationof Nomination and Remuneration Committee the Board of Directors through circularresolution passed on 31 March 2020 approved their re-appointment as an IndependentDirectors of the Company subject to approval of the members by way of a specialresolution to hold office for a second term of 3 (three) consecutive years with effectfrom 1 April 2020 to 31 March 2023.
Mr. Vishwesh Patel and Ms. Grishma Nanavaty Independent Directors of the Company wereceased to hold office with effect from 1 April 2020 due to completion of two consecutiveterms as independent directors.
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 Mr. Sanjiv Gandhi Non-Executive Director (DIN:00024548) will retire by rotation at the ensuing Annual General Meeting and beingeligible offers himself for re-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 Thirty Third Annual General Meeting.
Declaration by Independent Directors
The Company has received necessary declaration under Section 149(7) of the CompaniesAct 2013 and16(b) of the Listing Regulations from Independent Directors confirming thatthey are not disqualified for continuing as an Independent Director.
Training of Independent Directors
To familiarize 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 Program 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. Sahil Shah Chief Financial Officerand Mr. Vinod Mali Company Secretary of the Company are the Key Managerial Personnel asper the provisions of the Companies Act 2013 as on 31 March 2020. During the year Mr.Jigar Shah has resigned from the post of Chief Financial officer of the Company witheffect from 1 September 2019 and Mr. Sahil Shah has been appointed as Chief FinancialOfficer with effect from 1 March 2020. Mr. Rajiv
Gandhi has been re-appointed as a CEO & Managing Director of the Company witheffect from 1 April 2020 by members of the Company through postal ballot process on 24January 2020. Thereafter Mr. Sahil Shah has resigned from the post of Chief FinancialOfficer and Mr. Chetas Patel has been appointed as a Chief Financial Officer of theCompany with effect from 29 April 2020.
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 circulars with respect to Guidance Note on Board Evaluation. TheNomination and Remuneration Committee had approved the indicative criteria for theevaluation based on the SEBI Guidance Note on Board Evaluation. The evaluation for theperformance of the Board as a whole and of the Committees were conducted byquestionnaires.
In a separate meeting of Independent Directors held on 7 February 2020 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 judgment 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 Personnel and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report whichis a part of this Annual Report.
Board of Director Meetings
The information of meetings of the Board of Directors is given in Corporate GovernanceReport forming a part of this Annual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of section 134(3)(c) read with 134(5) of the Companies Act 2013 and to thebest of their knowledge and belief and according to the information and explanationsprovided to them your Directors hereby make the following statements:
a) That in preparation of Financial Statements for the year ended 31 March 2020 theapplicable accounting standards have been followed and no material departures have beenmade from the same;
b) The Directors had 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 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 Financial Statements for the year ended 31 March 2020on going 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 were in place and were adequate and operating effectively.
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:
Nomination and Remuneration Committee
Stakeholders' Grievances and Relationship Committee
Corporate Social Responsibility 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.
CORPORATE SOCIAL RESPONSIBILITY _"CSR"_
Your Company has contributed for healthcare education research and improvisation oflivelihood of poor's as a part of initiatives under "Corporate SocialResponsibility" for the year under review. Pursuant to section 135 of the Act and therelevant rules the Board has constituted a Corporate Social Responsibility("CSR") Committee under the Chairmanship of Mr. Rajiv Gandhi. The details ofmembership of the Committee & the meetings held are detailed in the CorporateGovernance Report forming part of this Report. The contents of the CSR Policy of theCompany as approved by the Board on the recommendation of the CSR Committee is availableon the website of the Company and can be accessed through the website of the Company:www.hester.in. The Disclosures with respect to CSR Activities form part of this Directors'Report as
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.
During the year State Bank of India has enhanced total credit facilities of theCompany to Rs. 753 million from existing limits of Rs. 557 million for working capitalrequirement and capital expenditures.
The Company's plant properties equipment and stocks are adequately insured againstall major risks.
VIGIL MECHANISM /WHISTLE BLOWER POLICY
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 PROHIBITION AND REDRESSAL_ ACT 2013
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention prohibition and redressal of sexual harassment atworkplace in line with the provisions of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 and the Rules made there under.
The Company always endeavors 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 financial year 2019-20 no complaints were received with regards to sexualharassment.
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 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 bothSecretarial Standards.
BUSINESS RESPONSIBILITY REPORTING
As per regulation 34(2)(f) of the Listing Regulations a separate section on BusinessResponsibility Reporting forms a part of this Annual Report.
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 AnalysisReport as required under Regulations 34 of the SEBI (LODR) Regulations 2015 is attachedand forms part of the Annual Report.
Statutory Auditor and Audit Report
Shah Karia & Associates (Firm Registration No. 131546W) Chartered AccountantsAhmedabad was appointed as the Statutory Auditors of the Company till the conclusion ofThirty Third Annual General Meeting. Shah Karia & Associates Chartered Accountantshave furnished a declaration confirming their independence as well as their arm's lengthrelationship with the Company and that they have not taken up any prohibited non-auditassignments for the Company.
The Board of Directors of the Company has appointed Chandulal M. Shah & Co. (FirmRegistration No. 101698W) Chartered Accountants Ahmedabad as statutory auditor of theCompany in their Board meeting held on 26 June 2020 subject to approval of the members inthe ensuing Annual General Meeting for a period of 3 years from the conclusion of ThirtyThird Annual General Meeting till the Conclusion of 36th Annual General Meeting. The AuditCommittee has considered the qualifications and experiences of the statutory auditor andhas recommended their appointment. Written consent of the auditor together with acertificate that the appointment if made shall be in accordance with the conditionsspecified in Rule 4 of the 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 2020 and the observations and commentsappearing in the report are self-explanatory and do not call for any further explanation/clarification by the Board of Directors as provided under section 134 of the CompaniesAct 2013.
Internal Auditor and Audit Report
Naresh J. Patel & Co. Chartered Accountants Ahmedabad has been the internalauditor of the Company for the FY 2019-20. 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 Ernest & Young LLP Chartered Accountants Ahmedabad forthe FY 2020-21 as an Internal Auditor of the Company in the Board meeting held on 26 June2020 after obtaining its willingness and eligibility letter for appointment as InternalAuditor of the Company.
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 2019-20 on the remuneration terms as approved by the members at the last AnnualGeneral Meeting held on 31 July 2019.The Cost Audit report for the financial year 2018-19was filed within the due date. The due date for submission of the Cost Audit Report forthe year 2019-20 is within 180 days from 31 March 2020.
The Board has appointed Kiran J. Mehta & Co. Cost Accountants Ahmedabad for theFY 2020-21 as a Cost Auditor of the Company in the Board meeting held on 26 June 2020after obtaining its willingness and eligibility letter for appointment as Cost Auditor ofthe Company. As required under the Act and Rules made thereunder the remuneration payableto the Cost Auditor is required to be placed before the Members in a general meeting forratification.
Accordingly a resolution seeking ratification by members for the remuneration payableto Kiran J. Mehta & Co. is included in the Notice convening 33rd Annual GeneralMeeting 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 2019-20. The Secretarial Audit Report for the FY 2019-20is annexed to this Directors' Report as Annexure-4. 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 2020-21 in the Board Meetingheld on 26 June 2020.
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.
BUSINESS 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 ITSADEQUACY
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 2020 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 thesame and identify gaps if any and implement new and/or improved controls whenever theeffect of such gaps would have a material effect on the Companys' operations.
During the year CARE Ratings Limited has reaffirmed the credit rating of "CARE A-/Stable" for long-term bank facilities and "CARE A- : Stable / CARE A2" forlong-term /short term bank facilities and "CARE A2" for short term bankfacilities of the Company. Further the CARE Ratings Limited has reaffirmed the ratings onrequest of State Bank of India upon sanctioned of additional term loan facility.
TRANSFER OF SHARES TO INVESTOR EDUCATION ANDPROTECTION FUND _IEPF_ ACCOUNT
During the year the Company has transferred 4826 Equity Shares of 58 shareholderswhose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) yearsto Investor Education & Protection Fund pursuant in compliance with the provisions ofSection 124(6) of Companies Act 2013 read with Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016 ("IEPF Rules").The Company has sent letters to shareholders to claim their unpaid dividend before theshares transferred to IEPF Account.
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 2020 in Form MGT-9 is annexed tothis report as Annexure-5. The same is available on the website of the Company:www.hester.in.
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-6.
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-7 and forms part ofthis report.
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) Rules2014 to the extent the transactions took place on these items during the year.
Apart from what are mentioned in this report there are no material changes andcommitments affecting the financial position of the Company between the end of thefinancial year and the date of this report.
Your Directors place on record their sincere appreciation for the continuedco-operation and support extended to the Company by various Banks. Your Directors alsothank the Medical Profession the Trade and Consumers for their patronage to the Company'sproducts. Your Directors also place on record sincere appreciation of the continued hardwork put in by the employees at all levels. The Directors also thank the Company'svendors investors business associates Stock Exchanges Government of India StateGovernment and various departments and agencies for their support and co-operation.