The Directors have pleasure to present their 33rd Annual Report and the audited AnnualAccounts for the year ended 31st March 2020.
Your Company's performance during the year as compared with that during the previousyear is summarized below::
(In Rs. Lakhs)
|S . No. Particulars ||Standalone ||Consolidated |
| ||March 31 2020 ||March 31 2019 ||March 31 2020 ||March 31 2019 |
|1 Revenue from operations ||88325.60 ||76898.90 ||93034.63 ||80941.81 |
|2 Profit before finance cost depreciation and tax expense ||28608.73 ||24843.22 ||29879.56 ||25463.78 |
|3 Finance Cost ||21.81 ||12.52 ||47.85 ||54.69 |
|4 Profit before depreciation and tax expense ||28586.92 ||24830.70 ||29831.71 ||25409.09 |
|5 Depreciation ||2430.71 ||2117.65 ||2566.38 ||2295.20 |
|6 Profit before exceptional items and tax ||26156.21 ||22713.05 ||27265.33 ||23113.89 |
|7 Exceptional items ||- ||- ||- ||- |
|8 Profit before Tax Expense ||26156.21 ||22713.05 ||27265.33 ||23113.89 |
|9 Tax Expense ||1029.52 ||1240.19 ||1274.88 ||1373.43 |
|10 Profit after Tax Expense ||25126.69 ||21472.86 ||25990.45 ||21740.46 |
|11 Non-controlling interests ||- || ||86.71 ||-4.61 |
|12 Profit after tax expense after non-controlling interests ||25126.69 ||21472.86 ||25903.74 ||21745.07 |
|13 Add: Surplus at the beginning of the year ||95681.44 ||96492.00 ||95071.80 ||95610.16 |
|14 Total Available for appropriation ||120808.13 ||117964.86 ||120975.54 ||117355.23 |
|Appropriations || || || || |
|15 Dividend including taxes ||2283.17 ||2283.17 ||2283.17 ||2283.17 |
|16 Transfer to general reserve ||1000.00 ||1000.00 ||1000.00 ||1000.00 |
|17 Utilized for Buyback ||22986.77 ||18940.99 ||22986.77 ||18940.99 |
|18 Transferred to Capital Redemption Reserve ||56.00 ||59.26 ||56.00 ||59.26 |
|19 Amortization of Interest on loan to employee trust ||1216.23 ||- ||10.71 ||- |
|Total Appropriations ||27542.17 ||22283.43 ||26336.64 ||22283.43 |
|20 Surplus carried to Balance Sheet ||93265.96 ||95681.44 ||94638.89 ||95071.80 |
State of the Company's Affairs
During the year the Company has recorded revenue of Rs.88325.60 Lakhs and net profitof Rs. 25126.69 Lakhs on a standalone basis. During the same period the consolidatedrevenue was Rs. 93034.63 Lakhs and net profit after non-controlling interests wasRs.25903.74 Lakhs.
Future Prospects and Outlook
Indian Agriculture and our role:
Agriculture is pivoted to the growth of the Indian economy both in terms of itscontribution to the GDP as well as a source of employment for a majority of the country'spopulation. As per 2nd advanced estimate by Ministry of Agriculture total food productionfor FY 2019-20 is estimated to be around 291.95 million tonnes an increase of 2.5% overthe previous year. India has emerged as the 5th largest seed market in the world. Theactive participation of both public and private sectors have played a vital role inlaying a strong foundation for the industry. In India there is a huge demand for goodquality branded seeds. Over the last few years rising awareness about the benefits ofusing certified/ quality seeds has increased the popularity of quality seeds amongfarmers.
Kaveri Seeds is one of the leading seed producing companies in India. With over threedecades of industry experience it has emerged as a premier multi-crop seed producingCompany in India. Over the years the Company has enhanced farmer trust by providing acomplete seeds basket comprising of Field and Vegetable crop seeds. Backed by its strongR&D program the Company specializes in the production of crop seeds including maizecotton rice pearl millet mustard wheat sorghum sunflower and a number of vegetables.
Your Company's dedicated team of researchers design and develop productive hybrids thatexcel in markets and meet the changing needs of farmers and consumers. It is consistentlybuilding a robust portfolio of field crops and vegetables to help enhance farm yield andactively engages with farmers to educate them about latest farming techniques.
Your Company has not only been successful in developing an innovative product rangebut has also helped to meet previously unmet requirements of the farmer community. Fromproviding complete crop solutions across crops terrains and seasons to capitalizing onemerging opportunities it has successfully reached out to farmers around the country.
Strong R&D Division: Kaveri Seeds successfully establishes itself asa market leader resting on its strong R&D team. Its research focuses on thedevelopment of quality hybrid and inbred seeds that offer higher yields. The Company has afully equipped state-of-the-art biotechnology laboratory and its R&D team comprisesof about 145 personnel including more than 40 scientists who strive hard to deliverexceptional results. Kaveri Seeds also has an enormous germplasm bank built over a periodof three decades to sustain innovations in the seed market.
World Class Infrastructure: Kaveri Seed has about 120 Out Reach Trialcentres across India for hybrid testing. The company also has 1 lakh+ loyal producers with65000 acres of land area for seed production. It also has 07 Mega Seed Processing Plantsequipped with modern equipment for pre-cleaning grading crop drying storage andpacking. WitRs.10 lakh sq. ft. cumulative warehouse space across India the Company hasclimate-control godowns and 15000 MT cold storage capacities to support its world classinfrastructure.
Strong Presence & Distribution Network in India: Kaveri seeds has astrong distribution network consisting of 40000 dealers/distributors. It employs morethan 1 lakh contract farmers through farm engagement programs for seed production.
Diversified Product Portfolio: Kaveri Seeds has consistently focused onbuilding a robust portfolio of field crops and vegetables to help enhance farm yield. TheCompany has successfully launched best quality hybrid seeds to further diversify itsofferings.
Your Company possess a strong in-house R&D base recognized since 2001 bythe Department of Scientific and Industrial Research (DSIR) GoI.
Opportunities for your Company:
With a growing market for agricultural seeds in India and abroad there is ahuge demand for seeds export and India's contribution is only 9% of the overall market.Kaveri Seeds with its expertise can tap the exports market and increase its market shareglobally.
India has the potential to produce a significant amount of hybrid seedsespecially high value vegetable seeds which can be produced at cheaper costs incomparison to other countries. Your Company with its innovation focused R&D divisioncan produce hybrid vegetable seeds and offer them at competitive prices.
Innovative and advanced seed designing is likely to be the future of thisindustry. To ensure higher yield across agro-climatic regions seeds will be modified tosuit varied agricultural conditions and will be designed to with stand biotic and abioticstresses.
Research & Development:
Agricultural science is constantly evolving and is a dynamic field fosteringinnovations and cutting-edge product developments. Your Company's advanced research anddevelopment capabilities enable the production of high yield seed varieties that immenselybenefit farmers. Over the years the Company has improved product yield improved thequality of seeds and has successfully increased its tolerance to biotic and abioticstresses.
As India's leading seed Company Kaveri Seeds focuses on combined use of conventionalbreeding techniques and biotechnology to increase and stabilize yields. Utilizinginnovative processes the Company adopted an integrated molecular breeding programme foraccelerated crop production. State-of-the-art biotechnological tools were also employed toensure precision breeding which not only helped to save time but also focused onimproving crops. We are also planning to work on phonemics to design plant ideotype thatwill be resilient to the effects of climate change. Our products are gaining acceptanceamong Indian farmers and in countries where we export our seeds
Your Company's robust R&D base has helped to develop new hybrids in cotton maizerice bajra and vegetables and they have created a significant impact on farm yield.Kaveri Seeds has a reliable track record of launching many new products and have a strongpipeline of promising products tailored to meet the specific needs of the farmingcommunity. Your Company's experience of managing risk is enabling us to navigate thecurrent volatility. We look at each crop through the eyes of the farmer and we understandthe farmers' concerns and grievances.
Iconic seed technical innovations: The biotechnological interventions initiated bythe Company ensure efficient quality checks. The Company strives to improve returns whileaccelerating the pace of innovation. With a strong commitment to innovate futuristicproducts it has aligned with national and international institutions to augment itsresearch capabilities. This has enabled the Company to meet the aspirations of farmersconsumers as well as the industry.
Plant Variety Protection: To safeguard the Company's products a number of hybridsdeveloped were registered with Protection of Plant Varieties and Farmers Right Act(PPVFRA).
Germplasm: The germplasm bank is critical for sustaining breeding programmes. YourCompany owns a vast gene pool of diverse germplasm to design and develop suitablevarieties that fulfil the aspirations of farmers and consumers.
Central Varietal Release Committee: More than 20 hybrids were Released and Notifiedin the Central Varietal Release Committee (CVRC) GoI and few are to be released soon.
COVID 19 PANDEMIC:
The Government of India imposed lockdown from 25th March 2020 to curb the spread of thevirus. The nationwide lockdown temporarily impacted the operations of the company due tothe non-availability of labour transportation and supply chain disruptions. However theGovernment classified seed business as "Essential Commodity" and granted certainrelaxations and guidelines to carry on production processing and distribution of seeds.A major portion of the Company's production processing and supply chain facilities wereoperational during most of the lockdown period following stipulated safety protocols.Thus the impact of Covid-19 on the Company is minimal at this point of time. The Companyhas assessed the recoverability of receivables inventories certain investments andother financial assets considering the available internal and external information as ondate. Considering the nature of these assets the Company expects to recover the carryingamount of these assets.
The Board of Directors at their meeting held on 13th August 2019 declared an InterimDividend @ 150% on the paid-up Equity Share Capital i.e. H3.00/- per equity share for thefinancial year 31st March 2020 and the same was paid to the shareholders.
Pursuant to Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Board has approved and adopted the DividendDistribution Policy and the same is available on the Company's website viz.http://www.kaveriseeds.in/images/ pdf/images/Dividend-Distribution-Policy.pdf and is alsoprovided as annexure.
BUYBACK OF EQUITY SHARES
In line with the practice of returning free cash flow to the shareholders during thefinancial year 2019-20 the Company has completed its Third buy-back of 2800000 EquityShares at a price of Rs.700/- per Equity Share for an aggregate consideration of Rs.196.00Crores. The offer size of the Buyback was 20.14% of the aggregate paid up equity sharecapital and free reserves of the Company and represented 4.44% of the total issued andpaid up equity share capital of the Company. The buyback process was completed and theshares were extinguished on 23rd January 2020. The Company's Second buy-back was completedin the Financial Year 2018-19.
TRANSFER OF AMOUNT TO RESERVE
The Company has transferred Rs.10.00 Crores to the general reserve for the financialyear ended 31st March 2020 under the provisions of Companies Act 2013 and Rules thereunder.
STATUTORY AUDITORS & AUDITORS' REPORT
The statutory auditors report is annexed to this annual report. There are no adverseremarks on disclosure by the statutory auditors in their report. They have not reportedany incident of fraud to the Audit Committee of the Company during the year under review.Pursuant to Section 139(2) of the Companies Act 2013 read with Companies (Audit andAuditors) Rules 2014 the Company at its 30th Annual General Meeting (AGM) held on 25thSeptember 2017 had appointed M/s. M. Bhaskar Rao & Co. Chartered Accountants asStatutory Auditors to hold office from the conclusion of 30th AGM until the conclusion of35th AGM of the Company subject to ratification by shareholders every year as may beapplicable. However the Ministry of Corporate Affairs (MCA) vide its notification dated7th May 2018 has omitted the requirement under first proviso to section 139 of theCompanies Act 2013 and rule 3(7) of the Companies (Audit and Auditors) Rules 2014regarding ratification of appointment of statutory auditors by shareholders at everysubsequent AGM.
Consequently M/s. M. Bhaskar Rao & Co. Chartered Accountants continues to be theStatutory Auditors of the Company till the conclusion of 35th AGM as approved byshareholders at 30th AGM held on 25th September 2017.
The Board of Directors of the Company has re-appointed M/s. M. Anandam & Co.Chartered Accountants as Internal Auditors to conduct Internal Audit of the Company forthe financial year ended 31st March 2020. The Internal Audit reports are being reviewed bythe Audit Committee of the Company.
The Company has 4 subsidiaries as of March 31 2020. There was no material change inthe nature of the business carried on by the subsidiaries. As per the provisions ofSection 129 of the Companies Act 2013 read with Companies (Accounts) Rules 2014 aseparate statement containing the salient features of the financial statements of thesubsidiary Companies is prepared in Form AOC-1 and is attached to the FinancialStatements of the Company.
In accordance with the provisions of Section 136 of the Companies Act 2013 theconsolidated financial statements along with relevant documents and separate auditedfinancial statements in respect of subsidiaries are available on the website of theCompany http:// www.kaveriseeds.in/images/pdf/images/material-subsidiary.pdf. The Companywill make available the Annual Accounts of the subsidiary companies and the relatedinformation to any member of the Company who may be interested in obtaining the same. Theannual accounts of the subsidiary companies will also be kept open for inspection by anymember at the Registered Office of the Company and that of the respective subsidiarycompanies.
Merger of Kexveg India Private Limited with Kaveri Microteck Private Limited;
Kexveg India Private Limited a wholly-owned subsidiary of Kaveri Seed Company Limitedmerged with Kaveri Microteck Private Limited a wholly-owned subsidiary of Kaveri SeedCompany Limited effective from 1st October 2018 vide the Merger Order issued by Hon'bleNational Company Law Tribunal (NCLT) Hyderabad Bench dated 26th August 2019.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
No material related party transactions during the year under review with thePromoters Directors or Key Managerial Personnel falls under the scope of Section 188(1)of the Companies Act 2013. The information on transactions for the year under review wereon arm's length basis and in the ordinary course of business with the related partiespursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts)Rules 2014 are given in Form No. AOC-2 and the same forms part of this report. Thecompany has developed a Related Party Transactions framework through standard operationprocedures for the purpose of identification and monitoring of such transactions.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 asrequired under Section 92 of the Companies Act 2013 is included in this Report as Annexure A and forms an integral part of this report. The same is available onhttps://www.kaveriseeds. in/investors/statutory-communications- announcements/#tab-mgt-9
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 Directorshave appointed M/s. L.D. Reddy & Co. a firm of Company Secretaries in Practice(C.P.No.3752) as Secretarial Auditors to conduct Secretarial Audit of the Company for thefinancial year ended 31st March 2020. The Secretarial Audit Report issued by M/s.L.D.Reddy & Co Practicing Company Secretaries in Form MR-3 is annexed to this Board'sReport as Annexure B.
The Secretarial auditors Report does not contain any qualifications reservation oradverse remarks.
BOARD'S RESPONSE ON AUDITOR'S QUALIFICATION RESERVATION OR ADVERSE REMARKS ORDISCLAIMER MADE
There are no qualifications reservation or adverse remarks made by the statutoryauditors in their report or by the Practicing Company Secretary in the Secretarial AuditReport for the year ended 31st March 2020. During the year there were no instances offrauds reported by auditors under Section 143(12) of the Companies Act 2013.
The Audit Committee of the Board of Directors consists Mr. K. Purushotham (Chairman)Dr. S. Raghuvardhan Reddy Dr. Bhaskar Venkataramany and Mr. C.Mithunchand. The Board hasaccepted all the recommendations made by the audit committee during the year. Furtherdetails can be seen in the chapter on Corporate Governance report.
NOMINATION AND REMUNERATION COMMITTEE
The Nomination and Remuneration Committee presently consists of the following Directorsnamely Dr S. Raghuvardhan Reddy Chairman Mr. K. Purushotham and Mrs. M. Chaya Ratan asMembers.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance with the relevant provisions of Section 133 of the Companies Act 2013and the Ind AS -110 on consolidated financial statements your Directors have pleasure inattaching the consolidated financial statements for the financial year ended March 312020 which forms part of the Annual Report. The company has placed separately theaudited accounts of its subsidiaries on its website www.kaveriseeds. in in compliance withthe provisions of Section 136 of the Companies Act 2013.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has laid down a set of standards which enables implementation of internalfinancial controls across the organization and ensure that the same are adequate andoperating effectively. The Board periodically reviews the findings and recommendations ofthe statutory auditors internal & secretarial auditors and suggests correctiveactions whenever necessary. The Audit Committee of the Board of Directors is also activelyreviewing the adequacy and effectiveness of the internal control systems and suggestimprovements to strengthen the same. The Audit Committee of the Board of DirectorsStatutory Auditors and Finance heads are periodically apprised of the internal auditfindings and corrective actions are taken.
The Internal Audit team prepares annual audit plans based on risk assessment andconducts extensive reviews covering financial operational and compliance controls. Auditplays a key role in providing assurance to the Board of Directors. Significant auditobservations and corrective actions taken by the management is presented to the AuditCommittee of the Board.
The Audit Committee of the Board monitors the performance of the Internal Audit team ona quarterly basis through a review of audit plans audit findings and speed of issueresolution through follow-ups. Each year there are at least four meetings in which theaudit committee reviews internal audit findings assurance and advisory functionresponsible for evaluating and improving the effectiveness of risk management control andgovernance processes. The internal audit team helps to enhance and protect organizationalvalue by providing risk-based objective assurance advice and insight.
ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The internal financial controls (IFC) framework at Kaveri Seeds encompasses internalcontrols over financial reporting (ICOFR) as well as operational controls that have beenput in place across all key business processes of the Company. The internal controls aredesigned to facilitate and support the achievement of the Company's business objectivesand such controls do enable the Company to adapt to changing and operating environment tomitigate risks to acceptable levels and to support right decision making and goodgovernance. Details in respect of adequacy of internal financial controls with referenceto the financial statements are briefly iterated below:
a. The Company maintains all its major records in ERP System.
b. The Company has appointed internal auditors to examine the internal controlswhether the workflow of the organisation is being done through the approved policies ofthe Company. In every quarter during the approval of financial statements internalauditors present the internal audit report and the management comments on the internalaudit observations; and
c. The Board of Directors of the Company has adopted various policies such as RelatedParty Transactions Policy Whistle Blower Policy Policy to Determine MaterialSubsidiaries Corporate Social Responsibility Policy Dissemination of Material EventsPolicy Documents Preservation Policy Sexual Harassment Policy Code of Conduct underInsider Trading Regulations Code of Conduct for Senior Management Nomination andRemuneration Policy Board Diversity Policy Dividend Distribution Policy Risk ManagementPolicy and such other procedures for ensuring the orderly and efficient conduct of itsbusiness for safeguarding of its assets the prevention and detection of frauds anderrors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information.
INDIAN ACCOUNTING STANDARDS IFRS CONVERGE STANDARDS
The Ministry of Corporate Affairs vide its notification dated 16th February 2015notified under Section 133 of the Companies Act 2013 read with Companies (IndianAccounting Standards) Rules 2015. In pursuance of the said notification your Company hasprepared the financial statements to comply in all material respects in accordance withthe applicability of Indian Accounting Standards.
DIRECTORS' RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(5) of the Companies Act 2013 withrespect to the Directors' Responsibility Statement the Board of Directors of the Companyhereby confirms:
i) that the applicable accounting standards have been followed in the preparation ofthe Annual Accounts.
ii) that the Directors have selected such Accounting policies and consistently appliedjudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year 31st March2020 and of the profit of the Company for that period.
iii) that the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the company and for preventing and detecting fraud andother irregularities.
iv) that the Directors have prepared the annual accounts on a going concern basis.
v) that the Directors have laid down Internal Financial Controls to be followed by theCompany and that the financial controls were adequate and were operating effectively and
vi) that the Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
Your Company is managed and controlled by a Board comprising an optimum blend ofExecutive and Non-Executive Directors. As on date the Board of Directors comprisesof nine (9) Directors consisting of Four Executive Directors including the Chairman &Managing Director one non-executive non independent Director and Four IndependentDirectors including one Women Independent Director.
The composition of the Board is in conformity with Regulation 17 of the SEBI (ListingObligations and Disclosure Requirements)
Regulations 2015 and the relevant provisions of the Companies Act 2013. The Directorspossess requisite qualifications and experience in general corporate management strategyfinance administration and other allied fields which enable them to contributeeffectively to the Company in their capacity as Directors of the Company.
Pursuant to the provisions of Section 203 of the Companies Act 2013 the Key ManagerialPersonnel (KMP) of the Company as on March 31 2020 are: Mr. G.V. Bhaskar Rao Chairman& Managing Director Mrs. G.Vanaja Devi Mr. C. Vamsheedhar and Mr. C. MithunchandWhole time Directors Mr. K.V. Chalapathi Reddy Chief Financial Officer & Mr.V.R.S.Murti Company Secretary. There have been no changes in the key managerial personnelduring the year.
Changes in Directors
The Board has expressed deep condolence for sudden demise of Dr. V. BhaskarIndependent Director of the Company and noted that his valuable service rendered to theCompany is highly appreciated and deeply grieved for losing an eminent Director of theCompany.
Director(s) retiring by rotation:
In accordance with the provisions of Section 152 of the Companies Act 2013 and theCompany's Articles of Association Mr. C. Vamsheedhar (DIN : 01458939) retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment. A resolution seeking shareholders' approval for his reappointment formspart of the Notice.
Declaration from Independent Directors
The independent Directors have submitted the declaration of independence as requiredpursuant to section 149 (7) of the Companies Act 2013 stating that they meet the criteriaof independence as provided in Section 149(6) of the Act along with Rules framedthereunder and Regulations 16(1)(b) of the SEBI Listing Regulations. There has been nochange in the circumstances affecting their status as independent directors of theCompany.
During the year under review the non-executive independent directors of the Companyhad no pecuniary relationship or transactions with the Company other than sitting feesand reimbursement of expenses incurred by them for the purpose of attending meetings ofthe Board/ Committees of the Company.
Registration of Independent Directors in Independent Directors Databank
All the Independent Directors of the Company have been registered and are members ofIndependent Directors Databank maintained by Indian Institute of Corporate Affairs.
COMMITTEES OF THE BOARD
The details pertaining to the composition of the Board and its Committees are includedin the Corporate Governance Report which is a part of this report.
MEETING OF INDEPENDENT DIRECTORS
A separate meeting of the Independent Directors was held under the Chairmanship of Mr.K. Purushotham Independent Director on 5th February 2020 inter-alia to discussevaluation of the performance of Non- Independent Directors the Board as a wholeevaluation of the performance of the Chairman taking into account the views of theExecutive and Non-Executive Directors and the evaluation of the quality content andtimelines of flow of information between the management and the Board that is necessaryfor the Board to effectively and reasonably perform its duties. The Independent Directorsexpressed satisfaction with the overall performance of the Directors and the Board as awhole.
Familiarization Programme for Independent Directors
The details of the familiarization programme for the Independent Directors is reportedin the Report on Corporate Governance which is attached to the Board's Report.
NUMBER OF MEETINGS OF THE BOARD
Five meetings of the Board were held during the year. The dates on which the Boardmeetings were held are 27th May 2019 13th August 2019 24th September 2019 13th November2019 and 05th February 2020. The details of attendance of Board meetings and Committeemeetings held during the Financial Year 2019-20 forms part of the Corporate GovernanceReport.
CHANGE IN THE NATURE OF BUSINESS IF ANY:
There was no change in the nature of business of the company or any of itssubsidiaries.
Your Company has not accepted any deposits covered under Chapter V of the CompaniesAct 2013. Accordingly no disclosure or reporting is required in respect of detailsrelating to deposits.
Pursuant to the provisions of the Companies Act 2013 and Securities and Exchange Boardof India (Listing Obligations and Disclosure Requirements) Regulations 2015 and theguidance Note on Board Evaluation issued by the SEBI on 5th January 2017 the Board hascarried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its committees.
The performance of the Board was evaluated by the board after seeking inputs from allthe directors on the basis of criteria such as the board composition and structureeffectiveness of board processes information and functioning etc.
The performance of the committees was evaluated by the board after seeking inputs fromthe committee members on the basis of criteria such as the composition of committeeseffectiveness of committee meetings etc.
In a separate meeting of independent directors performance of non-independentdirectors the chairman of the company and the board as a whole was evaluated taking intoaccount the views of executive directors and non-executive directors.
The Board and the nomination and remuneration committee reviewed the performance ofindividual directors on the basis of criteria such as the contribution of the individualdirector to the board and committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution and valuable inputs in meetings etc.
In the board meeting that followed the meeting of the independent directors and meetingof nomination and remuneration committee the performance of the board its committeesand individual directors was also discussed. The performance evaluation of the IndependentDirectors was completed. The performance evaluation of the Chairman and theNon-Independent Directors was carried out by the Independent Directors. The Board ofDirectors expressed their satisfaction with the evaluation process.
The Company recognizes and embraces the importance of a diverse board in its success.The Board has adopted the Board Diversity Policy which sets out the approach to diversifythe Board of Directors. The Board Diversity Policy is available on the Company's websitewww. kaveriseeds.in
APPOINTMENT OF DIRECTORS AND REMUNERATION POLICY
The assessment and appointment of board members is based on a combination of criterionthat includes ethics personal and professional stature domain expertise genderdiversity and specific qualifications required for the position. A potential board memberis also assessed on the basis of independent criteria defined in Section 149(6) of theCompanies Act 2013 and Regulation 16(1)(b) of SEBI (LODR) Regulations. In accordance withSection 178(3) of the Companies Act 2013 Regulation 19(4) of SEBI (LODR) Regulations andon recommendations of the company's Nomination and Remuneration Committee the Boardadopted a remuneration policy for directors KMP senior management and other employees.The Policy is placed on the Company's website:http://www.kaveriseeds.in/images/pdf/images/ Nomination-and-Remuneration-Policy.pdf andfurther details are set out in the Corporate Governance Report forming part of this annualreport.
A detailed Report on Corporate Governance systems and practices of the company is givenin a separate section forming part of this annual report.
The Certificate issued by M/s. L.D.Reddy & Co. Practicing Company SecretariesHyderabad with regard to compliance with the conditions of Corporate Governance isattached to the chapter on Corporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS:
Management's Discussion and Analysis report for the year under review as stipulatedunder Regulation 34(2)(e) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separatesection forming part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
In compliance with Section 135 of the Companies Act 2013 read with the Companies(Corporate Social Responsibility Policy) Rules 2014 the Company has established CorporateSocial Responsibility (CSR) committee composed of Mr. G.V.Bhaskar Rao as Chairman Mrs.G.Vanaja Devi and Dr. S. Raghuvardhan Reddy as members. The Committee is responsible forformulating and monitoring the CSR Policy of the Company the Report on CSR Activitiesforms part of this Report as "Annexure - C."
The Company has incorporated a separate company in the name of Kaveri Bhaskar RaoCharitable Trust' under Section 8 of the Companies Act 2013 to undertake CSR and othercharitable activities. For other details regarding the CSR Committee please refer to theCorporate Governance Report which is a part of this report. The CSR Policy is availableon http://www.kaveriseeds.in/images/pdf/ images/csr_policy.pdf
ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The Information on conservation of energy technology absorption foreign exchangeearnings and outgo stipulated under Section 134(3) (m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 forms part of this report as AnnexureD.
EMPLOYEE STOCK OPTION SCHEME
The Company grants share-based benefits to eligible employees with a view to attractingand retaining the best talent encouraging employees to align individual performances withCompany objectives and promoting increased participation by them in the growth of theCompany.
Kaveri Seed Employee Stock Option Plan 2018 (ESOP Plan)
On 19th July 2018 pursuant to the approval by the shareholders by way of PostalBallot the Board/Nomination and Remuneration Committee has been authorized to introduceoffer issue and grant the share-based incentives to eligible employees of the Company andits subsidiaries under the ESOP Plan. The Kaveri Employee Stock
Option Plan 2018 (ESOP Plan) to be implemented through the Kaveri Employees Trust(Trust) with an objective of enabling the company to attract and retain talented humanresources by offering them the opportunity to acquire a continuing equity interest in theCompany which will reflect in their efforts to sustain the growth and profitability ofthe Company.
The ESOP Plan involves acquisition of shares not exceeding 3000000 equity sharesfrom the secondary market through Barclays Wealth Trustees (India) Private Limited asTrustees of Kaveri Employees Trust for implementation and administration.
As on 31st March 2020 a total of 879491 Equity Share (Eight Lakhs Seventy NineThousand Four Hundered Ninety One Only) options were available in the Trust account.
The Nomination and Remuneration Committee (NRC) is empowered to formulate detailedterms and conditions of the ESOP Plan 2018 and supervise the same. The specific employeesto whom the Options would be granted and their eligibility criteria would be determined bythe Nomination and Remuneration Committee at its sole discretion. Further the Nominationand Remuneration Committee is empowered to determine the eligible employees of subsidiarycompanies whether existing or future whose employees will be entitled to stock optionsunder this Scheme.
The Nomination and Remuneration Committee has granted 629516 options @ 315/-. peroption to the eligible employees of the Company during the year under ESOP Plan. Thenumber of options outstanding as at the yearend was 249975.
The granted options would vest on or after 1 (one) year from the date of grant but notlater than 4 (four) years from the date of grant of such Options or any other terms asdecided by the Nomination and Remuneration Committee.
The ESOP Plan is in compliance with the SEBI (Share Based Employee Benefits)Regulations 2014. The disclosure required to be made under Regulation 14 of SEBI (ShareBased Employee Benefits) Regulations 2014 is available on the Company's website athttps://www. kaveriseeds.in/images/pdf/images/sept20/Disclosure_pursuant_Regulation_14_SEBI_Regulations_2014.pdf
STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
Details in respect of remuneration paid to employees as required under Section 197 (12)of the Companies Act 2013 read with Rule 5(2) & (3) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended forms part of thisreport. In terms of Section 136 of the Companies Act 2013 the same is open for inspectionat the Registered Office of the Company. Copies of this statement may be obtained by themembers by writing to the Company Secretary (email@example.com) of the Company. The ratioof the remuneration of each Director to the median employee's remuneration and otherdetails in terms of Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are enclosedin Annexure E and forms part of this Report.
All properties and insurable interests of the Company have been fully insured.
BUSINESS RESPONSIBILITY REPORT
A detailed Business Responsibility Report in terms of the provisions of Regulation 34of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is availableas a separate section in this Annual Report.
DIVIDEND DISTRIBUTION POLICY
Pursuant to Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 top 500 listed Companies based on market capitalization isrequired to formulate a Dividend Distribution Policy. In compliance with the saidrequirement the Company has formulated the Dividend Distribution Policy the details ofwhich are available on the Company's website at http://www.kaveriseeds.in/images/pdf/images/Dividend-Distribution-Policy. pdf and is alsoprovided as Annexure - 1.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no material changes and commitments in the business operations of the Companyfrom the financial year ended March 31 2020 to the date of signing of the Director'sReport.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The Company makes investments or extends advances to its subsidiaries for businesspurposes. The details of investments covered under the provisions of Section 186 of theCompanies Act 2013 are given in the notes to the Financial Statements provided in thisannual report.
VIGIL MECHANISM /WHISTLE BLOWER POLICY:
The Board of Directors has adopted the Whistle Blower Policy which is in compliancewith Section 177(10) of the Companies Act 2013 and Regulation 22 of the SEBI (LODR)Regulations 2015 to report genuine concerns or grievances. The Audit Committee Chairpersonis the chief ombudsperson. The policy also provides access to the Chairperson of the AuditCommittee for raising concerns. The Whistle Blower Policy has been posted on the websiteof the company. (http:// www.kaveriseeds.in/images/pdf/images/whistle-blower-policy.pdf)
Pursuant to the requirement of SEBI (LODR) Regulations 2015 the Company has a riskmanagement committee of the Board consisting of Director Mr. Dr. S.Raghuvardhan ReddyIndependent Director and Chairman of the Committee Mr. C.Vamsheedhar and Mr. C.Mithunchand as members of the Committee. The Risk Management Committee frames implementsand monitors the risk management plan for the Company. The Committee is responsible formonitoring and reviewing the risk management plan and ensuring its effectiveness. TheAudit Committee has additional oversight in the area of financial risks and controls. Themajor risks identified by the businesses and functions are systematically addressedthrough mitigating actions on a continuing basis. The development and implementation ofrisk management policy has been covered in the Management Discussion and Analysis whichforms part of this report and the Policy has been posted on the website of the companyviz. http://www.kaveriseeds. in/images/pdf/images/Risk-Management-Policy_final.pdf
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE COURTS/REGULATORS OR TRIBUNALS
There are no significant and material orders passed by the Regulators/ Courts ortribunals that would impact the going concern status of the company and its futureoperations.
LISTING ON STOCK EXCHANGES
The Company's shares are listed on BSE Limited and the National Stock Exchange of IndiaLimited.
TRANSFER OF UN-PAID AND UN-CLAIMED AMOUNT TO INVESTOR EDUCATION AND PROTECTION FUND(IEPF)
Pursuant to the provisions of the Companies Act 2013 read with IEPF Authority(Accounting Audit Transfer and Refund) Rules 2016 as amended declared dividends whichremained unpaid or unclaimed for a period of seven years have been transferred by thecompany to the IEPF which has been established by the Central Government.
The above-referred rules also mandate transfer of shares on which dividend are unpaidor unclaimed for a period of seven consecutive years to IEPF. The company has issuedindividual notices to the shareholders whose equity shares are liable to be transferred toIEPF on due dates advising them to claim their dividend within the stipulated time.
ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner thatensures safety of all concerned compliance to environmental regulations and preservationof natural resources.
HUMAN RESOURCE MANAGEMENT
At Kaveri Seeds employees are considered valued assets' for the organization. Weaim to foster an inclusive and diverse workplace that motivates and encourages our peopleto chart aspirational career paths. Our HR philosophy revolves around the 3 Cs of CultureCommitment and Competency.
We create a congenial atmosphere to ensure performance amidst challengingcircumstances. At Kaveri we also have an established Rewards and Recognition program toacknowledge and appreciate our people. We also nurture transparency in communicationallowing our employees to share feedbacks and opinions to improve our practices.
The commitment to productively contribute towards the attainment of organizationalgoals enable our employees to improve performances significantly. We conduct variedemployee engagement programs to motivate and engage people through sports celebrationsand other events.
A constantly evolving agricultural landscape calls for competencies to easily adapt andlearn new practices. At Kaveri we believe in empowering our employees with necessaryskill sets. As a result we invest in trainings and skill upgradation programs tocontinuously enhance capabilities and develop adequate competencies. While our scientistsparticipate in national and international symposiums seminars and workshops ourmarketing team is trained to understand various markets and its requirements. Similarlyour supply chain is well versed with effective production techniques to ensure seamlessdelivery of products.
The Company also plays a vital role to ensure healthy and conducive working environmentfor its employees. The total number of employees in the Company as on 31st March 2020are 1073.
POLICY ON SEXUAL HARASSMENT
Your Company has constituted an internal committee as per the Sexual Harassment ofWomen at Workplace (Prevention Prohibition
& Redressal) Act 2013 and Rules there under. The Company has a policy onprevention of Sexual Harassment at work place with a mechanism for lodging complaints. Thepolicy provides protection against sexual harassment of women at workplace and ensuresprevention and redressal of such complaints. During the year under review no complaintshave been received under the policy. The said policy is available on the website of thecompany. https://www. kaveriseeds.in/images/pdf/images/sexual-harrasment-policy.pdf
During the year there was change in the Paid-up Share Capital of your Company due toBuy-back issue of the Company.
During the year under review the Company bought back an aggregate of 2800000 EquityShares out of 63129133 Equity Shares from the Shareholders of the Company. Aftersuccessful completion of Buy-back the Paid-up Share Capital of the Company was decreasedfrom 63129133 Equity Shares to 60329133 Equity Shares of H2/- each.
COMPLIANCE WITH SECRETARIAL STANDARDS ON BOARD AND GENERAL MEETINGS
The Company complies with all applicable mandatory Secretarial Standards issued by theInstitute of Company Secretaries of India.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015 (the PIT Regulations') on prevention of insider tradingyour Company has revised its Code of Conduct for regulating monitoring and reporting oftrading by Designated Persons in line with the recent amendments brought by SEBI in thePIT Regulations. The said Code lays down guidelines which advise Designated Persons onthe procedures to be followed and disclosures to be made in dealing with the shares of theCompany and cautions them on consequences of non-compliances. Your Company has alsoupdated its Code of practices and procedures for fair disclosures of unpublished pricesensitive information by including a policy for determination of legitimate purposes.
The Company enjoyed cordial relations with its employees at all levels. Your Directorsrecord their appreciation of the support and cooperation of all employees and counts onthem for the accelerated growth of the Company.
The Directors acknowledge and would like to place on record the commitment anddedication on the part of the employees of your Company for their continued efforts inachieving good results. Your Company is grateful to the Distributors Dealers Customersand farming community for their support and encouragement. Your Directors thank the BanksFinancial Institutions Government Departments and Shareholders and look forward to havingthe same support in all our future endeavors.