Your Directors have pleasure in presenting the 25th Annual Report on the business andoperations of the Company and the Audited Accounts for the Financial Year ended 31stMarch 2017.
The Company's financial performance during the year 2016-17 as compared to the previousyear 2015-16 is summarized below: Rs. in Lakhs
| ||Standalone ||Consolidated |
|Particulars ||2016-17 ||2015-16 ||2016-17 ||2015-16 |
|Product R evenues ||3233.00 ||2757.67 ||3483.54 ||2869.97 |
|Service R evenues & O ther Incom e ||744.00 ||774.20 ||1923.14 ||1999.38 |
|G ross Incom e ||3977.00 ||3531.87 ||5406.68 ||4869.35 |
|Less:VAT & Excise D uty ||351.00 ||267.47 ||350.95 ||267.47 |
|Net Incom e from Sales/Services ||3625.00 ||3264.40 ||5055.73 ||4601.88 |
|Profit before Interest Depreciation & ||494.01 ||416.38 ||724.82 ||763.64 |
|Tax (EBITD A) || || || || |
|Profit/Loss before extraordinary item s ||337.32 ||249.92 ||424.98 ||410.83 |
|Extra O rdinary item s ||7.08 ||- ||7.08 ||- |
|Profit Before T ax ||330.24 ||249.92 ||417.90 ||410.83 |
|Net Profit/Loss after tax ||227.38 ||172.60 ||334.97 ||273.68 |
|M inority interest in Profit ||- ||- ||21.99 ||3.56 |
|N et C onsolidated Profit/Loss ||227.38 ||172.60 ||312.98 ||270.12 |
|Loss Brought forward from previous year ||(696.49) ||(869.09) ||(2884.96) ||(3056.34) |
|Loss C arried to the Balance Sheet ||(469.11) ||(696.49) ||(2571.98) ||(2884.96) |
REVIEW OF OPERATIONS
During the Financial Year under review the operational results ended with a Profitbefore Extraordinary items at Rs. 337.32 Lakhs as against Rs. 249.92 Lakhs in the previousyear. The Net revenue of the company stands at Rs. 3625.00 Lakhs as against Rs. 3264.40Lakhs in the previous Financial Year reporting a growth of 11.04%. The consolidated netrevenue including its subsidiaries for the year is Rs. 5055.73 Lakhs against Rs. 4601.88Lakhs during previous year resulting in a growth of 10%.
During the Financial Year under review your company was able to improve the marketshare in Kerala and made a big progress out side Kerala.
There are no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and the date of this report.
SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
Your company has seven subsidiaries including one step down subsidiary as on 31stMarch 2017 and the details are as under:
* CMS Katra Holdings LLC holds 51% shareholding in CMS Katra Nursing LLC and NutravedaInc. holds the balance 49% shareholding; hence CMS Katra Nursing LLCis a fully owned stepdown subsidiary of your company.
PERFORMANCE OF SUBSIDIARIES Indian Subsidiary
During the year under review M/s. Ayurvedagram Heritage Wellness Centre Pvt. Ltd. hasachieved a turnover of Rs. .796.44 lakhs as against Rs. 721.10 lakhs in the previousfinancial year clocking a growth of 10.45 %.The EBITDA of the company is Z Rs. 206.76lakhs against Rs. 241.00 lakhs in the previous year.
The combined turnover of overseas subsidiaries was Rs. 740 Lakhs as compared to Rs.681.00 Lakhs in the previous year. Kerala Ayurveda Academy is currently offering certifiedcourses in the state of Washington and California and also offers a distant learningcourse across USA.
CONSOLIDATED FINANCIAL STATEMENTS
As per Rule 8 of Companies (Accounts) Amendments Rules 2016 a report on thehighlights of performance of subsidiaries associates and joint venture companies andtheir contributions to the overall performance of the company during the period underreport is attached as Annexure 1. Any member indented to have a copy of Balancesheet and other financial statement of these Companies may write to Company Secretary. Itshall also be kept for inspection during business hours by any shareholder in theregistered office of the Company and the respective offices of its subsidiary companies.
It shall also be made available on the website of the Company www.keralaayurveda.biz /investor-relationship under the "Investors" Tab.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES DURING THE YEAR
During the financial year ended 31st March 2017 no entity became or ceased to be thesubsidiary joint venture or associate of the Company.
In view of the accumulated losses of the past your Directors are not in a position torecommend any dividend for the current year.
During the year the total reserves and surplus of the company has improved to Rs. 739Lakhs from Rs. 512 Lakhs. During the year company earned a net surplus of Rs. 227 Lakhs.The company does not propose to transfer any amount to reserves during the period.
CHANGE IN THE NATURE OF BUSINESS IF ANY
There was no change in the nature of business of the Company during the financial yearended 31st March 2017.
DIRECTORS& KEY MANAGERIAL PERSONS:
Appointment / Reappointment / Resignation of Directors
Pursuant to the provisions of Section 152 of the Companies Act 2013 and in terms ofArticles of Association of the Company Mr.Ramesh Vangal (DIN 00064018) Director of thecompany retires by rotation at ensuing Annual General Meeting and being eligible offerhimself for re-appointment. The Board of Directors recommends his re-appointment.
Mr. Kshiti Ranjan Das (DIN 07212449) Independent Director and Mr. Gokul Patnaik(DIN 00027915) Non Executive Director were re-appointed at the Annual GeneralMeeting held on 29.09.2016. Mr. Anand Subramanian (DIN:00064083) ceased as AlternateDirector to Ms. Katarzyna Zimpel on 29.09.2016 and was appointed as an Additional NonExecutive Director on 29.09.2016. A resolution for his reappointment as Non-ExecutiveDirector is proposed in this Annual General Meeting. Mr. A.T. Jacob Director resignedwith effect from 29.05.2016.
Due to ill health Mr. Ronald George Pearce DIN:00260166 Vice Chairman &Independent Director had not attended meetings during the 12 months period and hence hisoffice of directorship was vacated on 29th September2016 under Section 167 of theCompanies Act 2013.
Ms. Katarzyna Zimpel DIN:00264084 Director has owing to her personalreasons/commitment tendered resignation from her office of Non Independent director andher resignation has been accepted with effect from 29th May 2017.
Ms. Itti Bhargava Company Secretary resigned with effect from 11.06.2016. Mr. KRaghunadhan has joined as Company Secretary on18th January 2017. None of the directorsare disqualified u/s 164(2) of the Companies Act 2013.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year five Board Meetings and four Audit Committee Meetings and three Nomination andRemuneration Committee meetings were convened and held. The details are given in theCorporate Governance Report. The intervening gap between the Meetings was with in theperiod prescribed under the Companies Act 2013 and the SEBI (LODR) Regulations 2015.During the financial year 2016-17 the Board of Directors of the Company met on 29th May2016 9thAugust 2016 29th September 2016 10th November 2016 and 14th February 2017.
Further separate Meetings of Independent Directors of the Company were held on 10thNov 2016 and 14th February 2017 where at the prescribed items enumerated under ScheduleIV to the Companies Act 2013 and clause 25(4) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 were discussed.
DECLARATION BY INDEPENDENT DIRECTOR(S)
Mr. M C Mohan (DIN: 00633439) Mr. S Krishnamurthy (DIN: 00140414) Mr. Kshiti RanjanDas (DIN: 07212449) are Independent Directors on the Board of the company.
All the Independent Directors have furnished declarations that they meet the criteriaof independence as prescribed under Section 149(6) of the Companies Act 2013 and theRules made there under.
DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT 2013
Details pursuant to section 197(12) of the Companies Act 2013 read with the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 form part of thisReport as Annexure 2.
Pursuant to the provisions of The Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board has carried out an annualperformance evaluation of its own performance the directors individually as well as theworking of its Audit Nomination & Remuneration Committees. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
NOMINATION AND REMUNERATION POLICY OF DIRECTORS KEY MANAGERIAL PERSONNEL AND OTHEREMPLOYEES
As required under Section 178(1) of the Companies Act 2013 the Board of Directors ofthe Company has approved a policy on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters provided u/s 178(3).The broad parameters covered under the Policy are -Company Philosophy Guiding Principles Nomination of Directors Remuneration ofDirectors Nomination and Remuneration of the Key Managerial Personnel and SeniorManagement and the Remuneration of other employees. The Company's Policy furnished as Annexure3 forms part of this Report.
M/s. Biju George & Co Chartered Accountants Vellaringattu Towers Thodupuzha 685584 were appointed as Statutory Auditors of the company upto the conclusion of AnnualGeneral Meeting in 2019 subject to ratification at every Annual General Meeting. Companyhas received a letter pursuant to Section 139 of the Companies Act 2013 from M/s. BijuGeorge & Co. Chartered Accountants Vellaringattu Towers Thodupuzha 685 584confirming consent and their eligibility for acting as Statutory Auditors of the Companyif the appointment is ratified at the ensuing Annual General Meeting. The Board recommendsratification of their appointment as Statutory Auditors for the ensuing financial year.
Statutory Auditors' Report
The Auditors' Report does not contain any qualification. Notes to Accounts and Auditorsremarks in their report are self-explanatory and do not call for any further comments.
Details in respect of frauds reported by auditors under sub-section (12) of section 143other than those which are reportable to the Central Government Nil
Pursuant to the provisions of Section 204 of the Companies Act 2013 read withcorresponding Rules framed there under M/s. SVJS & Associates were re-appointed asSecretarial Auditors of the company to carry out the secretarial audit for the year ending31st March 2017.
Secretarial Audit Report
A Secretarial Audit Report issued by the Secretarial Auditors in Form No. MR-3 isannexed with this Report as Annexure 4. Regarding the requirement of Peer ReviewCertificate by Statutory Auditors we were informed by them that they have taken steps toobtain the same. Regarding the requirement of additional Independent Director themanagement is taking necessary action to fill the position.
3. Internal Audit &Controls
The Company appointed Mr. Mathew Joseph Chartered Accountant as its Internal Auditor.During the year the Company continued to implement their suggestions and recommendationsto improve the control environment. Their scope of work includes review of processes forsafeguarding the assets of the Company review of operational efficiency effectiveness ofsystems and processes and assessing the internal control strengths in all areas. InternalAuditors' findings are discussed with the process owners and suitable corrective actionstaken as per the directions of Audit Committee on an ongoing basis to improve efficiencyincoperations.
4. Cost Auditors
According to Companies (Cost Records and Audit) Rules 2014 your Company is notrequired to get the cost audit done for financial year 2016-17.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
Pursuant to the provisions of Section 177(9) & (10) of the Companies Act 2013 aVigil Mechanism / Whistle Blower Policy for directors and employees to report genuineconcerns has been established. The Vigil Mechanism / Whistle Blower Policy has beenuploaded on the website of the Company at www.keralaayurveda.biz under InvestorSection'.
The Policy is an extension of the Code of Conduct for Directors & Senior ManagementPersonnel and covers any unethical and improper actions or malpractices and events whichhave taken place/suspected to take place:
As per the policy all Protected Disclosures should be addressed to the VigilanceOfficer / Company Secretary or to the Chairman of the Audit Committee in exceptionalcases.
RISK MANAGEMENT POLICY
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Major risks identified by the businesses and functionsare systematically addressed through mitigating actions on a continuing basis. These arediscussed at the meetings of the Audit Committee and the Board of Directors of theCompany.
The Board of Directors has adopted a risk management policy for the company outliningthe parameters of identification assessment monitoring and mitigation of various riskswhich is available on the website of the company.
INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
The Company's internal control systems are commensurate with the nature of its businessand the size and complexity of its operations. These are routinely tested and certified byStatutory as well as Internal Auditors. Significant audit observations and follow upactions thereon are reported to the Audit Committee.
Kerala Ayurveda Ltd has been awarded NSIC-CRISIL rating of MSE2 which is validupto 8th May 2018.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNALS
There was no significant and material order passed by the regulators or courts ortribunals impacting the going concern status and Company's operations in future.
CORPORATE SOCIAL RESPONSIBILITY
Your company always had a deep sense of responsibility towards the community. Companyconducted medical camps and free medical checkups at various places. Diabetic Awarenesscampaigns were held to create awareness. Special Orientation training session conducted onYoga Day to the public. Corporate Social Responsibility provisions of the Companies Act2013 are not applicable to the company.
In terms of the provisions of Section 73 of the Companies Act 2013 the company hasnot accepted any deposits from the public during the financial year under review and thereare no outstanding fixed deposits from the pubic as on 31st March 2017.
Your company has complied with corporate governance norms as stipulated by SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. A detailed report onCorporate Governance in line with requirements of the Companies Act 2013 and SEBI(Listing Obligations sand Disclosure Requirements) Regulations 2015 is attached to thisreport. A certificate from statutory auditors confirming the compliance of CorporateGovernance is also attached to this report.
The details pertaining to composition of Audit Committee are included in the report oncorporate Governance.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A detailed review of operations performance and future outlook of your company and itsbusinesses is given in the Management Discussion and Analysis Report which forms part ofthis report.
EXTRACT OF ANNUAL RETURN
As required under Section 92(3) of the Companies Act 2013 an extract of Annual Returnin Form MGT9 in Annexure 5 forms part of this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The Company has provided following loans and guarantees and made following investmentspursuant to Section 186 of the Companies Act 2013:
|Name of the entity ||Relation ||Amt in Rupees ||Particulars of loans guarantees and investments ||Purpose for which the loan guarantee and investment are proposed to be utilised |
| || ||Lakhs || || |
|Nutraveda ||100% ||1159.80 ||Interest free Working ||To meet the working capital |
|Inc. USA ||subsidiary || ||Capital Loan given by ||requirement |
| || || ||KAL to subsidiary || |
|Ayurvedic ||100% ||1162.26 ||Interest free Working ||To meet the working capital |
|Academy Inc. ||subsidiary || ||Capital Loan given by ||requirement |
|USA || || ||KAL to subsidiary || |
|CMS-Katra ||81.67% ||828.67 ||Interest free Working ||To meet the working capital |
|Holdings LLC ||subsidiary || ||Capital Loan given by ||requirement |
|USA || || ||KAL to subsidiary || |
|Nutraveda PTE ||100% ||0.44 ||Interest free Working ||To meet the working capital |
|Ltd Singapore ||subsidiary || ||Capital Loan given by ||requirement |
| || || ||KAL to subsidiary || |
Current borrowings of the company are within the limits of Section 180(1)(c) of theCompanies Act 2013
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:
The particulars of contracts or arrangements entered into by the Company with relatedparties referred to in subsection (1) of Section 188 of the Companies Act 2013 includingcertain arm's length transactions under that proviso attached as Annexure 6 in FormAOC-2 forms an integral part of this report.
DIRECTORS' RESPONSIBILITY STATEMENT
In terms of Section 134(3)(c) of the Companies Act 2013 in relation to financialstatements of the company the Board of Directors state that:
1. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
2. 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 and loss of the company for that period;
3. the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safe guarding theassets of the company and for preventing and detecting fraud and other irregularities;
4. the directors had prepared the annual accounts on a going concern basis;
5. the directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively and
6. the directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PALCE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
Company has adopted a policy for prevention of Sexual Harassment of Women at workplaceas per the provisions of Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013 and has set up Committee for implementation of said policy.During the year Company has not received any complaint of harassment.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUT GO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section134 (3) (m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 furnished in Annexure7 forms part of this Report
Your Company treats its "human resources" as one of its most importantassets. Your Company continuously invests in attraction retention and development oftalent on an ongoing basis. A number of programs that provide focused people attention arecurrently underway. Your Company's thrust is on the promotion of talent internally throughjob rotation and job enlargement.
RESEARCH AND DEVELOPMENT
The Research and Development (R&D) Center of KAL is well-equipped and is engaged invarious Research activities spanning across all areas of Ayurvedic Research. During thisyear we have received license for Myaxyl Spray Baby oil and many more Kashayam Tablets.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Your Company did not have any funds lying in unpaid or unclaimed dividend for a periodof seven years. Therefore there were no funds which were required to be transferred toInvestor Education and Protection Fund (IEPF) under Section 124 of the companies Act2013.
LISTING WITH STOCK EXCHANGES:
The equity shares of the company are listed on Bombay Stock Exchange and the Companyconfirms that it has paid the Annual Listing Fees for the year 2017-18 to BSE.
The Board places on record its appreciation for the continued patronage support andco-operation extended by its shareholders customers bankers and all Government andstatutory agencies with whose help cooperation and hard work the Company was able toachieve the results. Your directors would further like to record appreciation to theefforts of every employees for their valuable contribution to the Company.
| ||By order of the Board of Directors |
| ||For Kerala Ayurveda Limited |
| ||Sd/- |
| ||Ramesh Vangal |
|Place: Bengaluru ||Chairman |
|Date : 11th August 2017 || |
| ||(DIN 00064018) |