THE MEMBERS OF
NITTA GELATIN INDIA LIMITED
Your Directors have pleasure in presenting the 42nd Annual Report andaudited financial statements for the year ended 31st March 2018.
The Statement of Accounts have been prepared in accordance with Indian AccountingStandards (IND AS) which have been made applicable to the Company w.e.f. 1stApril 2017 as per the Rules laid down in this regard. Accordingly accounts of theCompany have been restated w.e.f. 1st April 2016 (being comparative year forthe current financial year) as per the IND AS requirements.
(Rs. in Crores)
|Particulars ||For the year ended 31st March 2018 ||For the year ended 31st March 2017 |
|Sales (including export incentives and net of Excise Duty VAT/GST) ||326.44 ||340.79 |
|Other Income ||4.37 ||9.36 |
|TOTAL ||330.81 ||350.15 |
|Gross Profit before Depreciation ||34.26 ||42.31 |
|Deducting therefrom: || || |
|Depreciation ||11.91 ||10.48 |
|Provision for Tax - || || |
|- Current Tax ||10.95 ||8.91 |
|- Deferred Tax ||(3.17) ||2.43 |
|Profit after Tax from continuing operations ||14.57 ||20.49 |
|Other comprehensive income (net of tax) ||(0.70) ||0.60 |
|Total comprehensive profit for the year ||13.87 ||21.09 |
|Profit brought forward from previous year ||14.68 ||3.87 |
|Balance Profit available for appropriation ||29.25 ||24.36 |
|Appropriations : || || |
|Dividend on Optionally Convertible Preference Shares ||0.85 ||0.79 |
|Final dividend on equity shares at 25% ||2.27 ||2.27 |
|Tax on dividend ||0.64 ||0.62 |
|Transfer to General Reserve ||- ||6.00 |
|Balance profit carried forward to next year ||25.49 ||14.68 |
|Earnings per share (Rs.) || || |
|Basic ||15.27 ||23.23 |
|Diluted ||15.27 ||23.23 |
The Board has recommended a dividend @5.4029 % p.a. for the year ended 31stMarch 2018 on the 929412 Optionally Convertible Preference Shares of face value of Rs.170/- each subject to approval of the members at the ensuing Annual General Meeting .
Considering the Company's performance and financial position for the year under reviewthe Board has also recommended a dividend of Rs. 2.5 per share i.e. 25% of the face valueof Rs. 10/- per share on the Equity Capital for the year ended 31st March2018 subject to approval of the members at the ensuing Annual General Meeting.
Togetherwith Corporate Tax on dividend the total outflow on account of dividend willbe Rs. 376.55 lakhs including Rs. 85.36 lakhs on Preference Shares (Rs. 85.36 lakhs forthe financial year 2016-17) vis--vis Rs. 375.93 lakhs paid for the financial year2016-17 (paid in 2017-18).
During the year unclaimed dividend of Rs. 3.86 lakhs pertaining to the year ended 31stMarch 2010 was transferred to the Investor Education & Protection Fund after givingdue notice to the members. Besides upon complying with statutory formalities prescribedunder the IEPF (Accounting Audit Transfer and Refund) Rules 23706 shares correspondingto 171 holdings (records) which represent holdings with respect whereof dividend was notclaimed and paid for a consecutive period of seven years were transferred to the accountof IEPF Authority maintained with National Securities Depository Limited (NSDL) and thefact of the same was also apprised to the Board (Agenda 252.08 I) at its meeting dated03-02-2018.
The Authorised Share Capital of your Company is Rs. 358000040/- (Rupees Thirty FiveCrores Eighty lakhs and Forty only) (comprising of two crore Equity Shares of Rs. 10/-each and 929412 Optionally Convertible (non-cumulative) Preference Shares (OCPS) of Rs.170/- each). Nitta Gelatin Inc. (NGI) Japan had not exercised the option to convert theOCPS shares into Equity Shares at the end of 18 months from date of its allotment as perterms of the issue.
No amount is transferred to General Reserve during the year as transfer of profit toReserve Rules for declaration of Dividend is no longer in force. The Company has providedfor an amount of Rs. 17.04 crores towards impairment in value of investments made in RevaProteins Ltd. on account of accumulated loses in the said Company caused mainly due torestrictions in effluent discharge which have impacted the capacity utilization levelssignificantly. Such impairment provision is adjusted in the credit balance in the Profitand Loss account as stipulated by transitional provisions of IND AS. Reserves as on31.03.2018 comprises of Security
Premium Reserve of Rs. 2895.90 lakhs equity contribution on External CommercialBorrowings and Preference Share Capital Rs. 664.95 lakhs Special Export Reserve of Rs.79.00 lakhs General Reserve of Rs. 7836.64 lakhs credit balance in the Profit and LossAccount of Rs. 2549.05 Lakhs and other comprehensive income reserve of (Rs. 4.89) lakhsaggregating to Rs. 14020.65 lakhs.
PARTICULARS OF LOANS GUARANTEES & INVESTMENTS
No Corporate Guarantee was provided during the year. However the Company has receiveda request for providing Corporate Guarantee from Bamni Proteins Ltd. (Subsidiary Company)to the lenders towards its borrowings for working capital requirement to the extent of Rs.750 lakhs and from Reva Proteins Ltd. (Subsidiary Company) towards its short terms workingcapital requirements to the tune of Rs. 500 lakhs.
Details in respect of other loans guarantees and investments covered under theprovision of Section 186 of the Companies Act 2013 are given in the notes on accounts forthe Financial Year ended 31st March 2018.
The gross revenue from operations of your Company during the year under review was Rs.326.44 crores. There was decrease in unit sales realisation per unit of Gelatin in linewith the decline in Gelatin prices worldwide which impacted the gross revenue fromoperations. Though there was decrease in sales realization of Gelatin an exception waswith respect to Collagen Peptide where there was increase in unit sales price.
The District Administration of Thrissur District where one of the plants of theCompany is situated had ordered reduction in drawal of water by 80% for the periodcommencing from February 2017 and until the onset of monsoon as a fall out of deficientmonsoon in January 2017. This has affected the operations of the Ossein Division of theCompany in the Ist quarter impacting revenue. Though the Company could manageto sustain the operations of Gelatin plant by procuring Ossein from the localmanufacturers the resultant higher cost of operations has impacted the operationalresults of the Company in the said quarter. In addition crushed bone charging was stoppedfrom 23rd October 2017 to 15th November 2017 due to sabotage on the outleteffluent pipeline leading to restriction in discharge of effluent water. A stone grinder(ural) was removed from the pipeline with the help of the Government and the local police.
During the year approval was received from the Irrigation Dept. Govt. of Kerala forrerouting the effluent pipeline at Ossein Division which was passing through a privateproperty and was subjected to frequent attacks by the agitators for disrupting theCompany's operations. Accordingly the Company has rerouted the effluent pipeline byby-passing the private property in the month of January 2018.
With some of the Gelatin plants not in full scale operation during the year and theresultant low demand for crushed bone crushed bone prices have decreased by 13% during2017-18 as compared to the previous fiscal. However the per unit price realization hascome down for Ossein by around 6% DCP by 3% Gelatin by 5% during the year due to lowercrushed bone prices. The sales of Collagen Peptide had witnessed a revival; however supplyof raw material fish protein - on account of regulatory issues / clearancescontinued to pose a challenge to the Company in terms of customer serviceability. Thestrengthening of the Rupee against USD during 2017-18 as compared to 2016-17 has alsocontributed to lower sales realisation on exports.
Despite the reduction in prices as explained above the total sales turnover could bemaintained with improvement in volume of sales on all the products except Gelatin (salesvolume of Gelatin has declined by 2% during the year). The decrease in price of crushedbone (though its poor quality continues to be a major concern) has helped the Company inmaintaining profitability during the year. In the backdrop of this situation your Companyexercised close monitoring and strict control over each significant element of cost andachieved appreciable savings. In respect of utilities the usage of LNG has increased dueto maintenance issues in wood fired boilers but at the same time efficiency of wood firedboilers has improved. There was significant reduction in power cost also as aresult of various cost control measures in both the Divisions of the Company. Though theprice of LNG firewood and furnace oil has increased during the year cost controlmeasures helped the Company to keep the costs under control. Factory overheads witnessedcost increase due to the comprehensive annual shut down taken in Gelatin Division duringthe year and the disposal costs incurred for clearing the settled sludge in the aerationtanks of effluent treatment plant of both the Divisions. Administration overheads could bemaintained at last year levels by establishing appropriate controls.
With regard to finance cost Company could effectively leverage low cost foreigncurrency loans though interest rates based on LIBOR has gone up to 2.30% from 1.30% duringthe course of the year. The sales mix during the year was such that the Company couldachieve a reduction in selling expenses such as freight charges on products discount andcommission on sales etc. aggregating to a saving of Rs. 0.48 crores during the year underreview.
As a result of the above the operations of the Company for the year 2017-18 haveresulted in a pre-tax profit of Rs. 22.34 crores (negative impact of Rs. 6.67 crores dueto restatements on account of changes in accounting treatment as well as Ind AS Accountingadjustments) as against Rs. 31.83 crores (which included Rs. 4.08 crores towardsrestatement of foreign exchange gains made during the year 2016-17 on account of change inaccounting treatment.) inspite of the disruption in operations in Ossein Division in Q1of the financial year. The results of the financial year 2016-17 have been restated inaccordance with IND AS Accounting Standards during the financial year 2017-18.
The products of your Company continued to enjoy robust market demand during the yearunder review. The entire sale of Ossein / Limed Ossein 46.08% of the total sale ofGelatin and 47.80% of Collagen Peptide was through exports. Your Company has arrangementswith its overseas promoter Nitta Gelatin Inc. Japan to leverage their expertise andmarket insights in servicing its customers in a pro-active manner in line with the globalstandards of NITTA Group.
The major production facilities of your Company are the Ossein Plant at KorattyThrissur District and Gelatin / Peptide Plant at Kakkanad Ernakulam District Kerala. Allthe factories owned by the Company are being operated in strict compliance with theapplicable standards / norms prescribed by the Statutory authorities including the StatePollution Control Board. The Kadukutty Panchayat in Thrissur District did not renew thefactory license for its Ossein Plant at Koratty for the year 2017-18 and the Company havemoved the matter before the High Court of Kerala. The Court has ordered status quo in thematter till final disposal of the writ petition filed by the Company. In addition duringthe year Company has also applied for Panchayat Licence for the financial year 2018-19which was also rejected by the Panchayat. The High Court has stayed the operation of thePanchayat's orders upto 8th June 2018. The last review of the effluentmanagement system at Ossein Division by the National Environmental Engineering ResearchInstitute (NEERI) has confirmed the efficacy of the system on the basis of which thePollution Control Board has renewed the Consent To Operate upto 30.06.2018. Based onexpert legal advice the earlier court verdicts and the facts of the situation asexplained above the Company expects a favourable resolution of the matter.
The National Green Tribunal(NGT) has passed anorderdated27.02.17disposingdifferentapplications moved before that honorable forumchallenging the operations of the Company as violative of the environmental regulations inforce. The NGT while disposing of the application has concluded that on the analysis ofthe entire facts and materials that industry has discharged efficiently and as of now thedischarge of the treated effluent from the ETP to the Chalakkudy river has no adverseimpact on the river water or the ground water. However NGT by applying the precautionaryprinciple to avoid any possibility of causing pollution to both air and water in theenvironment directed the Company to install certain equipment to reinforce the effluenttreatment process and technologies besides adopting methods which help recycling oftreated effluent and minimize the discharge into the river. The order also gave directionsto the Kerala State Pollution Control Board (KSPCB) for amending some of the dischargestandards. The Order had detailed prescriptions for implementation in a time-bound manner.Whereas there were certain directions which needed a relook on a factual as well aspractical consideration of the issues involved the Company had filed a Petition beforethe Hon'ble Tribunal for a review of such directions. The Hon'ble NGT vide their Orderdated 08.11.2017 allowed the review petition in part by way of modification of one of thedirections in view of practicality of implementation. The Company has subsequently fileda writ petition before the
Hon'ble High Court of Kerala pleading stay of operation of NGT orders dated 08.11.2017for the remaining directions. The High Court has accepted a jurisdiction before it whichwas challenged by the Action Council and has stayed the operation of NGT Orders untilfurther orders vide Order dated 14.03.2018. All the other directions which requiredimplementation on the Company's part have already been made except the one relating toinstallation of online monitoring systems for KSPCB which is expected to be completed byend July 2018. The Company co-sponsored Japan Mela (organized by the Indo Japan Chamber ofCommerce Kerala) conducted in the 1st week of December 2017 with a dedicated stall ofthe Company for display of materials relating to Nitta Gelatin Group worldwide. TheCompany's major products including Gelixer and Agri products and CSR initiatives weredisplayed in the said Mela and received much public attention. Operations Excellence fairswere conducted at the Ossein and Gelatin Divisions of the Company with active involvementfrom employees. Some of the nearby Panchayat members and Directors of the Company alsoparticipated in the fair which showcased the various types of products offered and alsovarious initiatives pursued by the Company for the public at large.
MERGER OF SUBSIDIARY REVA PROTEINS LTD.
The Subsidiary Company Reva Proteins Ltd. which began commercial production in the year2012-13 could not be operated at planned capacity utilization levels due to restriction ondischarge of treated effluent on account of non-commissioning of the marine dischargeeffluent pipeline as promised by the Gujarat Government. The delayed commissioning of thepipeline has resulted in accumulated losses for the Company for the past several years.Though the marine effluent discharge line was made operational during the year afterpressure testing and amendment in consolidated consent authorization as per marine normsas stipulated by Gujarat State Pollution Control Board the high ammoniacalnitrogen content in effluent stream following the maintenance issues in marine effluentpipeline for discharge has also affected the capacity utilization levels for the year2017-18 and significantly eroded the quantum of inventories and receivables withcorresponding reduction in drawing power for working capital arrangement. Under suchcircumstance the Board of Directors of Reva Proteins Ltd. (Transferor Company) and NittaGelatin India Ltd. (TransfereeCompany) resolved at their meeting dated 03.02.2018 subjectto required Regulatory approvals to merge the activities of the former with the lattersuch that a total of 4444444 Redeemable Preference Shares of Rs 10 each be credited asfully paid up Preference Share capital of the Transferee Company as consideration for theother share holders in the following share exchange ratio Shares of NGIL of INR 10/- eachfully paid up for every One Hundred and Eight (108) Equity Shares of RPL of INR 10/- eachfully paid up with the following terms:- a. Such Preference Shares shall be entitled to afixed dividend of 5% + 6 months USD LIBOR as on the record date over a non-cumulativebasis. b. A right to exercise put and call option for repayment shall be given at theexpiry of 5 years from the date of allotment subject to such approvals as may be required.c. Such Preference shares shall be redeemable at par on the expiry of seven years from thedate of allotment.
The Board of both Companies having approved the merger it awaits clearance fromRegulatory bodies BSE / SEBI besides the approval from the National Company LawTribunal (NCLT).
During the year rating agency CRISIL has reaffirmed the rating of CRISIL A-/ andmaintained outlook as "Negative" for Long Term Instruments and retained"CRISIL A2+" rating for short term instruments.
AWARDS & ACCOLADES
During the year your Company was awarded: a. the second prize in its category forExcellence in Cost Management instituted by the Institute of the Cost and ManagementAccountants of India for the year 2016; and b. Best Corporate Citizen from NIPM for GreenInitiatives and CSR. The following prestigious certifications are retained by yourCompany:-
(a) European Directorate for the Quality of Medicines & Health (EDQM) Certificatefor Gelatin Division
(b) HACCP Certificate for Ossein Division and Gelatin Division for food safety.
(c) ISO 14001:2015 for Gelatin Division for Environment Management System
(d) ISO 9001:2015 for Quality Management System of the Company.
(e) ISO 18001:2007 for Ossein and Gelatin Divisions of the Company.
(f) FSSC Certification for Food Safety Management System for Gelatin Division
(g) FSSAI Certification for manufacturing import/export of Gelatin & CollagenPeptide
(h) WHO GMP Certification for manufacture of Gelatin & Collagen Peptide
(i) Halal/Kosher Certification for Gelatin and Collagen Peptide
(j) NABL Accreditation for in-house laboratory
(k) OSHAS Certification by NVTQC for Occupational Health and Safety Standards forGelatin Division
(l) Sanitary Certificate received from the Health Inspector Public Health CentreKathikudam for Ossein Division vide Order dt. 20.02.2018 for satisfactory compliance ofsanitary conditions based on verification. Company's factory license was often rejected bythe Panchayat citing non-receipt of sanitary certificate in the past.
HEALTH SAFETY AND ENVIRONMENT
Compliance with relevant regulations and effective management of the related issues isan integral part of the Company's philosophy and your Company stands committed tocontinually improve on these objectives. The Company year on year increases its focus onimproving matters relating to Health Safety and Environment.
1. Health and Safety
The Company is committed to promoting the health and safety of its employees. Inaddition to the Head (Safety) for the Company each of the plants of the Company is havinga Safety Officer and Safety Committees which include representation from workmen. TheCommittees meet regularly to review issues impacting plant safety and employee health.Regular health checkup of the employees is carried out through reputed hospitals. Varioustraining programmes are conducted at the plant on health and safety issues includingemergency preparedness work safety first-aid etc. The Company is augmenting resourcesto further strengthen the level of safety at its plants. Our Ossein factory has receivedthe OSHAS certification during the year which is a testimony to the Company's commitmentin this area. During the year the Company has also entered into an agreement with NittaGelatin Inc. (NGI) where by as part of services in the areas of Environment Health &Safety NGI shall provide qualified expertise for providing assistance to ensure safety ofoperations of the Company and its subsidiaries. Responsibilities of such qualifiedexpertise shall include benchmarking sharing information on incidences in groupcompanies establishing robust and standardized procedures and controls audits actionitem review and follow up developing appropriate key performance indicators and regularreporting to the Company NGI and Company's Subsidiary managements.
The Company continuously endeavors to improve on Environmental Management and throughall activities demonstrate its commitment to protecting the environment. The factories ofthe Company are equipped with modern effluent treatment plants for treating anddischarging treated water with parameters well within the norms laid down by therespective State pollution Control Boards. The emissions from the boilers and generatorstacks are regularly monitored for compliance. With the commissioning of two biogasgenerators at its Ossein plant substantial portion of the raw effluent from theproduction process is now being subjected to biomethanisation thereby reducing the organicload in the subsequent treatment process whereby generation of sludge is reducedconsiderably and the biogas generated is being used for meeting the Company's energyrequirements. Diffused Air floatation System for effective grease removal and removal ofsuspended solids Primary Treatment System Reinforcement and ETP Automation for soundeffluent management system introduction of Chemical treatment and Activated Carbon Systemin Fresh Water Treatment Plant for improving the water quality and improving the processstability addition of 3 nos diffused aerators in ETP System and commissioning of multigrade Sand Filters before final discharge point of treated water are some of theinitiatives carried out during the year to ensure protection of the environment andsustainability of operations at Ossein Division. M/s. National Environmental Engineering
Research Institute (NEERI) a constituent laboratory of the Council of Scientific &Industrial Research Govt. of India inspected the plant for assessment of implementationstatus of their own recommendations in June 2016 and observed that the Company hascomplied with the implementation of all the recommendations of NEERI excepting onei.e. cleaning of weeds along the banks of Chalakudy river for want of approval fromregulatory authorities for carrying out the activity. They have also observed that basedon the physio chemical analysis of various effluent samples of ETP the finaltreated effluent being discharged into Chalakudy river conforms to the discharge Standardsstipulated by the KSPCB for the Company and also the CPCB General Standards for Discharge.It was also confirmed that there is no adverse impact on the River water quality becauseof the discharge of treated water from the factory in to the river.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has formulated a well structured Policy aimed at providing focus anddirection to the various activities on CSR. The Company is committed to identifying andsupporting programmes aimed at:
Company's website www.gelatin.in. The CSR projects undertaken by the Company are inaccordance with Schedule VII of the Companies Act 2013. Annual Report on CSR activitiesis annexed herewith as Annexure I.
POLICY FOR DETERMINING MATERIAL SUBSIDIARIES
In view of the change in the definition of Material Subsidiary Reva Proteins Limitedwhich was a Material Subsidiary until 2015-16 was not a Material Subsidiary as per theLODR Regulations 2015. In accordance with LODR Regulations the Company's policy onmateriality of Subsidiaries specifying the criteria for determining the MaterialSubsidiaries is available in the Company website www.gelatin.in. There has been no changein the nature of business of subsidiaries during the year under review. As per the abovecriteria the Company has no Material Subsidiary as of today.
BAMNI PROTEINS LIMITED
The annual production during the year in this Subsidiary Company was 2580 MT of Osseinand 6000 MT of Di Calcium Phosphate as against 2324 MT of Ossein and 5885 MT of Di-CalciumPhosphate during the previous year.
The operation of this Subsidiary for the year under review has resulted in a post-taxprofit of Rs. 82.51 Lakhs (Rs. 71.96 lakhs in the previous year) other comprehensive lossof Rs. 5.35 lakhs (Rs. 2.82 lakhs in the previous year) and total comprehensive income ofRs. 77.16 lakhs (Rs. 69.14 lakhs in the previous year). Pre-tax profit during the yearunder review where Rs. 114.61 lakhs as against a pretax profit of Rs. 111.35 lakhs duringthe previous financial year.
REVA PROTEINS LIMITED
At Reva Proteins Ltd. owing to restrictions in the quantum of discharge of treatedeffluent there has been considerable under utilization of capacity in the Ist Qtr. of thefinancial year. The clearance of the Consent to authorise and operate for Reva Plant bythe Gujarat State Pollution Control Board was received in the month of June 2017 after thecommissioning and high pressure testing of the effluent pipeline was completed in January2017. In addition the high ammoniacal nitrogen content in effluent stream following plantstoppages due to the maintenance issues in marine effluent pipeline for discharge has alsoaffected the capacity utilization levels for the year 2017-18. Arising out of the abovethe financial year 2017-18 witnessed a net loss of Rs. 1270.81 lakhs and a cash loss ofRs. 1029.89 lakhs as against a net loss of 871.87 lakhs and a cash loss of Rs. 620.72lakhs during the previous financial year. Other comprehensive income during the currentyear was Rs. 1.27 lakhs as against Rs. 0.49 lakhs for the previous year. The annualproduction during 2017-18 was 1091 MT of Ossein 450 MT of Dry Limed Ossein and 1519 MT ofDi Calcium Phosphate as against 1909 MT of Ossein 1096 MT of Dry Limed Ossein and 843 MTof Di Calcium Phosphate during the previous year. Your Company has proactively undertakena comprehensive scheme for revival of the Subsidiary including merger of the same with theCompany. In accordance with Section 129(3) of the Companies Act 2013 a consolidatedfinancial statement of the Company and all its Subsidiary companies has been preparedwhich is forming part of the Annual Report.
The statement containing the salient features of the financial statement of both thesubsidiaries under first proviso to Sub-section (3) of Section 129 of the Act in form AOCI is attached as Annexure II.
In accordance with fourth proviso of Section 136(1) of the Companies Act 2013 theAnnual Report of the Company containing therein its standalone and consolidated financialstatements has been uploaded on the website of the Company www. gelatin.in. Further asper the fourth proviso of the said section the annual accounts of the SubsidiaryCompanies and the related detailed information have also been uploaded on the website ofthe Company www.gelatin.in. Annual accounts of the Subsidiary Companies and relateddetailed information shall be made available to the shareholders of the Company andSubsidiary companies seeking such information at any point of time. The annual accounts ofthe Subsidiary Companies shall also be made available for inspection by any shareholder atthe Registered Office of the Company and Subsidiary companies concerned. Hard copy ofdetails of accounts of subsidiaries shall be furnished to any shareholder on demand.Further pursuant to
Indian Accounting Standard (Ind AS) 110 issued by the Institute of CharteredAccountants of India consolidated financial statements presented by the Company includethe financial information of its Subsidiaries.
STATUTORY AUDITOR'S REPORT
Emphasis of Matter on the accounts of the Company referred to in the Auditor's Reportis explained in detail in Note No. 3.04 (a) of the Notes forming part of accounts for theyear and hence no further comments are necessary.
SECRETARIAL AUDITORS' REPORT EXPLANATION TO OBSERVATIONS OF AUDIT
As prescribed under Section 204(1) of the Act the Company has received the SecretarialAudit Report including a statement therein refering to complaince of applicableSecretarial Standards. The observations made therein and the corresponding explanationsare given below:
|Sl No ||Observation ||Our explanation |
|1 ||As per the provisions of FSSA Act read with Rules quarterly return needs to be filed within 10 days from the end of each quarter. On analysis of the quarterly Returns filed by the Company it is found that there are delays in filing those Returns which are stated herein below; ||Being in an initial phase there often required multiple entries before the data finally got uploaded in the respective site. The delay was also due to the fact that the quarterly Returns introduced during the year 2017 had warranted uploading of the backlog Returns for previous periods. |
| ||Qtr Due Date Actual date of filing ||Delay in No. of days |
| ||1 July 10th 2017 06-01-18 ||180 |
| ||2 October 10th 2017 14-02-18 ||127 |
| ||3 January 10th 2018 19-03-18 ||68 |
| ||4 April 10th 2018 14-04-2018 ||4 |
| ||Company is advised to file quarterly Returns in time since any delay in filing will invite penalties. || |
|2. ||With respect to creation of Charge for Rs 6 crores with YES Bank Limited Company has filed the Form CHG-1 with Ministry of Corporate Affairs with 88 days of delay. Company is advised to closely monitor the same in future whenever credit facility is granted by Banks/Financial Institutions. ||The delay was due to the delay in documentation by the Bankers. |
|3 ||With respect to cessation of Alternate directorship of Mr. Raymond Merz Company has filed Form DIR-12 with Ministry of Corporate Affairs with a delay of 23 days. ||The delay is admitted. Each successive attendance and absence (when original Director himself attends the meeting)of the Alternate Director is warranting a filing in MCA portal. This is one such return where there was a delay. Care shall be taken to avoid such delays in filing in future. |
The Collaborators of your Company continue to be the relentless source of support andguidance for the Company in each of its key initiatives. Their patronage in areas offinancial support product development marketing quality improvement and training ofpersonnel has contributed significantly to the growth of the Company. NGI Japan has notonly subscribed to the Optionally Convertible Preference Shares for an amount of Rs. 1580lakhs issued by the Company in full but also provided term loan assistance to the Companyat attractive rates of interest. NGI Japan has provided guidance and considerablefinancial support for the scheme of revival of the Subsidiary Reva Proteins Ltd. KeralaState Industrial Development Corporation Ltd. the other promoter is also equallysupportive to each and every development concerning your Company.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information as required under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8(3) of the Companies (Accounts) Rules 2014 is attached as Annexure III.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are provided in the Annual Report as Annexure IVAto this report.
The Annual Report excluding the details of employees receiving remuneration in excessof the limits prescribed under Section 197 of the Act 2013 read with Rule 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is being sentto the shareholders of the Company in terms of first proviso to Section 136(1) of the Act2013. The annexure is available for inspection at the Registered Office of the Companyduring business hours and any shareholder interested in obtaining a copy of the saidannexure may write to the Company Secretary at the Registered Office of the Company.
INTERNAL CONTROL SYSTEM
ADEQUACY OF INTERNAL CONTROL SYSTEMS
The Company has in place well defined and adequate internal controls commensurate withthe size of the Company and the same were operating effectively throughout the year. Theinternal control systems operate through well documented Standard Operating Procedurespolicies and process guidelines. These are designed to ensure that transactions areconducted and authorized within defined authority limit commensurate with the level ofresponsibility for each functional area. The Company's accounting and reporting guidelinesensure that transactions are recorded and reported in conformity with the generallyaccepted accounting principles.
The Company has engaged a professional firm of Accountants with long years ofexperience to carry out the internal audit function. The Company has not placed anylimitation on the scope and authority of the internal audit function. The internal auditfunction evaluates the efficacy and adequacy of internal control systems its compliancewith operating systems and policies of the Company and accounting procedures at alllocations of the Company. To maintain its objectivity effectiveness and independenceinternal audit is being carried out on a quarterly basis and reports thereon along withthe remarks of the process owners on each of the observations of audit are placed beforethe Audit Committee of the Board. The Audit Committee reviews each of the internal auditreports as a separate item of agenda along with the internal / Statutory Auditors and themanagement representatives wherein the Committee gives their advice / suggestions on theaudit points. Based on the report of the internal audit as well as the observationsof the Audit Committee the process owners undertake requisite corrective action in theirrespective areas thereby further strengthening the control systems. Action Taken Reportsare also reviewed by the Audit Committee for each actionable item. The minutes of theAudit Committee are reviewed by the Board of Directors.
INTERNAL CONTROLS OF FINANCIAL REPORTING
The Company has in place adequate financial controls commensurate with the size scaleand complexity of its operations. During the year such controls were tested and noreportable material weakness in the design or operations were observed. The Company haspolicies and procedures in place for ensuring proper and efficient conduct of itsbusiness safeguarding of its assets prevention and detection of frauds and errorsaccuracy and completeness of the accounting records and timely preparation of reliablefinancial information.
The Company has adopted accounting policies which are in line with the AccountingStandards and the Companies Act. They are in accordance with the Generally AcceptedAccounting Principles in India. Changes in policies if required are made in consultationwith the auditors and are approved by the Audit Committee. The Board is of the view thatappropriate procedures and controls are operating effectively and monitoring proceduresare in place.
RISK MANAGEMENT POLICY
The Board of Directors of the Company has entrusted the management of the Company toevaluate and manage various risks faced by the Company and appropriately apprise the Boardperiodically. Accordingly the management has constituted a Risk Management Committeecomprising of Senior Management Personnel to develop and implement a Risk ManagementPolicy including identification therein of elements of risks which in the opinion of theBoard may impact the operations of the Company. The Board of Directors shall review theevaluation of risks and the mitigation measures taken by the Company in managing suchrisks to sustain the operations of the Company for the foreseeable future. Some of the keyrisk areas identified for mitigation and corrective action include crushed boneavailability and pricing patterns impact of high cost crushed bone on the yield levelssafety and security policies of the Company succession planning for key executivesimpact of the National Green Tribunal's Orders impact significant litigation against theCompany having material financial impacts moves of competitors water scarcity foroperational requirements emergence of alternate substitutes for the products of theCompany adverse forex rate fluctuations risk of losing premium commanded by the Companydue to emergence of alternate Halal certifications etc.
MATERIAL POST BALANCE SHEET EVENTS
The business model of Bamni Proteins Ltd. Subsidiary of the Company with which theCompany had a job processing arrangement till the end of the financial year 2017-18 is setto change as an Independent manufacturer and seller w.e.f. 01.04.2018. This change wasnecessitated to avoid the impact of GST on processing charges which was introduced w.e.f.01.07.2017. This business model change is expected to have an impact on the turnover ofthe Company as well as the profitability of the operations of the Company.
APPLICABILITY OF COST AUDIT REQUIREMENTS
As per the Company's (Cost Records and Audit) Rules 2014 the Company's products arenot covered under Cost Audit and for the products for which the maintenance of cost recordis required since the relative turnover in respect of the products listed in the saidRules is less than threshold limit of Rs. 35 cr. maintenance of cost records is also notmandatory.
RESPONSIBILITY STATEMENT OF DIRECTORS
To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134 of the Companies Act 2013:
a) that in the preparation of the annual accounts for the year ended 31stMarch 2018 the applicable Indian Accounting Standards have been followed along withproper explanation relating to material departures if any;
b) that they had selected such accounting policies as mentioned in Note 1 of the notesto the Financial Statements and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company as at 31st March 2018 and of the profit of the Company for theyear ended on that date;
c) that they have 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) that they had prepared the annual accounts on a going concern basis;
e) that proper internal financial controls laid down by the Directors were followed bythe Company and such internal financial controls are adequate and were operatingeffectively; and
f) that they had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
RELATED PARTY TRANSACTIONS
The Company has formulated a policy on Related Party Transactions which is in line withthe relevant provisions of the Companies Act and as well as SEBI (LODR) Regulations. Thesaid policy as approved by the Board is available in the Company website www.gelatin.in.As per the said policy prior omnibus approval of the Audit Committee is obtained on aquarterly basis for all the Related Party Transactions which are of a foreseen andrepetitive nature. All Related Party Transactions actually taken place are subsequentlyreviewed by the Audit Committee on a quarterly basis in comparison with the conditions ofomnibus approval and are recommended to the Board for approval. Additionally materialRelated Party Transactions foreseen in the year ahead were got approved by the membersalso. Particulars of contracts of arrangements with Related Parties referred to in subSection 1 of Section 188 read with Rule 8(2) of the (Companies Accounts) Rules 2014 areattached in Form No. AOC 2 as
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report for the year under review as stipulated underSEBI (LODR) Regulations is presented in a separate section forming part of this AnnualReport.
The Company has complied with the corporate governance requirements under the CompaniesAct 2013 and as stipulated under the SEBI (LODR) Regulations. A separate section oncorporate governance under the Regulation along with a certificate from the auditorsconfirming the compliance is annexed and forms part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements have been prepared in accordance with theprovisions of Schedule III of the Companies Act 2013 and Indian AccountingStandards (IND AS) 110 and other applicable Accounting Standards issued by the Instituteof Chartered Accountants of India and the provisions of the SEBI (LODR) Regulations andform part of the Annual Report.
Dr. Paul Antony IAS who was Director and Chairman of the Company with effect from27.09.2016 ceased to hold office on 03.02.2018 consequent on intimation by The KeralaState Industrial Development Corporation Limited (KSIDC) whose nominee the office of theChairman continues to be for the Company. Mr. T. K. Jose IAS who succeeded tooffice continued till 28.02.2018 when Dr. K. Ellangovan IAS who is also PrincipalSecretary Dept. of Industries and Commerce & Dept. of NORKA was nominated as theChairman of the Board. Besides Mr. Raymond Merz had again replaced Mr. Hiroshi Nitta asAlternate Director to Mr. Koichi Ogata. Mr. Hiroshi Nitta Nominee of Nitta Gelatin Inc.was appointed as Alternate Director wef. 09-05-2017 and ceased to be so wef. 29-07-2017.Mr. Koichi Ogata was appointed as Director in casual vacancy wef. 09-05-2017 and Mr.Raymond Merz who was appointed as Alternate Director to Mr. Koichi Ogata (29-07-2017)ceased to be so wef. 03-02-2018. Earlier Mr. Seichi Nishikawa ceased to be a Directorwef. 09-05-2017.
Mr. Sajiv K. Menon Managing Director was reappointed as Managing Director wef.01-04-2017 for a period of three years. Similarly Mr. Takeo Yamaki Whole-time Directorceased to be so wef. 01-04-2017 while Dr. Shinya Takahashi got appointed as Whole-timeDirector wef. 09-05-2017.
Your Directors extend a warm welcome to Dr. K. Ellangovan IAS as Chairman of the Boardand place on record the appreciation for valuable guidance and support extended by theDirectors /Chairman who ceased to be Board members during the year besides welcoming theother entrants to the Board of Directors during the year.
NOMINATION AND REMUNERATION COMMITTEE
The Board of Directors has constituted a Nomination and Remuneration Committee (NRC)consisting of the following person:-
1. Mr. A. K. Nair Chairman
2. Mr. K. L. Kumar Member
3. Dr. K. Cherian Varghese Member
The terms of reference of the NRC are as follows:-
1. The NRC shall identify persons who are qualified to become directors and who may beappointed in senior management in accordance with the criteria laid down recommend to theBoard their appointment and removal and shall carry out evaluation of everydirector's performance.
2. The NRC formulates the criteria for determining qualifications positive attributesand independence of a director recommending to the Board and also a policy relating to theremuneration for the Directors Key Managerial Personnel and senior management personnelmeaning thereby employees of the Company who are members of core management excludingBoard of Directors. This would comprise all members of management one level belowthe Executive Directors including all functional heads.
3. The NRC formulates the Remuneration policy to ensure that: the level andcomposition of remuneration is reasonable and sufficient to attract retain andmotivate personnel as are herein referred at (2) above of the quality required to run theCompany successfully; relationship of remuneration to performance is clear andmeets appropriate performance benchmarks; and remuneration to Whole-time Directors KeyManagerial Personnel and senior management involves a balance between fixed and incentivepay reflecting short and long-term performance objectives appropriate to the working ofthe Company and its goals. During the year the NRC has met once.
KEY MANAGERIAL PERSONNEL
Rule 8(5)(iii) of Companies (Accounts) Rules 2014 prescribes that Report of Directorsshould contain details of Directors and Key Managerial Personnel. Therefore inaddition to the details of Directors hereinabove given it is brought to the notice ofshareholders that Mr. P. Sahasranaman and Mr G.Rajesh Kurup continue as Chief FinancialOfficer (CFO) and Company Secretary respectively.
The Companies Amendment Act 2015 prescribes that there shall be a meeting ofIndependent Directors during each of the financial years. Accordingly the meetingsboth of the Independent Directors followed by that of the Board had during the beginningof the year 2017-18 made an evaluation of the performance of the Directors / IndependentDirectors respectively and found them to have the requisite qualification expertise andtrack record for performance of their duties as envisaged under Law.
All the Directors on the Board continued thereafter until there was change in theoffice of Chairman during the last quarter consequent on change in nomination by TheKerala State Industrial Development Corporation Limited. There shall therefore bemeetings conducted during the course of the financial year 2018-19 by the IndependentDirectors and generally by the Board where there shall be evaluation of performance by theDirectors on the Board so reconstituted.
The Board of Directors met 5 (Five) times during the financial year 2017-18. Thedetails of the Board meetings and the attendance of the Directors are provided in theCorporate Governance Report. The intervening time gap between the two consecutive meetingswas within the period prescribed under the Companies Act 2013.
COMPOSITION OF AUDIT COMMITTEE
The Audit Committee has Mrs. Radha Unni as Chairperson with Mr. A. K. Nair Mr. K. L.Kumar and Dr. K. Cherian Varghese as members.
More details on the Committee are given in the Corporate Governance Report.
The Company has established a vigil mechanism for Directors and employees to reportgenuine concerns while providing for adequate safeguards against victimization providingdirect access to chairperson of Audit Committee the details regarding which have alsobeen given in the Company's official website.
DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013.
Your Company has always believed in providing a safe and harassment free workplace forevery individual working and associating with the Company through various interventionsand practices. The Company always endeavors to create and provide an environment that isfree from discrimination and harassment including sexual harassment.
A four member Internal Complaints Committee (ICC) is constituted with three ladyemployees and one lady NGO member. ICC is responsible for redressal of complaints relatingto sexual harassment as envisaged under the provisions of Act and Rules. Hitherto nocomplaints were received by ICC.
PREVENTION OF INDISER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a viewto regulate trading in securities by the Directors and designated employees of theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.
At the Annual General Meeting dated 24th June 2017 M/s. Walker Chandiok& Co. LLP (WCL LLP) Chartered Accountants (Firm Registration No. 001076N / N500013)were appointed as Statutory Auditors of the Company to hold office for a period of 5 yearsuntil the conclusion of the financial year 2021-22. As envisaged under the Company LawProvision the appointment of M/s. Walker Chandiok & Co. LLP (WCC LLP) as StatutoryAuditors for the year 2018-19 is being put up for ratification by members at theensuring Annual General Meeting which would be subject to their continuing to conform tothe eligibility norms prescribed under Section 141 of the Companies Act 2013 and theRules thereon..
Pursuant to the provisions of the Section 204 of the Companies Act 2013 and TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Mr. Abhilash Nediyalil Abraham. (CP No. 14524 M No. 22601) CompanySecretary-in-Practice to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report is annexed herewith as Annexure VI.
EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 are annexedherewith as Annexure VII.
Your Directors are thankful to the esteemed shareholders for their continued patronageand the confidence reposed on the Company and its management. Your Directors place onrecord its sincere appreciation for the support and assistance extended by the StateGovernment and The Kerala State Industrial Development Corporation Ltd. They alsotake this opportunity to extend their whole hearted gratitude to M/s. Nitta Gelatin Inc.Japan for their timely and valuable guidance and inspiration. Your Board places on recordits sincere appreciation for the significant contributions made by employees across theCompany through their dedication and commitment. On this occasion your Board thanks allthe customers suppliers bankers and other associates for their unstinted co-operation.For and on behalf of the Board of Directors
|Sajiv K. Menon ||Dr. M. Beena IAS |
|Managing Director ||Director |
|(DIN : 00168228) ||(DIN: 03483417) |
|Kochi || |
|04.05.2018 || |