THE MEMBERS OF
NITTA GELATIN INDIA LIMITED
Your Directors have pleasure in presenting the 45th Annual Report and audited financialstatements of your Company for the year ended 31st March 2021.
The Statement of Accounts has been prepared in accordance with Indian AccountingStandards (IND AS) which are applicable to the Company w.e.f. 1st April 2017 as per theRules laid down in this regard.
The Authorised Share Capital of your Company as on 31st March 2021 was Rs.8024.44Lakhs comprising of 40000000 Equity Shares of Rs.10/- each totalling to Rs.4000.00Lakhs 929412 Optionally Convertible Non Cumulative Preference Shares (OCPS) of Rs.170/-each totalling to Rs.1580.00 Lakhs 20000000 Optionally Convertible Non-CumulativePreference Shares of Rs.10/- each totalling to Rs.2000.00 Lakhs and 4444444 RedeemablePreference Shares of Rs.10/- each totalling to Rs.444.44 Lakhs.
The gross revenue from operations of your Company during the year under review was Rs.354.29 Crores as compared to Rs.294.47 Crores in the previous year. There was an increasein sales realisation per unit of Gelatin in line with global prices with the growth inGelatin demand worldwide as also increased raw material cost. Increased quantity of saleshigher unit sales price of Gelatin and increase in volume of sales of Collagen Peptidehave resulted in higher gross revenue for the year.
The availability of Crushed Bone (CB) the main raw material of your Company was underpressure during the financial year following the lockdown declared by the Government owingto the pandemic COVID-19. Non-availability of CB in the required quantity and at areasonable price posed a big challenge to the Company as it depended to a large extent onopening up of restaurants and eateries which account for a large part of beef consumptionand also increase in export of buffalo meat. Many regional localities were placed underlockdown and there was acute shortage of manpower as large number of migrant workmenreturned to their home States. The closure of hotels & restaurants and strictrestrictions in attendance in functions like weddings have worsened the scenario.
The following are noteworthy :
It took about 3-4 months after the relaxation of the restrictions caused by thelockdown before normalcy could be restored. Demand side pull following the operation ofall the Gelatin manufacturers to near full capacity and the limited availability of CB hastaken the price of CB to all time high levels during the year apart from itsdeteriorating quality. Your Company through effective sourcing measures was able to sourcethe required quantity of CB to ensure full utilisation of the Gelatin production capacitydespite all these challenges. This has enabled the Company to post robust financialresults amidst the pandemic.
Though there was some respite in CB availability in Quarter 4 compared to the previousquarters the situation continues to look challenging in the wake of the alarmingly highnumber of COVID-19 cases in Kerala and across the Country as a part of the second wave.
Your Company imported 500 MT premium quality gelbone from France in 2020-21 and hasalready contracted to import another 2100 MT. Your Company is also discussing with anothergelbone manufacturer in Canada for import this year.
Pilot plant production of Degreased Crushed Bone (DCB) - a better qualityCrushed Bone is progressing at one of the Company's associated bone mills and the Companyexpects to achieve significant mileage out of this initiative to effectively addressquality related issues. The request made to the Central Govt. for liberalizing import ofCB is now under their active consideration.
Your Company has been producing Hide Gelatin regularly though in small quantityas part of the initiative to establish a cheaper substitute for Crushed Bone and was ableto develop a good supply chain to meet its requirement. Trial runs are continuing andefforts are on to optimise process engineering in consultation with Nitta Gelatin Inc.for producing Hide Gelatin meeting the requirements of various end use applications.
The Company produced and exported Limed Ossein from Reva Division. The RevaDivision continues to be beset with challenges to achieve capacity levels owing toproblems with the discharge pipeline non availability of Crushed Bone and inadequatesupply of water and power. Despite this the Division was able to achieve better capacityutilisation levels for Limed Ossein in the financial year. Quality of Crushed Bone hasdeteriorated significantly during the year which has not only affected the through put andcost but also has put the effluent treatment plant of the Company under severe strain.Achieving higher Limed Ossein production at Reva Division continues to pose challenge onthe face of effluent parameters going out of the required specification. Your Companycontinues its efforts to plan the production requirements in accordance with the dischargenorms without a major impact on the supply chain.
Installation of the new jet aerator at Reva Division has been completed. Its operationhad displaced the settled sludge in the aerator leading to choking of some of theassociated piping. This has been cleared. There was also an increase in the AmmoniacalNitrogen and COD levels in the ETP which is being monitored for corrective action.
OPERATION DURING CHALLENGING TIMES
The Government of India had announced a complete lockdown with effect from 24thMarch to 4th May 2020 in view of the COVID-19 pandemic. The Local Governments ordered theCompany to stop operations in all factories. The Company could convince the Government ofKerala on the relevance of the Company's produce in health management and that anydisruption in Company's production will severely affect public health. Based on Company'srepresentation Government of Kerala classified its operations in the essential categoryin the interest of public health and gave permission to operate the Company's factorieswith effect from 26th March. This was followed by our efforts for achieving the saidrelaxation for the units in the States of Gujarat and Maharashtra from the concernedGovts. and operate its plants despite the lockdown condition.
To address the risks posed by the COVID-19 infection the Company implemented manyprecautionary measures. They were followed up with the below actions at the unit level atall locations of the Company during the period of lockdown.
Stopping of fresh raw material (CB) charging at our Ossein factories
Head count of permanent workers reduced by 50% in all shifts. Salary protectedfor workers not attending duty
Employees allowed to work from home wherever possible
Minimised use of contract workers and payment of 50% salary for regular contractworkers even if they do not report for work
Ban on visitor entry and if inescapable to be met with at a makeshift visitors'meeting room at the entry point and stopping all non-critical activities including 5Slandscaping etc.
Key challenges faced by the Company include logistic issues for obtaining theraw materials and other inputs required for operation such as firewood etc. Outboundtransport restrictions also affected customer side supply chain activities. The variousguidelines stipulated by the Govt. and the Local Administration Authorities were impressedupon the employees such that the protocols were adhered strictly. They were providedreimbursement of transportation and food expenses. IT infrastructure was reinforced tosupport more employees working from home as and when required.
Company also made significant contributions through its CSR fund for helping the peopleaffected by the pandemic.
The Company debottle necked the sludge drier at Ossein Division and the Company couldachieve a through put of 400 Kg/hr against the earlier rate of 280 Kg/hr after fine tuningthe equipment in consultation with the equipment manufacturer. This has enabled theCompany to record significant progress in augmenting the Company's sludge management anddisposal systems.
The Company completed the work on the rain harvesting pond during the year at itsOssein Division. This is expected to improve the water table in nearby areas in additionto de-risking the Company from any sudden developments affecting water availabilitythough to a limited extent. Planting of saplings for creation of Miyawaki forest atechnique leading to thick growth of trees in a measured area was also completed.
The problem that would be created in terms of nonavailability of water at GelatinDivision by the proposed relocation of the embankment due to the Water Metro boat servicehas been escalated to higher levels of the Government for a solution. The Kerala StateSingle Window Clearance Board took stock of the situation especially the jointrepresentation made by affected parties in the neighbourhood regarding possible solutionin the form of relocation of drawal point of fresh water to a point upstream of newlocation of bund. It is expected that a solution would be found so that the industries inthat belt are not adversely affected.
With all the Gelatin plants (except the Ooty plant of Sterling Biotech) in full scaleoperation during the year and the resultant high demand for Crushed Bone Crushed Boneprices increased significantly. Acid prices have gone up by 17% adversely impacting thecost of production. The per unit price realization has gone up by 16% for Ossein/ LimedOssein 13% for Gelatin and 13% for Bovine Collagen Peptide in line with global trends.Prices for Fish Collagen Peptide has declined by 30% due to lower demand in the highpriced domestic market. Supply of the raw material fish protein on account of regulatoryissues continued to pose a challenge for Collagen Peptide sales. The weakening of Rupeeagainst USD during 2020-21 as compared to 2019-20 has contributed to better salesrealisation on exports.
In the backdrop of this situation your Company exercised close monitoring and strictcontrol over each significant element of cost and achieved appreciable savingsnotwithstanding the higher costs incurred due to higher production levels. The Companycould achieve economies of scale due to higher volume of production of Gelatin and Ossein.There was significant reduction in power cost as a result of various cost control measuresin both Divisions of the Company. Though the price of LNG firewood and furnace oil hasincreased during the year cost control measures helped the Company to keep costs undercontrol. Factory and Administration overheads also decreased significantly on account ofthe various austerity measures taken by the Company in the wake of COVID-19 uncertainties.
With regard to finance cost the Company could effectively leverage low cost foreigncurrency loans by negotiating with the Banks and introducing Banks that provide workingcapital funds at competitive rates. Interest rates for foreign currency loans have alsodropped as LIBOR has gone down from 1.40% to 0.25% during the course of the year.
The products of your Company continued to enjoy robust market demand during the yearunder review. The entire sale of Ossein/Limed Ossein 56% of the total sale of Gelatin and80% of Collagen Peptide was through exports. Your Company has arrangement with itsoverseas promoter Nitta Gelatin Inc. Japan to leverage their expertise and marketinsights in servicing its customers in a proactive manner in line with the globalstandards of
By way of a significant judgment the Panchayat Tribunal of Kerala had quashed thedecision of the Kadukutty Panchayat to reject the Company's application for the factorylicence for Ossein Division and directed the Panchayat to issue the license to theCompany. The licence once issued for 5 years in November 2019 by the Panchayat wasreversed by the said local body at the instance of yet another authority in the saidoffice. The Company filed a case against the Panchayat President's decision in the HighCourt and the Court stayed the Order of the President. The Court subsequently instructedthe Central Pollution Control Board to study the assimilation capacity of Chalakudy river.In the report submitted by Central Pollution Control Board to High Court they have statedthat the Company fully meets the discharge norms and has also made some observations onoperation of Effluent Treatment Systems. The status quo continues and the petition is nowpending for adjudication by the High Court.
The Pollution Control Board has renewed the validity of the Consent to operate upto30th June 2023 for the Ossein Division. Similarly for Gelatin Division the Company hasrenewed the Consent to Operate upto 30th June 2023. Reva Division's Consent to Operateissued by the Gujarat State Pollution Control Board is valid upto May 2021 and efforts areon to renew the same.
The operations of the Company for the year 2020-21 have resulted in a pre-tax profit ofRs. 24.33.Crores (as against a pre-tax profit of Rs.6.87 Crores during the year 2019-20.Details are as under:
(All amounts are in Rs.Crore unless otherwise stated)
|Particulars ||For the year ended 31st March 2021 ||For the year ended 31st March 2020 |
|Sales (including export incentives and net of Excise Duty & VAT) ||354.29 ||294.47 |
|Other Income ||4.62 ||3.30 |
|TOTAL ||358.91 ||297.77 |
|Gross Profit before Depreciation ||39.13 ||21.83 |
|Deducting there from: || || |
|Depreciation ||14.80 ||14.95 |
|Provision for Tax - || || |
|- Current Tax ||4.53 ||1.18 |
|- MAT ||(2.03) ||(1.18) |
|- Deferred Tax ||3.93 ||2.09 |
|- Prior years ||- ||(3.10) |
|Profit/(Loss) after Tax from continuing operations ||17.90 ||7.89 |
|Other comprehensive income/(loss) (net of tax) ||4.29 ||(5.88) |
|Total comprehensive profit for the year ||22.19 ||2.01 |
|Profit brought forward from previous year ||(6.55) ||(13.06) |
|Balance Profit available for appropriation ||17.90 ||7.89 |
|Appropriations : || || |
|Final dividend on equity shares - paid ||2.27 ||1.36 |
|Tax on dividend ||- ||0.02 |
|Total ||2.27 ||1.38 |
|Transfer to General Reserve || || |
|Balance profit carried forward to next year ||9.08 ||(6.55) |
|Earnings per share || || |
|Basic ||19.72 ||8.70 |
|Diluted ||19.72 ||8.70 |
Note: Dividend on Preference Shares is considered as finance costs.
Considering the Company's performance the Board has recommended a dividend of Rs. 3.0per share i.e. 30% of the face value of Rs. 10/- per share on the Equity Capital for theyear ended 31st March 2021. The Board has also recommended dividend @ 5.4029% p.a. on the929412 Optionally Convertible Preference Shares of face value of Rs. 170/- each and adividend @7.65063% on the 4444444 Redeemable Preference Shares of the face value of Rs.10/- each for the year ended 31st March 2021. This dividend payment is out of the currentyear profits of the Company and is subject to approval of the members at the ensuingAnnual General Meeting.
The total outflow on account of dividend will be Rs.391.74 Lakhs (Rs.346.35 Lakhs inthe financial year 2019-20) comprising of Rs.119.37 Lakhs on Preference Shares (Rs.119.37Lakhs in the financial year 2019-20) and Rs. 272.37 Lakhs on equity shares (Rs. 226.98Lakhs in the financial year 2019-20).
During the year unclaimed dividend of Rs. 317576/- pertaining to the year 2012-13was transferred on to the Investor Education & Protection Fund after giving due noticeto the members.
No amount is transferred to General Reserve during the year. The Company has recognizedcapital reserves amounting to Rs.2750.62 Lakhs on account of the merger (includingdeferred tax asset on the unabsorbed business loss of Reva Proteins Ltd. carried over fromprevious years as per tax books for an amount of Rs.1609 Lakhs and other appropriateadjustments).
Reserves as on 31.03.2021 comprises of Security Premium Reserve of Rs. 2895.90 Lakhsequity contribution on External Commercial Borrowings and Preference Share Capital Rs.984.43 Lakhs Special Export Reserve of Rs.79 Lakhs General Reserve of Rs. 7836.64 LakhsRetained earnings of Rs. 908.67 Lakhs Capital Reserve of 2750.62 Lakhs Hedge Reserve ofRs. 111.05 Lakhs and other comprehensive loss of Rs. 163.95 Lakhs aggregating to Rs.15402.36 Lakhs.
PARTICULARS OF LOANS GUARANTEES & INVESTMENTS
The Company has provided Corporate Guarantee on behalf of Bamni Proteins Ltd.(subsidiary Company) to the lenders towards its borrowings for working capital requirementto the extent of Rs. 750 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 2021 and such loans guarantees and investments arewithin limits prescribed under that Section.
During the year rating agency CRISIL has reaffirmed the rating of "CRISILA-" and revised its rating outlook as "Stable" from "Negative"for Long Term Instruments and reaffirmed "CRISIL A2+" rating for short terminstruments
AWARDS & ACCOLADES
During the year your Company received the following awards:
a) Company has won 2 awards in CII Southern Region Kaizen competition in medium scaleprocess industry held online from 18-20th August 2020 in Supervisory and Operator category
b) Company has achieved Gold Recognition for CII's Business Excellence MaturityAssessment 2020.
c) Company's Ossein Division has been selected to receive Safety Awards in MediumFactories Category by the Department of Factories & Boilers.
d) Gelatin Division & Ossein Division have successfully achieved the TPMCertification Assessment of STRONG COMMITMENT conducted by CII.
The following prestigious certifications are retained by your Company:
(a) European Directorate for the Quality of Medicines & Health (EDQM) Certificatefor Gelatin Division
(b) CAPEXIL plant approval certificate for Ossein Division Gelatin Division and RevaDivision for the export of Ossein Gelatin and Collagen Peptide.
(c) HACCP Certificate for Ossein Division for food safety.
(d) ISO 14001:2015 for Gelatin Division for Environment Management System
(e) ISO 9001:2015 for Quality Management System of the Company.
(f) FSSC 22000 V.5 Certification for Food Safety Management System for GelatinDivision.
(g) FSSAI Certification for manufacturing import/export of Gelatin & CollagenPeptide
(h) WHO GMP Certification as per World Health Organisation/Codex for manufacture ofGelatin & Collagen Peptide
(i) Halal (MUI IFANCA & JUM)/Kosher Certification for Gelatin and Collagen Peptide- JUM Halal for Ossein & Dicalcium Phosphate
(j) NABL Accreditation for in-house laboratory of Gelatin Division.
(k) ISO 45001:2018 Certification for Occupational Health and Safety Standards forGelatin Division and Ossein Division
(l) ISO 50001:2018 Certification for Energy management system for Gelatin Division& Ossein Division.
HEALTH SAFETY AND ENVIRONMENT
Compliance with relevant regulations and effective management of the related issues isan integral part of the Company's philosophy.
1. Health and Safety
The Company is committed to protecting the health and safety of its employees. Inaddition to the Head (Health Safety & Environment) for the Company each plant has aSafety Officer and Safety Committees which include representation from workmen andexecutives. The Committees meet regularly to review issues impacting plant safety andemployee health. Regular health checkup of the employees is carried out through tie-upwith reputed hospitals. Various training programs are conducted at the plant on health andsafety issues including emergency preparedness work safety first-aid etc. Both Osseinand Gelatin factories have received the ISO 45001-2018 certification which is a testimonyto the Company's commitment in this area.
The following were the major activities carried out during the year :-
Plant operations of all units are being done as per government guidelinesstrictly adhering to COVID-19 protocol Migration audit to ISO 450012018 completed at bothOssein division and Gelatin Division
Integration of ISO 14001-2015 certification audit completed at Gelatin division.
External safety audit completed at Ossein and Gelatin Divisions.
Action points identified based on experience at other factories of Nitta GelatinInc. Japan completed.
Fire license renewed at Ossein and Gelatin Divisions
Fire and safety audit have been conducted at Reva Division by the Safety officerof the Gujarat Government
Mock drills conducted at Ossein Reva and Gelatin Divisions.
Safety day and Environmental day celebrations conducted at Ossein Reva andGelatin Divisions.
TPM Certification Assessment-2021 of Strong Commitment by CII has beensuccessfully completed by both Ossein and Gelatin Divisions.
The Company continuously endeavors to enhance Environmental Management and through allactivities demonstrates its commitment to protect the environment. The factories of theCompany are equipped with modern effluent treatment plants for treating and dischargingtreated water with parameters well within the norms laid down by the respective StatePollution Control Board. The emissions from the boilers and generator stacks are regularlymonitored for compliance. Solid waste from operations is collected in a secured manner anddisposed in authorized locations. Ambient air quality is monitored on regular basis andensured for its compliance. Our ETP operations have been reinforced with the introductionof new equipment and technologies. Various energy saving measures and efficiencyimprovement activities were taken up during the year that reduced the consumption of fuelscompared to previous years. Action plans have been drawn up to reduce consumption of waterin the coming years. In the case of solid waste reduction Company follows a structuredaction plan. A polymer house based facility using solar energy has been developed at theCompany's Gelatin Division for drying the sludge emanating out of the operations leadingto lower operating costs and carbon print. With a view to reduce the greenhouse effectCompany is focusing on greenery development at all its locations.
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 such of the sectors a brief indication of which has beenoutlined in Annexure II forming part of this report. The CSR Policy can be accessed on theCompany's website www.gelatin.in. The CSR projects undertaken by the Company are inaccordance with Schedule VII of the Companies Act 2013 which is given in the aforesaidannexure.
The total CSR expenditure incurred by the Company during the year of Rs. 15.45 Lakhswas in compliance with the statutory requirement of 2% of the average profit for the lastthree years. A CSR Committee of the Board had during the course of the year been replacedby a Committee of Executives in line with relaxation introduced in the Company's Actwhich acts in an advisory capacity with respect to policies and strategies that affect theCompany's role as a socially responsible organization. The CSR Committee monitors theprogress of the projects and ensures that the implementation of the projects is incompliance with the CSR objectives and Policy of the Company. The Annual Report on CSRactivities is annexed herewith as Annexure I which in effect is the newly introducedAnnexure II to the amended CSR Rules w.e.f. 01.04.2020.
POLICY FOR DETERMINING MATERIAL SUBSIDIARIES
In accordance with SEBI LODR Regulations the Company's policy on materiality ofsubsidiaries specifying the criteria for determining the Material Subsidiaries isavailable in the Company website www.gelatin.in. As per such criteria the Company has nomaterial subsidiary as of 1st April 2020.
BAMNI PROTEINS LIMITED
The annual production during the year in this subsidiary Company was 2201 MT of Osseinand 5090 MT of Di Calcium Phosphate as against 2385 MT of Ossein and 5440 MT of Di CalciumPhosphate during the previous year.
The operation of this subsidiary for the year under review has resulted in a pre-taxprofit of Rs. 394.22 Lakhs (Rs. 848.75 Lakhs in the previous year) post-tax profit of Rs.307.47 Lakhs (Rs. 627.82 Lakhs in the previous year) and other comprehensive income of Rs.33.35 Lakhs (loss of Rs. 92.76 Lakhs) during the previous financial year.
In accordance with Section 129(3) of the Companies Act 2013 a consolidated financialstatement of the Company and its subsidiary Company has been prepared which is formingpart of the Annual Report.
The statement containing the salient features of the financial statement of thesubsidiary under first proviso to Sub-Section (3) of Section 129 of the Act in Form AOC Iis 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 as perthe fourth proviso of the said section the annual accounts of the Subsidiary Company andthe related detailed information have also been uploaded on the website of the Companywww.gelatin.in.
Annual accounts of the Subsidiary Company and related
detailed information shall be made available to the Shareholders of the Company andSubsidiary Company seeking such information at any point of time. The annual accounts ofthe Subsidiary Company shall also be made available for inspection by any Shareholder atthe Registered Office of the Company and Subsidiary Company concerned. Hard copy ofdetails of accounts of Subsidiary shall be furnished to any Shareholder on demand.Further pursuant to Indian Accounting Standard Ind AS 110 issued by the Institute ofChartered Accountants of India consolidated financial statements presented by the Companyinclude the financial information of its Subsidiary.
STATUTORY AUDITORS' REPORT
The delay in remittance of undisputed statutory dues as pointed out by the StatutoryAuditors in their report was within the extended time as permitted by the EmployeesProvident Fund organisation following the COVID-19 lockdown restrictions. Payment delaywith respect to Water cess (Statutory dues outstanding for more than six months) was dueto pendency of Order of assesment under the Water (Prevention Control of Pollution) CessAct 1977.
SECRETARIAL AUDITORS' REPORT - EXPLANATION TO OBSERVATIONS OF AUDIT
As prescribed under Section 204(1) of the Act the Company has received the SecretarialAudit Report. The observations made therein and the corresponding explanations are givenbelow:
|Sl. No. Observation ||Management Reply |
|1. As per Regulation 17(1) (b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 50% of the Board of Directors of Nitta Gelatin India shall be Independent Directors There was one short of the required number of Independent Directors on the Board for the limited period between 19.03.21 to 31.03.21 consequent to the retirement of Dr. K. Cherian Varghese Independent Director on 18.03.2021. ||In the wake of the vacancy arising in the position of an Independent Director the Company has time till the immediate next meeting of the Board or 3 months from the date of the vacancy whichever is later for conforming to such requirement of minimum no. of Independent Directors. |
|The Company is advised to maintain the composition of Board of Directors at all point of time. ||That being the case the Board of Directors shall have opportunity at their Accounts meeting to consider a proposal from Nomination & Remuneration Committee and approve the appointment of an Independent Director for filling the vacancy. |
|2. Considering the retirement of Dr. K. Cherian Varghese on 18.03.21 and as a proactive measure the Board of Directors at their meeting held on 29.01.21 had reconstituted the Stakeholders Relationship Committee (SRC) and Nomination and Remuneration Committee (NRC) with sufficient number of directors. However Audit Committee (AC) has not been reconstituted with sufficient number of directors on the day. ||Though the law prescribes a minimum no. of 3 Directors for the Audit Committee to be properly constituted any interim vacancy need only to be filled before the Audit Committee meets again in a formal meeting. |
|Hence for the limited period between 19.03.21 to 31.03.21 the number of required ID in the Audit Committee was one short of the minimum required as per SEBI LODR. ||To that extent the Company shall be ensuring that the Audit Committee is properly constituted with the addition of a member before the succeeding meeting. |
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. Nitta Gelatin Inc.Japan has provided guidance and considerable financial support for the scheme of revivalof its Reva Division. Kerala State Industrial Development Corporation Ltd. the otherpromoter is equally supportive for development of 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 IV to thisreport.
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 observations of theAudit 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 by themanagement and no reportable material weakness in the design or operations was observed.The Company has policies and procedures in place for ensuring proper and efficient conductof its business safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of the accounting records and timely preparation ofreliable financial information.
The Company has adopted accounting policies which are in line with the AccountingStandards and the Companies Act and with the generally accepted accounting principles inIndia. Changes in policies if required are made in consultation with the auditors andare approved by the Audit Committee.
The Board is of the view that appropriate procedures and controls are operatingeffectively and monitoring procedures are 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 reviews 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 Bone availability and pricing patterns
impact of the high cost of Crushed Bone on the cost of production
safety and security policies of the Company
succession planning for key executives
impact of the National Green Tribunal's Orders
significant litigation against the Company having material financial impacts
moves of competitors
water scarcity for operational requirements
emergence of alternate substitutes for the products of the Company
adverse forex rate fluctuations
risk of losing pricing premium commanded by the Company due to emergence ofalternate Halal certifications
sustaining operations in lockdown conditions with minimal disruption etc.
MATERIAL POST BALANCE SHEET EVENTS
There is no significant material post balance sheet event.
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 the Company maintains the relevant cost records for theproducts for which the maintenance of cost record is required as per the above Rules.
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 31st March 2021the applicable Indian Accounting Standards have been followed along with properexplanation 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 2021 and of the profit of the Company for the year endedon 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 that have taken place aresubsequently reviewed by the Audit Committee on a quarterly basis in comparison with theconditions of omnibus approval and are recommended to the Board for approval.Additionally Material Related Party Transactions foreseen in the year ahead were approvedby the members. Particulars of contracts of arrangements with Related Parties referred toin sub section 1 of Section 188 read with Rule 8(2) of the (Companies Accounts) Rules2014 are attached in Form No. AOC 2 as Annexure V.
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 Accounting Standards INDAS 110 and other applicable Accounting Standards issued by the Institute of CharteredAccountants of India and the provisions of the SEBI (LODR) Regulations and form part ofthe Annual Report.
Mr. M. G. Rajamanickam IAS ceased to be Nominee Director on 28.05.2020 upon withdrawalof his nomination by KSIDC. Whereafter Mr. S. Harikishore IAS was appointed as NomineeDirector on 28.05.2020 by KSIDC. On 19.10.2020 Mr. S. Harikishore IAS ceased to beNominee Director and was succeeded by Mr. M. G. Rajamanickam IAS as Nominee Director ofKSIDC.
Dr. K. Cherian Varghese ceased to hold office on 18.03.2021 on completion of his tenureas Independent Director.
The Board of Directors had constituted a Nomination and Remuneration Committee (NRC)consisting of three Directors which until vacation of office by Dr. K. Cherian Varghesecomprised besides him Mr. E. Nandakumar and Mr. Yoichiro Sakuma. In the wake ofretirement of Dr. K. Cherian Varghese the Board at the meeting dated 29.01.2021reconstituted the NRC by induction of Mrs. Radha Unni as an additional member.Accordingly the said Committee as on date has the following members:
1. Mr. E. Nandakumar
2. Mr. Yoichiro Sakuma
3. Mrs. Radha Unni
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 every Director'sperformance.
2. The NRC formulates the criteria for determining qualifications positive attributesand independence of a Director for recommending to the Board and also a policy relating tothe remuneration for the Directors Key Managerial Personnel and senior managementpersonnel meaning thereby employees of the Company who are members of core managementexcluding Board of Directors. This would comprise all members of management one levelbelow the 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 and motivatepersonnel as are herein referred at (2) above of the quality required to run the Companysuccessfully; relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and remuneration to Whole-time Directors key managerial personneland senior management involves a balance between fixed and incentive pay reflecting shortand long-term performance objectives appropriate to the working of the Company and itsgoals.
During the financial year the Nomination and Remuneration Committee met on 27.01.2021adjourned and held on 28.01.2021.
KEY MANAGERIAL PERSONNEL Rule 8(5)(iii) of Companies (Accounts) Rules 2014 prescribesthat Report of Directors should contain details of Directors and Key Managerial Personnel.Therefore in addition to the details of Directors herein above given it is brought tothe notice of shareholders that Mr. P. Sahasranaman and Mr. G. Rajesh Kurup continue asChief Financial Officer (CFO) and Company Secretary (CS) respectively.
The Companies Amendment Act 2015 prescribes that there shall be a meeting ofIndependent Directors during each of the financial years. Accordingly the IndependentDirectors who met on 29.01.2021 evaluated the performance of the Directors other thanthemselves which are followed by an evaluation made by the Board in the presence of theChairman at their Meeting held on that date. The evaluation found each of the Directors tohave requisite qualification expertise and track record for performance of their dutiesas envisaged by law. MEETINGS
The Board of Directors met 4 (Four) times during the financial year 2020-21. 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 AUDITCOMMITTEE The Audit Committee had during the year Mrs. Radha Unni as Chairperson with Dr.K. Cherian Varghese and Mr. E. Nandakumar as members More details on the Committee aregiven 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 memberInternal Complaints Committee (ICC) is constituted with three lady employees and one ladyNGO member. ICC is responsible for redressal of complaints relating to sexual harassmentas envisaged under the provisions of Act and Rules. Hither to no complaints were receivedby ICC.
PREVENTION OF INSIDER 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 the Companyand other Connected Persons with in the meaning of the concerned SEBI Regulation. The Coderequires pre-clearance for dealing in the Company's shares and prohibits the purchase orsale of Company shares by the Directors and the designated employees who have access tounpublished price sensitive information in relation to the Company and during the periodwhen the Trading Window is closed. The Board is responsible for implementation of theCode.
M/s. Walker Chandiok & Co. LLP (WCC LLP) Chartered Accountants (Firm RegistrationNo. 001076N/N500013) who were appointed as Statutory Auditors of the Company for a 5 yearterm at the Annual General Meeting in the year 2017 continues to hold office while suchappointment for the remaining period for the 5 year term were ratified at the AnnualGeneral Meeting in the year 2020. Hence no specific item regarding the appointment is putup for transaction at the forth coming Annual General Meeting and the Notice for theMeeting makes no such mention as part of Ordinary Business.
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. F10876) CompanySecretary-in-practice to undertake the Secretarial Audit of the Company. The SecretarialAudit Report is annexed herewith as Annexure VI.
The Company has a website https://www.gelatin.in where the annual return of the Companywill be published complying with the provisions of Section134 (3) (a) of the Companies Act2013.
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. The Board takesthis 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 during a very challenging year. On thisoccasion your Board thanks all the customers suppliers bankers and other associates fortheir unstinted co-operation.
For and on behalf of the Board of Directors
| ||Dr. K. Ellangovan IAS |
|Kochi ||Chairman |
|07.05.2021 ||DIN: 05272476 |