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Nitta Gelatin India Ltd.

BSE: 506532 Sector: Industrials
BSE 00:00 | 27 Jan 580.10 -16.05






NSE 05:30 | 01 Jan Nitta Gelatin India Ltd
OPEN 596.15
52-Week high 785.00
52-Week low 249.10
P/E 12.43
Mkt Cap.(Rs cr) 527
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 596.15
CLOSE 596.15
52-Week high 785.00
52-Week low 249.10
P/E 12.43
Mkt Cap.(Rs cr) 527
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Nitta Gelatin India Ltd. (KERALACHEM) - Director Report

Company director report




Your Directors have pleasure in presenting the 46th Annual Report and audited financialstatements of your Company for the year ended 31st March 2022. The Statement of Accountshas been prepared in accordance with Indian Accounting Standards (IND AS) which areapplicable to the Company w. e. f. 01st April 2017 as per the Rules laid down in thisregard.


The Authorised Share Capital of your Company as on 31st March 2022 was Rs 8024.44Lakhs comprising of 40000000 Equity Shares of Rs 10/- each totaling to Rs 4000.00Lakhs 929412 Optionally Convertible Non-Cumulative Preference Shares (OCPS) of Rs 170/-each totaling to Rs 1580.00 Lakhs 20000000 Optionally Convertible Non- CumulativePreference Shares of Rs 10/- each totaling to Rs 2000.00 Lakhs and 4444444Redeemable Preference Shares of Rs 10/- each totaling to Rs 444.44 Lakhs.


Record Profits & Turnover

The Company recorded the highest turnover and profits in its history during thefinancial year 2021-22 based on robust demand for all its products and the associatedselling price that it could command. The gross revenue from operations of your Companyduring the year under review was Rs 428.51 Crores as compared to Rs 354.29 Crores in theprevious year registering a growth of 21%. Profit before tax was Rs 37.61 Crores againstRs 24.34 Crores registering a growth of 54.5%. There was an increase in sales realisationper unit of Gelatin in line with the global prices with the growth in Gelatin demandworldwide as also increased raw material cost.

Higher Di-Calcium Phosphate (DCP) Price Realisation

During first half of 2021-22 the Poultry feed market was going through a stablecondition with the Import of Mono Calcium Phosphate (MCP) from China in the range of 7000MT/month and the DCP production slightly more than the market requirement causing almoststable DCP prices till August. Meanwhile during July – August period due to floodsand coal shortage there was Energy crisis in China. Due to this crisis Chinese Governmentstarted capping the high energy intensive manufacturing Companies. Thus Calcium Phosphateproduction units were banned to export their products. As a result the MCP exports toIndia also shrinked substantially below 2000 MT/month in July & August. As there wasconstant demand for the phosphorous supplement for Poultry feed and lower availability ofMCP DCP sales price could be increased from September 2021. Even though ban for MCPexports from China was lifted due to shortfall during the ban period we could maintainhigher DCP prices up to March 2022. Thus the overall sales realisation from DCP could beimproved substantially for the period 2021-22.

Economic Scenario- Domestic and Global Market

According to the Indian Economic Survey 2021 India's domestic pharmaceutical market islikely to reach US$ 65 Billion by 2024 and further expand to reach US$ 120-130 Billion by2030. In the global pharmaceuticals sector India is a significant and rising player.India is the World's largest supplier of generic medications accounting for 20% of theWorldwide supply by volume and supplying about 60% of the global vaccination demand. TheIndian pharmaceutical sector is worth US$ 42 Billion and ranks 3rd in terms of volume and13th in terms of value Worldwide. At present India is the largest provider of genericdrugs globally. Indian pharma Companies cater to over half of the global demand forvarious vaccines along with 40 percent of generic drugs demand in US. Gelatin being apharmaceutical excipient for making capsules tablet binding etc. the growth in thepharmaceutical market is a boost to the gelatin demand.

Gelatin is the popular excipient in empty capsules and softgel capsules. Capsules arethe second most preferred delivery format. The empty capsule market size is projected togrow at a CAGR of 7.2% and reach US$ 3.7 Billion by 2026 while the global softgelcapsules market is expected to reach $316.6 Billion by 2025 at a CAGR of 5.4%. Softgelsmake up 25 percent of the total market for nutritional supplements and are the secondmost-prevalent dosage form behind tablets. Other than pharma industry capsules are beingused by the Nutraceutical industry Cosmetic industry and research laboratories. Emergingeconomies such as the Asia Pacific the Middle East Latin America and Africa providesignificant opportunities for the growth of the market. Global raw gelatin and gelatincapsule manufacturers have been capitalizing on this demand by expanding their businesspresence and production capacities in these regions. The increasing demand in emergingeconomies coupled with lower raw material and labour costs offer an opportunity for thegrowth in revenue terms for softgel capsules market by 2026 end.

Collagen Peptide- capacity utilization new customer development

Collagen Peptide is a significant source of protein and a vital component of healthynutrition. Their physiological and nutritional properties promote the strength of jointsand bones as well as contribute to beautiful skin.

Collagen Peptide Market is expected to reach USD 828 Million by 2026 at a CAGR of 5.6%during the forecast period. Consumers are becoming extremely aware of the benefits ofconsuming collagen peptide products. Various factors such as the rising popularity ofcollagen-based functional products growing use of collagen as additive and wideapplications of collagen peptides are responsible for driving the growth of this market.Further research advances and biotechnological advancement has enabled the utilizationand incorporation of collagen peptides in pharmaceutical applications and biomedical useswhich are some of the growing opportunities in the market.

North America is expected to grow more than the global CAGR at 8.6% and will be ourfocus market for Collagen Peptides. Asian markets will continue to be tapped for deepeningour presence. Other markets are also tapped for increasing the presence. Our major marketsegments will be beauty from within joint health sports nutrition diabetes andgeneral wellness. High functional Collagen Peptide and Diabetes management peptidesare the new products under development.

Plant utilisation at full capacity

During the year the Company was able to achieve full capacity utilisation for Gelatinand Collagen Peptide. The Company's Plants have been operating at 100% capacities for theyear and the Company has successfully executed de-bottlenecking operations to maximiseproduction. The Company has produced 4150 MT of Gelatin and 489 MT of Collagen Peptide.The growth rate of Collagen Peptide was 58% as compared to the previous year.

Increased quantity of sales higher unit sales price of Gelatin and significantincrease in sales volume of Collagen Peptide have resulted in higher gross revenue foryour Company. Further the Company was able to make significant inroads into the KoreanBeauty market for Collagen Peptide with its clinically proven product derived from FishProtein. This product backed by the Health-Claim and approved by the KFDA has beenconsistently increasing its market share in Korea and commands a dominant share in themarket. The Company is currently exploring newer markets like USA & South Africa withthis product based on the success achieved so far.

The availability of Crushed Bone (CB) the main raw material of your Company hasimproved during the year though the price was under pressure during the financial yeardue to demand outstripping the supply. The second wave of COVID-19 Pandemic had somemarginal impact in the supply chain. The following are noteworthy:

The CB situation continued to face challenges during the year due to the continuedlockdown announcements across the Country and many suppliers were demanding price increasewhile finalizing supply deals. The situation was the worst in Gujarat where the demandfrom the Gelatin manufacturers is the highest. The Crushed Bone (CB) supplied during theyear was plagued with deteriorating quality with higher impurities.

The prices of premium quality indigenously sourced gelbone increased by 19% during theyear. Your Company through effective sourcing measures with an eye on quality was able tosource the required quantity of Crushed Bone to ensure full utilisation of the Gelatinproduction capacity despite all these challenges. This has enabled the Company to postrobust financial results amidst the Pandemic.

Though there was some respite in CB availability during the year compared to theprevious quarters the situation continues to look challenging in the wake of theuncertainty in the supply chain caused by COVID- 19 and the high demand situation.

Exploring import of Crushed Bone

The deteriorating quality and the constant increase in price of indigenously sourcedCrushed Bone has forced the Company to scout for other alternate source of raw materialsuch as imports. The quality of Gelbone from France Canada and New Zealand are allreported to be at premium levels with high available bone and protein content probablybecause of the advanced technologies deployed in these Countries for pre-treatment andprocessing the material. Accordingly your Company imported 2100 MT premium qualityGelbone from France in 2021-22 and has already contracted to import another 2500 MT in thenext year. Your Company is also discussing with another Gelbone manufacturer in Canada forimports this year.

With the intent of accessing the other markets for sourcing CB a request has been madeto the Central Government for liberalizing import of CB from BSE undetermined countries asper OIE practice and the same is now under their consideration.

During the year the Company took the initiative of partnering with Crushed Bonesuppliers for improving the quality of the material by working in close association withthem and providing the requisite technology to them for enabling them to supply goodquality material for pre-treatment. This project is expected to reduce the impurity andother unwanted material content in Crushed Bone and expected to reinforce the supplychain. Once this partnership is successful this will be replicated in other potentialsuppliers also which will greatly help the Company in terms of improving the overallproductivity and reducing the cost considerably.

The price of fish protein the raw material required for manufacture of Fish CollagenPeptide has increased significantly during the course of the year affecting the margin onthe sale of the product. The Company is negotiating with the customer for absorbing theimpact of the price hike and is hopeful of a favourable outcome.

The Company produced and exported Ossein & Limed Ossein from Reva DivisionGujarat. The Reva Division continues to be beset with challenges in achieving fullcapacity levels owing to problems with the discharge pipeline non-availability ofCrushed Bone inadequate supply of water and power and poor quality of raw materials. Asthe quality of CB had deteriorated significantly the production of Ossein and LimedOssien had to be aligned to the effluent discharge parameters as stipulated by thePollution Control Board in a cost effective manner. Despite this the Division was able tomaintain moderate capacity utilisation levels for Ossein in the financial year. The highprice of Di-Calcium Phosphate also enabled the unit to better its performancecompared to previous year. Installation of a new jet aerator for improving the ETPperformance insulation of acid baths to minimize the impact of extreme heat conditionsespecially during summer increase in the water storage capacity to manage productiondisruptions when water supply is affected managing Effluent treatment systems in a costeffective manner through better chemical control methods etc. are some of the measuresimplemented during the year. Installation of the new Jet Aerator at Reva Division has beencompleted. The increase in the Ammoniacal Nitrogen and COD levels in the ETP has beenmanaged by aligning the production levels to the required parameters.

Operation during challenging times

i) The operating systems and procedures of the Company have been geared up to meet therequirements of challenging times for the various processes such as raw materialprocurement supply chain movements etc. There is significant disruption in internationaltrade by way of COVID-19 related issues causing delays in container movement andavailability thereof. In addition to absolute increase in container freight rates delayin shipping schedule is forcing the Company to necessitate air freighting certainshipments which are getting unduly delayed at a high cost. The Company continues toimpress upon the Local Governments and others the importance of keeping the operationsactive in view of its role in the pharmaceutical industry.

ii) The change in geopolitical situation with the onset of Russia – Ukraine warand the following price hike consequent to the supply chain disruptions on account of thewar risk of shortage of material delay in shipment and the resultant logistic issue etc.are posing challenges before the Company. The Company is closely watching the situation onaccount of these situations and framing alternate remedial action as appropriate forsustaining the operations of the Company without any disruption.

iii) To address the risks posed by COVID-19 Pandemic the Company implemented manyprecautionary measures. Entry protocols such as temperature checking usage of face maskshand washing at regular intervals avoiding assembly of people more than the specifiedlimits installation of partitions at canteens and encouraging virtual meetings thanphysical meetings etc were some of these measures. These measures had helped the Companyto manage the COVID-19 Pandemic by keeping the people safe and without affecting the Plantoperations. IT infrastructure was reinforced to support more employees working from homeas and when required.

iv) With all the Gelatin plants in full scale operation during the year and theresultant high demand for Crushed Bone Crushed Bone prices increased by 10%. Acid priceshave dropped by 8% adversely impacting the cost of production. The per unit pricerealization has gone up by 11% for Ossein/ Limed Ossein 9% for Gelatin and there was adrop of 5% for Bovine Collagen Peptide in line with global trends for similar products.Prices for Fish Collagen Peptide has maintained parity. The price of raw material fishprotein for Fish Collagen Peptide has recorded an increase of 43% significantly impactingthe margins for Collagen Peptide sales. Price negotiations with raw material suppliers andfinished product are on to protect the margins. The weakening of Rupee against USD during2021-22 as compared to 2020-21 has contributed to better sales realisation 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 various reasons as described above. TheCompany could achieve economies of scale due to higher volume of production of Ossein. Theusage of low cost hide as the raw material as compared to Crushed Bone had helped theCompany in terms of controlling the raw material costs. There was absolute increase inpower cost due to higher Ossein levels but the overall cost could be maintained atmanageable levels for power cost as a result of various cost control measures in both theDivisions of the Company. Though the price of LNG firewood and furnace oil has increasedduring the year cost control measures helped the Company to keep costs under control.India has been affected by the Coal shortage consequent to events in China. The Company'sefforts to create value from wastes by generating gas from residual sludge has furthergained momentum during the year. The operation of sludge dryer which could substantiallyreduce the volume of sludge for disposal has helped the Company in terms of reducing theattendant costs. Availability and pricing of Coal at Reva Division is posing challenges tomanage the costs. This might also impact price of alternate fuels like firewood. Factoryand Administration overheads also increased marginally in line with the overall businesssentiment. The Company continues its focus on the various austerity measures in the wakeof COVID-19 uncertainties.

v) With regard to finance cost the Company could effectively leverage low cost foreigncurrency loans by negotiating with the Banks and bringing in Banks that provide workingcapital funds at competitive rates. Interest rates for foreign currency loans have alsodropped as the benchmark LIBOR has witnessed significant drop during the course of theyear to almost as low as 0.15%. The Company negotiates with the banks to have alternatebenchmark rates in the wake of LIBOR getting out of the system as a viable benchmarkoption.

vi) The products of your Company continued to enjoy robust market demand during theyear under review. The entire sale of Ossein/Limed Ossein 52% of the total sale ofGelatin and 80% of Collagen Peptide was through exports. Your Company has arrangement withits overseas 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 NITTA Group.

vii) The Pollution Control Board has renewed the validity of the Consent to operateupto 30th June 2023 for the Ossein Division. Similarly for Gelatin Division the Companyhas renewed the Consent to operate upto 30th June 2023. Reva Division's Consent to Operateissued by the Gujarat State Pollution Control Board has been renewed and is valid upto23.05.2026.

Environmental Sustainability

Our Company has always prioritized environmental sustainablity as an importantindicator to reduce carbon foot print and has taken various measures in this regard.

i) The Company is in the process of retrofitting its boiler at its Gelatin Division foroptimizing its steam generating efficiency.

ii) The Company is installing an Anaerobic Digestor for managing the revised effluentstream in view of the changes in operating parameters. This will equip the Company to meetthe required effluent parameters as stipulated by the Pollution Control Board in view ofthe changed scenario.

iii) The Company's rain harvesting pond at its Ossein Division has helped to improvethe water table in nearby areas in addition to de-risking the Company from any suddendevelopments affecting water availability though to a limited extent. iv) The Companycontinues to maintain the Miyawaki forest a technique leading to thick growth of trees ina measured area and thereby ensures its commitment to green aspects of the environment.


The operations of the Company for the year 2021-22 have resulted in a pre-tax profit ofRs 37.61 Crores (as against a pre-tax profit of Rs 24.33 Crores during the year 2020-21.Details are as under: (All amounts are in Rs Crore unless otherwise stated)

Particulars For the year ended 31st March 2022 For the year ended 31st March 2021
Sales (including export incentives and net of GST) 428.51 354.29
Other Income 5.80 4.62
TOTAL 434.31 358.91
Net Profit before Depreciation 51.20 39.13
Deducting therefrom:
Depreciation 13.59 14.80
Provision for Tax - -
- Current Tax 11.24 4.53
- MAT Tax - (2.03)
- Deferred Tax (0.22) 3.93
Profit after Tax from continuing operations 26.60 17.90
Other comprehensive income/(loss) net of tax (2.26) 4.29
Total comprehensive profit for the year 24.34 22.19
Profit brought forward from previous year 9.08 (6.55)
Balance Profit available for appropriation 26.60 17.90
Appropriations :
Final dividend on equity shares- paid 2.72 2.27
Total 2.72 2.27
Transfer to General Reserve
Balance profit carried forward to next year 32.96 9.08
Earnings per share (Rs)
Basic 29.29 19.72
Diluted 29.29 19.72


Considering the Company's performance the Board has recommended a dividend of Rs 4/-per share i.e. 40% of the face value of Rs 10/- per share on the Equity Capital for theyear ended 31st March 2022. 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 Rs10/- each for the year ended 31st March 2022. This dividend payment is out of the currentyear profits of the Company and is subject to approval of the members at the ensuing

Annual General Meeting.

The total outflow on account of dividend will be Rs 482.54 Lakhs (Rs 391.74 Lakhs inthe financial year 2020-21) comprising of Rs 119.37 lakhs on Preference Shares (Rs 119.37Lakhs in the financial year 2020-21) and Rs 363.17 Lakhs on Equity Shares (Rs 272.37 Lakhsin the financial year 2020-21).

During the year unclaimed dividend of Rs 126242 pertaining to the year 2014-15 shallbe transferred to the Investor Education & Protection Fund after giving due notice tothe 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 31.03.2022 comprises of Security Premium Reserve of Rs2895.90 Lakhs equity contribution on External Commercial Borrowings and Preference ShareCapital Rs 984.43 Lakhs Special Export Reserve of Rs 79.00 Lakhs General Reserve of Rs7836.64 Lakhs Retained earnings of Rs 3296.00 Lakhs Capital Reserve of 2750.62 LakhsHedge Reserve of Rs 9.44 Lakhs and other comprehensive loss of Rs 288.27 Lakhs aggregatingto

Rs 17563.76 Lakhs.


Details in respect of other loans guarantees and investments covered under theprovisions of Section 186 of the Companies Act 2013 are given in the notes on accountsfor the financial year ended 31st March 2022 and such loans guarantees and investmentsare within limits prescribed under that Section.


During the year rating agency CRISIL has reaffirmed the rating of CRISIL A- andrevised its rating outlook as Stable for Long Term Instruments and reaffirmed CRISIL A2+rating for short term instruments.


During the year your Company received the following awards:

a) Company's Ossein Division and Gelatin Division has won 4 awards in CII SouthernRegion Kaizen competition in medium scale process industry

i. Ossein Division won First Prize for ETP slurry reduction

ii. Gelatin Division won Second Prize for reduction in maintenance cost in Boiler area

iii. Gelatin Division won First prize for improvement in Chitosan production yield

iv. Ossein Division won First prize for shredder system modification in CB crushing

b) Gelatin Division has been adjudged as the "Best Karakuri Kaizen Winner(Platinum Trophy Winner)" in the CII National Technology competition for efficientusage of Solar Energy for Sludge Drying and reducing the drying cost

c) Gelatin Division has won the Gold category award in the CII National OfficeInnovation Competition for paperless office

d) Gelatin Division has won the Silver Category award in CII National Kaizen completionfor Nano filtration Peptide

e) Wellnex Replenwell Collagen Peptides have been selected as Nutra Ingredients –USA's Ingredient of the Year for beauty-from-within applications

f) FIEO's Top performing Exporter Gold Award for Export performance 2018-19

g) SAP India and TV9 Network's Dare2Dream Awards 2021 for Businesstransformation through technology h) Our teams received the following recognitions invarious competitions:

Recognition won Award conferred for Division
Platinum 1st CII Operational Sustainability Competition – Reduce sludge drying cost Gelatin Division
Jury Challenger 41st CII National Kai-Zen Competition – Challengers Trophy – Nanofiltration of peptide Gelatin Division
Star Champion Champions Trophy – CII National Technology Competition – Efficient usage of Solar Energy for Sludge Drying and reducing the drying cost Gelatin Division
Commendation Certificate Kerala State Energy Conservation Awards 2021 - Energy Conservation Initiatives Gelatin Division
Runner Up CSR Awards 2020 – Environment & Greenery Category - CSR initiatives in OD Ossein Division

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 Gelatin Division

(g) FSSAI Certification for manufacturing import/export of Gelatin & CollagenPeptide (h) WHO GMP Certification as per World Health Organisation/Codex for manufactureof Gelatin & Collagen Peptide

(i) Halal (MUI IFANCA & JUM )/Kosher Certification for Gelatin and CollagenPeptide – 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.

(m) Company's Gelatin Division & Ossein Division have passed the recent TPMCertification Assessment-2022 of SIGNIFICANT ACHIEVEMENT


Compliance with relevant regulations and effective management of the related issues isan integral part of the Company's philosophy.

1. 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 Plants on healthand safety issues including emergency preparedness work safety first-aid etc. BothOssein and Gelatin Factories have received the ISO 45001-2018 Certification which is atestimony to the Company's commitment in this area. The following were the majoractivities carried out during the year:-

Plant operations of all units are being done as per Government guidelines strictlyadhering to COVID-19 protocol Surveillance audit of ISO 45001-2018 completed at bothOssein Division and Gelatin Division

Fire license renewed at Ossein and Gelatin Divisions Various training programs wereconducted for improving health awareness among the employees.

A free Counselling and Support Service was started for Nitta family members

Mock drills conducted at Ossein Reva and Gelatin


Safety day celebrations were conducted at Ossein Reva and Gelatin Divisions TPMCertification Assessment-2022 of Significant Achievement by CII has been successfullycompleted by both Ossein and Gelatin Divisions

2. Environment

The Company continuously endeavors to enhance Environmental Management and through allactivities demonstrates its commitment to protecting 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 Boards. The emissions from the boilers and generator stacks areregularly monitored for compliance. Solid waste from operations is collected in a securedmanner and disposed of in authorized locations. Ambient air quality is monitored onregular basis and ensured for its compliance. Our ETP operations have been reinforced withthe introduction of new equipment and technologies. Various energy-saving measures andefficiency improvement activities were taken up during the year that reduced theconsumption of fuels compared to previous years. Action plans have been drawn up to reducethe consumption of water in the coming years. In the case of solid waste reduction theCompany follows a structured action plan. A polymer house-based facility using solarenergy has been developed at the Company's Gelatin Division for drying the sludgeemanating out of the operations leading to lower operating costs and carbon print. With aview to reducing the greenhouse effect the Company is focusing on greenery development atall its locations.

Surveillance Audit of ISO 14001-2015 completed for Gelatin Division Environmental daycelebrations conducted at Ossein Reva and Gelatin Divisions

The implementation of an anaerobic digestor at the Gelatin Division of the Company isin progress and the boiler retrofitting project is in progress to ensure controlled usageof firewood for steam requirements.


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. The CSR Policy can be accessed on theCompany's website The CSR projects undertaken by the Company are inaccordance with Schedule VII of the Companies Act 2013 which is given in Annexure I.The total CSR expenditure incurred by the Company during the year of Rs 18.86 Lakhs wasin compliance with the statutory requirement of 2% of the average profit for the lastthree years. The Annual Report on CSR activities is annexed herewith as Annexure I.


Contributing to sustainable development has always been the core ethos of all theoperations & business decisions of your Company. Also it has become even moreimportant an element of the overall corporate strategy. We have committed ourselves onceagain to take the path of Profitable Sustainable and Socially Responsible Growthkeeping in mind the interests of all our Stakeholders as our central objective. We aim togrow and achieve higher returns and in the process we will ensure an increased positiveimpact on the environment and the society at large. We continuously endeavor to enhanceour performance and optimize efficiency across the environmental social and governanceaspects. Simultaneously we encourage involvement from all Stakeholders and ensure thatour sustainable framework policies are well communicated implemented monitored andreviewed regularly.

We are and will continue to be increasingly focused on sustainable and sociallyresponsible corporate behavior in everything we do. Our approach mainly centers around thefollowing pillars:

- Environmental Sustainability

Focus Area-Reduction in consumption of water solid waste power fuel and plastic.

- People Sustainability

Focus Area- Employees safety health development engagement rewards and recognition.

- Social Sustainability

Focus Area- Corporate Social Responsibility (CSR): education training health womensports agriculture and waste management.

- Economic sustainability

Focus Area: Cost reduction procurement practices and growth initiatives.

Our goal is to set an example for the Gelatin Industry in India in particular andindustry in general for World-class sustainability practices. The raw material sources forGelatin and Collagen Peptide are the by products from the meat and farmed fish processingindustries which are generally considered as well managed natural and renewableresources. Collagen and its derived products are pure natural proteins made from animalraw materials and contain neither preservatives nor other additives. They are thus naturaland healthy food with a clean label that optimally meets consumer needs in terms ofapplication and sustainability. As such Gelatin can be considered as a product with apositive impact on overall sustainability since it is part of the circular economy of theMeat Industry. Sustainable development is an integral part of our business strategy and weensure that it is built into the complete business cycle- product development newmarkets capital projects operational management and ultimately product end-use. Healthand safety social and governance issues are built into all stages of the asset lifecycle which help in serving our customers and all Stakeholders over a longer termwherever they are across the World.


In accordance with the SEBI LODR Regulations the Company's policy on materiality ofSubsidiaries specifying the criteria for determining the Material Subsidiaries isavailable in the Company website As per such criteria the Company'sSubsidiary - Bamni Proteins Limited is a Material Subsidiary as on 01st April 2022.



The annual production during the year in this Subsidiary Company was 2652 MT of Osseinand 6018 MT of Di-Calcium Phosphate as against 2200 MT of Ossein and 5090 MT ofDi-Calcium Phosphate during the previous year.

The operation of this Subsidiary for the year under review has resulted in a pre- taxprofit of Rs 1452.30 Lakhs (Rs 394.22 Lakhs in the previous year) post-tax profitof Rs 1091.69 Lakhs (Rs 307.47 Lakhs in the previous year) and other comprehensiveloss of Rs 11.27 Lakhs (income of Rs 33.35 Lakhs) during the previous financialyear.

In accordance with Section 129(3) of the Companies Act 2013 consolidated financialstatements of the Company and its Subsidiary Company have been prepared which is formingpart of the Annual Report. The statement containing the salient features of the financialstatement of the Subsidiary under first proviso to Sub-Section (3) of Section 129 of theAct in Form AOC I 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 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

Annual accounts of the Subsidiary Company and related detailed information shall bemade available to the Shareholders of the Company and Subsidiary Company seeking suchinformation at any point of time. The annual accounts of the Subsidiary Company shall alsobe made available for inspection by any Shareholder at the Registered Office of theCompany and Subsidiary Company concerned. Hard copy of details of accounts of Subsidiaryshall be furnished to any Shareholder on demand. Further pursuant to Indian AccountingStandard IND AS 110 issued by the Institute of Chartered Accountants of Indiaconsolidated financial statements presented by the Company include the financialinformation of its Subsidiary.


Qualification on the internal audit systems in the Reva Division of the Company asreffered to in the Consolidated Auditor's Report has been properly addressed by theCompany by appointing a reputed Chartered Accountants firm having significant internalaudit exposure which is expected to cover the enhanced reporting requirements asenvisaged.


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. Observations Management Reply
1 It is found that the Audit Committee at their meeting held on 06.05.2021 had made recommendation to the Board to authorise Managing Director (MD) to appoint Internal Auditors for the Reva Division and based on this the Board at their meeting held on 07.05.2021 authorised Managing Director to appoint Internal Auditor for Reva Division. Further the act of appointment of Internal Auditor by the MD is not subsequently ratified by the Board. On analysis the The Board while exercising the power to delegate to the MD the act of appointing Internal Auditor to one particular Division of the Company (Reva Division) did so in exercise of the powers under Section 179(3) of the Act with intend to conform to the decision taken by the delegatee; having regard to the suitability of a person/ entity who could appropriately undertake Internal Audit of the Division distantly located at Bharuch Gujarat.
act of recommendation and subsequent authorisation by the Board are not in accordance with Section 179(3) since the power of appointment of Internal Auditor specified under Section 179(3) (k) has been vested specifically upon the Board and shall exercise those power only at their meeting and cannot be delegated to MD. Hence my advice to the Board is to note/ratify the appointment in the subsequent Board meeting. The Board subsequently had the opportunity to take note of the appointment made by MD in the context of considering as part of the Agenda for meeting the record of the proceedings of the Audit Committee meeting wherein the Internal Audit Report was initially presented.
The Ruling by the Hon'ble Punjab & Haryana High Court in Hindustan Petroleum Corporation Vs Sardar Chand & another held that the resolution when fully authorising the delegatee to act on behalf of the Board the passing of any (subsequent) specific resolution is not contemplated under the Act in each and every case.
The recommendation made by the Audit Committee to the Board regarding delegation need be seen in the light of the fact that Internal Audit and consideration of Report thereon are matters of direct concern to the Audit Committee. To that extent the recommendation by AC to the Board would very well stand scrutiny.
2 There is an inadequate compliance with the Secretarial Standards I Clause 6.4 in as much as the Circular resolution dated 27.04.2021 with respect to the appointment of Mr. V. Ranganathan Independent Director even though the same taken note at the Board meeting dated 07.05.2021 but the assent/ dissent obtained from the Directors has not been mentioned in the said Board Minutes as provided in the said Standards. All the decisions of the Board of Directors are implied as having been unanimously passed unless otherwise expressly provided in the context of dissent to any of the decision(s) taken.
For that reason alone the resolution unanimously passed through circulation to Directors for appointment of Mr. V. Ranganathan as an Additional Director; when subsequently reported to the Board for noting did not contain any specific reference to dissent (as against assent) for that decision.


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.


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 IVto this report.

The Annual Report excluding the details of employees receiving remuneration in excessof the limits prescribed under Section 197 of the Companies Act 2013 read with Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 isbeing sent to the Shareholders of the Company in terms of first proviso to Section 136(1)of the Act 2013. The annexure is available for inspection at the Registered Office of theCompany during business hours and any Shareholder interested in obtaining a copy of thesaid annexure may write to the Company Secretary at the Registered Office of the Company.



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 the 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 its advice/suggestions on the auditpoints. Based on the report of the internal audit as well as the observations of the AuditCommittee the process owners undertake requisite corrective action in their respectiveareas thereby further strengthening the control systems. Action Taken Reports are alsoreviewed by the Audit Committee for each actionable item. The minutes of the AuditCommittee are reviewed by the Board of Directors.

INTERNAL CONTROLS OF FINANCIAL REPORTING The Company has in place adequatefinancial controls commensurate with the size scale and complexity of its operations.During the year such controls were tested by the management and no reportable materialweakness in the design or operations was observed. The Company has policies and proceduresin place for ensuring proper and efficient conduct of its business safeguarding of itsassets prevention and detection of frauds and errors accuracy and completeness of theaccounting records and timely preparation of reliable 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 proceduresand controls are operating effectively and monitoring procedures are in place.


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 the evaluation of risks and the mitigationmeasures taken by the Company in managing such risks to sustain the operations of theCompany for the foreseeable future. Some of the key risk areas identified for mitigationand corrective action include

Crushed Bone availability and pricing patterns impact of the high cost of crushed boneon the cost of production safety and security policies of the Company succession planningfor key executives impact of the National Green Tribunal's Orders significant litigationagainst the Company having material financial impact moves of competitors water scarcityfor operational requirements emergence of alternate substitutes for the products of theCompany adverse forex rate fluctuations risk of losing pricing premium commanded by theCompany due to emergence of alternate Halal certifications sludge reduction Potential lossof fish CPT business in India due to non- availability of raw material within India


During the month of March 2020 World Health Organisation declared COVID -19 to be aglobal Pandemic. The spread of COVID-19 has impacted the normal operations of businessesin many Countries including India. The Country has witnessed several disruptions in normaloperations due to lockdowns imposed by the Government in the form of restrictions tomovement of people transportation and supply chain along with other stringent measures tocontain COVID-19 spread.

The Company has made an assessment of the business situation and has evaluated thepossible impact of the outbreak of COVID-19 on its business. Though the Government hasclassified the Company's operations as part of "essential services" and hasexempted the Company from lockdown restrictions the Company's operations have beenimpacted due to inadequate availability of raw materials and other necessary items. Thoughthe Company faced many challenges the Company could sustain its operations without anysignificant disruptions during the pandemic period. However the impact on futureoperations would to a large extent depend on how the Pandemic develops and the resultantimpact on businesses.


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 records is required as per the above Rules.


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 2022the 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 2022 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.


The Company has formulated a policy on Related Party Transactions which is in line withthe relevant provisions of the Companies Act as well as SEBI (LODR) Regulations. The saidpolicy as approved by the Board is available in the Company website As perthe said policy prior omnibus approval of the Audit Committee is obtained on a quarterlybasis for all the Related Party Transactions which are of a foreseen and repetitivenature. All Related Party Transactions that have taken place actually 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 approved by the members.Particulars of contracts of arrangements with Related Parties referred to in sub section 1of Section 188 read with Rule 8(2) of the (Companies Accounts) Rules 2014 are attached inForm 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 secretarialauditors confirming the compliance is annexed and forms part of the Annual Report.


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 2015 and form partof the Annual Report.


Mr. V. Ranganathan was appointed as an Independent Director on 07.05.2021. Mr. Sajiv K.Menon has completed his tenure as Managing Director on 31.03.2022. Dr. K.Ellangovan IAS ceased to be Nominee Director on 15.02.2022 upon withdrawal of hisnomination by KSIDC consequent to his superannuation from service. Whereafter Mr. A. P. MMohamedhanish IAS was appointed as Nominee Director on 15.02.2022. The Board of Directorshad constituted a Nomination and Remuneration Committee (NRC) with the followingmembers:-1. Mr. E. Nandakumar 2. Mr. Yoichiro Sakuma 3. Mrs. Radha Unni The terms ofreference 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 and compositionof remuneration is reasonable and sufficient to attract retain and motivate personnel asare herein referred at (2) above of the quality required to run the Company successfully;relationship of remuneration to performance is clear and meets appropriate performancebenchmarks; and remuneration to Whole-time Directors Key Managerial Personnel and seniormanagement involves a balance between fixed and incentive pay reflecting short andlong-term performance objectives appropriate to the working of the Company and its goals.

During the financial year the Nomination and Remuneration Committee met on 28.09.2021and 19.02.2022.


Rule 8(5)(iii) of the Companies (Accounts) Rules 2014 prescribes that Report ofDirectors should 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 continued as Chief FinancialOfficer (CFO) and Company Secretary (CS) respectively for the year under review.


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 05.02.2022 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.


The Board of Directors met 4 (Four) times during the financial year 2021-22. 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.


The Audit Committee comprises of Mr. V. Ranganathan as Chairman with Mrs. Radha Unniand Mr. E. Nandakumar as members. More details on the Committee are given in the CorporateGovernance Report.


The Company has established a vigil mechanism for

Directors and employees to report genuine concerns while providing for adequatesafeguards against victimization providing direct access to Chairperson of AuditCommittee the details regarding which have also been given in the Company's officialwebsite.


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 the Act and Rules. Hitherto no complaints werereceived by ICC.


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 whohave access to 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.


M/s. Walker Chandiok & Co. LLP (WCC LLP) Chartered Accountants (Firm RegistrationNo. 001076N/500013) who were appointed as Statutory Auditors of the Company for a 5 yearterm at the Annual General Meeting in the year 2017 was reappointed by the Board ofDirectors at its meeting held on 07.02.2022 on the basis of recommendation of AuditCommittee who shall hold office from the conclusion of the 46th Annual General Meetingtill the conclusion of the 51st Annual General Meeting of the Company to be held for theFinancial Year ended March 31 2027 subject to the approval of the members at the GeneralMeeting. The item regarding the reappointment of Statutory Auditors is put up fortransaction at the forthcoming Annual General Meeting and the Notice for the Meeting makesa reference of the same 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) Company

Repor t 2021-2022

Secretary-in-practice to undertake the Secretarial Audit of the Company. TheSecretarial Audit Report is annexed herewith as Annexure VI.


The Company has a website where the annual return of the Companywill be published complying with the provisions of Section 134 (3) (a) of the CompaniesAct 2013.


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 Kerala State Industrial Development Corporation Ltd. The Board takes thisopportunity to extend their whole hearted gratitude to M/s. Nitta Gelatin Inc. Japan fortheir timely and valuable guidance and inspiration. Your Board places on record itssincere 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
DIN: 02504842