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Source Natural Foods & Herbal Supplements Ltd.

BSE: 531398 Sector: Health care
NSE: N.A. ISIN Code: INE679C01027
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VOLUME 2
52-Week high 90.05
52-Week low 34.55
P/E 41.67
Mkt Cap.(Rs cr) 45
Buy Price 62.35
Buy Qty 11.00
Sell Price 70.00
Sell Qty 7470.00
OPEN 70.00
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VOLUME 2
52-Week high 90.05
52-Week low 34.55
P/E 41.67
Mkt Cap.(Rs cr) 45
Buy Price 62.35
Buy Qty 11.00
Sell Price 70.00
Sell Qty 7470.00

Source Natural Foods & Herbal Supplements Ltd. (SOURCENATURAL) - Director Report

Company director report

To

The Members

Source Natural Foods and Herbal Supplements Limited Bangalore

We are pleased to present the 24th Annual Report of the Company togetherwith Audited Financial Statements and Auditors Report for the Financial year ended 31stMarch 2019.The Financial Highlights for the year under review are given below:

1. FINANCIAL RESULTS:

(Rs. in Lakhs)

Particulars 31.03.2019 31.03.2018
Total revenue 1281.22 1084.74
Profit/ (Loss) before exceptional and extraordinary items and tax 105.57 83.21
Exceptional Items - -
Profit before extraordinary items and tax 105.57 83.21
Extraordinary Items - -
Tax expenses 2.92 3.12
Net Profit/(Loss) carried to Balance Sheet 102.64 80.09
Earnings Per Share (Basic/ Diluted) 4.59 1.24

2. OPERATIONS:

The Total revenue of the Company for the year ended 31st March 2019 was Rs.1281.22 Lakhs which has increased by 17.80% as compared to the total revenue in previousyear of Rs. 1084.74 Lakhs. The increase in revenue is due to the expansion in the sales offlagship products of the Company. The Company has made an additional investment of Rs.3053130/- in the plant & equipment

The total expenses for the year ended 31st March 2019 has increased to Rs.1175.65 lacscompared to Rs. 1001.54 lacs of the previous year ended 31st March 2018 increase by 17.38%. The Company has been marketing its products through its holding Company which has alarger reach in India and abroad and this strategy has helped the Company to cut down themarketing expenses gradually in the year under review.

3. FUTURE OUTLOOK:

The Ayurveda and Herbal Supplement sector has huge potential for growth not only inIndia but all over the world. A recent survey forecast says that India Ayurvedic productmarket will register a CAGR of 16% by 2016-2021. Ayurvedic nutraceuticals and dietarysupplements as well as Ayurvedic cosmetics and skin care products are likely to boost themarket over the next five years. With rising health concerns consumer preference forAyurvedic products in the country is increasing . The Company also has a vision to provideAyurveda and Herbal Supplements to everyone who needs it across the globe. Maintaininghigh standards of quality that contribute truly to the health of an individual and ensurethat the Company builds an excellent reputation as a research based developer andmanufacturer and continues to contribute to wealth creation for shareholders.

Your Company focuses on such new range of products which will bring Ayurveda in to anindividual's daily diet by manufacturing various Ayurvedic and herbal supplementsproducts. During the coming year it is planned to develop and test few products based onresearch being carried out which are likely to be ready for consumers in this year and hasthe potential to be mass consumption item which can give a large impetus to the Company'sgrowth plans.

The Company will continue to contribute its might to the growth of Ayurveda and HerbalSupplements and at the same time enhance shareholders wealth by accelerated performance.

4. RESEARCH AND DEVELOPMENT:

Ayurveda is a system of Medicine with high credentials as a Holistic Healing andwellness Science. It is concerned with the whole and complete system rather than with theanalysis or treatment of parts. It attempts to treat both the Mind and the Body. Researchand Development is a core activity in any Pharma industry and through its scientificvalidation it will help to reinstate the high credentials of Ayurveda System of Medicineas a complete alternative wellness mechanism.

The development for any company requires the perfect Pharmaceutical research &development. Your Company focuses on ongoing R & D which helps it to achieve its coreobjectives so as to bring more herbal and organic products in to the existing/new productportfolio and to add more value to the existing products and develop organic food andnutritional supplements with an optimum mix of naturally available ingredients forattaining a sustainable improvement in the Health of all age Groups.

Over the years the Company has developed a variety of products on the basis of theircontinued and in depth efforts in R & D and it also understands that combining richAyurveda wisdom with modern science will help in providing simple but effective methods ofAyurveda Research and Development activities undertaken by the Company will also enable itto adhere to the benchmarks and standards set by the Government and other StandardInstitutes.

5. DIVIDEND:

Based on the Company's performance the Directors have recommended a final dividend ofRs 1 per equity share for FY 2018-2019.

TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND:

The provisions of Section 125(2) of the Companies Act 2013 do not apply as the Companyhas not declared and paid any dividend in previous years.

6. AMOUNT TRANSFERRED TO RESERVES:

The amount to be carried to Reserves is Rs. 102.64 Lakhs

8. CHANGE IN THE NATURE OF BUSINESS:

There is no change in nature of business of the Company during the year.

9. MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THESE FINANCIAL STATEMENTSRELATE AND THE DATE OF THE REPORT:

No material changes and commitments affecting the financial position of the Companyoccurred between the end of the financial year to which these financial statements relateon the date of this report.

10. SHARE CAPITAL:

The Authorised Share Capital of your Company is Rs. 90000000/- divided into9000000 Equity Shares of Rs. 10/- each. The Paid up Capital is Rs. 64369310/- dividedinto 6436931 Equity Shares of Rs. 10/- each.

During the year under review there is no change in the Share Capital of the Company.

a. Provision of money by company for purchase of its own shares by employees or bytrustees for the benefit of employees:

The Company has not made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees as per Rule 16(4) of Companies(Share capital and Debentures) Rules 2014.

b. Issue of Sweat Equity Shares:

The Company has not issued any sweat equity share during the financial year inaccordance with the provisions of Section 54 of Companies Act 2013 read with Rule 8 ofthe Companies (Share Capital and Debentures) Rules 2014.

c. Issue of Equity Shares With Differential Rights:

The Company has not issued any equity shares with differential voting rights during thefinancial year as per Rule 4(4) of Companies (Share capital and Debentures) Rules 2014.

d. Issue of Employee Stock Option:

The Company has not issued any employee stock option during the financial year as perRule 12 of Companies (Share Capital and Debentures) Rules 2014.

11. DIRECTORS:

Pursuant to the provisions of Section 152 of the Companies Act 2013 and the Articlesof Association of the Company Shri Narayanan Narasimhan retires by rotation at theconclusion of the ensuing Annual General Meeting and being eligible offers himself forre-appointment.

As per Section 149 and the recommendation of the Nomination and Remuneration CommitteeMrs. Srinivas Gowra and Mr Sriram Chandrasekaran are proposed to be re-appointed asIndependent Directors for a further period of Five years without any remuneration. TheBoard recommends approval of the enabling resolutions in the ensuing Annual GeneralMeeting.

The profiles of Directors retiring by rotation and of those proposed to be appointedare given elsewhere in the Annual Report.

12. NUMBER OF MEETINGS OF THE BOARD:

During the year 2018-19 the Board met 5 (Five) times on the following dates viz. May7 2018 June 26th 2018 August 02nd 2018 November 14th2018 and February 06 2019. The maximum gap between any two successive meetings was lessthan 120 days.

13. NUMBER OF MEETINGS OF THE AUDIT COMMITTEE

During the year 4 meetings of the Committee were held on May 7th 2018August 02nd 2018 November 14th 2018 and February 06th2019

The following are the details of the Directors their attendance at the Audit CommitteeMeeting held during the year 2018-19.

Name Designation Attendance
Mr. Srinivas Gowra Chairman 4
Mr. Sriram Chandrasekaran Member 4
Mr. Chandrakant L. Rathi Member 2

14. NUMBER OF MEETINGS OF THE STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee is constituted pursuant to the provisions ofthe Companies Act 2013.

During the year one meeting of the Committee was held on 06th February 2019.

The following are the details of the Directors their attendance at the StakeholdersRelationship Committee Meeting held during the year 2018-19.

Name Designation Attendance
Mr. Sriram Chandrasekaran Chairman 1
Mr. Srinivas Gowra Member 1
Mr. Arvind Varchaswi N. Member 1

15. NUMBER OF MEETINGS OF THE STAKEHOLDERS RELATIONSHIP COMMITTEE

The Nomination and Remuneration Committee is constituted pursuant to the provisions ofthe Companies Act 2013.

During the year one meeting of the Committee was held on 02th August 2018

The following are the details of the Directors their attendance at the Nomination andRemuneration Committee Meeting held during the year 2018-19.

Name Designation Attendance
Mrs. Bharthy Chairman 1
Mr. Srinivas Gowra Member 1
Mr. Sriram Chandrasekaran Member 1

16. KEY MANAGERIAL PERSONNEL:

In compliance with Section 203 of the Companies Act 2013 the following are the Keymanagerial Personnel of the Company:

Mr. Arvind Varchaswi N. - Managing Director
Mr. Tejagna K. Katpitia - Whole-time Director
Mr. Seshadri Ramaswamy - Chief Financial Officer
Mrs. Sweta Gaur - Company Secretary

17. DECLARATION OF INDEPENDENT DIRECTORS:

In accordance with Section 149(7) of the Companies Act 2013 the Independent Directorsof your Company have given a Declaration that they meet the criteria of Independence asprovided in sub section (6)of Section 149 of the Act. There has been no change in termsand conditions of appointment of Independent Directors.The Policy relating to appointmentof Independent Directorsis available on the website of the Company: http://www.source-natural.com.

18. POLICY ON DIRECTORS APPOINTMENT ANNUAL PERFOMANCE EVALUATION OF THE BOARD ANDPOLICY ON REMUNERATION:

Pursuant to the requirement under Section 134(3)(e) and Section 178(3) of the CompaniesAct 2013 the policy on appointment of Board members including criteria for determiningqualification positive attributes independence of a director and the policy onremuneration of Directors KMP and other employees is available on the website of theCompany: http://www.source-natural.com.

In a separate meeting of Independent directors performance of non-independentdirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive directors and non-executivedirectors. The same was discussed in the Board meeting that followed at which theperformance of the Board its Committees and individual directors were discussed.

19. PARTICULARS OF REMUNERATION TO DIRECTORS/KMP/EMPLOYEES:

There were no employees during the year 2018-19 covered under the provisions of Section197 of the Companies Act 2013.

The details of Remuneration paid to the Directors Key Managerial Personnel andEmployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenin Form MGT-9 which is posted on website of the companyhttp://www.source-natural.com/announcements-other.php

20. DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions under Section 134(5) of the Companies Act 2013 withrespect to Directors' Responsibility Statement the Directors confirm:

a. That in the preparation of the Annual Accounts the applicable Accounting Standardshave been followed and no material departures have been made from the same;

b. That they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year on 31stMarch 2019 and of the profit and loss of the Company for that period;

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 have prepared the annual accounts on a going concern basis;

e. That they have laid down internal financial controls to be followed by the Companyand that such internal financial controls are adequate and were operating effectively; and

f. That they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.

21. AUDITORS:

In accordance with Section 139 of the Companies Act 2013 and rules there under M/s.Srinaga & Giridharan Chartered Accountants Bangalore were appointed as the StatutoryAuditors of the Company at 21st Annual General Meeting for a period of 5 years.

The Audit Report for the financial year 2018-19 as certified by the Statutory Auditorsof the Company does not contain any qualification reservation or adverse remarks andtherefore does not require any explanations from the Directors.

22. SECRETARIAL AUDIT REPORT:

The Board appointed Mr. Ajay Suman Shrivastava Practicing Company Secretary to carryout Secretarial Audit for the financial year 2018-19 under the provisions of Section 204of the Companies Act 2013. The Secretarial Audit Report is annexed to this report asAnnexure-1. There are no qualifications made by the Auditor in the report. The Auditor hasremarked about excess of Related Party Transaction over the approved limit under Section188 which are with the Holding Company at Arms Length basis. Annexure 2 is annexed ascertificate of Non Qualification of Directorss

23. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report prepared in accordance with Schedule Vof the SEBI Listing Regulations are annexed to this report as Annexure-3.

24. DETAILS OF SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS ORTRIBUNAL:

During the year under review there have been no significant and material orders passedby any regulators or courts or tribunal.

25. RISK MANAGEMENT:

The Company has comprehensive risk assessment and minimization procedure which arereviewed by the Board and the Audit Committee of the Company. The Company identifies risksand control systems to mitigate them are in place. In the opinion of the Board at presentthere are no risks which may threaten the existence of the Company

26. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS:

The Company has in place adequate internal financial controls which are commensurateand adequate with the size and scale of operations of the Company. During the year underreview such controls were tested and no reportable material weakness in the design oroperation were observed.The reports on Internal Audit given by M/s Krishna & SureshChartered Accounts the Internal Auditors are placed before the Audit Committee and theBoard periodically for review.

27. ESTABLISHMENT OF VIGIL MECHANISM:

The Company has adopted a Whistle Blower Policy and has established the necessary vigilmechanism as defined under Regulation 22 of SEBI Listing Regulations for directors andemployees to report concerns about unethical behaviour. Adequate safeguards agaisntvictimization of employees and Directors who express their concerns forms part of themechanism. The Company has also provided direct access to the Chairman of the AuditCommittee on reporting issues concerning the interests of the employees and the Company.The said policy has been also put up on the website of the Company -www.source-natural.com.

28. THE SEXUAL HARASSMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL)ACT 2013:

The Company has place an Anti-Sexual Harassment policy in line with the requirement ofthe Sexual harassment of Woman at Workplace (Prevention prohibition and redressal) Act2013. There have been NIL complaints of such nature during the period under review.

29. CORPORATE SOCIAL RESPONSIBILITY (CSR):

As your Company's net worth does not exceed Rs. 500 Crores (or) Company's turnover doesnot exceed Rs. 1000Crores or company's net profit does not exceed Rs. 5 Crores for thefinancial year the provisions under Section 135 of the Act read with rules made thereunder are not applicable. Hence the compliance to the initiative of Corporate SocialResponsibility is not required.

However as a good Corporate Citizen the Company aims to provide sustainable value tothe society in which it operates. Moreover your Company is focused to bring Ayurveda intoevery individual's daily diet by manufacturing various Ayurvedic and herbal products thuselevating the healthcare standards in the country as a whole.

30. 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 theCompany. The Code requires pre-clearance for dealing in the Company's shares and prohibitsthe purchase or sale of Company shares by the Directors and the designated employees whilein possession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code. All Directors and the designated employees have confirmedcompliance with the Code. The same has been displayed at the company's website at www.sourcenatural. com

31. LISTING:

The shares of your Company are listed at BSE Limited and traded actively during theyear. Your Company has duly complied with all the applicable provisions of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 during the year underreview.

32. General Shareholder Information 1) 24th Annual General Meeting

Date and Time 21st September 201911:00 AM
Venue
Hotel Pai Comforts #1319 100 Feet Road
J. P. Nagar II Phase Bangalore - 560 078.

2) Financial Calendar (2019-20) (Tentative)

The Financial year of the company is from 1st April of the year to 31st March of thenext year.

For the year ending 31st March 2020 quarterly Un-audited / Annual Audited resultsshall be announced as follows:

Financial reporting for Proposed Date
Unaudited Results for the Quarter ending: 30th June 2019 On or before 14th August 2019
Unaudited Results for the Quarter ending: 30th September 2019 On or before 14th November 2019
Unaudited Results for the Quarter ending: 31st December 2019 On or before 14th February 2019
Audited Results for the year ended 31st March2020 On or before 30th May 2020
3) Book Closure Date 16thSeptember 2019 to 21st September2019 (Both days inclusive)
4) Registered Office No: 201 Sumeru Towers 2nd Floor #54/46 39th A Cross 11th Main Road Jayanagar 4thT Block Bangalore - 500 041
5) Listing of Equity Shares: BSE Limited Mumbai (BSE)
6) Listing Fees Listing fee has been paid to BSE Limited till the year 2018-19
7) Stock Code 531398
8) ISIN No. INE679C01027
9) CIN Number L24231KA1995PLC101742

33 Plant Location:

Plot No: 22 & 23 SVCIE Bachupally Quthbullapur Mandal Hyderabad - 500 090.

34. DISCLOSURES:

a. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo:

Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule8(3) of the Companies (Accounts) Rules 2014 the details of conservation of energy andtechnology absorption and Foreign exchange earnings and outgo are attached as Annexure-3.

b. Subsidiary Holding Associate Companies:

There are no subsidiaries to your Company as on the date of report. In terms of theshareholding the Company is a subsidiary of Sriveda Sattva Private Limited.

c. Particulars of Loans Guarantees or Investments made under Section 186 of theCompanies Act 2013:

There were no loans guarantees or investments made by the Company under Section 186 ofthe Companies Act 2013 during the year under review and hence the details required to befurnished herein are NIL.

d. Particulars of Contracts or Arrangements made with Related Parties:

All the related party transactions are entered on arm's length basis and in theordinary course of business in compliance with the applicable provisions of the CompaniesAct 2013 and the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015.

The details of the transactions with related parties are provided in the Notes to thefinancial statements.

f. Fixed Deposits:

Your Company has not accepted any Fixed Deposits from the Public within the meaning ofSection 73 to 76 of the Companies Act 2013 during the year under review. The details forthe same are filed with the concerned authorities

35. ACKNOWLEDGEMENTS:

Your Directors take this opportunity to express their gratitude for the assistance andcooperation extended by Government Authorities Bankers and other business associatesalong with our estimated Shareholders. Your Directors also acknowledge the supportextended by the Company's employees for their dedicated services.

Place: Bangalore For and On Behalf of the Board
Date: 05.08.2019 (Arvind Varchaswi N.) (Tejagna K Katpitia)
Managing Director Executive Director
DIN:00143713 DIN:00445283