Your Directors have pleasure in presenting the Forty Third Annual Report and auditedfinancial statements for the financial year ended 31st March 2019.
|FINANCIAL RESULTS || || |
| ||(Rs. in Crores) |
|Description ||2018-19 ||2017-18 |
|Revenue from Operations (Net) ||3043.14 ||2686.21 |
|Operating Expenditure ||2734.72 ||2300.07 |
|Depreciation ||29.35 ||28.13 |
|Operating Profit ||279.06 ||358.01 |
|Finance Costs ||31.55 ||49.88 |
|Other Income ||29.01 ||28.82 |
|Profit Before Tax ||276.52 ||336.96 |
|Provision for Tax ||99.61 ||117.28 |
|Tax adjustment in respect of earlier years ||2.78 ||19.96 |
|Profit for the year ||174.14 ||199.71 |
|Amount available for appropriation ||481.92 ||368.76 |
|Appropriations : || || |
|Transfer to General Reserve ||50.00 ||50.00 |
|Dividend ||11.27 ||8.45 |
|Dividend Distribution Tax ||2.32 ||1.72 |
|Net Surplus in the Statement of Profit and Loss ||418.33 ||308.59 |
The sales turnover of the Company for the year ended 31st March 2019 was atRs. 3043.14 Crores as compared to Rs. Rs. 2686.21 Crores in the previous year registering a growth of 13.29%. Profit before tax was Rs. 276.52 Crores as compared to Rs.336.96 Crores in the previous year a decline of 17.94%.
During the financial year under review the poultry and poultry products segment'sperformance was affected due to steep increase in the prices of maize the majoringredient of poultry feed. The financial performance of animal health products segmentwas slightly lower. The oilseed segment's performance was lower as compared to theprevious year.
Your Directors recommend a dividend of Rs. 8.00 per equity share (80%) for the yearended 31st March 2019 same as in the previous year. The dividend ifapproved at the ensuing Annual General Meeting will absorb Rs. 11.27 Crores plus taxes.
The Company's dividend distribution policy is available on page no. 135 of this report.
Operational performance of each business segment has been comprehensively covered inthe Management Discussion and Analysis Report given in Annexure-A which forms part of thisReport.
CORPORATE GOVERNANCE REPORT
As per the requirements of Regulation 34(3) read with Clause C of Schedule V of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a separate reporton Corporate Governance along with the certificate issued by Company Secretary inWhole-Time Practice thereupon is given in Annexure-B which forms part of this Report.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92 of the Companies Act 2013 extract of theAnnual Return in Form MGT-9 is available on the website of the Company www.venkys.com
MEETINGS OF BOARD
During the year 2018-19 6 (Six) meetings of the Board of Directors were held on thefollowing dates:
1) 3rd May 2018 2) 9th August 2018 3) 5thNovember 2018 4) 6th December 2018 5) 6th February 2019 6) 29thMarch 2019.
DIRECTORS' RESPONSIBILITY STATEMENT
The Directors declare that :
1. the accounts for the year ended 31st March 2019 have been prepared byfollowing applicable accounting standards;
2. the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year ended 31stMarch 2019 and of the profit of the Company for that year;
3. proper care has been taken for the maintenance of adequate records for safeguardingthe assets of the Company and for preventing and detecting frauds and otherirregularities;
4. the accounts for the year ended 31st March 2019 have been prepared on agoing concern basis;
5. internal financial controls to be followed by the company are laid down and thatsuch internal financial controls are adequate and are operating effectively; and
6. proper systems are devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
BOARD OF DIRECTORS AND THEIR COMMITTEES
a. Changes in the Composition of Board of Directors.
As per the provisions of Companies Act 2013 and Articles of Association of theCompany Mr. B. Venkatesh Rao Director is due for retirement by rotation at the ensuingAnnual General Meeting and being eligible offers himself for reappointment.
The Board of Directors in their meeting held on 6th December 2018 appointedMs. Uttara J. Desai as Additional Director and as per the Articles of Association sheholds office upto the date of the ensuing Annual General Meeting and being eligibleoffers herself for appointment as Non Executive Non Independent Director.
Further as per provisions of the Companies Act 2013 Lt. Col. Ashok Mahajan (Retd.)Col. Surinder Kumar (Retd.) Brig. Rajeshwar Singh Rathore (Retd.) and Brig. Amrit Kapur(Retd.) Independent Directors of the Company were appointed in the 38th AGM ofthe Company to hold office for a period of 5 years. Their appointment is due for renewalfor a further period of 5 years in terms of provisions of Companies Act 2013.
A brief profile of the above Directors is given in the Corporate Governance Reportannexed to this report.
Apart from the above there is no change in the Board of Directors of the Company.
b. Declaration from Independent Directors:
Pursuant to Section 149(7) of the Companies Act 2013 the Company has receiveddeclarations from all the Independent Directors confirming that they meet the criteria ofindependence as stipulated under sub section 6 of Section 149 of the Companies Act 2013and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and that they have complied with the Code for Independent Directorsprescribed in Schedule IV of the Companies Act 2013.
c. Policy relating to the remuneration for directors key management personnel &other employees.
The Company's policy on directors' appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a director and othermatters provided in sub section 3 of Section 178 of Companies Act 2013 is available onthe website of the Company at http://www.venkys.Com/ Policy_on_Remuneration_of_DirectorKMP_etc.pdf
d. Annual evaluation by the Board of its own performance and that of its Committees.
The board annually performs the evaluation of its own performance the Committees ofthe Board and that of individual Directors. While carrying out such evaluation variousaspects relating to the Board functioning such as adequacy of composition level ofdiversity of the Board execution of specific duties governance etc. are considered. Thesame mechanism is applied while evaluating the performance of the Committees of the Boardand additionally the fulfillment of duties and scope as stipulated by the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 isconsidered.
The performance evaluation of individual directors is carried considering factors likeexecution of specific assignments effective contribution to the Board discussions anddecisions independence of judgment and steps taken towards proper governance of businessand safeguarding interest of stakeholders.
e. Familiarisation Programme of Independent Directors
The Company at selected intervals takes steps to familiarise its independent directorsabout their roles rights and responsibilities. The details of such programme is availableon the website of the Company at http://www.venkys.com/Familiarisation_Programme_for_ID.pdf
f. Audit Committee
The Company has already formed Audit Committee as per as Section 177 of the CompaniesAct 2013. Details of such committee is given in the Corporate Governance Report which isannexed and forms part of this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review the Company has not given any loans guarantees or madeinvestments which fall under the purview of Section 186 of the Companies Act 2013.
The Company has in place a risk management plan devised by the Board and focuses onthree key elements i.e. Risk Assessment Risk Management and Risk Monitoring. The Boardtherefore identifies elements of risk focus on mitigating the risk as per the plan andmonitor the same post execution. In terms of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Company has formed a Risk Management Committee tomonitor and review the Risk Management Plan of the Company. The Risk Management Committeecomprises of two members Col. (Retd). Surinder Kumar-Chairman and Mr. J. K. Handamember.
CORPORATE SOCIAL RESPONSIBILITY
VH Group and in particular Venky's (India) Limited has been historically counductingCSR activities concentrated on educational and medical services for the upliftment of thesociety. Your company has pursuant to Section 135 of the Companies Act 2013 formed a CSRCommittee. The Annual Report on CSR for the F.Y. 2018-19 is appended as Annexure C to thisreport. The policy on CSR is available on the website of the company at http://www.venkys.com/CSR_Policy.pdf.
The Company has a practice of doing CSR activities and in the previous years have spentmore than what was required as per provisions of Companies Act 2013. For the year2018-19 the Company was required to spend an amount of Rs.3.90 Crores on such activitieswhich are considered as CSR in terms of provisions of Companies Act 2013. However theactual spending on such activities was Rs. 2.54 Crores. The Company has also made certainother donations which do not fall under the criteria of CSR expenses as per the provisionsof Companies Act 2013. The Company and its CSR Committee are now in the process offinding and re-aligning the avenues in which the additional donations / CSR expenditure isto be done so as to avoid such shortfall in considering CSR expenditure in the future.
INTERNAL FINANCIAL CONTROLS
The internal control system is designed to ensure that all the financial and otherrecords are reliable for preparing financial statements and for maintaining accountabilityof the assets. The Company has a proper and adequate system of internal controls.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has established a Vigil Mechanism as per the provisions of the CompaniesAct 2013 for the Directors and employees to report genuine concerns. The Audit Committeeis in-charge of this function. The details of vigil mechanism are available on the websiteof the Company at http://www.venkys.com/VIGIL_MECHAHISM.pdf.
During the year under review the Company has neither accepted any deposits underChapter V of the Companies Act 2013 nor did any such deposits remain unpaid or unclaimed.
CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Pursuant to the provisions of Section 134 of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules 2014 contracts or arrangements entered into by theCompany with Related Parties have been done at arm's length and are in the ordinary courseof business. Hence no particulars are being provided in Form AOC - 2. Related Partydisclosures as per IND AS 24 have been provided in Note no. 13 to the FinancialStatements.
The accounts read with the notes thereon are self-explanatory and hence do not call forany further comments.
The assets of the Company which include buildings sheds machinery stocks etc. areadequately insured.
PERSONNEL AND HUMAN RESOURCES
Employee relations continued to be cordial throughout the year. The relevantinformation and the details of employees whose remuneration are required to be disclosedin terms of the provisions of Section 197 of the Companies Act 2013 read with Rule 5 ofthe Companies (Appointment & Remuneration of Managerial Personnel) Rules 2014appended to this Report as Annexure D.
M/s. B D Jokhakar & Co. Chartered Accountants were appointed as Statutory Auditorsof the Company in 41st Annual General Meeting of the Company continue to be theauditors of the Company. Further the Auditors have not reported any Fraud under Section143 (12) of the Companies Act 2013 for the year ended 31.03.2019.
Pursuant to Section 204 of the Companies Act 2013 and allied rules thereof the Boardof Directors has re-appointed Mr. P. L. Shettigar Practicing Company Secretary asSecretarial Auditor for conducting the audit for the financial year 2018-19. TheSecretarial Audit report for financial year ended 2018-19 issued by Mr. Shettigar isappended as Annexure E and forms part of this report. The Secretarial Auditor has reportedthat as per Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 i.e. the Company is required to appoint one more Independent Director onits Board. After appointment of one more non independent Director on the Board in December2018 an Independent Director was required to be appointed by the Company. The Company isin process of identifying a suitable person who can be appointed as Independent Director.
Pursuant to Section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 the Company has appointed M/s. Joshi Apte & AssociatesPune as Cost Auditors of the Company for conducting cost audit for the financial year2019-20. Further as per sub section (3) of Section 148 of the Companies Act 2013 theremuneration decided between the Board of Directors and Cost Auditor is put before themembers for their ratification in the ensuing Annual General Meeting. The Cost Audit forthe financial year ended 31st March 2019 is under process and the Company willsubmit the Cost Auditors' Report to the Central Government in time.
BUSINESS RESPONSIBILITY REPORT
Based on the market capitalization as on 31st March 2019 your Companycontinues to be in the Top 500 Listed Companies in India. Hence pursuant to Regulation 34of the SEBI (Listing Obligations and Disclosure Requirements) 2015 the BusinessResponsibility Report describing the initiatives taken by the Company forms part of theAnnual Report.
INTERNAL COMPLAINTS COMMITTEE
The Company has in place an Internal Complaints Committee which are constituted interms of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. In the year 2018-19 there were no complaints received by thiscommittee.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As per the provisions of Companies Act 2013 in the year 2018-19 the Company hastransferred unclaimed dividend pertaining to financial year 2010-11 amounting toRs.1198815/- to the IEPF. The details of dividend to be transferred to IEPF in this yearand subsequent years are provided in the Corporate Governance Report which is annexed tothis report.
Further in the year 2018-19 200883 shares of such shareholders whose dividendremained unclaimed for past seven consecutive years were transferred to IEPF. The detailsof shares proposed to be transferred to IEPF in the current year are available on thewebsite of the Company www.venkys.com.
The Company has complied with all the applicable and effective Secretarial Standardsissued by the Institute of Company Secretaries of India from time to time.
INFORMATION UNDER SECTION 134 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES 2014.
A. Conservation of Energy
The operations of the Company are not very power intensive. Nevertheless the Companycontinues its efforts to conserve energy wherever practicable by economizing on the useof power at the farms hatchery and offices. The Company has installed state-of-the-arthatchers and setters at its hatcheries.
B. Technology Absorption
1. Research and Development (R & D)
a) Specific areas: R & D activities of the Company are concentrated in the areas ofdeveloping wider application of Specific Pathogen Free (SPF) eggs and application ofvarious breeder management techniques to improve productivity and increase feedefficiency.
b) Benefits derived: Wider acceptance of SPF eggs in the manufacture of human andlivestock vaccines in India and higher production and increased feed efficiency ofbreeders.
c) Plan of action: Further promotion of SPF eggs applications in the biologicalindustry.
d) Expenditure on R & D: The expenditure incurred by the Company during the year onResearch and Development was Rs. 220.48 Lakhs.
2. Technology Absorption Adaptation and Innovation
a) Efforts made : The Company maintains continuous interaction with Charles RiverLaboratories Inc. (formerly SPAFAS Inc.) U.S.A. for absorption of technology.
b) Benefits :
i. Development of new application
ii. Savings in foreign exchange through import substitution.
c) Technology Imported : SPF egg production and Reagent production technologies wereimported from Charles River Laboratories Inc. The benefit of the ongoing research by themin the said technologies is being derived by the Company through continued associationwith them.
C. Foreign Exchange Earnings and Outgo
1. Efforts have been made to increase exports of hatching eggs and SPF eggs.
2. Earnings and outgo:
a. Foreign exchange earnings (FOB): Rs. 2002.28 Lakhs
b. Foreign exchange outgo: Rs. 7250.28 lakhs
The Directors place on record their appreciation for the excellent services of theemployees at all the levels. The Company also expresses its thanks to its shareholdersbankers Central and State Governments and district level authorities Stock Exchangesdealers and customers of the Company for their valued support.
| ||For and on behalf of the Board of Directors |
|Pune ||Anuradha J. Desai |
|May 10 2019 ||Chairperson |