The Directors have pleasure in presenting the 30th Annual Report togetherwith the audited financial statements for the year ended 31st March 2017.
|Financial Highlights || ||(Rs. in Cr.) |
| ||FY17 ||FY16 |
|Particulars ||(Merged) ||(Merged) |
|Total Revenue ||323.42 ||301.68 |
|Total Expenses ||305.51 ||295.86 |
|Profit before Exceptional Items and Tax ||17.92 ||5.82 |
|Exceptional Items ||- ||3.23 |
|Profit Before Tax (PBT) ||17.92 ||2.59 |
|Income Tax ||6.34 ||0.43 |
|Profit After Tax (PAT) ||11.57 ||2.16 |
|Other Comprehensive Income ||(0.22) ||(0.38) |
|Total Comprehensive Income ||11.35 ||1.78 |
|Basic EPS (in Rs.) ||3.00 ||0.56 |
|Diluted EPS (in Rs.) ||2.79 ||0.53 |
The Financial Statements for the year ended March 31 2017 have been prepared under IndAS (Indian Accounting Standards) for the first time by the Company. To ensure comparativefigures the financial statements for the year ended March 31 2016 have been restated inaccordance with Ind AS.
Further the Board at the meeting held on 30th May 2017 approved theAudited Financial Statements for the year ended 31st March 2017. Subsequentlyupon receipt of the Order sanctioning the Scheme of Amalgamation of Pinnae Feeds Limited(PFL) with the Company from the National Company Law Tribunal (NCLT) Hyderabad on 22nd3November 2017 the same was filed with the Registrar of Companies on 27thNovember 2017 making the Order effective from that date. Hence to give effect to theamalgamation in the books of the Company and to present the audited merged accounts forapproval of the Shareholders the Board at the meeting held on 29th3November2017 approved the merged Audited Financial Statements for the year ended 31stMarch 2017. Since the appointed date of the Scheme is 1st3August 2015 theprevious year's figures have also been restated to give effect to the amalgamation.
For details refer Notes to Accounts forming part of this Annual Report.
Performance Overview & Strategic Initiatives
The Company reported revenues of Rs. 323.42 Crores in FY17 compared to Rs. 301.68Crores last year registering a growth of 7%. Total expenditure for the year stood at Rs.305.51 Crores higher by 3% when compared with last year. During the year the Companyprovided Rs. 6.34 Crores for taxation as against Rs. 0.43 Crores in the same period lastyear. The Company began FY17 strongly. However the gains were not carried through in thesecond and third quarters due to impact of drought disease and demonetization instronghold markets. Profitability in shrimp feed business was also impacted by the rise inprices of key raw material which were not fully passed on. In the shrimp processingbusiness scarce availability of shrimps due to prevalence of diseases pushed up farmgateprices compressing profitability. During FY17 the Company made an export of about 407Tons processed shrimps which has gone up by 200 Tons when compared to the previous year.Export orders were undertaken for major shrimp consuming regions of US3and Europe.Further the Company incurred certain one-time costs during FY17 for restarting theprocessing business from the disruption caused due to last year's floods. The combinationof the above factors has impacted profitability for the year.
The Company has taken some exciting initiatives during the year to open new growthavenues. The Company launched the farmcare range of products under the brand nameBaylife'. The response for the products have been encouraging though major revenuesfrom this vertical will start flowing from FY18. Further the frozen sea food productsunder the brand Prize Catch' was launched in Q3 of FY17. The Company offersprocessed shrimp and pasteurized crab meat in the first phase to institutional clients(Hotel Chains Restaurants and Institutions) in Chennai market and there has been goodresponse. The Company intends to progressively extend the launch of Prize Catch'products in other Cities and also expand the basket of products available under itsumbrella.
Construction of Phase I of Hatchery with a capacity of 250 million seeds is nearingcompletion. Commissioning of the Hatchery project was hampered due to various reasonsbeyond the control of the Company. The Hatchery is now expected to go live to meet thefarming season of FY18.
Material Developments during the year under review that occurred between end of thefinancial year and date of this report - Scheme of Amalgamation of PFL with the Company
The Scheme of Amalgamation of PFL with the Company which was initiated in FY16 reachedthe final stages during FY17. The meeting of shareholders and the secured creditors of theCompany was convened on 8th June 2016 as directed by the High Court ofJudicature at Hyderabad and the scheme was duly approved by the requisite majority.Further the Court ordered convening the meeting of Unsecured Creditors of PFL on 24thAugust 2016 and there too the scheme was approved by requisite majority.
During FY17 the Company also obtained the approval of public shareholders (i.e.shareholders other than Promoter/ Promoter Group) through Postal Ballot/ e-Voting for theScheme as it involves issuance of shares by the Company to Karam Chand Thapar & Bros.(Coal Sales) Limited (KCT) (or its successor) which is an entity forming part of thePromoter/ Promoter Group.
Based on the above approvals the petition by both the Companies were filed before theHigh Court of Judicature at Hyderabad. However in the interim the Ministry of CorporateAffairs notified the Companies (Transfer of Pending Proceedings) Rules 2016 pursuant towhich the pending petitions were transferred to NCLT Hyderabad. NCLT Hyderabad soughtcertain clarifications on the Scheme which were provided and subsequently the matterswere reserved for Orders on 28th August 2017. Taking into consideration thisscenario the Board decided to apply for extension of time to hold the thirtieth AnnualGeneral Meeting to the Registrar of Companies so that the merged accounts can be presentedfor approval of shareholders. The Registrar of Companies granted an extension of threemonths i.e. till 31st December 2017 to hold the thirtieth Annual GeneralMeeting. Since the Order sanctioning the Scheme dated 14th November 2017 cameinto effect on 27th November 2017 the Company proposes to hold the thirtiethAnnual General Meeting on 30th December 2017 to approve the audited mergedaccounts.
Dividend and Appropriations
Based on the Company's financial performance and considering the profitability and cashflow the Board had recommended a final dividend of Rs. 1/- per equity share for FY17 atthe meeting held on 30th May 2017. This dividend was declared considering thepaid-up equity share capital of 38603250 shares of Rs. 10/- each. However subsequentto the Scheme of Amalgamation becoming effective on 27th November 2017 andalso since the dividend entitlement shall accrue to the shareholders as on the record datefixed for payment of dividend which is 23rd December 2017 the shares that areto be allotted to the Shareholder of PFL (Transferee) as consideration for theamalgamation amounting to 2823529 equity shares of Rs. 10/- each shall also beentitled to receive the dividend of Rs. 1/- each if allotted within the record date of 23rdDecember 2017.
The Dividend is payable on obtaining the Shareholders' approval in the ensuingthirtieth Annual General Meeting of the company.
Allotment of shares and changes in Capital Structure
Increase in authorised share capital The Authorised Share Capital of theCompany has increased from Rs. 50 Crores comprising of 45000000 equity shares of Rs.10/- each and 500000 preference shares of Rs. 100/- each to Rs. 65 Crores comprising of60000000 equity shares of Rs. 10/- each and 500000 preference shares of Rs. 100/-each by virtue of the Order on Scheme of Amalgamation passed by NCLT Hyderabad.
Increase in paid-up share capital Pursuant to the Order on Scheme ofAmalgamation passed by NCLT Hyderabad 4 (four) equity shares of Rs. 10/- each of theCompany shall have to be allotted for every 17 (seventeen) equity shares of Rs. 10/- eachheld by the Shareholder of PFL the Transferor Company. Consequently the paid-up sharecapital of the Company shall increase from 38603250 equity shares of Rs. 10/- each to41426779 equity shares of Rs. 10/- each upon allotment of the said shares.
Restructuring of Promoter Holdings
During FY17 the Promoter group entities of the Company restructured their holdings inthe Company. This restructuring and consolidation envisages the creation of a Trust whichwill ultimately hold all the shares of the Company currently held by the Promoter andPromoter Group which shall be subject to receipt of requisite approvals from Securitiesand Exchange Board of India.
As a part of this four entities forming part of the promoter group of the Companynamely The Punjab Business & Supply Company Private Limited The Doaba Industrial& Trading Company Private Limited Karam Chand Thapar and Bros (Jammu & Kashmir)Private Limited and Indian City Properties Limited transferred their holding of 612470equity shares amounting to 1.59% of the pre-merger equity share capital inter-se to KCT.Thereafter the shares held by KCT amounting to 21934545 shares (i.e. 56.82% of thepre-merged equity share capital) was transferred on 24th March 2017 to NavSrijit Shakti Telangana Private Limited (which is controlled by the same set of Promotersas KCT). Hence the Company which was a subsidiary of KCT became the subsidiary of NavSrijit Shakti Telengana Private Limited with effect from 24th March 2017.
The overall shareholding of the promoters and promoter group in the Company remainsunaffected due to the restructuring and is at 23551081 equity shares amounting to61.01% of the equity share capital.
Directors and Key Managerial Personnel
During FY17 there was no change in the Directors. Mr. S.Giridhari Chief FinancialOfficer of the Company attained Superannuation and Mr. R. Sureshkumar was appointed as theChief Financial Officer of the Company with effect from 1st December 2016 inthe Board meeting held on 25th November 2016.
Board Evaluation and Familiarization
The Company's Board has established a formal annual evaluation framework for measuringthe performance of itself the individual Directors and the Board level Committees. Theevaluation framework envisages a three stage evaluation process wherein the IndependentDirectors Nomination and Remuneration Committee and the Board are involved. During FY17the annual evaluation process was kick started at the meeting of Independent Directorsheld on 9th February 2017. Thereafter the Nomination and RemunerationCommittee and the Board completed the annual evaluation process at their respectivemeetings held on 30th May 2017.
The evaluation criteria for the Directors include parameters such as Strategic andfunctional contribution ethics values etc. Similarly for the Board as a wholeparameters such as Strategic decision making Risk Management Governance etc wereconsidered. The Committees of the Board were evaluated on the basis of their performanceas against their terms of reference. Further details on the said evaluation have beenenumerated in the Corporate Governance Report which is annexed to and forms part of thisReport.
The Company takes all steps necessary to keep the Directors apprised of keydevelopments in the business and Industry and to familiarize them for enabling theircontribution and good governance. Since the Independent Directors are the critical link inany successful Corporate Governance program a detailed Appointment Letter incorporatingthe roles duties and expectations remuneration insurance cover code of conduct etc.is issued for the acceptance of the Independent Directors. Presentations made to analystsand any Corporate Presentations are circulated to them on periodical basis. AnnualReports product information brochures etc are also given for their reference. Further aspart of the Board/ Committee Meetings the Independent Directors are briefed about thedevelopments impacting the Industry various strategic initiatives of the Company updateon operations etc. Senior Executives regularly make presentations by audio visual means tothe Board. The broad overview of the Company's approach to familiarization of Directors isavailable at the link http://www.waterbaseindia.com/pdf/Independent_Directors_Familiarisation_Programme.pdf.
Meetings of the Board
The meetings of the Board are scheduled at regular intervals to decide and discuss onbusiness performance policies strategies and other matters of significance. The Board ofDirectors of the Company met four times during the financial year on 24th May2016 12th August 2016 25th November 2016 and 10thFebruary 2017. Further details of Board and Committee Meetings and attendance thereon areprovided in the Corporate Governance Report which is annexed to and forms part of thisReport.
Policy on Directors' Appointment and Remuneration
As on 31st March 2017 the Board consists of 8 (eight) members of which 4(four) are Independent non-executive directors and 43(four) are non-executive directors.The policy of the Company on Director's appointment and remuneration including criteriafor determining qualifications independence and other matters as provided undersubsection (3) of Section 178 of the Companies Act 2013 and the details of employees asper Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is annexed to and forms part of this Report.
Corporate Social Responsibility
The Company believes that its ultimate objective is to benefit communities throughinitiatives which contribute to nation-building. The Company's leadership takes activeresponsibility in various community engagement initiatives. The Company follows a systemof Triple Bottom Line accountability to measure its performance and its impact oninclusive and equitable growth of the marginalized sections of society.
During FY17 the CSR initiatives of the Company was primarily carried out through theregistered Trust established by the KCT Group under the name and style of KCT GroupTrust'. Many exciting and beneficial CSR programs were launched under the aegis of KCTGroup Trust with far reaching societal implications.
The CSR Committee of the Board had approved the list of CSR Projects/ Programmes to beundertaken by KCT Group Trust from out of the funds provided by the Company and alsomonitored the implementation of those CSR projects and programmes.
Further the Board has also adopted a policy on CSR which lays down the parameters todeepen the societal impact significantly. The CSR policy of the Company can be accessed athttp://www.waterbaseindia. com/pdf/code_of_conduct/Corporate_Social_Responsibility_Policy.pdf. A detailed report regarding Corporate Social Responsibility is annexed to and formspart of this report.
Energy Technology Absorption and Foreign Exchange
Information required under Section 134(3) (m) of the Act read with Rule 8(3) of theCompanies (Accounts) Rules 2014 with respect to conservation of energy technologyabsorption and foreign exchange earnings/outgo is annexed to and forms part of thisreport.
Extract of Annual Return
In accordance with section 134(3) (a) of the Act the extract of the Annual Return inForm MGT-9 is annexed to and forms part of this report.
Related Party Transactions
The Company has formulated a Policy on Related Party Transaction (RPT) which isavailable on Company's website http://www.waterbaseindia.com/pdf/code_of_conduct/Related_Party_ Transaction_Policy.pdf.
All RPTs are done on an arm's length basis and in the ordinary course of business. TheCompany presents a detailed summary of all RPTs to the Audit Committee specifying thenature value and terms and conditions of the transaction. The Audit Committee also grantsomnibus approval for certain contracts and arrangements with Related Parties as per theprovisions contained in the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Details of all Related Party Transactions wereplaced before the Audit Committee for consideration on a quarterly basis.
Details of transactions with PFL were submitted with the Stock Exchange on Quarterlybasis along with the Quarterly report on Compliance with Corporate Governance. The Companyhad also taken approval of the shareholders on 30th September 2015 as thetransactions were expected to be material in nature. However since the Appointed Date ofthe Scheme of Amalgamation of PFL with the Company was 1st August 2015 asapproved by NCLT Hyderabad disclosure of transactions of the Company with PFL would notbe necessary. There are no other transactions which are reportable under Section 13(3) (h)read with Rule 8 of the Companies (Accounts) Rules 2014. Form AOC-2 is annexed to andforms part of this report.
The Company strives to maintain high standards of Corporate Governance in allinteractions with stakeholders. The Company has conformed to the Corporate Governance codeas stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations2015. A separate section on Corporate Governance containing the details as required to beprovided under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015along with a certificate from the Secretarial Auditor of the Company is annexed to andforms part of this report.
Loans Guarantees or Investments
The details of changes in the Loans Guarantees and Investments covered under theprovisions of Section 186 of the Act are given in the notes to the Financial Statementswhich are annexed to and forms part of this report.
Directors Responsibility Statement
Pursuant to Section 134 of the Act the Directors affirm the following:
a) The Financial Statements have been prepared in conformity with the applicableaccounting standards and requirements of the Companies Act 2013 ("the Act") tothe extent applicable to the Company; on the historical cost convention; as a goingconcern and on the accrual basis. There are no material departures in the adoption of theApplicable Accounting Standard;
b) The Board of Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;
c) The Board of Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the company and for preventing and detecting fraud and other irregularities;
d) The Board of Directors have laid down internal financial controls to be followed bythe company and that such internal financial controls are adequate and were operatingeffectively;
e) The Board of Directors have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
Management's Discussion and Analysis
Management's Discussion and Analysis report as required under SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 is disclosed separately in the AnnualReport.
Prevention of Sexual Harassment Policy
The Company's policy on prevention of sexual harassment of women provides for theprotection of women employees at the workplace and for prevention and redressal of suchcomplaints. An Internal Complaints Committee has been set up to redress complaintsreceived regarding sexual harassment. All employees (permanent contractual temporarytrainees) are covered under this policy. There were no complaints pending for redressal atthe beginning and at the end of FY17.
Whistle Blower Policy/ Vigil Mechanism
In accordance with section 177 (9) and (10) of the Companies Act 2013 and Regulation22 of the SEBI (LODR) Regulations 2015 the Company has implemented a Whistle BlowerPolicy whereby employees can report matters such as abuse of authority misconductfraud misappropriation of assets non-compliance to code of conduct etc to the AuditCommittee. The Audit Commitee reviews on quarterly basis the functioning of the WhistleBlower and Vigil Mechanism. In order to ensure that the Policy is adhered to and toassure that the concern will be acted upon seriously the Company has committed itself tothe following:
1. Ensure that the Whistle Blower and/or the person processing the Disclosure is notvictimized for doing so;
2. Treat victimization as a serious matter including initiating disciplinary action onsuch person(s);
3. Ensure complete confidentiality and no attempt to conceal evidence of theDisclosure;
4. Take disciplinary action if any one destroys or conceals evidence of the Disclosuremade/to be made;
5. Provide an opportunity of being heard to the persons involved especially to theperson against or in relation to whom a Disclosure is made or evidence gathered during thecourse of an investigation The policy lays down the detailed mechanism for reviewing theComplaints spells out the remedial mechanism assures the confidentiality and protectionof whistle-blowers from victimization.
The policy provides for confidential and anonymous reporting to the Chairman of AuditCommittee wherever required. The policy also discourages frivolous and vexatiouscomplaints by suitably incorporating penal provisions for such complaints.
The details of the Whistle Blower Policy are available on the website of the Company athttp://www.waterbaseindia.com/pdf/code_of_ conduct/Whistle_Blower_Policy.pdf.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014.
M/s Mitra Kundu & Basu Chartered Accountants (Firm Registration No. 302061E) theStatutory Auditors of the Company holds office till the conclusion of the ensuingthirtieth Annual General Meeting of the Company and are liable for mandatory rotation interms of the provisions of Section 139 and the Rules thereunder of the Companies Act2013. Accordingly the Audit Committee of the Board of Directors of the Company had atits meeting held on 29th November 2017 recommended the appointment of M/s.Deloitte Haskins & Sells LLP Chartered Accountants (Firm Registration No.117366W/W-100018) as the Statutory Auditors of the Company. Hence the Board recommendsfor approval of the shareholders the appointment of M/s. Deloitte Haskins & SellsLLP Chartered Accountants (Firm Registration No. 117366W/ W-100018) as the StatutoryAuditors of the Company to hold office from the conclusion of the thirtieth Annual GeneralMeeting for a period of 5 (five) consecutive years i.e. till the conclusion of the thirtyfifith Annual General Meeting of the3Company.
Further the report of the Statutory Auditors for FY17 is given along with theFinancial Statements which is annexed to and forms part of this report. The said reporthas a matter of emphasis which does not require any explanation from the Directors.
The unmerged financial statements of the Company for the year ended 31stMarch 2017 were earlier approved by the Board of Directors at its meeting held on 30thMay 2017. Those unmerged financial statements have been updated by the Company so as togive effect to the scheme of amalgamation approved by the NCLT Hyderabad vide its orderdated 14th3November 2017 filed by the Company with the Registrar of Companieson 27th November 2017 with effect from appointed date i.e 1stAugust 2015. As a result fresh audit report has been issued on the merged financialstatements.
As required under Section 204 of the Companies Act 2013 and Rules thereunder theBoard had appointed M/s. ARUB & Associates Practising Company Secretaries assecretarial auditor of the Company for FY17. The report of the said Secretarial Auditorfor FY17 is annexed to and forms part of this report.
The Secretarial Auditors had remarked about the following in their report for FY17 forwhich the Directors' explanation is also set out against the following remark.
The Company had not complied with the requirements of Andhra Pradesh CompulsoryGratuity Insurance Rules 2011. The Board would like to clarify to the Shareholders thatthe Company had been providing Gratuity to its employees as per the provisions of thePayment of Gratuity Act 1972. As clarified by the Secretarial Auditor in his report theCompany had complied with the provisions of Andhra Pradesh Compulsory Gratuity InsuranceRules 2011 in FY18.
The Company carries out a detailed Risk assessment exercise and has implemented theEnterprise Risk Management (ERM) policy and framework. This policy is applicable for allstrategic high level operational financial reporting compliance and enterprise widerisks that have a high impact on the Company. The ERM framework is a continuous cyclebeginning with risk identification and followed sequentially by risk assessment riskevaluation and risk response. The framework also lays down the process for riskmonitoring review reporting control and managing materialized risks to support theentire ERM process across the Company. The ERM framework aims to realize the followingbenefits:
1. Link growth risk and returns - Risk management enhances the capacity toidentify events and assess risks and set risk tolerances consistent with growth and returnobjectives;
2. Rationalize resources - Deploy resources more effectively thereby reducingoverall capital requirements and improving capital allocations;
3. Exploit opportunities - Identify and take advantage of opportunities andevents quickly and efficiently;
4. Reduce operational surprises and losses - Recognize potential adverse eventsassess risks and establish responses thereby reducing surprises and related costs orlosses;
5. Report with greater confidence - Prepare internal and external informationthat is reliable timely and relevant; and
6. Satisfy legal and regulatory requirements - Ensure compliance with legal andregulatory requirements and identify risks of non-compliance.
Under this framework the Company has segregated the risks into two levels:
1. Enterprise-wide Risks These are risks that have a mid to long termimpact on us and would include any form of Risk that would have high impact on theCompany. An example of such a risk is Reputational Risk'. The ERM framework laysdown the procedures for addressing such risks.
2. Process level Risks These are risks that have a current to short termimpact on the Company. These risks are faced by the operational teams on a periodic basisdue to the ongoing operations of the company. An example of such a risk is duplicateinvoices from vendors'. These risks can also arise from change of business offeringsprocesses activities etc. In order to mitigate such risks the process owner shall updatethe Standard Operating Procedures (SOPs) to include mitigating checks and controls.
Towards inculcating a strong Risk Management culture the Company had constituted anExecutive Committee on Risk Management comprising of Senior executives to periodicallyreview the risk profile and to fine tune the Risk Management initiatives. To add to it astrong and independent Internal Audit function carries out risk focused audits across theCompany and enables identification of areas where the processes may need to be improved tomitigate the risks. A separate note covering the various aspects of the Financial Riskmanagement objectives and policies for hedging these risks are given in the notes toaccounts
Internal Financial Control Framework
The Company's Internal Financial Controls encompass policies and procedures adopted bythe Board for ensuring the orderly and efficient conduct of business including adherenceto its policies safeguarding of its assets prevention and detection of frauds anderrors the accuracy and completeness of accounting records and the timely preparation ofreliable financial information. Appropriate review and control mechanisms are built inplace to ensure that such control systems are adequate and are operating effectively.
The systems/frameworks include proper delegation of authority operating philosophiespolicies and procedures effective IT systems aligned to business requirements anInternal Audit framework a comprehensive Code of Conduct & Business Ethics frameworka Risk Management framework and adequate segregation of duties to ensure an acceptablelevel of risk. Documented Standard Operating Procedures are in place for all businessprocesses. Key controls are tested to assure that these are operating effectively.Besides the Company has also implemented SAP ERP for all its processes to strengthen theinternal control and segregation of duties/access.
Significant and Material Orders passed by the Regulators
There are no significant material orders passed by the regulators or courts ortribunals which would impact the going concern status of the company and its futureoperations.
The Board greatly appreciates the commitment and dedication of its employees across alllevels the collaborative sprit unrelenting dedication and expert thinking which has ledto the growth and success of the Company. We would like to thank all our customersinvestors bankers business partners vendors and other business associates for theircontinued support and encouragement during the year.
We also thank the Government of India Government of Andhra Pradesh Ministry ofCommerce and Industry Ministry of Finance Customs and Excise Departments Income TaxDepartment and all other government agencies for their support during the year and lookforward to the same in the future.
|For and on behalf of the Board of Directors || |
|Varun Aditya Thapar ||Anil Kumar BhandaUi |
|Director ||Director |
|Delhi 29th November 2017 || |