BOARD'S REPORT The Directors have pleasure in presenting the 54th Annual Report of your Company and the Audited Accounts for the financial year ended 31st March, 2015. Economy Overview Indian economic growth in 2014 rose to 5.2% from 4.7% last year as a result of the improved macro-economic situation. Falling oil prices, lower food and commodity prices and proactive measures taken by the Government helped in controlling inflation in 2014. The low economic growth appears to have bottomed out and a gradual increase in economic activity is expected in 2015. The medium to long term growth prospects look positive in view of the Government's determination to bring in reforms. For the year 2015, the economy is expected to grow at a higher rate than in 2014 and the long term prospect are optimistic. Operating Performance During the year under review, your company recorded a moderate growth of 3% in Sales while the Profit before tax marginally declined to Rs. 23.40 crores as compared to Rs. 24.85 crores in 2013-14. The industry witnessed an upward trend in raw material input prices affecting margin. The prices of Di-calcium phosphate, a by-product also remained soft throughout the year. Share Capital During the year, Bonus Equity Shares in the ratio of 1:2 (i.e one bonus equity share of Rs. 10/- each for every two fully paid up equity shares of Rs. 10/- each held), were allotted to the shareholders, resulting in an increase in the paid-up Equity Share Capital of the Company from Rs. 4.03 crs to Rs. 6.05 crs. Dividends Your Directors recommend a dividend of Rs. 3.50 per Equity Share (last year Rs. 5/- per Equity Share) for the financial year ended March 31, 2015 on the enhanced Equity Share Capital. The total outflow on account of the proposed dividend including dividend distribution tax will be Rs. 254.07 lacs, (previous year Rs. 235.92 lacs). The dividend on equity shares, if approved at the ensuing Annual General Meeting, will be paid to Members whose names appear in the Register of Members as on 10th September, 2015 and to Members whose names appear on that date as Beneficial Owners as furnished by National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). Transfer to Reserves It is proposed to transfer an amount of Rs. 155.04 lacs (being 10% of the net profits for the year) to the General Reserve. Industry Structure and Developments Gelatin finds demand in end-user industries such as food and beverages, pharmaceutical and cosmetics. Growing health concerns and the ageing population also act as major factors driving this market. Globally, 26% of gelatin is bovine bone based and is used in pharmaceuticals. The rapid growth of the pharmaceutical industry in India and across the world has resulted in stable demand for gelatin in domestic market. The demand for exports was also stable during the period. However, cultural and religious barriers in India and across the world on the use of gelatin derived from animals is a factor which inhibits the overall market growth. Moreover, growing regulatory issues primarily in the food industry are also challenges for the players operating in this market. Opportunities and Threats India continues to be categorised as "Negligible Risk" as far as Bovine Spongiform Encephalopathy (BSE) categorisation is concerned. The level of awareness about environmental hazards has increased among the general public and the state authorities are upgrading pollution control norms regularly. The industry is now required to address the issue of environment with more commitment. Your company continues to take all necessary steps to meet these challenges effectively. The availability of good quality raw material as also the steep rise in prices are areas of constant concern and could affect the future profitability of the Company. The import of poor quality of gelatin into India is a matter of health concern and affects proper price realisation for the gelatin produced by the domestic manufacturers. The industry as a whole has approached the government to initiate action against the import of poor quality gelatin. Outlook While your company is taking all actions to improve product mix, yield and productivity along with cost reduction measures, the shortage of raw material due to lower meat exports and strict implementation of ban on cow slaughtering in some states of the country is resulting in an unprecedented increase in price of raw materials and this is likely to have an adverse effect on the performance of your company, at least in the short term. Risks and Concerns Rising raw material costs, fuel and electricity prices are likely to impact margins. Tightening of pollution control norms by the statutory authorities can affect output and result in higher cost of production. The steady economic development in China and India is expected to drive the market for Asia-Pacific. The imports from China at prices well below the domestic price can have a major effect on the margins in the near future. However, due to continuous efforts of the gelatin industry and actions taken by the authorities, the imports of poor quality gelatine have seen a reduction. Segment-wise or product-wise performance The company is engaged in the manufacture and sale of gelatin and ossein and the by-product di-calcium phosphate which broadly form part of one product group and hence a single business segment. However, based on geographical spread, reportable segments have been identified as exports sales and domestic sales. The segment revenue information is given separately in Notes on Accounts under the disclosure as required under Accounting Standard (AS 17) - Segment Reporting and forms part of the Directors' Report. Internal Control System The Company has an adequate internal control system covering supervision, checks and balances, policies, procedures and internal audit which ensures that company assets are safeguarded and protected and that transactions are authorised, recorded and reported correctly. The system is reviewed and updated on an ongoing basis. The Company's internal control system comprises audit and compliance of observations made by the Internal Auditor. The Internal Auditor independently evaluates the adequacy of internal controls and concurrently audits the majority of the transactions in value terms. Independence of audit and compliance is ensured by direct reporting of Internal Auditor to the Audit Committee. Fixed Deposits During the year under review, the Company has not accepted any fixed deposits from the public, and as on March 31, 2015, the Company had no unclaimed deposits or interest thereon due to any depositor. Particulars of Loans, Guarantees or Investments Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements. Corporate Social Responsibility (CSR) The Company has Corporate Social Responsibility (CSR) Committee. The Committee recommends to the Board the activities to be undertaken by the Company for approval. As part of the initiatives, the Company has undertaken (CSR) projects in the areas of environment, education, livelihood, health, water, sanitation and rural development. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. During the year, the Company has spent Rs. 41.75 lacs on CSR activities, which was around 2% of the average net profits of the last three financial years. The Annual Report on CSR activities is annexed herewith as Annexure - I. Risk Management The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. During the year Risk Management Committee has been constituted which is entrusted with the responsibility to assist the Board in overseeing the risks associated with the business and risk mitigating measures to be taken by the Company. The details of the Risk Management Committee, its terms of reference, key business risks identified and mitigation plans are set out in the Corporate Governance Report. Vigil Mechanism The Company has a vigil mechanism in the form of a Whistle Blower Policy to deal with instances of fraud and mismanagement, the details of which are explained in the Corporate Governance Report and also posted on the website of the Company. Subsidiaries, Joint Ventures and Associate Companies The Company does not have any subsidiary, joint ventures or any associate companies. Directors and Key Managerial Personnel During the year under review, the Members had approved the appointment of Justice Gulab Gupta, Mr. Mohan C. Pant and Mr. Deepak Chaudhari as Independent Directors, for a period of two years i.e. upto the conclusion of 55th Annual General Meeting of the Company and the appointment of Mrs Drushti R Desai as a Director liable to retire by rotation. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as laid down under sub-section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. In accordance with the provisions of Section 152 of the Companies Act, 2013, and Article 115 of the Articles of Association of the Company, Mr. Sanjeev Jain retires by rotation at the ensuing Annual General Meeting of the Company and being eligible, has offered himself for re-appointment. The Board of Directors recommends his re-appointment. All the appointments of the Directors of the Company are in compliance with the provisions of Section 164(2) of the Companies Act, 2013 read with Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014. Attention of Shareholders is invited to the relevant items of the Notice of the Annual General Meeting and the Notes thereto Brief resume of the Directors proposed to be appointed/ reappointed, nature of their expertise in specific functional areas and names of companies in which they hold directorship and membership/ chairmanship of committees of the Board, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges, are given in the section on Corporate Governance in this Annual Report. During the year under review, Ms. Priya Gupta, was designated as Chief Financial Officer of the Company. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and other Committees in addition the Board has also carried out a review of the Board's performance as the whole. The manner in which the evaluation has been carried out is covered in the Corporate Governance Report. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Meetings During the year five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between two Meetings was within the period prescribed under the Companies Act, 2013. Directors' Responsibility Statement In accordance with Section 134(5) of the Companies Act, 2013, the Directors' hereby confirm that: a. in the preparation of the annual financial statements for the year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. appropriate accounting policies have been selected and applied consistently and judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date; c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. the annual financial statements have been prepared on a going concern basis; e. proper internal financial controls have been followed and that such financial controls are adequate and are operating effectively. f. proper systems to ensure compliance with the provisions of all applicable laws are in place are were adequate and operating effectively. Related Party Transactions The Company has a policy on Related Party Transactions for the purpose of identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is also posted on the Company's website. All Related Party Transactions are placed before the Audit Committee and also the Board for approval. All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 are disclosed in the financial statements. The transactions with related parties are set out in the Notes to Financial Statements forming part of the Annual Report. None of the Directors has any pecuniary relationships or transactions with the Company or vice versa. Statutory Auditors and Audit Report M/s T.R. Chadha & Co., Chartered Accountants, Statutory Auditors of the Company, hold office until the conclusion of ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for such re-appointment within the meaning of Section 141 of the said Act. The Notes on Financial Statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments. Secretarial Audit Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Dr. Asim Kumar Chattopadhyay, Company Secretary in Practice to undertake the Secretarial Audit of the Company. Secretarial Audit Report is annexed herewith as Annexure - II. Transfer of Unpaid and Unclaimed amounts to IEPF Pursuant to the provisions of Section 124 of the Companies Act, 2013, the declared dividends and interest on debentures which remained unpaid or unclaimed for a period of 7 years have been transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government pursuant to Section 125, of the said Act. During the financial year 2014-15 the Company has transferred to the Investor Education and Protection Fund the unclaimed Dividend on Equity Shares amounting to Rs. 52,275 and on 9% Cumulative Redeemable Preference Shares amounting to Rs. 1,83,538 for the year 2006-07. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rule, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 22nd September, 2014 (date of last Annual General Meeting) on the Ministry of Corporate Affairs' website. Enhancing Shareholders' Value Your Company believes that its Members are among its most important stakeholders. Accordingly, your Company's operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your Company is also committed to creating value for its other stakeholders by ensuring that its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development. Corporate Governance Your Company is committed to maintain the highest standards of Corporate Governance and adhere to the requirements set out by the Securities and Exchange Board of India's Corporate Governance practices. Report on Corporate Governance as stipulated under Clause 49 of the Listing Agreements with the Stock Exchanges forms part of the Annual Report. The Whole-Time Director's declaration regarding compliance with the Company's Code of Business Conduct and Ethics for Directors and Management Personnel forms part of Report on Corporate Governance. The requisite certificate from M/s T.R. Chadha & Co., Chartered Accountants, Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance, as stipulated under the aforesaid Clause 49, is annexed to this Report. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed to this Report as Annexure - III. Extract of Annual Return The details forming part of the extract of the Annual Return is annexed to this Report as Annexure - IV. Particulars of Employees None of the employees of the Company is in receipt of remuneration exceeding the limits prescribed under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Disclosures pertaining to remuneration and other details in respect of directors and employees of the Company as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Report as Annexure - V. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 The company has in place a suitable Policy in line with the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been setup to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. No complaint was received by the company during the financial year ended 31st March, 2015. Industrial Relations Industrial relations remained cordial throughout the year. Your Directors place on record their sincere appreciation of the significant contributions made and the continued support extended by all employees at all levels to the Company's operations during the year. Acknowledgement Your Directors take this opportunity to thank the Central and the State Governments, statutory authorities, bankers, vendors and business associates and the shareholders for their continued interest and valued support. For and on behalf of the Board Ravindra K Raje Director Ashok K Kapur Wholetime Director Place: Jabalpur Date: 27th May, 2015 |