DIRECTORS' REPORT DEAR SHAREHOLDERS, Your Directors have pleasure in presenting the 28th Annual Report together with the Audited Financial Statements of the company for the year ended 31st March, 2015 FINANCIAL STATEMENTS The Financial Statements have been prepared in accordance with Accounting Standards notified under section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules 2014, to reflect the financial position and the results of operations of the Company. The Financial Statements together with the Auditor's report is annexed and forms part of this report. PERFORMANCE OVERVIEW FY15 has been an exciting year for the Company as it achieved the highest ever Revenues and Profitability in its history. Additionally, there has been significant progress on strategic initiatives and rollout of business expansion plans. Your Company reported revenues of Rs. 279.50 crore in FY15 compared to Rs. 229.59 crore last year, registering growth of 22%. Revenue growth was achieved by steady growth in volumes of shrimp feed due to continued robust demand from farmers and stable realizations as well as sustained contribution from shrimp processing. While there was some firming up in the price of agri-based raw materials, the Company was able to mitigate the impact through proactive sourcing and efficient production which helped to contain the rise in expenditure in line with revenue growth thereby preserving margins. During the year the Company provided Rs. 10.73 crore for taxation as against Rs. 6.87 crore for last year. Profit after Tax for the year was Rs. 19.51 crore compared to Rs. 13.57 crore in FY14, registering a year-on-year increase of 44%. This was the highest ever PAT reported by the Company in its history. The earnings per share (EPS) for the year stood at Rs. 5.06, an increase of 16% compared to Rs. 4.37 in the previous year. DIVIDEND AND APPROPRIATIONS Based on the Company's financial performance and considering the profitability and cash flow, the Board had declared an interim dividend of 10% 1 per equity share) during FY15 at the meeting held on 31st July, 2014. This was subsequently paid to all the eligible shareholders. Further, the Board has recommended a final dividend of 5% (i.e. 50 Paisa per equity share) at the meeting held on 21st May 2015. The same is payable on obtaining the Shareholders' approval in the ensuing Twenty Eighth Annual General Meeting. This would entail a total outflow of Rs. 6.83 Crore on account of dividend including dividend tax for FY15. Further, Rs. 0.37 Crore was transferred to reserves during FY15. MATERIAL CHANGES COMMITMENTS At present, Pinnae Feeds Limited (PFL), which is a wholly owned Subsidiary of Karam Chand Thapar & Bros. (Coal Sales) Limited (Promoter of the Company) is manufacturing feed for your Company at their state-of-the-art plant located near Nellore, Andhra Pradesh. Their feed manufacturing capacity is 75,000 MTPA. At the meeting held on 21st May, 2015, the Board of Directors of both PFL and the Company had in-principally sanctioned the amalgamation of PFL with the Company. Pursuant to this, on consummation of the amalgamation, the feed manufacturing capacity is expected to increase from 35,000 MTPA to 1,10,000 MTPA. Apart from the increase in capacity, this amalgamation is expected to lead to higher efficiencies due to economies of scale, enable better negotiation in sourcing of raw material and improve the availability of the Company's Products in the domestic market. The Company will also leverage the increased capacity to enhance its presence in high growth markets. DIVERSIFICATION The Company is undertaking steps to diversify its revenue streams and is implementing initiatives to drive sustained growth. In the meeting held on 21st May, 2015, the Board has approved setting up of Hatcheries which will ensure availability of quality seeds to farmers and elevate the sustainability of the industry. The first unit is expected to be commissioned in the current financial year. Your Company is also planning to revive export of processed shrimps in the ensuing financial year in a phased manner. DIRECTORS AND KEY MANAGERIAL PERSONNEL The members at their Meeting held on 29th September, 2014, had appointed Mr. Anil Kumar Bhandari, Lt. Gen. Deepak Summanwar (Retd.), Mr. Nakul Kamani and Mr. Ranjit Mehta as Independent Directors of the Company for a term of 5 years i.e. up to 31st March, 2019. The Company has received declarations from all the above Independent Directors that they meet the criteria of independence as laid down under Section 149(6) of the Act and Clause 49 of the Listing Agreement. Mrs. Jyoti Thapar retires at the forthcoming AGM and has offered herself for re-appointment. Necessary resolution for re-appointment of Mrs. Jyoti Thapar has been included in the Notice convening the ensuing Annual General Meeting and details of the proposal for re-appointment are mentioned in the Explanatory Statement to the Notice. Pursuant to the provisions of Section 203 of the Act read with the rules made thereunder, the following employees were/are designated as whole-time key managerial personnel of the Company: 1. Mr. Ashok Nanjapa - Chief Executive Officer - Till 31st July, 2014 2. Mr. Ramakanth V Akula - Chief Executive Officer - With effect from 1st August, 2014 3. Mr. S.Giridhari, Chief Financial Officer 4. Ms. Suguna Krishnamurthy, Company Secretary - Till 30th September, 2014 5. Mr. G.Venkatram, Company Secretary - With effect from 17th February, 2015 BOARD EVALUATION AND FAMILIARIZATION The Company believes that stakeholder value is created through strong Board Governance which requires a robust evaluation mechanism. In line with this, the Board has established a formal annual evaluation framework for measuring the performance of itself, the Directors and Board Committees. The evaluation framework envisages a three stage evaluation process wherein the Independent Directors, Nomination and Remuneration Committee and the Board are involved. During FY15, the annual evaluation process was kick started at the meeting of Independent Directors held on 21st February, 2015. Thereafter, the Nomination and Remuneration Committee and the Board completed the annual evaluation process at the meeting held on 21st May, 2015. The evaluation criteria for the Directors include parameters such as Strategic and functional contribution, ethics, values etc. Similarly, for the Board as a whole, parameters such as Strategic decision making, Risk Management, Governance etc were considered. The Committees of the Board were evaluated on the basis of their performance as against their terms of reference. Further details on the said evaluation have been enumerated in the Corporate Governance Report, which is annexed to and forms part of this Report. The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. MEETINGS OF THE BOARD The meetings of the Board are scheduled at regular intervals to decide and discuss business performance, policies, strategies and other matters of significance. The Board of Directors of the Company met four times during the financial year. The details of various Board Meetings are provided in the Corporate Governance Report. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION The Board consists of 8 (eight) members, of which 4 (four) are independent and non-executive. The remaining 4 (four) members are non-executive Promoter Directors. The policy of the Company on Director's appointment and remuneration, including criteria for determining qualifications, independence and other matters as provided under subsection (3) of Section 178 of the Companies Act, 2013 and the details of employees as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given as Annexure A, which forms part of this report. CORPORATE SOCIAL RESPONSIBILITY Since inception, the Company had cultivated a value system that business enterprises are economic organs of society and thrive on societal resources; hence it is the moral obligation and duty of an enterprise to reward the society. Long before the advent of CSR on the Indian Corporate scene, the Company has been contributing immensely for the cause of Education, Sports and Medicare in India, with an aim to benefit the disadvantaged/ underprivileged sections of society. The Company follows a system of Triple Bottom Line accountability to measure the Company's performance and its impact on inclusive and equitable growth of the marginalized sections of society In continuation of that approach and to meet the requirements of the Companies Act, 2013, the Board has formed a Corporate Social Responsibility Committee, which monitors and oversees various CSR initiatives and activities of the Company. The Board has also adopted a policy on CSR which lays down the parameters to deepen the social impact significantly. The CSR policy of the Company can be accessed at <http://www.waterbaseindia.com/> pdf/code_of_conduct/Corporate_Social_Responsibility_Policy.pdf. A detailed report regarding Corporate Social Responsibility is given as Annexure B, which forms part 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 the Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is given as Annexure C, which forms part of this report. EXTRACT OF ANNUAL RETURN In accordance with section 134(3) (a) of the Act, the extract of the Annual Return in Form MGT-9 is attached as Annexure D, which forms part of this report. RELATED PARTY TRANSACTIONS All contracts and arrangements with related parties entered prior to the commencement of the Companies Act, 2013 and the revised Clause 49 of the Listing Agreement was considered and ratified by the Audit Committee during FY15. All the contracts and arrangements with the related parties were on arm's length basis and in ordinary course of business. There were no materially significant contracts and arrangements with related parties which may have a potential conflict with the interest of the Company at large. To deal with Related Party Transactions in a transparent manner, the Board had approved the policy on dealing with Related Party Transactions the text of which could be accessed at <http://www.waterbaseindia.com/pdf/code_of_conduct/Related_Party_Transaction_> Policy.pdf. The Audit Committee had granted omnibus approval for certain contracts and arrangements with Related Parties as per the provisions contained in the Listing Agreement and in line with the policy adopted for dealing with Related party Transactions. All transactions arising out of such approved contract and arrangements with Related Parties were placed before the Audit Committee for consideration on a quarterly basis. During FY15, the Audit Committee had approved a contract for purchase of finished shrimp feed and reimbursement & deputation of manpower entered into with Pinnae Feeds Limited which is an entity wholly owned by Karam Chand Thapar & Bros. (Coal Sales) Limited (Promoter of the Company). As the value of transactions arising out of the contract with Pinnae Feeds Limited exceeded the threshold limit of materiality i.e. 10% of the turnover of the Company, in FY15, approval of the Shareholders is being sought in the forthcoming Annual General Meeting. Suitable resolution in this regard has been added in the notice convening the 28th Annual General Meeting. Further, the details of transactions with PFL were submitted with the Stock Exchanges on Quarterly basis along with the Quarterly report on Compliance with Corporate Governance requirements of the Stock Exchange. The details of the contract with Pinnae Feeds Limited as required under Section 13(3) (h) read with Rule 8 of the Companies (Accounts) Rules, 2014, is given in form AOC-2 as Annexure E, which forms part of this report. CORPORATE GOVERNANCE The Company strives to maintain high standards of Corporate Governance in all interactions with stakeholders. The Company has conformed to the Corporate Governance code as stipulated under the Listing Agreement with the Stock Exchange. A separate section on Corporate Governance containing the details as required to be provided under Clause 49 of the Listing Agreement along with a certificate from the Statutory Auditors is given as Annexure F which forms part of this report. LOANS, GUARANTEES OR INVESTMENTS The Company has no outstanding Inter-Corporate Guarantees. The details of changes in the Loans and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134(5) of the Act, the Directors affirm that: a) The Financial Statements have been prepared in conformity with the applicable accounting standards and requirements of the Companies Act, 2013 to the extent applicable to the Company; on the historical cost convention as a going concern and on the accrual basis. There are no material departures in the adoption of the Applicable Accounting Standard; b) The Board of Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at the end of the financial 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 of adequate accounting records in accordance with the provisions of the Act for safeguarding the 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 by the company and that such internal financial controls are adequate and were operating effectively; e) The Board of Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and Analysis report as required under Clause 49 (VII) (D) (I) of the Listing Agreement is disclosed separately in the Annual Report. PREVENTION OF SEXUAL HARASSMENT POLICY The Company's policy on prevention of sexual harassment of women provides for the protection of women employees at the workplace and for prevention and redressal of such complaints. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. There were no complaints pending for redressal at the beginning and at the end of FY15. WHISTLE BLOWER POLICY/ VIGIL MECHANISM The Company has implemented a Whistle Blower Policy, whereby employees can report matters such as corruption, misconduct, fraud, misappropriation of assets, non-compliance to code of conduct etc. to the AuditCommittee. The policy provides for confidential and anonymous reporting to the Audit Committee and adequate safeguards to the reporting party against retaliation. The policy also provides direct access to the Chairman of the Audit Committee. The details of the Whistle Blower Policy are available on the website of the Company at <http://www.waterbaseindia>. com/pdf/code_of_conduct/Whistle_Blower_Policy.pdf. Further details of the Whistle Blower Policy is given as part of the Corporate Governance Report. FIXED DEPOSITS The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. AUDITORS Statutory Audit At the Annual General Meeting held on 29th September, 2014, M/s Mitra Kundu & Basu, Chartered Accountants were appointed as Statutory Auditors, for a period of three years, to hold office till the conclusion of the 30th Annual General Meeting i.e. AGM for FY17. As per the provisions of the Act, the appointment of Statutory Auditors shall be ratified by the Shareholders at every Annual General Meeting till the expiry of the tenure for which he was appointed. The Audit Committee had considered the ratification of appointment of the Statutory Auditors for FY16 which was approved by the Board. A suitable resolution proposing the ratification of appointment by the Shareholders is included in the Notice convening the forthcoming Annual General Meeting for consideration and approval. Further, the report of the Statutory Auditors for FY15 is given along with the Financial Statements which forms part of this report. The Board had appointed Mr. B. Ravi, Practising Company Secretary for conducting Secretarial Audit of the Company for FY15 as required by Section 204 of the Act. The report of the Secretarial Auditor is given as Annexure G, which forms part of this report. The Secretarial Audit report contains a qualification regarding non-submission of Annual Return on Foreign Liabilities and Assets for FY14 under the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 read with the relevant Master Circulars issued by the Reserve Bank of India in this regard. The Board would like to clarify that the Company had received investments from certain foreign entities under the then extant Foreign Exchange Regulation Act (FERA) and the rules/regulations laid down thereunder. The same was subject to approval of the Reserve Bank of India. However, these entities were later classified as Overseas Corporate Bodies (OCBs) which are now not recognized for investment in India. These OCBs continue to hold shares in the Company. All other foreign holdings in the Company were not under the Foreign Direct Investment route. Hence, the Board would approach the Reserve Bank of India to ascertain the requirement to file the return under the Foreign Exchange Management Regulations and would take steps to file the return, if required. RISK MANAGEMENT / INTERNAL CONTROLS The Company has adopted a Risk Management Plan for implementation of Enterprise Risk Management (ERM) framework. As per the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board shall establish a Risk Management Plan/ Policy and the Audit Committee shall evaluate the Risk Management systems periodically. In line with this requirement, the Board is responsible for initiating and instituting the ERM framework and setting the requisite tone at the top for implementation of the ERM framework. Further, the Board shall be responsible for overseeing measures for managing risk. The Plan also envisages a key role for the Audit Committee which shall periodically (at least annually) review the adequacy of Risk Management Systems, recommend improvements if needed, discuss with external consultants, Internal Auditors to test the adequacy and effectiveness of the Risk Management System. A strong and independent Internal Audit function carries out risk focused audits across the Company and enables identification of areas where risk management processes may need to be improved. The Company's Internal Financial Controls encompass policies and procedures adopted by the Board for ensuring the orderly and efficient conduct of business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information. Appropriate review and control mechanisms are built in place to ensure that such control systems are adequate and are operating effectively. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant material orders passed by the regulators or courts or tribunals which would impact the going concern status of the company and its future operations. ACKNOWLEDGEMENT The Board greatly appreciates the commitment and dedication of its employees across all levels, the collaborative sprit, unrelenting dedication and expert thinking which has led to the growth and success of the Company. We would like to thank all our clients, vendors, investors, bankers and other business associates for their continued support and encouragement during the year. We also thank the Government of India, Governments of Andhra Pradesh, Ministry of Commerce and Industry, Ministry of Finance, Customs and Excise Departments, Income Tax Department, and all other government agencies for their support during the year and look forward to the same in the future. For and on behalf of the Board of Directors Vikramaditya Mohan Thapar Chairman Place : Chennai, date : 12th August, 2015 |