DIRECTORS' REPORT To THE MEMBERS OF NITTA GELATIN INDIA LIMITED Your Directors have pleasure in presenting the 40th Annual Report and audited financial statements for the year ended 31st March, 2016. DIVIDEND The Board has, subject to approval of the members at the ensuing Annual General Meeting, recommend a dividend @ 5.4029% p.a. for the year ended 31st March, 2016 on the 929,412 Optionally Convertible Preference Shares of face value of Rs. 170/- each on a pro-rata basis from the date of allotment. Considering the Company's performance and financial position for the year under review, the Board has also recommended a dividend of Rs. 2.50 per share i.e. 25% of the face value of Rs. 10/-per share on the equity capital for the year ended 31st March, 2016, subject to the approval of the members at the ensuing Annual General Meeting. Together with corporate tax on dividend, the total outflow on account of dividend will be Rs. 368.07 lakhs(including Rs. 94.88 lakhs on preference shares), vis-a-vis Rs. 109.27 lakhs paid for the financial year 2014-15. During the year, unclaimed dividend of Rs. 1.69 lakhs pertaining to the year ended 31st March, 2008, was transferred to the Investor Education & Protection Fund after giving due notice to the members. SHARE CAPITAL The Authorised share capital of your Company has been enhanced from Rupees Twenty Crores (comprising of two crore equity shares of Rs. 10/-each) to Rupees Thirty Five Crores Eighty lakhs and Forty only (comprising of two crore equity shares of Rs. 10/- each and 929,412 Optionally Convertible (non-cumulative) Preference Shares (OCPS) of Rs. 170/- each). During the year, the Company has issued 929,412 Optionally Convertible (non-cumulative) Preference Shares of Rs. 170/- each aggregating to Rs. 15,80,00,040/- to M/s. Nitta Gelatin Inc., Japan, one of the promoters carrying a fixed dividend of 5.4029% and redeemable at par at the expiry of seven years from the date of allotment, 28.04.2015 with put and call option at the expiry of five years from the date of allotment. The said OCPS carry the option to get converted into equity shares either in full or in part at a value of Rs. 170/- per equity share of face value of Rs. 10/- and share premium of Rs. 160/- per share not later than 18 months from the date of allotment of OCPS, subject to the Company complying with Clause 38 of the SEBI (LODR) Regulations 2015, post conversion and NGI, Japan adhering to the SEBI Takeover Regulations. None of the OCPS shares have been converted into equity shares till date. RESERVES An amount of Rs. 600.00 lakhs is transferred to General Reserve during the year. Reserves as on 31.03.2016 comprises of Security Premium Reserve of Rs. 2895.90 lakhs, Capital Investment subsidy of Rs. 15.00 lakhs, Special Export Reserve of Rs. 79.00 lakhs, General Reserve of Rs. 7236.64 lakhs, Hedge Equalisation Reserve of Rs. 151.02 lakhs and credit balance in the Profit and Loss Account of Rs. 2091.32 Lakhs, aggregating to Rs. 12468.88 lakhs. PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS In the wake of the progress made with regard to commissioning of the common treated effluent discharge pipeline for want of which the operations of M/s. Reva Proteins Ltd. (RPL), the subsidiary of the Company, was so far unviable, your company has made an investment of Rs. 1250 lakhs in the issue of 6% Optionally Convertible (Non-cumulative) Preference Shares of Rs. 10/-each at par of the said subsidiary. Corporate Guarantee for an amount of Rs. 271.31 lakhs was provided against a term loan of Rs. 300.00 lakhs sanctioned to RPL by M/s. Kerala State Industrial Development Corporation Ltd. during the year. Details in respect of other loans, guarantees and investments covered under the provision of Section 186 of the Companies Act, 2013 are given in the notes on accounts for the financial year ended 31st March, 2016 PERFORMANCE The gross revenue from operations of your Company during the year under review was Rs. 370.86 crores. Though there has been an increase in the unit sales realization in all our products during the year, increase in sales volumes could not be achieved due to various extraneous factors. With all the domestic Gelatin plants in full scale operation during the year and the resultant heavy demand for crushed bone, the quality of supplies could not meet the export quality specifications for Ossein and Limed Ossein. This has led to a reduction in export volumes of Ossein / Limed Ossein by 19% during the year. The demand for Collagen Peptide witnessed a setback in major overseas markets like Korea and Thailand. In the domestic market, the unduly long delay in granting new product approvals by the regulatory authorities has resulted in a poor off take of Collagen Peptide. Despite the reduction in volumes as explained above, the total sales turnover could be maintained with improvement in unit sales realization on all our products and the higher volume of Gelatin sales achieved during the year. The improvement in USD / INR exchange rates during 2015-16 as compared to 2014-15 has also contributed to improved sales realisation on exports. The increase in price of crushed animal bone, apart from its poor quality as explained above, was not conducive for the business of the Company. Crushed bone prices have increased by 11% during 2015-16 as compared to the previous fiscal. In the backdrop of the aforesaid adversities, your Company exercised close monitoring and strict control over each significant element of cost, and achieved appreciable savings. In respect of utilities, the usage of LNG was significantly substituted by firewood and at the same time, efficiency of wood fired boilers was improved. Aided also by the decline in the price of LNG and firewood, these measures have helped the company to achieve an overall cost reduction of around Rs. 6.08 crores for utilities. With regard to finance cost, Company could effectively leverage low cost foreign currency loans and achieve almost a one third reduction amounting to Rs. 2.48 crores. The sales mix during the year was such that the Company could achieve a reduction in selling expenses such as freight charges on products, discount and commission on sales, etc. aggregating to Rs. 3.52 crores during the year under review. As a result of the above, the operations of the Company for the year 2015-16 has resulted in a pre-tax profit of Rs. 26.43 crores as against Rs. 10.03 crores during 2014-15. The products of the your Company continued to enjoy an enviable market demand during the year under review. The entire sale of Ossein / Limed Ossein, 44.5% of the total sale of Gelatin and 38.6% of Collagen Peptide were through exports. Your Company has arrangements with its overseas collaborators, Nitta Gelatin Inc., Japan to leverage their expertise and market insights in servicing its customers in a pro-active manner in line with the global standards of NITTA Group. The major production facilities of your Company are the Ossein Plant at Koratty, Trichur District and Gelatin / Peptide Plant at Kakkanad, Ernakulam District, Kerala. All the factories owned by the Company are being operated in strict compliance with the applicable standards / norms prescribed by the Statutory authorities including the State Pollution Control Board. The Kadukutty Panchayat in Trichur District did not renew the factory licence for our Ossein Plant at Koratty for the year. However, the Kerala State Tribunal for Local Self Government Institutions has stayed the orders of the Panchayat until further orders. The denial of grant of factory licence by the Kadukutty Panchayat for earlier years was challenged before the Hon'ble High Court of Kerala and the Court has ordered status quo in the matter till final disposal of the writ petition filed by the Company. The recent review of the effluent management system at Ossein Division by the National Environmental Engineering Research Institute (NEERI) has confirmed the efficacy of the system on the basis of which the Pollution Control Board has renewed the Consent To Operate upto 30.06.2018. Based on expert legal advice, the earlier court verdicts and the facts of the situation as explained above, the Company expects a favourable resolution of the matter. CREDIT RATING During the year, rating agency CRISIL has reaffirmed the rating of "CRISIL A-/ Stable" rating for Long Term Debts and "CRISIL A2+" rating for short term borrowings. AWARDS & ACCOLADES During the year your Company was awarded the top export award in Ossein & Gelatin panel instituted by CAPEXIL for the year 2012-13. The following prestigious certifications are retained by your Company:- (a) European Directorate for the Quality of Medicines & Health (EDQM) Certificate for Gelatin Division (b) HACCP Certificate for Ossein Division and Gelatin Division for food safety. (c) ISO 14001:2004 for Gelatin Division for Environment Management System (d) ISO 9001: 2008 for Quality Management System of the Company. (e) FSSC Certification for Food Safety Management System for Gelatin Division (f) Halal / Kosher Certification for Gelatin and Collagen Peptide (g) NABL Accreditation for in-house laboratory HEALTH, SAFETY AND ENVIRONMENT Compliance with relevant regulations and effective management of the related issues is an integral part of the Company's philosophy and we stand committed to continually improve on these objectives. The Company, year on year, increases its focus on improving matters relating to Health, Safety and Environment. Health and Safety The Company is committed to promoting the health and safety of its employees. Each of our plants is having a Safety Officer and Safety Committee which includes representation from workmen. The Committee meets regularly to review issues impacting plant safety and employee health. Regular health checkup of the employees is carried out through reputed hospitals. Various training programmes are conducted at the plant on health and safety issues including emergency preparedness, work safety, first-aid, etc. The Company is augmenting resources to further strengthen the level of safety at its plants. Environment The Company continuously endeavors to improve on environmental management and through all activities demonstrate its commitment to protecting the environment. The factories of the Company are equipped with effective effluent treatment plants for treating and discharging treated water with parameters well within the norms laid down by the Pollution Control authorities. The emissions from the boilers and generator stacks are regularly monitored for compliance. With the commissioning of two biogas generators at our Ossein plant, substantial portion of the raw effluent from the production process is now being converted into biogas used for meeting our energy requirements. Water recycling and water reuse are being regularly pursued and improved upon by the Company with specific targets. In connection with the renewal of the Consent To Operate our Ossein plant, M/s. National Environmental Engineering Research Institute (NEERI), a constituent laboratory of the Council of Scientific & Industrial Research, Govt. of India, conducted a detailed study of the pollution status with respect to the air, water and solid waste generated from the Ossein plant and confirmed the efficacy of such systems. However, with a view to further enhance the infrastructure for environment management, water conservation, ambient air quality etc., the Company has mobilized Rs. 15.80 crores through the issue of Optionally Convertible (non-cumulative) Preference Shares. With the completion of this investment, your Company will be equipped with state-of-the-art facilities for management of environment and hence the health and safety of the employees and the local community at large. The ambient air quality in our Ossein plant is being monitored on a continuous basis to conform to the regulations relating to ambient air quality standards. Out of the total plot area of approximately 1,53,900 sq. meters, about 10,000 sq. meters of land around the boundary of Gelatin Division and about 38,000 sq. meters of land in Ossein Division have been developed and maintained as green area. These steps are expected to go a long way in furthering our efforts to protect the nature and environment around our plant. CORPORATE SOCIAL RESPONSIBILITY (CSR) Your Company has formulated a well structured Policy aimed at providing focus and direction to the various activities on CSR. The Company is committed to identifying and supporting programmes aimed at: • Empowerment of the disadvantaged / weaker sections of the society through education, skill development and the like; • Provision of access to basic necessities like healthcare, drinking water & sanitation; • Supporting environmental and ecological balance through afforestation, soil conservation, conservation of flora and similar programme; • Promotion of sports through training of sports persons; • Rural development projects; • Total CSR expenditure incurred by your Company during the year was Rs. 19.48 lakhs which was higher than the statutory requirement of 2% of the average profit for the last three years. • A CSR Committee has been constituted to act in an advisory capacity to the Board and Management with respect to policies and strategies that affect the Company's role as a socially responsible organization. • The CSR Committee ensures that the implementation and monitoring of the projects are in compliance with the CSR objectives and Policy of the Company. • The CSR Policy can be accessed on the Company's website www.gelatin.in The CSR projects undertaken by the Company are in accordance with Schedule VII of the Companies Act, 2013. Annual Report on CSR activities is annexed herewith as Annexure I. POLICY FOR DETERMINING MATERIAL SUBSIDIARIES In accordance with the provisions of the SEBI (LODR) Regulations 2015, your Company had formulated a Material Subsidiary Policy specifying the criteria for determining the Material Subsidiaries. The said policy is available in the Company website www.gelatin.in. There has been no change in the nature of business of subsidiaries during the year under review. As per the above policy, the Company has only one material subsidiary, Reva Proteins Ltd SUBSIDIARY COMPANIES BAMNI PROTEINS LIMITED The annual production during the year in this subsidiary company was 2349 MT of Ossein and 5508 MT of Di Calcium Phosphate as against 2345 MT of Ossein and 5135 MT of Di-Calcium Phosphate during the previous year. The operation of this subsidiary for the year under review has resulted in a post - tax profit of Rs. 128.75 Lakhs as against a net loss of Rs. 54.86 lakhs during the previous financial year. REVA PROTEINS LIMITED At Reva Proteins Ltd., owing to restrictions in the quantum of discharge of treated effluent, there has been considerable under utilization of capacity. The common treated effluent discharge pipeline currently being set up by M/s. Narmada Cleantech Limited, expected to be commissioned during mid 2015-16 has been delayed further. Arising out of the above, the financial year 2015-16 witnessed a net loss of Rs. 941.17 lakhs and a cash loss of Rs. 684.59 lakhs as against a net loss of 813.92 lakhs and a cash loss of Rs. 519.14 lakhs during the previous financial year. The annual production during 2015-16 was 900 MT of Ossein and 642.30 MT of Limed Ossein as against 1336.65 MT of Ossein and 521.90 MT of Limed Ossein during the previous year. M/s. Narmada Cleantech Limited, the agency entrusted with the setting up of the common effluent discharge pipeline has assured the commissioning of the pipeline by early 2016. Taking into consideration the techno-commercial viability of the project once the pipeline gets commissioned, your Company has proactively undertaken a comprehensive scheme for revival of the subsidiary. The main features of this scheme of revival are: • Capital investment Rs. 900 lakhs financed out of term loans from the promoter, NGI Inc. Japan. • Induction of capital of an amount of Rs. 1250 lakhs into the Company through the issue of 125 lakhs 6% Optionally Convertible (Non- cumulative) Preference Shares of Rs. 10/-each at par. • Rescheduling of existing term loans • Change of business model into direct billing w.e.f. 01.04.2016 onwards. With the implementation of the above scheme of revival, this subsidiary can achieve a turnaround in operations within a short time once the pipeline is commissioned. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement of the Company and all its subsidiary companies, which is forming part of the Annual Report. The statement containing the salient features of the financial statement of both the subsidiaries under first proviso to sub-section (3) of section 129 of the Act in form AOC I is attached as Annexure II. In accordance with fourth proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company containing therein its standalone and consolidated financial statements has been uploaded on the website of the Company, www. gelatin.in. Further as per the fourth proviso of the said section, the annual accounts of the subsidiary companies and the related detailed information have also been uploaded on the website of the Company, www.gelatin.in Annual accounts of the subsidiary companies and related detailed information shall be made available to the shareholders of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies shall also be available for inspection by any shareholder at the Registered Office of the Company and subsidiary companies concerned. Hard copy of details of accounts of subsidiaries shall be furnished to any shareholder on demand. Further, pursuant to Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, consolidated financial statements presented by the Company include the financial information of its subsidiaries. STATUTORY AUDITOR'S REPORT Emphasis of Matter on the accounts of the Company referred to in the Auditor's Report is explained in detail in Note No. 2.11.1 of the Notes forming part of accounts for the year and hence no further comments are necessary. COLLABORATOR Your Collaborators continue to be the relentless source of support and guidance for the Company in each of its key initiatives. Their patronage in areas of financial support, product development, marketing, quality improvement and training of personnel has contributed significantly to the growth of the Company. NGI, Japan has not only subscribed the Optionally Convertible Preference Shares for an amount of Rs. 1580 lakhs issued by the Company in full, but also provided term loan assistance to the Company at attractive rates of interest. NGI, Inc. Japan has provided guidance and considerable financial support for the scheme of revival of the subsidiary, Reva Proteins Ltd. Kerala State Industrial Development Corporation Ltd., the other promoter is also equally supportive to each and every development concerning your Company. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The information as required under Section 134(3) (m) of the Companies Act, 2013, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure III. POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS AND SENIOR MANAGEMENT PERSONNEL The Nomination and Remuneration Committee shall identify persons who are qualified to become directors and who may be appointed in senior management cadre in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every director's performance. The Nomination and Remuneration Committee does formulate the criteria for determining qualifications, positive attributes and independence of a director recommending to the Board a policy relating to the remuneration for the directors, key managerial personnel and senior management personnel meaning thereby employees of the company who are members of the core management excluding Board of Directors. This would comprise all members of management one level below the Executive Directors, including all functional heads. The Remuneration policy to ensure that:— • the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate personnel as are herein referred to above of the quality required to run the company successfully; • relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and • remuneration to Whole-time directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in the Annual Report as Annexure IVA to this report. The Annual Report excluding the details of employees receiving remuneration in excess of the limits prescribed under section 197 of the Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is being sent to the shareholders of the Company in terms of first proviso to Section 136(1) of the Act 2013. The annexure is available for inspection at the Registered Office of the Company during business hours and any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the Registered Office of the Company. INTERNAL CONTROL SYSTEM ADEQUACY OF INTERNAL CONTROL SYSTEMS The Company has in place well defined and adequate internal controls commensurate with the size of the Company and the same were operating effectively throughout the year. The internal control systems operate through well documented Standard Operating Procedures, policies and process guidelines. These are designed to ensure that transactions are conducted and authorized within defined authority limit commensurate with the level of responsibility for each functional area. The Company's accounting and reporting guidelines ensure that transactions are recorded and reported in conformity with the generally accepted accounting principles. The Company has engaged a professional firm of Accountants with long years of experience to carry out the internal audit function. The Company has not placed any limitation on the scope and authority of the internal audit function. The internal audit function evaluates the efficacy and adequacy of internal control systems, its compliance with operating systems and policies of the Company and accounting procedures at all locations of the Company. To maintain its objectivity, effectiveness and independence, the internal audit is being carried out on a quarterly basis and reports thereon, along with the remarks of the process owners on each of the observations of audit are placed before the Audit Committee of the Board. The Audit Committee reviews each of the internal audit reports as a separate item of agenda along with the internal / statutory auditors and the management representatives wherein the Committee gives their advice / suggestions on the audit points. Based on the report of the internal audit as well as the observations of the Audit Committee the process owners undertake requisite corrective action in their respective areas thereby further strengthening the control systems. The minutes of the Audit Committee are reviewed by the Board of Directors. INTERNAL CONROLS OF FINANCIAL REPORTING The Company has in place adequate financial controls commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in the design on operations were observed. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Company has adopted accounting policies which are in line with the Accounting Standards and the Act. They are in accordance with the generally accepted accounting principles in India. Changes in policies, if required, are made in consultation with the auditors and are approved by the Audit Committee. The Board is of the view that appropriate procedures and controls are operating effectively and monitoring procedures are in place. RESPONSIBILITY STATEMENT OF DIRECTORS To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134 of the Companies Act, 2013: a) that in the preparation of the annual accounts for the year ended 31st March, 2016, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any; b) that they had selected such accounting policies as mentioned in Note 1 of the notes to the Financial Statements 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 31st March 2016 and of the profit of the Company for the year ended on that date; c) that they have taken proper and sufficient care 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) that they had prepared the annual accounts on a going concern basis; e) that proper internal financial controls laid down by the Directors were followed by the Company and such internal financial controls are adequate and were operating effectively; and f) that they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. RELATED PARTY TRANSACTIONS The Company has formulated a policy on Related Party Transactions which is in line with the relevant provisions of the Company's Act and as well as SEBI (LODR) Regulations. The said policy as approved by the Board is available in the Company website www.gelatin.in As per the said policy, prior omnibus approval of the Audit Committee is obtained on a quarterly basis for all the Related Party Transactions which are of a foreseen and repetitive nature. All Related Party Transactions actually taken place are subsequently reviewed by the Audit Committee on a quarterly basis in comparison with the conditions of omnibus approval and are recommended to the Board for approval. Additionally material Related Party Transactions foreseen in the year ahead, were got approved by the members also. Particulars of contracts of arrangements with Related Parties referred to in sub section 1 of Section 188 read with Rule 8(2) of the (Companies Accounts) Rules, 2014 are attached in Form No. AOC 2 as Annexure V. MANAGEMENT DISCUSSION AND ANALYSIS REPORT Management Discussion and Analysis Report for the year under review as stipulated under SEBI (LODR) Regulations 2015 are presented in a separate section forming part of this Annual Report. CORPORATE GOVERNANCE The Company has complied with the corporate governance requirements under the Companies Act, 2013, and as stipulated under the SEBI (LODR) Regulations. A separate section on corporate governance under SEBI (LODR) Regulations 2015, along with a certificate from the auditors confirming the compliance, is annexed and forms part of the Annual Report CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements have been prepared in accordance with the provisions of Schedule III of the Companies Act, 2013 and Accounting Standards 21, 27 and other applicable Accounting Standards issued by the Institute of Chartered Accountants of India and the provisions of the SEBI (LODR) Regulations and form part of the Annual Report. DIRECTORS Your Board had appointed Dr. K. Cherian Varghese as an Additional Director on the Board w.e.f. 08.09.2015. Dr. K.Cherian Varghese, a banker by profession was General Manager in Indian Bank. He had a stint in South Indian Bank as their Chairman & CEO. He was the Executive Director of Central Bank of India before holding post as CMD successively, in two leading Public Sector Banks namely, Corporation Bank and Union Bank of India. He also served as member and Chairman of the Board for Industrial & Financial Reconstruction of Govt. of India. Mr. Norimichi Soga, currently the Director & Chairman of Nitta Gelatin Inc., Japan was a member of the Board of Directors of your Company since May 2005. NGI, Japan vide their letter dt. 24.02.2016 withdrew their nomination of Mr. Soga as a director of the Company and instead nominated Mr. Raymond Merz, Director and Executive Officer, NGI, Japan. Mr. Seiichi Nishikawa of NGI, Japan has been appointed as an Alternate Director for Mr. Raymond Merz as envisaged under law. The period of appointment of Mr. Takeo Yamaki as a Wholetime Director designated as Director (Operations) has been extended for a further period of two years from 11.07.2016. With great pleasure, your Directors welcome the new Directors, Dr. K. Cherian Varghese, Mr. Raymond Merz and the Alternate Director, Mr. Seiichi Nishikawa. The Board also placed on record its sincere appreciation for the valuable contribution made by Mr. Norimichi Soga during his tenure as the Director of the Company. KEY MANAGERIAL PERSONNEL Rule 8(5)(iii) of Companies (Accounts) Rules, 2014 prescribes that Report of Directors should contain details of Directors and Key Managerial Personnel. Therefore, in addition to the details of Directors hereinabove given, it is brought to the notice of shareholders that Mr. P. Sahasranaman is appointed as Chief Financial Officer (CFO) w.e.f.01.12.2015, while Mr. G. Rajesh Kurup who held office as Company Secretary, continues as such since commencement of the Act and Rules effective 01.04.2014. BOARD EVALUATION As per Section 134(3)(P) of the Act, 2013 there has to be furnished to the shareholders as part of the Directors' Report, a statement indicating the manner in which formal annual evaluation was made by the Board of their performance. Similarly, the Independent Directors as part of their mandate under Schedule VI of the Act need to make an evaluation of performance of the constituents of the Board other than themselves. Accordingly, the Board at their meeting dt. 01.02.2016 deliberated and took into record that the Independent Directors (IDs) have the requisite qualification, expertise and track record for performing their duties as envisaged under Law, and they make value addition in the decision making process of the Board. Similarly the IDs at their meeting that day evaluated and expressed satisfaction at the performance of other Directors on the Board. Pursuant to the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulation, the Board at its meeting dated 20.03.2015 carried out its own annual evaluation with specific reference to Independent Directors and criteria for their independence. The rest of the Board members including the Chairman of the Board were evaluated by the Independent Directors at their meeting dated 17.04.2015. On the basis of report on performance evaluation by the Board, the Independent Directors were proposed for appointment before the Extraordinary General Meeting of the Company dated.17.04.2015, who had since been appointed MEETINGS The Board of Directors met 6 (six) times during the year 2015-16. The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report. The intervening time gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013. COMPOSITION OF AUDIT COMMITTEE The Board had re-constituted the Audit Committee with Mrs. Radha Unni as Chairperson, Mr. A. K. Nair, Mr. K. L. Kumar and Dr. K. Cherian Varghese as members. More details on the Committee are given in the Corporate Governance Report. VIGIL MECHANISM The Company has established a vigil mechanism for Directors and employees to report genuine concerns, while providing for adequate safeguards against victimisation; providing direct access to chairperson of Audit Committee, the details regarding which has also been given in the Company's official website. DISCLOSURE UNDER SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013. Your Company has always believed in providing a safe and harassment free workplace for every individual working and associating with the company, through various interventions and practices. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. A four member Internal Complaints Committee (ICC) is constituted with three lady employees and one lady NGO member. ICC is responsible for redressal of complaints relating to sexual harassment, as envisaged under the provisions of Act and Rules. Hiterto no complaints were received by ICC. PREVENTION OF INDISER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. STATUTORY AUDITORS As per Section 139 of the Act read with Rule 6 of the Companies (Audit and Auditors) Rule, 2014, M/s. Varma & Varma, Statutory Auditors, has time till AGM corresponding to the year ended 31.03.2017 for subjecting themselves to rotation. The Board at the meeting dt. 06.05.16 having proposed to the ensuing AGM, their re-appointment for yet another year, the Auditors vide letter confirmed their eligibility under Section 141 of the Companies Act, 2013 and other applicable provisions for reappointment as auditors of the Company. As required under SEBI (LODR) Regulations, the auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. M/s. Varma & Varma have forwarded their confirmation that their re-appointment as above is within the limits specified under the Companies Act, 2013. Their appointment as above is being put up for approval by members at the ensuing Annual General Meeting. SECRETARIAL AUDIT Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, the Company has appointed Mr. Abhilash N. A. (CP No. 14524, M No. 22601), Company Secretary in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure VI. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT 9 are annexed herewith as Annexure VII. ACKNOWLEDGEMENT Your Directors place on record their sincere appreciation for the support and assistance extended by the Government of Kerala and M/s. Kerala State Industrial Development Corporation Ltd. They also take this opportunity to extend their whole hearted gratitude to M/s. Nitta Gelatin Inc., Japan, for their timely and valuable guidance and inspiration. Your Board placed on record its sincere appreciation for the significant contributions made by employees across the Company through their dedication and commitment. On this occasion, your Board thank all the customers, suppliers, bankers and other associates for their unstinted co-operation. Your Directors are also thankful to the esteemed shareholders for their continued patronage and the confidence reposed in the Company and its management. For and on behalf of the Board of Directors, P. H. KURIAN IAS CHAIRMAN DIN: 00027596) Date : 06.05.2016 Place : Kochi |