DIRECTORS' REPORT The Shareholders, Your Directors have pleasure in presenting the Thirty Ninth Annual Report and audited accounts for the financial year ended 31st March 2015. OPERATIONS For the year ended 31st March, 2015, the Company's sales turnover was at Rs. 1,73,081 lacs as against Rs. 1,73,612 lacs in the previous year. The profit before tax stood at Rs. 2,772 lacs as compared to Rs. 4,517 lacs in the previous year. During the year the cost of raw material like maize and soya de-oiled cake was on higher side and realizations from the sale of grown up broiler birds were on lower side. During the year under review, the Poultry and Poultry Products Segment showed improved performance as compared to the previous year. Performance of the animal health products segment was better as compared to the previous year. However, the performance of the oilseed segment was affected due to lower realizations. EXPANSION All the expansion programmes of the Company i.e. to augment capacities in poultry and poultry products segment and setting up a new plant for processing of soya seeds have been completed during the year under review. Setting up of Venky's XPRS outlets at various locations is under way. DIVIDEND Your Directors recommend a dividend of Rs. 5.00 per equity share (50%). The dividend, if approved at the ensuing Annual General Meeting, will absorb Rs. 470 lacs (previous year Rs. 470 lacs) plus taxes. Your Directors propose to transfer Rs. 2,000 lacs to the General Reserve. SEGMENT-WISE PERFORMANCE Operational performance of each business segment has been comprehensively covered in the Management Discussion and Analysis Report given in Annexure-A which forms part of this Report. CORPORATE GOVERNANCE REPORT As per the requirements of Clause 49 of the Listing Agreement a separate report on Corporate Governance along with the certificate issued by Company Secretary in Whole-Time Practice thereupon is given in Annexure-B which forms part of this Report. EXTRACT OF ANNUAL RETURN Pursuant to the provisions of Section 92 of the Companies Act, 2013 an extract of the Annual Return in Form MGT-9 is annexed to this report as Annexure C and forms of this report. MEETINGS OF BOARD During the year 2014-15, five meetings of the Board of Directors were held. The dates on which the said meetings were held are as follows: 1) 12th May, 2014, 2) 29th May, 2014, 3) 11th August, 2014, 4) 12th November, 2014, 5) 11th February, 2015. DIRECTORS' RESPONSIBILITY STATEMENT The Directors declare that : 1. the accounts for the year ended 31st March, 2015 have been prepared by following applicable accounting standards; 2. the 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 at the end of the financial year ended 31st March, 2015 and of the profit of the Company for that year; 3. proper care has been taken for the maintenance of adequate records for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; 4. the accounts for the year ended 31st March, 2015 have been prepared on a going concern basis; 5. internal financial controls to be followed by the company are laid down and that such internal financial controls are adequate and are operating effectively; and 6. proper systems are devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. BOARD OF DIRECTORS & THEIR COMMITTEES a. Changes in the Composition of Board of Directors. As per the provisions of Companies Act, 2013 and Articles of Association of the Company, Mrs. Anuradha J. Desai, Director is due for retirement by rotation at the ensuing Annual General Meeting and, being eligible, offers herself for reappointment. A brief profile of the retiring director is given in the Corporate Governance Report annexed to this report. Apart from the above, there is no change in the Board of Directors of the Company. b. Declaration from Independent Directors: Pursuant to Section 149(7) of the Companies Act, 2013, the Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as stipulated under sub section 6 of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement. c. Policy relating to the remuneration for directors, key management personnel & other employees. The Company's policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided in sub section 3 of Section 178 is available on the website of the Company at <http://www.venkys.com/Policy> on Remuneration of Director, KMP etc.pdf d. Annual evaluation by the Board of its own performance and that of its Committees. The board annually performs the evaluation of its own performance, the Committees of the Board and that of individual directors. While carrying out such evaluation various aspects relating to the Board functioning such as adequacy of composition, level of diversity of the Board, execution of specific duties, governance etc. are considered. The same mechanism is applied while evaluating the performance of the Committees of the Board and additionally the fulfillment of duties and scope as stipulated by the Companies Act, 2013 and Listing Agreement is considered. The performance evaluation of individual directors is carried considering factors like execution of specific assignments, effective contribution to the Board discussions and decisions, independence of judgment and steps taken towards proper governance of business and safeguarding interest of stakeholders. e. Familiarisation Programme of Independent Directors The Company at selected intervals takes steps to familiarise its independent directors about their roles, rights and responsibilities. The details of such programme is available on the website of the Company at <http://www.venkys.com/> Familiarisation Programme for ID.pdf f. Audit Committee: The Company has already formed Audit Committee as per Section 177 of the Companies Act 2013. Details of such committee is given in corporate goverence report which is annexed and forms part of this report PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS During the year under review the Company has not given any loans, guarantees or made investments under Section 186 of the Companies Act, 2013. RISK MANAGEMENT The Company has in place a risk management plan devised by the Board and focuses on three key elements i.e. Risk Assessment, Risk Management and Risk Monitoring. The Board therefore identifies elements of risk, focus on mitigating the risk as per the plan and monitor the same post execution. CORPORATE SOCIAL RESPONSIBILITY VH Group and in particular Venky's (India) Limited has been historically doing CSR activities concentrated on educational and medical services for the uplifment of the society. Your company has pursuant to Section 135 of the Companies Act, 2013 formed a CSR Committee. The Annual Report on CSR for the F.Y. 2014-15 is appended as Annexure D to this report. The policy on CSR is available on the website of the company at <http://> www.venkys.com/CSR_Policy.pdf INTERNAL FINANCIAL CONTROLS The internal control system is designed to ensure that all the financial and other records are reliable for preparing financial statements and for maintaining accountability of the assets. The Company has a proper and adequate system of internal controls. VIGIL MECHANISM / WHISTLE BLOWER POLICY Your company has established a Vigil Mechanism as per the provisions of the Companies Act, 2013 for the directors and employees to report genuine concerns. The Audit Committee overlooks this function. The details of vigil mechanism is available on the website of the Company at <http://> www.venkys.com/VIGIL_MECHAHISM.pdf DEPOSITS During the year under review the Company has neither accepted any deposits under Chapter V of the Companies Act, 2013 nor any such deposits remained unpaid or unclaimed. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES Pursuant to the provisions of Section 134 of the Companies Act, 2013, read with Rule 8 (2) of the Companies (Accounts) Rules, 2014, contracts or arrangements entered into by the Company with Related Parties have been done at arm's length and are in the ordinary course of business. Hence, no particulars are being provided in Form AOC - 2. However, Related Party disclosures as per AS -18 have been provided in Note no. 10 to the Financial Statements. ACCOUNTS The accounts read with the notes thereon are self-explanatory and hence do not call for any further comments. INSURANCE The assets of the Company which include buildings, sheds, machinery, stocks, etc. are adequately insured. PERSONNEL AND HUMAN RESOURCES Employee relations continued to be cordial throughout the year. The Company did not have any employee during the year under review whose remuneration is required to be disclosed in terms of the provisions of Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014. Further information as per said rule is appended to this report as Annexure E. AUDITORS M/s. Sudit K. Parekh & Co., Chartered Accountants, were appointed in the 38th Annual General Meeting and their appointment is liable for ratification in the ensuing Annual General Meeting. SECRETARIAL AUDITOR Pursuant to Section 204 of the Companies Act, 2013 and allied rules thereof, the Board of Directors has appointed Mr. P. L. Shettigar, Practicing Company Secretary as Secretarial Auditor for conducting the audit for the financial year 2014-15. The Secretarial Audit report issued by Mr. Shettigar is appended as Annexure F and forms part of this report. The Secretarial Audit report does not contain any qualification, reservation or adverse remark. COST AUDITORS Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Record and Audit) Rules, 2014 the Company has appointed M/s. Joshi Apte & Associates, Pune as Cost Auditors of the Company for conducting cost audit for the financial year 2015-16. Further, as per sub section (3) of Section 148 of the Companies Act, 2013 the remuneration decided between the Board of Directors and Cost Auditor is put before the members for their ratification in the ensuing Annual General Meeting. The Cost Audit for the financial year ended 31st March, 2015 is under process and the Company will submit the Cost Auditors' Report to the Central Government in time. INFORMATION UNDER SECTION 134 READ WITH RULE 8 OF THE COMPANIES (ACCOUNTS) RULES, 2014 A. Conservation of Energy The operations of the Company are not very power intensive. Nevertheless, the Company continues its efforts to conserve energy wherever practicable, by economizing on the use of power at the farms, hatchery and offices. The Company has installed state-of-the-art hatchers and setters at its hatcheries. B. Technology Absorption 1. Research and Development (R & D) a) Specific areas: R & D activities of the Company are concentrated in the areas of developing wider application of Specific Pathogen Free (SPF) eggs and application of various breeder management techniques to improve productivity and increase feed efficiency. b) Benefits derived : Wider acceptance of SPF eggs in the manufacture of human and livestock vaccines in India and higher production and increased feed efficiency of breeders. c) Plan of action : Further promotion of SPF eggs applications in the biological industry d) Expenditure on R & D : The expenditure incurred by the Company during the year on Research and Development was Rs. 69.49 Lacs. 2. Technology Absorption, Adaptation and Innovation a) Efforts made : The Company maintains continuous interaction with Charles River Laboratories Inc. (formerly SPAFAS Inc.), U.S.A for absorption of technology. b) Benefits : i. Development of new application ii. Savings in foreign exchange through import substitution. c) Technology Imported : SPF egg production and Reagent production technologies were imported from Charles River Laboratories Inc. The benefit of the ongoing research by them in the said technologies is being derived by the Company through continued association with them. C. Foreign Exchange Earnings and Outgo 1. Efforts have been made to increase exports of hatching eggs and SPF eggs. 2. Earnings and outgo: a. Foreign exchange earnings (FOB): Rs. 213.25 lacs b. Foreign exchange outgo: Rs. 1,353.75 lacs ACKNOWLEDGEMENT The Directors place on record their appreciation for the excellent services of the employees at all the levels. The Company also expresses its thanks to its shareholders, bankers, Central and State Governments and district level authorities, Stock Exchanges, dealers and customers of the Company for their valued support. For and on behalf of the Board of Directors Anuradha J. Desai Chairperson Date : May 29, 2015 Place : Pune |