DIRECTORS' REPORT TO THE MEMBERS Your Directors have pleasure in presenting the 23rd Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2015. REVIEW OF OPERATIONS During the financial year under review, the operational results ended with a Profit before Extraordinary items at Rs. 111 Lacs as against Rs. 82 Lacs in the previous year. The Net revenue of the company stands at Rs. 2832 Lacs as against Rs. 2555 Lacs in the previous financial year reporting an 11% growth. The consolidated net revenue including its subsidiaries for the year is Rs. 3906 Lacs against Rs. 3486 Lacs during previous year. During the financial year under review, distribution of Ayurveda Formulation has shown a growth of 13%. Your company was able to improve the market share in Kerala and made a big progress outside Kerala. PERFORMANCE OF SUBSIDIARIES Indian Subsidiary During the year under review, M/s. Ayurveda Gram Heritage Wellness Centre Pvt. Ltd. has achieved a turnover of Rs. 637 Lacs against a turnover of Rs. 564 Lacs in the previous financial year clocking a sound growth of 13%. The Net profit of the company, after providing for tax is Rs. 61 Lacs against Rs. 66 Lacs in the previous year. Overseas Subsidiaries The combined turnover of overseas subsidiaries was Rs. 530 Lacs as compared to Rs. 454 Lacs in the previous year. Kerala Ayurveda Academy under Ayurvedic Academy Inc is currently offering certified courses in the state of Washington and California and also offers a distant learning course across USA. CONSOLIDATED FINANCIAL STATEMENTS A report on performance and financial position of each of the subsidiaries, associates and joint venture companies is attached as Annexure 1. Accordingly, this annual report does not contain the reports and other statements, of the subsidiary companies. Any member intented to have a copy of Balance sheet and other financial statement of these Companies may write to Company Secretary. It shall also be kept for inspection during business hours by any shareholder in the registered office of the Company and the respective offices of its subsidiary companies. It shall also be made available on the website of the Company www.keralaayurveda.biz under the "Investors" section. COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES DURING THE YEAR During the financial year ended 31st March, 2015, no entity became or ceased to be the subsidiary, joint venture or associate of the Company. DIVIDEND In view of the accumulated losses of the past, your Directors are not in a position to recommend any dividend for the current year. RESERVES During the year the total reserves and surplus of the company has improved to Rs. 325 Lacs from Rs. 288 Lacs. Based on the Companies Act, 2013 Rs. 73 Lacs of reserves was adjusted towards depreciation of the assets whose useful life as on 1st April, 2014 was nil. During the year company earned a net surplus of Rs. 110 Lacs. MATERIAL CHANGES AND COMMITMENTS With a view to broad base the reach of the company & to propagate Ayurveda, your company has revamped its website by adding useful articles, blogs, videos related to Ayurveda and companies products. Your company is providing access to people who are currently not served by our centers or our distribution network by providing Ecommerce option to pay online or by making offline payments at any of the ICICI bank branches across India and receive products at their doorsteps. Company believes that this will help building knowledge, communication and will increase Purchase of Company' products. CHANGE IN THE NATURE OF BUSINESS, IF ANY There was no change in the nature of business of the Company during the financial year ended 31st March, 2015. BOARD OF DIRECTORS Appointment / Reappointment / Resignation of Directors Mr. A T Jacob, Director of the company retire by rotation at ensuing Annual General Meeting and being eligible, offer himself for re-appointment. During the year, Dr. K Rajagopalan, Mr. M C Mohan, Mr. Ronald George Pearce and Mr. S Krishnamurthy have been appointed as an Independent Directors for a term of 5 years. Dr. K Rajagopalan Independent Director of the company had passed away on 10th January, 2015. Dr. K Rajagopalan had contributed immensely for the growth of the company. The Board placed on record its appreciation for the valuable services rendered and the wholehearted support and advice given by him to the board during his tenure. Mr. M S Seetharaman was appointed as Additional Independent Director with effect from 10th February, 2015. He offers himself as Non Executive Independent Director in this Annual General Meeting. Also, Mr. Arvind Agarwal has been appointed as Chief Financial Officer of the company with effect from 24th May 2014. Mr. K Raghunadan, Company Secretary has resigned from the post of Company Secretary on 10th February, 2015. Pursuant to his resignation, Ms. Anusha Rajeswaran was appointed as Company Secretary from 10th February, 2015. MEETINGS OF THE BOARD OF DIRECTORS A calendar of Meetings is prepared and circulated in advance to the Directors. 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 the Meetings was within the period prescribed under the Companies Act, 2013 and the listing agreement with the Bombay Stock Exchange. During the financial year 2014-2015, the Board of Directors of the Company, met 5 (five) times on 24th May, 2014, 6th August 2014, 29th September, 2014, 14th November, 2014 and 10th February, 2015. Further, a separate Meeting of the Independent Directors of the Company was also held on 14th November, 2014, whereat the prescribed items enumerated under Schedule IV to the Companies Act, 2013 and clause 49 of the Listing Agreement were discussed. DECLARATION BY AN INDEPENDENT DIRECTOR(S) AND RE- APPOINTMENT All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under section 149 (6) of the Companies Act, 2013. DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013 Details pursuant to section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as Annexure 2. FORMAL ANNUAL 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 of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. NOMINATION AND REMUNERATION POLICY OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company approved a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178(3), based on the recommendations of the Nomination and Remuneration Committee. The broad parameters covered under the Policy are - Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Directors, Nomination and Remuneration of the Key Managerial Personnel (other than Managing/ Whole-time Directors), Key-Executives and Senior Management and the Remuneration of Other Employees. The Company's Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure 3 and forms part of this Report. AUDITORS: 1. Statutory Auditors M/s.Biju George & Co, Chartered Accountants, Vellaringattu Towers, Thodupuzha 685584 were appointed as Statutory Auditors of the company upto the conclusion of Annual General Meeting in 2019 subject to ratification at every Annual General Meetng. Company has received a letter, pursuant to Section 139 of the Companies Act, 2013, from M/s.Biju George & Co., Chartered Accountants, Vellaringattu Towers, Thodupuzha 685584 confirming consent and their eligibility for acting as Statutory Auditors of the Company, if the appointment is ratified at the ensuing Annual General Meeting. The Board also recommends their appointment as Statutory Auditors for the ensuing financial year. Statutory Auditors' Report The Auditors' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are self-explanatory and do not call for any further comments. 2. Secretarial Auditor Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed there under, M/s. SVJS & Associates were appointed as the Secretarial Auditors of the Company to carry out the secretarial audit for the year ending 31st March, 2015. Secretarial Audit Report A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as Annexure 4. There are few qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report and the company has taken steps to ensure that it complies in future and corrective action has been taken to rectify the observation made in the report. 3. Internal Audit & Controls The Company appointed Mr.Mathew Joseph, Chartered Accountant, as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations. 4. Cost Auditors In terms of the Cost Audit Order dated 31st December, 2014 notified by the Ministry of Corporate Affairs which exempted certain industries from the purview of Cost Audit, your Company is not required to get the cost audit done for financial year 2014-15. VIGIL MECHANISM : In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.keralaayurveda.biz under "Investors" Section. RISK MANAGEMENT POLICY The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS There was no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. CORPORATE SOCIAL RESPONSIBILITY Your company always had a deep sense of responsibility towards the community. Company conducted medical camps and free medical check ups at various places. Diabetic Awareness campaign was held on world Diabetic Awareness day to create awareness. DEPOSITS In terms of the provisions of Section 73 of the Companies Act, 2013, the company has not accepted any deposits from the public during the financial year under review and there are no outstanding fixed deposits from the pubic as on 31st March, 2015. CORPORATE GOVERNANCE Your company has complied with corporate governance norms as stipulated by Listing Agreement entered into with the Bombay Stock Exchange. A detailed report on Corporate Governance in line with requirements of the Companies Act, 2013 and clause 49 of the Listing Agreement entered into with stock exchange is attached to this report. A certificate from statutory auditors confirming the compliance of Corporate Governance is also attached to this report. AUDIT COMMITTEE The Audit Committee of the Board of Directors of the Company, comprises 4 (Four) Members, namely Mr. S Krishnamurthy, Mr. M C Mohan, Ms. Katarzyna Zimpel and Dr. K Rajagopalan, majority of them being Independent Directors except Ms. Katarzyna Zimpel who is a Non-Independent Non-Executive Director. Dr. K Rajagopalan expired on 10th January, 2015 and subsequently Mr. M S Seetharaman was appointed in his place. The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A detailed review of operations, performance and future outlook of your company and its businesses is given in the Management Discussion and Analysis, which forms part of this report. EXTRACT OF ANNUAL RETURN As required pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report as Annexure 5. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES: The particulars of every contract or arrangements entered into by the Company with related parties referred to in subsection (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso is attached as Annexure 6. DIRECTORS' RESPONSIBILITY STATEMENT The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that— (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; (e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively, and (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE Company has adopted a policy for prevention of Sexual Harassment of Women at workplace (prevention, prohibition and redressal Act, 2013) and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure 7 and forms part of this Report. HUMAN RESOURCES Your Company treats its "human resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF). LISTING WITH STOCK EXCHANGES: The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to Bombay Stock Exchange where the Company's Shares are listed. ACKNOWLEDGEMENTS The Board places on record its appreciation for the continued patronage, support, co-operation extended to the Company by its shareholder, customers, bankers and all the Government and statutory agencies with whose help, cooperation and hard work the Company is able to achieve the results. Your directors would further like to record appreciation to the efforts of every employees for their valuable contribution to the Company. By order of the Board of Directors For Kerala Ayurveda Limited Ramesh Vangal Chairman DIN 00064018 Date :29th May, 2015 Place: Bengaluru |