Mar 31, 2022
Your Directors have a great pleasure in presenting the 30th Annual Report together with the Audited Standalone & Consolidated Financial Statements of your Company for the Financial Year ended March 31, 2022.
Financial Results
The Company''s financial performance for the year ended March 31, 2022 is summarized below: |
('' in Millions) |
|
Particulars |
Standalone |
|
FY 2021-22 |
FY 2020-21 |
|
Net Sales |
26404.91 |
24067.87 |
Other Operating Income |
24.30 |
2.42 |
Total Revenue |
26429.21 |
24070.29 |
Add: Other Income |
103.14 |
84.07 |
Total Income |
26532.35 |
24154.36 |
Less: i) Total Expenditure |
24556.70 |
21525.36 |
ii) Fair value loss on FVTPL equity shares |
- |
48.12 |
Profit before Finance cost, Depreciation, Amortisation Expenses and Tax |
1975.65 |
2580.88 |
Less: i) Finance cost |
32.01 |
178.48 |
ii) Depreciation and Amortisation Expenses |
499.64 |
440.54 |
Profit before tax and exceptional items |
1444.00 |
1961.86 |
Exceptional items |
91.40 |
- |
Profit before tax |
1352.60 |
1961.86 |
Less: i) Current Tax |
343.01 |
500.37 |
ii) Deferred Tax |
(5.75) |
9.85 |
Profit after tax |
1015.34 |
1451.64 |
Performance of the Company Standalone
Your Company, during the year under review earned revenue from operations (Gross) of '' 26,429.21 Million, against '' 24,070.29 Million over the previous year. The profit before Finance Cost, depreciation & amortization and tax was of '' 1975.65 Millions as against '' 2,580.88 Million in the previous year.
The Profit After Tax for the current year is '' 1,015.34 Million against '' 1,451.64 Million in the previous year.
Consolidated
Your Company, during the year under review earned revenue from operations (Gross) of '' 26,812.79 Million, against '' 24,731.13 million over the previous year. The profit before Finance Cost, depreciation & amortization and tax was of '' 1,869.31 Millions as against '' 2,679.24 Million in the previous year.
The Profit After Tax from continuing operations for the current year is '' 965.21 Million against '' 14,90.50 Million in the previous year.
Transfer to General Reserves
Your Directors do not propose to transfer any amount to general reserves for the financial year ended March 31, 2022.
Dividend
During the year under review the Board of Directors at its meeting held on October 21, 2021 declared 1st interim dividend of 50% i.e. '' 2.50/- per equity share of face value of '' 5/- each amounting to '' 115.99 Million for the Financial Year 2021-22 and paid on November 12, 2021.
Your Directors have pleasure in recommending a final dividend of 50% i.e. '' 2.50/- per equity share of face value of '' 5/- each for the financial year ended March 31, 2022 at their meeting held on May 27, 2022 amounting to '' 115.99 Million. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.
The Register of Members and Share Transfer Books will remain closed from Saturday, July 23, 2022 to Friday, July 29, 2022 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2022. The Annual General Meeting is scheduled to be held on Friday, July 29, 2022.
In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulationsâ), the Company has formulated and adopted a Dividend Distribution Policy with the objective of providing clarity to its stakeholders on the profit distribution strategies of the Company. During the year, the said Policy has been reviewed by the Board of Directors of the Company. The policy hosted on the website of the Company at https://www. heritagefoods.in/policy
The Authorised Share Capital of the Company as on March 31, 2022 was '' 500,000,000/- divided into 9,60,00,000 equity shares of '' 5/- each and 20,00,000 preference shares of '' 10/- each. The paid up Equity Share Capital as on March 31, 2022 stood at '' 23,19,90,000/- divided into 4,63,98,000 equity shares face value of '' 5/- each. During the year under review, the Company has not issued any shares including shares with differential voting rights, not granted any stock options and not issued any sweat equity share to its employee(s)/director(s). As on March 31, 2022, none of the Directors of the Company holds any instruments convertible into equity shares of the Company. The Company has not issued equity shares with differential rights as to dividend, voting or otherwise as on March 31, 2022.
Your Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013, i.e. within the meaning of Section 2(31) of the Companies Act, 2013 read with Rule 2(1)(c) of the Companies (Acceptance of Deposits) Rules, 2014 and as such there are no such overdue deposits outstanding as on 31st March, 2022.
The Company has not bought back any of its shares during the Financial Year ended March 31, 2022.
Particulars of Loans, Guarantees and Investments
Loans: During the year under review your Company has not given any loans to any persons or body corporates as envisaged under Section 186 of the Companies Act, 2013.
Guarantees: The Company has given corporate guarantee as at March 31, 2022 of '' 207.50 Million for the credit facilities availed by its wholly owned subsidiary Company namely M/s. Heritage Nutrivet Limited (CIN: U15400TG2008PLC062054) (the outstanding as on March 31, 2022 was '' 79.69 Million) and '' 220 Million for the credit facilities availed by its joint venture Company namely Heritage Novandie Foods Private Limited (CIN: U74999TG2017PTC120860) (the outstanding as on March 31, 2022 was '' 120.26 Million).
Investments: During the year under review your Company has invested '' 104.65 million in the equity shares of its Joint Venture namely Heritage Novandie Foods Private Limited.
Particulars of Contract or Arrangements made with Related Parties
The particulars of contracts or arrangements with related parties as per Section 188 of the Companies Act, 2013 and rules made thereof as amended from time to time and as per the Related Party Transaction (RPT) policy the Company during the financial year ended March 31, 2022 in prescribed Form AOC-2 is annexed to this Board''s Report (Annexure-1). Further there are no materially significant related party transactions during the year under review with Promoters, Directors, Key Managerial Personnel''s and their relatives, which may have potential conflict with interest of the company at large. The related party transactions were placed before the audit committee and also to the Board at their respective meetings for approval. All related party transactions entered during the year were in the ordinary course of business and at arm''s length basis. Details of the related party transactions during the year are part of the financial statements forming part of this Annual Report.
Material changes and commitments affecting financial position between the end of the financial year and date of report
There are no material changes and commitments affecting financial position of the company, which occurred after the end of the financial year i.e., March 31, 2022,
Director''s Responsibility Statement as required under Section 134 (3)(c) & (5) of the Companies Act, 2013.
The financial statements are prepared in accordance with the provision of Section 129 read with Schedule III of the Companies Act, 2013 and the rules made thereof, Ind-AS and Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except the sale proceeds received under REC Mechanism of the Renewable Energy. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''the Act''), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). There are no material departures from prescribed accounting standards in the adoption of these standards.
The Board of Directors to the best of their knowledge and understand confirm that:
⢠In the preparation of the annual accounts (Standalone & Consolidated) for the financial year 2021-22, the applicable accounting standards have been followed along with proper explanation relating to material departures.
⢠They 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 2021-22 and of the profit and loss of the Company for that period.
⢠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 if any,
⢠The annual accounts of the company have been prepared on a going concern basis.
⢠They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
⢠They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Variation in market capitalization
As at March 31 |
||
2022 |
2021 |
|
Market Capitalization ('' in million) |
14,838.08 |
13,622.50 |
Price earning Ratio |
14.62 |
9.38 |
Note: Data based on share prices quoted on BSE
Management Discussion and Analysis
In terms of the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 as amended from time to time, the Management''s Discussion and Analysis is provided in a separate section and forms an integral part of this Report.
Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization''s brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders'' expectations. It is imperative that your company''s affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of the stakeholders.
In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter "Listing Regulationsâ) as amended from time to time, a Report on Corporate Governance along with Compliance Certificate
issued by Statutory Auditors of the Company forms integral part of this Annual Report.
Your Company has not changed its nature of business during the period under review. Your Company has two divisions i.e. Dairy division and Renewable division in operation in different States in India as on March 31, 2022.
Global Dairy Industry: World milk production is expected to increase by 1.6 percent annually between 2021 and 2029 and reach 997 million tons in 2029, according to a report prepared by OECD-FAO. This report reveals that the increase in milk yield is highly related to the diet. In countries where grazing-based livestock breeding is carried out, milk production increases are mostly related to the number of herds, while in countries where special feeding is common, production increases due to productivity.
Indian Dairy Industry: India has been the leading producer and consumer of dairy products worldwide since 1998 with a sustained growth in the availability of milk and milk products. Dairy activities form an essential part of the rural Indian economy, serving as an important source of employment and income. India also has the largest bovine population in the world. However, the milk production per animal is significantly low as compared to the other major dairy producers. Moreover, nearly all of the dairy produce in India is consumed domestically, with the majority of it being sold as fluid milk. On account of this, the Indian dairy industry holds tremendous potential for value-addition and overall development.
Along with offering profitable business opportunities, the dairy industry in India serves as a tool of socio-economic development. Keeping this in view, the Government of India has introduced various schemes and initiatives aimed at the development of the dairy sector in the country. For instance, the "National Dairy Programme (Phase-I)â aims to improve cattle productivity and increase the production of milk expanding and strengthening and expanding the rural milk procurement infrastructure and provide greater market access to the farmers. On the other hand, the private participation in the Indian dairy sector has also increased over the past few years. Both national and international players are entering the dairy industry, attracted by the size and potential of the Indian market. The focus is being given to value-added products such as cheese, yogurt, probiotic drinks, etc. They are also introducing innovative products keeping in mind the specific requirements of the Indian consumers. These players are also improving their milk procurement network which is further facilitating the development of the dairy industry in India.
Dairy Market Forecast: As per the research report by IMARC Group, The dairy market in India has reached a value of '' 13,174 Billion in 2021. Looking forward, IMARC Group expects the market to reach '' 30,840 Billion by 2027, exhibiting a CAGR of 14.98% during 20222027.
Organized & Unorganized Dairy Market in India: Being one of the primary dairy consumables in India, the demand increase for milk in the country is owed to the increasing population. As of
FY 2020-21, 70-74% of the Indian dairy and milk processing market was part of the unorganized sector.
State-wise segment: Uttar Pradesh, Rajasthan, and Gujarat have been the major milk producing states in India. Uttar Pradesh is the largest dairy and milk-producing state because it is home to the highest buffalo population and the second-highest cattle population in the country. The majority of the rural population in this state is engaged in livestock rearing and dairying. Gujarat has numerous cooperative dairy milk unions, private dairy plants, and primary milk cooperative societies, which play crucial role in the production of milk in the state.
Value-added product: Apart from milk, the revenue of the Indian dairy and milk processing industry is generated from several value-added products such as butter, curd, paneer, ghee, whey, flavored milk, ultra-high temperature (UHT) milk, cheese, yogurt etc. The value-added products market is under-penetrated, thus having tremendous scope for the growth and is expected to grow at much faster rate as compared with the commodity market.
Export/Import: From India, the export of dairy products has increased to countries like Bhutan, Afghanistan, Canada, Egypt, and the United Arab Emirates. India has also imported a significant amount of dairy products from countries like France, New Zealand, Ireland, France, Ukraine, and Italy.
Key growth drivers of the market: India''s livestock sector is regarded as one of the largest in the world with a bovine population of 299.90 Mn, which comprises of cow''s and buffalo''s. The growth of the Indian dairy and milk processing market is ensured by the steady supply of milk which is the primary raw material for this industry.
The major challenge faced by the Dairy Industry is the organization of the supply chain and logistics. The good part is that challenges are nothing but opportunities in disguise and in order to meet this challenge head on, proactive steps need to be taken to empower farmers and provide a stronger supply chain for them to rely on. Even though India is the largest producer of milk in the world, the industry itself is largely unorganized, with only 26-30% percent of the total milk produced being channelized in an organized manner. The first step to countering this would be to shift the focus to smaller dairy farms, which sometimes lack veterinary facilities and basic nutritious fodder etc.
Increasing Demand for Milk and Value-Added Products: With an increase in the spending power of the population, the demand for milk and other value-added dairy products is expected to increase in the coming years. In order to meet the rising demand, there needs to be a marked shift from the unorganized to the organized sector. Moreover, consumers now-a-days are not only hold greater buying power but also health conscious regarding what they consume. Value added products are produced by some modification or enhancement via addition or segregation of liquid wholesome milk. Value-added products include cheese, paneer, ghee, yoghurt and probiotic drinks etc. These products are produced by alteration and enrichment via use of additives,
microbial fermentation or simply mixing with liquid milk. There is thus a necessity to provide healthy dairy products which can be readily consumed. This creates an opportunity for boutique dairy farms to set up local operations providing fresh cow or buffalo milk to consumers. Over and above with people having less time these days, the demand for premium value added products such as probiotic yoghurt, cheese, milk shakes etc. are on the rise. These products not only have a higher margin but also have a longer shelf life which makes the supply chain easier and cost effective.
There is immense room for the organized sector to gain market share of marketable milk from unorganized sector as per the Department of Animal Husbandry, Dairying and Fisheries, the organized milk handling is expected to grow from 26-30% at present to 50% by FY23.
Organised players account for just 26-30% of the overall milk market and expect their share to grow going forward. Also expect rising milk procurement prices to be passed on by B2C players, resulting in stable margins.
Government Initiatives: Government is progressively taking initiatives to promote the dairy industry in India, in which inclination towards cattle breeding, clean milk production, dairy development and feed fodder management are included. The Department of Animal Husbandry, NDDB, and other government affiliated institutions manage these initiatives in a constructive way. Utilizing the available resources for dairy industry to their full extent is the main objective behind these initiatives. The manner in which Dairy industry would enhance milk production and upgrade milk processing technologies, is also supervised by these departments/agencies.
Your Company is a strong player in the curd segment and has expanded its product basket by entering into the fastest growing product like Yoghurt, through a Joint Venture Company.
The motto of your company is to empower farmers by doing the following activities
⢠Facilitating loans for the purchase of cattle through commercial banks/ NBFCs
⢠Facilitating cattle insurance;
⢠Conducting veterinary camps for animals at frequent intervals;
⢠Supply of high quality cattle feed and fodder seeds;
⢠Ensuring timely payment to farmers.
In its bid to become a pan India player, your Company has expanded its distribution of products to 11 states in India covering South, West and North India. It has direct procurement network of 0.3 million dairy farmers across eight major milk producing States namely, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Rajasthan, Punjab and Haryana. The direct
'' in Millions |
||||||
Particulars |
Heritage Nutrivet Limited (Wholly Owned Subsidiary) year ended on |
Skil Raigam Power (India) Limited (Associate) year ended on |
Heritage Novandie Foods Private Limited (Joint Venture) year ended on |
|||
31/03/2022 |
31/03/2021 |
31/03/2022 31/03/2021 |
31/03/2022 |
31/03/2021 |
||
Total Income |
959.97 |
1218.56 |
- |
23.49 |
1.17 |
|
Total Expenses |
944.32 |
1120.98 |
28.91 |
0.19 |
144.17 |
45.33 |
Profit/ (Loss) before tax |
15.65 |
97.58 |
(28.91) |
(0.19) |
(120.68) |
(44.16) |
Current tax |
0.58 |
16.03 |
- |
- |
- |
- |
Deferred tax |
4.48 |
9.43 |
- |
- |
- |
- |
Profit/ (loss) for the year |
10.59 |
72.12 |
(28.91) |
(0.19) |
(120.68) |
(44.16) |
route of milk procurement enables it to maintain quality. The company also operates 187 bulk coolers, chilling plants and procured 1.3 Million liters of milk per day. It operates 18 own processing plants with installed milk processing capacity of 2.7 million liters per day.
Your Company procures 1.3 Million litres of milk daily from 0.3 million farmers across eight states. The milk is directly procured from farmers which ensures greater consistency in milk quality and consistency in supply. The company''s installed processing capacity is 2.7 Million liters per day and chilling capacity is 2.13 Million LPD. Products of the Company are available across 11 states viz. Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Uttar Pradesh and Uttarakhand.
The second wave of the global health pandemic COVID-19 in the month of April and May 2021 in India and the lockdown imposed by the State Governments resulted in slowdown of most of the businesses in India. Your Company''s plants continued to operate as per the business requirements and in compliance with the instructions and guidelines issued by the Government of India and the respective State Governments.
Your Company was been categorised under "Essential Commoditiesâ as per the notification issued by Ministry of Home Affairs (MHA) Govt. of India, for supply of Milk and Milk Products. The pandemic had no material adverse impact on the company''s business, although the sales of milk and value-added products have come down because of the lockdown imposed by various State Governments. Transportation was also impacted initially to some extent due to absenteeism of drivers. All the milk supplied by farmers was procured and processed during the lockdown period.
However, the availability of raw materials and the supply chain of the company were not affected.
The Company took conscious decision to balance uninterrupted operations and ensuring a safe working environment. The company is continuously ensuring a safe working environment to its employees by sanitizing its work place regularly. Your Company has complied with the COVID-19 guidelines issued by the Government of India and the respective State Governments.
The Board of Directors expressed their satisfaction about the way company has handled the business during the period of COVID-19 outbreak.
Your Company strongly recognizes the responsibility towards protecting the environment. As a forward-looking enterprise, it is strongly committed to extending the Green'' footprint.
Your Company is taking a lot of initiatives for conservation of energy. Renewable energy was the major focus area in the last ten years. Now your Company has 10.50 MW of solar and wind power
for captive consumption. Your Company is continuously investing in latest technologies and efficiencies to conserve energy.
Renewable Energy Division of your Company had achieved the turnover of 90.03 Million during the year under review
Subsidiary / Associate Companies
Your Company as on March 31, 2022 is having following subsidiary/ associate/joint venture Companies:
Heritage Nutrivet Limited (CIN: U15400TG2008PLC062054)
A wholly owned Subsidiary Company operating with Animal Nutrition and one of the leading Live Stock Feed & Feed Supplements Companies in Southern and Western India, covering over 0.3 million farmers spread across five states viz., Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Maharastra. Product quality is pivotal in our endeavour towards "HEALTHY MILCH ANIMAL - HAPPY FARMERâ
It is also proficient in providing cost-effective solutions for the farmers facing ground reality. The products of the Heritage Nutrivet Limited are innovatively engineered to serve varieties of needs of the animals. It segregate the animal feed into dairy power, dairy milk, rich, dairy supreme, milk magic plus, gomitra, gomitra plus.
Skil Raigam Power (India) Limited (CIN:U40102TG2009PLC063671)
An associate Company as per the provisions of Section 2(6) of the Companies Act, 2013, which has been declared as Dormant Company as per Section 455(2) of Companies Act, 2013 vide SRN: T42936765 dated September 22, 2021, the Company will be in the process of setting up hydro power plant at Raigam, in Arunachal Pradesh. Your Company is having 43.33% of shareholding in this Company.
Heritage Novandie Foods Private Limited (CIN: U74999TG2017PTC120860)
A 50:50 Joint Venture Company between Heritage Foods Limited (HFL), Hyderabad, India and Novandie, France with an object to manufacture and market various Fruit Yoghurts and other dairy products in India. The Company had started the commercial production on February 16, 2021 and launched French Yoghurt brand ''Mamie Yova'' in India. The Company is hoping to woo Indian consumers with its fruit-based yogurt and aims to have a strong presence across 8-10 key cities in the next two years. Due to COVID out-break the Company has not make the market penetration in large scale, however during the coming financial year the company is expected to make more penetration in the market, resulting to make more revenue and losses will be minimised.
The details of transaction are available in the AOC-1 which is forming part of the consolidated financial statement. The gist of financial performance of the Subsidiary/ Associate/Joint Venture companies is as follows.
During the financial year under review, your Company has not added/ removed any subsidiaries, joint ventures or associate companies.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its Subsidiary, Associate and Joint Venture are available on the website of your Company www.heritagefoods.in. These documents will also be available for inspection during the business hours of the Company at its registered office in Hyderabad, India.
Your Company continues the journey of delivering value to its consumers/customers through significant investments in quality assurance programs.
Your Company adheres to international quality standard certifications such as ISO 22000:2018 (Food Safety Management System), ISO 9001:2015 (Quality Management System), ISO 45001:2018 (Occupational Health & Safety), ISO 14001:2015 (Environmental Management System), ISO 50001:2018 (Energy Management System) and HALAL Certification by JUHF. Your Company has also have AgMark, BIS and EIA certificates.
The Quality department of your Company handles large change management initiatives to drive quality and productivity improvements across the Company, using various techniques and updated technologies.
"Heritageâ as a brand reflects your company''s identity, core values and belief system. Your company is actively working on diversifying the products portfolio in line with the current consumer trends and mission of bringing health, nutrition & happiness to every home. On the communication front your company focusing on improving
consumer connect using social & digital media platforms. In the coming years, your company shall develop interactive and engaging campaigns that help to connect with the consumer actively.
During the financial year 2021-22 your Company has received the following awards and recognitions.
⢠CII National Energy Conservation Awards for FY 2020-21
⦠1st Prize won by Gokul Plant, Charndragiri (M), Chittoor Dist-517101, Andhra Pradesh, India
⦠2nd Prize won by Bayyavaram Plant, Bayyavaram(V), Visakhapatnam District-531031, Andhra Pradesh, India
⦠Certificate of Merit to Bengaluru Plant, Yadavanhalli (V), Anekal Taluk, Bengaluru South-562107, Karnataka, India
⢠CII National Award in Food Safety for the Year 2021
⦠1st Prize won by B. Kothakota Plant, Kothakota (M), Chittoor Dist-517370, Andhra Pradesh, India
⢠The central Board of Indirect Taxes and Customs conveyed its appreciation to the Company for prompt filing of returns and payments of Goods and Services Tax (GST) as on 31st March, 2021 in the following states:
PUNJAB HARYANA RAJASTHAN
MAHARASHTRA KARNATAKA TELANGANA
Human Resources and Industrial Relations
Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Your company ensures that it provides a harmonious and cordial
working environment to all its employees. To ensure good human resources management, your Company focused on all aspects of the employee lifecycle. This provides a holistic experience for the employee as well. During their tenure at the Company, employees are motivated through various skill- development program, engagement and volunteering programs. Your company has put in continued efforts in building capabilities of Human Resources with adoption of specific and targeted interventions. Your Company has a structured induction process at all locations and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas are in place for all employees.
Your Company is committed to nurture, enhance and retain talent through superior Learning & Organizational Development.
The total strength of your Company employees as on March 31, 2022 was 3009.
Your Company continuously strives for excellence in its Investor Relationship (IR) engagement with Domestic and International investors and has set up feedback mechanism to measure IR effectiveness. Structured conference calls and periodic investor/ analyst interactions, participation in investor conferences, quarterly earnings calls and annual analyst meet with the Executive Director, President, Chief Executive Officer, Chief financial Officer, Chief Operating Officer and Business Heads were organised during the year. Your Company always believes in leading from the front with emerging best practices in IR and building a relationship of mutual understanding with investor/ analysts. Your Company ensures that relevant information about the Company is available to all the investors by uploading all such information at the Company''s website and the Stock Exchanges where the shares of the company are listed.
The details of the credit rating are as follows:
a) Credit rating obtained by the company: in respect to long term and short term debts
b) Name of the credit rating agency: Credit Rating Information Services of India Limited (CRISIL)
i. Long term Rating: CRISIL A/Positive
ii. Short term Rating: CRISIL A1
c) Date on which the credit rating was obtained: April 07, 2022 (valid up to December 31, 2022)
d) Revision in the credit rating: No
e) Reasons provided by the rating agency for a downward revision: NA
Particulars of Employees and Related Disclosures
The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure-2A. A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of '' 10.20 million or more per annum or employed for part of the year and in receipt of ''
0. 85 million or more in a month under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time are provided in Annexure-2B to this report.
Information Technology and Digitization:
Implementation of IT & Digital Transformation Strategy has been a key priority for your company for the financial year 2021-22. The Strategy was focused on addressing the perspective of all the stakeholders, viz. Farmer, Consumer, Customer and the Employee to achieve the desired outcomes of reducing the Cost, enhancing the efficiency, consumer delight and enhancing revenue.
Introduction of various initiatives using Data Science such as grading of MCCs & Agents and Forecasting of SMP Price - have helped the Organisation in taking data driven decisions. BI Dashboards have been deployed covering all major functions such as; Sales, Procurement, Finance, Production, Purchase & Stores and Human Resource.
Heritage CLapp (Customer Live Application) & DMS (Distributor Management System) have given an edge in terms of streamlining the primary and secondary sales process from Agent level up to the counter sales level in an authentic manner.
Vet app continued to widen its user base and the range of services helping the Farmers with hassle free veterinary services and eventually enhancing their income.
All the IT related initiatives combinedly have helped the organisation in being consumer centric and farmer friendly while making Heritage as the best place to work with for its employees.
Your Company recognizes and embraces the importance of a diverse board for its success. Your Company believes that a truly diverse board will leverage differences in thought, perspective, knowledge, skill and industry experience, cultural and geographical background, age and gender, which will help the Company, retain its competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Policy is available in the Company website
1. e. www.heritagefoods.in > Investor > Policies.
The Board met six (6) times during the financial year 2021-22, the details of which are given in the Corporate Governance Report forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Policy on Director''s Appointment and Remuneration
The current policy is to have an appropriate mix of Executive and Non-executive & Independent and Women Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2022, the Board consists of 7 members, 2 of them are Executive/Whole-time directors, 1 is Non-Executive Director, 1 is Non-Executive Independent Woman Director and 3 are Non-Executive Independent Directors. The Board periodically evaluates the need for change in its composition and size.
The policy of your Company on directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Section 178(3) of the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 was adopted by the Board. It is affirmed that the remuneration paid to the Director(s) are as per the terms laid out in the nomination and remuneration policy of the Company.
Your Company has received necessary declaration from all directors stating that they are not debarred or disqualified from being appointed or continuing as Directors of companies as per the Securities and Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs or any such other Statutory Authority.
Declaration by Independent Directors
Your Company has received necessary declaration from each independent director stating that they met the criteria prescribed for independence under Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the Board has confirmed its veracity and taken the same on record.
As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time the Nomination and Remuneration Committee laid down criteria for performance evaluation of individual director(s), the board and its committee(s). Accordingly,
an annual evaluation was carried out for the Board''s performance, its Committees and individual director(s).
The Board performance evaluation is carried out through a structured questionnaire which provides a clear and valuable feedback for Board effectiveness and highlighting areas for further development.
The following are some of the broad issues that are considered in performance evaluation questionnaire
⢠Ability to act on a fully informed basis, in good faith, with due diligence and in the best interest of the company and the stakeholders.
⢠Optimum combination of knowledge, skill, experience and diversity on the Board as well as its Committees.
⢠Relationships and effective communication among the Board members.
⢠Effectiveness of individual non-executive and executive directors and Committees of Board.
⢠Quality of the discussions, general information provided on the company and its performance, papers and presentations to the Board.
⢠Risk management as well as processes for identifying and reviewing risks.
⢠Well- defined mandate and terms of reference of Committee.
⢠Attendance at Board as well as Committee Meetings
⢠Procurement of Information, preparation for Board Meetings and value of contribution at meetings
⢠Relationships with fellow Board members, the company secretary and senior management and mutual trust and respect they stimulated within the Board.
⢠Keeping update with the latest developments in the areas of governance and financial reporting
⢠Willingness to devote time and effort to understand the company and its business
⢠Providing necessary guidance using their knowledge and experience in development of corporate strategy, major plans of action, risk policy, and setting performance objectives.
⢠Independence exercised in taking decisions, listening to views of others and maintaining their views with resolute attitude
⢠Ability in assisting the Company in implementing the best corporate governance practices.
⢠Capability in exercising independent judgement to tasks where there is potential conflict of interest
⢠Commitment in fulfilling the director''s obligations fiduciary responsibilities.
The Board of Directors received all evaluations from each Director including Board as a whole and its committee based on the above criteria, discussed various points and all points are satisfactory, no further action is required. There were no actions pending from the previous year observations. The detailed format of Board evaluation is available in the website of the Company i.e. https://www.heritagefoods.in/ uploads/ investors/pdf/ 15870145475 Board_&_Director_Evaluation_ Framework.pdf
Training of Independent Directors
Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of your Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Company''s strategy, operations, product and service offerings, markets, organization structure, quality and risk management etc.
Mr. M P Vijay Kumar (DIN: 05170323) has been appointed as a Non-Executive Independent Director of the Company w.e.f. November 01, 2021, for a period of 5 consecutive years, the said appointment was approved by shareholders through postal ballot on November 24, 2021.
The approval of members through special resolution was taken on April 29, 2022 for Continuation of directorship as per Regulation 17(1A) of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 of Dr. V Nagaraju (DIN: 00003730) as a Non Executive Director after attaining the age of 75.
In order to comply with the provisions of section 152 of the Companies Act, 2013 and rules applicable thereunder, the appointment of Dr. V. Nagaraja Naidu (DIN: 00003730) Non-Executive Director of the Company is liable to retire by rotation at this Annual General Meeting, being eligible offers himself for re-appointment.
During the year under review, none of the Directors retired or resigned from the Board.
During the year under review, the Company is having the following persons as Key Managerial Personnel. |
||
Name of the Official |
DIN/M. No |
Designation |
Mrs. N. Bhuvaneswari |
00003741 |
Vice Chairperson & Managing Director |
Mrs. N. Brahmani |
02338940 |
Executive Director |
Mr. A Prabhakara Naidu |
FCA 200974 |
Chief Financial Officer |
Mr. Umakanta Barik |
FCS 6317 |
Company Secretary& Compliance Officer |
Dr. M Sambasiva Rao |
- |
President |
Mr. Srideep Madhavan Nair Kesavan* |
- |
Chief Executive Officer |
* Mr. Srideep Madhavan Nair Kesavan appointed as Chief Executive Officer the Company w.e.f 28-07-2021
Currently, the Board has six committees i.e. Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Risk Management Committee and Management Committee.
A detailed note on the Board and its committees is provided under the Corporate Governance Report section in this Annual Report. The composition of the committees and compliances, as per the applicable provisions of the Act and Rules, are as follows:
Name of the Committee |
Composition of the Committee |
Highlights of roles and responsibilities |
Audit |
Mrs. Aparna Surabhi (C) |
⢠All recommendations made by the audit committee during the year were accepted |
committee |
Mr. Rajesh Thakur Ahuja (M) |
by the Board. |
Mr. N Srivishnu Raju (M) |
⢠Reviewing, with the management, the quarterly financial statements before submission to the Board for approval. |
|
Mr. M P Vijay Kumar (M) |
⢠Approval or any subsequent modification of transactions of the Company with |
|
(wef. 21/01/2022) |
related parties. |
|
Dr V Nagaraja Naidu (M) |
⢠Reviewing, with the management, the performance of statutory auditors and |
|
internal auditors, adequacy of internal control systems, etc. |
||
Nomination |
Mr. N Srivishnu Raju (C) |
⢠The committee oversees and administers executive compensation, operating |
and Remuneration Committee |
Mr. Rajesh Thakur Ahuja (M) Mrs. Aparna Surabhi (M) Mr. M P Vijay Kumar (M) (wef. 21/01/2022) |
under a written charter adopted by our Board of Directors. ⢠The nomination and remuneration committee has framed the nomination and remuneration policy. |
Corporate |
Mr. Rajesh Thakur Ahuja (C) |
⢠To formulate and recommend to the Board, a Corporate Social Responsibility |
Social Responsibility |
Mr. N Srivishnu Raju (M) |
(CSR) Policy indicating activities to be undertaken by the Company in compliance with provisions of the Companies Act, 2013 and rules made there under. |
Committee |
Mrs. N Bhuvaneswari (M) |
⢠To monitor the implementation of the CSR Policy of the Company from time to |
time |
||
Stakeholders |
Dr. V Nagaraja Naidu (C) |
⢠The committee reviews and ensures redressal of investor grievances. |
Relationship Committee |
Mr. N Srivishnu Raju (M) |
⢠The committee noted that all the grievances of the investors have been resolved |
Mrs. N Bhuvaneswari (M) |
during the year. |
|
Mr. Rajesh Thakur Ahuja(M) |
||
Risk |
Mr. Rajesh Thakur Ahuja (C) |
⢠The purpose of the committee is to assist the Board in fulfilling its corporate |
Management |
Mr. N Srivishnu Raju (M) |
governance with regard to the identification, evaluation & mitigation of operational, |
Committee |
strategic and environmental risks efficiently and effectively. |
|
Mrs. N Bhuvaneswari (M) |
⢠The Company has developed and implemented a risk management framework |
|
Mrs. Aparna Surabhi (M) |
that includes identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company. |
|
Management |
Mrs. Aparna Surabhi(C) |
⢠Setting the strategic direction to guide and direct the activities of the organization; |
Committee |
Mr. N Srivishnu Raju (M) |
⢠Ensuring the effective management of the organization and its activities; and |
Mr. M P Vijay Kumar (M) |
⢠Monitoring the activities of the organization to ensure they are in keeping with the |
|
(wef. 21/01/2022) |
founding principles, objects and values. |
|
Mrs. N Bhuvaneswari (M) |
C- Chairperson M-Member
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All the corporate policies are available on the Company website (www.heritagefoods.in/Investors/ policies). The policies are reviewed periodically by the Board and updated based on need and new compliance requirement.
In addition to its Code of Conduct and Ethics, key policies that have been adopted by the Company are as follows:
Name of the policy |
Brief description |
Web link |
|
Whistleblower Policy (Policy on vigil mechanism) |
The Company has adopted the whistleblower mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the Company''s code of conduct and ethics. It also provides for adequate safeguards against victimization of employees who availed the mechanism and also provides for direct access to the Chairperson of the Audit Committee. |
||
Insider Trading Policy and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information |
The Company has adopted a Code of Conduct to Regulate, Monitor & Report Trading by Insiders and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information as per the SEBI (Prohibition of Insider Trading) Regulation 2015, with a view to regulate trading in securities by the Directors and Designated Persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed and other certain situations. All Board of Directors and the designated employees have confirmed compliance with the Code. |
||
Policy and procedure of inquiry in case of leak or suspected leak of unpublished price sensitive information ("upsiâ) |
The Policy aims to provide a framework for inquiry in case of leak or suspected leak of Unpublished Price Sensitive Information. |
||
Nomination and Remuneration Policy |
This policy formulates the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of a director (executive / non-executive) and also the criteria for determining the remuneration of the directors, key managerial personnel and senior management of the Company. |
||
Corporate Social Responsibility Policy |
The policy outlines the Company''s strategy to bring about a positive impact on Society through programs relating to hunger, poverty, education, healthcare, environment, relief, disaster management etc., as per the provisions of the Companies Act, 2013. |
||
Policy for Determining Material Subsidiaries |
The policy is used to determine the material subsidiaries and material non-listed Indian subsidiaries of the Company and to provide the governance framework for them. |
||
Related Party Transaction Policy |
The policy regulates all transactions between the Company and its related parties |
||
Policy on Preservation of Documents |
The policy deals with the preservation of corporate records of the Company. |
||
Archival Policy |
The policy deals with the retention and archival of corporate records of the Company. |
||
Business Responsibility Policy |
This Policy endorses the Company''s commitment to follow principles and core elements, in conducting its business, as laid down in the National Voluntary Guidelines on Social, Environmental and Economic responsibilities of Business. |
||
Dividend Distribution Policy |
This Policy is to ensure the right balance between the quantum of Dividend paid and amount of profits retained in the business for various purposes |
||
Policy on Determination of Materiality of Events |
The Policy is to determine materiality of events or information relating to the Company and to ensure timely and accurate disclosure on all material matters concerning the Company. |
||
Risk Management Policy |
This policy sets out the objectives and accountabilities for the management of risk within the Company such that it is structured, consistent and effective |
||
Anti-Sexual Harassment - Safe work environment policy |
The policy aims at providing a safe work environment for women at workplace |
||
Code of Conduct to Regulate, Monitor & Report Trading by Insiders |
This code Regulates any kind of Insider Trading by designated persons |
||
Note: There were no changes in the above policies during the year under review except the Related Party Transaction Policy of the Company. |
Remuneration of Directors, Key Managerial Personnel and Senior Management
The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 of the Listing Regulations.
The information required under Section 197 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors/ employees of the Company is set out in the Annexure-2 [A&B] to this report.
Auditors'' & Auditor''s Report Statutory Auditors:
As per Section 139 of the Companies Act, 2013 (''the Act''), read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at their 25th Annual General Meeting held in the year 2017, approved the appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants (FRN 001076N/N500013), as the Statutory Auditors of the Company for a term of 5 years i.e. from the conclusion of 25th Annual General Meeting till the conclusion of ensuing 30th Annual General Meeting of the Company.
The Audit reports dated May 27, 2022 (Standalone UDIN: 22207660AJRYHR7151) (Consolidated UDIN: 22207660AJRYLT1186) issued by M/s. Walker Chandiok & Co. LLP, Chartered Accountants, Statutory Auditors on the Company''s standalone and consolidated financial statements for the financial year ended 2021-22 is part of the Annual Report. There has been no qualification, reservation or adverse remark in their Report.
The Board of Directors of the Company on recommendation of the Audit Committee, has recommended the re-appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants (FRN 001076N/ N500013), as statutory auditors of the Company for second and final term of 5 (five) consecutive years (i.e. from April 01, 2022 to March 31, 2027) to the members at the ensuing Annual General Meeting of the Company. Accordingly, a resolution proposing appointment of M/s. Walker Chandiok & Co. LLP, Chartered Accountants, as statutory auditors of the Company from the conclusion of 30th Annual General Meeting till the conclusion of 35th Annual General Meeting of the Company pursuant to Section 139 of the Companies Act, 2013, forms part of the Notice calling 30th Annual General Meeting of the Company, Further, M/s. Walker Chandiok & Co. LLP has furnished a certificate of their eligibility and consent for appointment under Section 139(1) & 141 of the Companies Act, 2013 and the Rules made thereunder.
As your Company is dealing with Skimmed Milk Powder, which require to maintain the cost records. Your Company has maintained all the required records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and the appointment of Cost Auditor is not applicable for your Company.
Secretarial Auditor and Secretarial Standards
The Secretarial Audit was carried out by Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Hyderabad - 500094, Telangana for the financial year
2021- 22. The Report issued by the Secretarial Auditors is annexed in Annexure-3 and forms integral part of the Board''s Report. There has been no qualification, reservation or adverse remark in their Report.
In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board of Directors appointed Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Hyderabad - 500094, Telangana as the Secretarial Auditors of the Company for the financial year
2022- 23.
In terms of Regulation 24(A) of SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 as amended from time to time, the Company has obtained the Secretarial Compliance certificate from Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No: 1796, M.No.3738), Hyderabad - 500094, Telangana is annexed in Annexure-3(i) and forms part of the Annual Report and the same was also intimated to the Stock Exchanges where the shares of the Company are listed.
Pursuant to Regulation 34(3) and Schedule V Para C clause (10) (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Company has obtained a certificate from Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Hyderabad - 500094, Telangana is annexed in Annexure-3(ii) and forms part of the Annual Report and the same was also intimated to the Stock Exchanges where the shares of the Company are listed.
Your Company has obtained a secretarial Audit Report of its wholly owned subsidiary company namely Heritage Nutrivet Limited from Mrs. Khusboo Laxmi Bhagat, Partner of M/s. KLB & Associates, Practicing Company Secretary (CP No:14703, M.No.9376), Hyderabad- 500016, Telangana is annexed in Annexure- 3(iii) and forms part of the Annual Report.
Your Company is in compliance with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India, New Delhi for the financial year ended March 31, 2022.
Internal Auditors
The Company has appointed external firms of Chartered Accountants across the locations as internal auditors to conduct internal audit and to review internal controls and operating systems and procedures as per the scope of the audit. The Internal Audit Reports of the company are reviewed by the Audit Committee on monthly basis. The Internal Auditors send the quarterly audit observations to the Company in addition to the monthly reports and the same were presented quarterly by the lead internal auditor of the Company to the Audit Committee. The Audit Committee along with Statutory Auditors and
the management of the Company meets all Internal Auditors of the Company once in a year and review the internal controls and its adequacy. The Board of Directors on recommendation of the Audit Committee appoints/re-appoints the Internal Auditors every year in compliance with Section 138 of the Act read with the Companies (Accounts) Rules, 2014. List of Internal Auditors is provided in the corporate information section in the Annual Report.
Internal Audit & Control Systems
Your Company has a well-defined and documented internal audit & control system, which is adequately monitored. Checks & balances and control systems have been established to ensure that assets are safe guarded, utilized with proper authorization and recorded in the books of account. The Internal control systems are improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements.
These are supplemented by internal audit of your Company carried out by reputed firms of Chartered Accountants across the locations of the Company. Your Company has an Audit Committee consisting of Four Non-Executive Independent Directors and one NonExecutive Director. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control system and suggests improvements if any for strengthening them. Your Company has a robust Management Information System which is an integral part of the control mechanism.
The equity shares of your Company are listed at BSE Limited, Mumbai and National Stock Exchange of India Limited, Mumbai. The applicable annual listing fees were paid before the due date. The annual custodian fees have also been paid to the depositories before the due date.
Significant Material Orders Passed by the Regulators
There were no significant material orders passed by any Regulators/ Courts that would impact the going concern status of the Company and its future operations.
Your Company has complied with all the Acts, Rules, Regulations and Guidelines issued/prescribed by the Securities Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs and other statutory authorities.
The Annual Return as on March 31, 2022 as required under Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, is available on the Company''s website (https://www.heritagefoods.in/annualreturn)
Internal Financial Control (IFC) and its adequacy
Your Company has adequate Internal Financial Controls as per Section 134(5)(e) of Companies Act, 2013, that commensurate
with the size of the business and nature of its operations, designed to provide reasonable assurance with regard to the accuracy and completeness of the accounting records and timely preparation and provision of reliable financial statements.
The Board has inter alia reviewed the adequacy and effectiveness of the Company''s internal financial controls relating to its financial statements.
The Board has discussed with the Management of the Company the major financial risk exposures if any and the steps taken by it to monitor and control such exposures, overseen and reviewed the functioning of the Whistle Blower Mechanism and the findings in respect of the investigations conducted on frauds if any, which were material in nature and the actions taken by the Management, in this regard.
Your Company has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, 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 financial information.
During the year, such controls were tested and no reportable material weakness in the design or operation was observed by the consultant namely, CA JSS Sivarama Prasad, Chartered Accountant (M No. 208735), Hyderabad appointed by the Board of Directors of the company
During the year no fraud by the Company or with the Company by its officers or employees has been noticed / reported.
Declaration as per Section 134(3)(ca) of the Companies Act, 2013
During the year, the statutory auditors and secretarial auditor have not reported any instances of frauds committed by or against the Company by its Directors/Officers/ Employees to the Audit Committee or Board under section 143(12) of the Companies Act, 2013 and rules made thereof. Therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.
The Vice Chairperson & Managing Director, Chief Executive Officer and Chief Financial Officer of the Company have given annual certification on financial reporting and internal controls to the Board in terms of Regulation 17(8) of the SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015. Vice Chairperson & Managing Director, Chief Executive Officer and Chief Financial Officer also give quarterly certification on financial results while placing the financial results before the Board in terms of Regulation 33(2) (a) of the SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015. The annual certificates given by the Vice-Chairperson & Managing Director, Chief Executive Officer and Chief Financial Officer forms part of this Annual Report.
Corporate Social Responsibility (CSR)
Your Company has been an early adopter of corporate social responsibility (CSR) initiatives. Your Company has made Corporate Social Responsibility (CSR) an integral part of its ethos and culture. Your company has constituted a Corporate Social Responsibility Committee ("CSR Committeeâ) in accordance with Section 135 of the Companies Act, 2013. A robust system of reporting and monitoring has been put in place to ensure effective implementation of planned CSR initiatives.
The CSR activities / projects as per the provisions of the Companies Act, 2013 and rules made thereof, is undertaken directly by the Company or through a registered trust or a registered society. During the Financial Year 2021-22 the CSR Committee of the Board evaluated various options to implement the CSR activities and decided to contribute the mandated CSR amount to the following implementing Agencies:
S. No |
Name of the implementing Agency |
List of Activities |
NTR Memorial Trust, |
To carry out the activities such as |
|
NTR Bhavan, Road |
promoting education, enhancing |
|
1. |
No. 2, Banjara Hills, |
the vocational skill & supply of clean |
Hyderabad -500034, |
drinking water, disaster management, |
|
Telangana. |
relief and rehabilitation etc. |
|
Asian Healthcare |
To carry on research related to |
|
Foundation, |
Single cell whole transcriptome |
|
2. |
#6-3-661, |
based approach to understand the |
Somajiguda, |
dysregulation in immune repertoire |
|
Hyderabad 500082, Telangana. |
in COVID-19 long haulers |
NTR Memorial Trust is operating since 1997 towards the promoting and preventive of health care of the needy groups, meeting the educational needs of underprivileged students, advancing the concept of entrepreneurship and self-employment and offering support and relief during disasters and lot more other initiatives for the upliftment of the backward and needy population in the society.
Asian Healthcare Foundation (AHF) is the research and training wing of Asian Institute of Gastroenterology (AIG), a premier medical institution (accredited by OMED) providing tertiary medical care for gastroenterology related diseases. The mission of AHF is to conduct focused research in frontier areas of gastroenterology & minimum invasive surgical Gastroenterology and to translate the benefits for better patient care not only for India but for the world at large.
The mandated CSR amount of the Company for FY 2021-22 was '' 29.35 million out of which '' 0.025 million was spent on single year project and '' 29.325 million was allocated for spending on ongoing/ multi-year projects. The details of the CSR initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-4 forming part of the Board''s Report in the format
prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company''s CSR Policy. The Policy is available at the Company''s website at www.heritagefoods.in.
Business Responsibility Report (BRR)
Pursuant to regulation 34(2)(f) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, top 1000 listed entities based on their market capitalisation as on 31st March every year, are required to submit their Business Responsibility Report (BRR) as a part of their Annual Report. The Annual Report shall contain a Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective. BRR has been designed as a tool to help companies understand the principles and core elements of responsible business practices and start implementing which reflect their adoption in the manner the company undertakes its business. Based on the market capitalization of BSE as on March 31, 2022 your Company was in sl no. 796 under top 1000 listed Company. In compliance with the regulation, the BRR is annexed in Annexure-5 to the board report.
Energy Conservation, Technology Absorption & Foreign Exchange Earnings & Outgo
The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act 2013, read with the Companies (Accounts) Rules, 2014 are provided in the Annexure-6 to the Board Report.
Transfer of Un-Claimed Dividends and Shares
Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C(2) of the Companies Act, 1956] read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time the unclaimed/ unpaid dividend amount of '' 22,30,704/- (Twenty Two Lakhs Thirty Thousand Seven Hundred and Four Only) for the year 2013-14 was transferred to the Investor Education and Protection Fund during the financial year 2021-22.
In compliance with the provisions of Section 124 of the Companies Act, 2013, the Company has transferred 24,234 no of equity shares belongs to 42 members of the company to Investor Education and Protection fund Authority (IEPF) on November 29, 2021 of those members who have not claimed the dividends for a continuous period of 7 years.
Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C (2) of the Companies Act, 1956] read with the Investor Education and Protection Fund (awareness and protection of Investors) Rules, 2001 as amended from time to time the unclaimed/unpaid dividend and the shares thereof pertaining for the financial year 2014-15 shall be transferred to the Investor Education and Protection Fund during the financial year 2022-23.
The information in respect of unclaimed/unpaid dividend & shares thereto and the last date for claiming the dividend are given below: |
|||||
Date of Declaration of Dividend |
Unclaimed/Unpaid Dividend |
||||
Financial |
Last date for claiming |
as on March 31, 2022 |
|||
year ended |
unpaid Dividend |
Amount outstanding ('' in Rupees) |
1 |
No of Shares |
|
2014-15 |
24-09-2015 |
29-10-2022 |
2199882.00 |
733294 |
|
2015-16 |
19-08-2016 |
24-09-2023 |
1721013.00 |
573671 |
|
2016-17 |
23-08-2017 |
27-09-2024 |
2895932.00 |
723983 |
|
2017-18 |
30-08-2018 |
04-10-2025 |
1491520.00 |
745760 |
|
2018-19 |
30-08-2019 |
04-10-2026 |
1457828.00 |
728914 |
|
2019-20 |
28-08-2020 |
03-10-2027 |
1694148.50 |
524671 |
|
2020-21 |
30-07-2021 |
03-09-2028 |
2624739.00 |
604538 |
|
2021-22 |
21-10-2021 (1st Interim Dividend) |
25-11-2028 |
1364854.50 |
644555 |
Policy on Sexual Harassment
The Company has always believed in providing a safe and harassment free workplace for every women working in Company''s premises, through various interventions and practices. The Company has adopted policy and constituted the Internal Complaint Committee under Prevention of Sexual Harassment of Women at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 as amended from time to time.
The Company has not received any complaints during the year.
The Company regularly conducts awareness programmes for its employees.
The following are the summary of sexual harassment complaints received and disposed of during the year:
Sl No |
Particulars |
Status of the No. of complaints received and disposed off |
1 |
Number of complaints on sexual harassment received |
Nil |
2 |
Number of complaints disposed off during the year |
Nil |
3 |
Number of cases pending for more than ninety days |
Nil |
4 |
Number of workshops or awareness programmes against sexual harassment carried out |
The Company regularly conducts necessary awareness programmes for its employees |
5 |
Nature of action taken by the employer or district officer |
Nil |
Vigil Mechanism policy
The Board of Directors of the Company had adopted the Whistle Blower Policy in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A
The voting rights on the shares transferred to IEPF Authority shall remain frozen till the rightful owner of such shares claim the shares. The company sends reminders to the members concerned to claim the unclaimed and unpaid dividends & shares thereto before they are transferred to the IEPF Authority as per the applicable provisions.
The members whose shares and dividend thereof got transferred to IEPF Authority shall claim the dividends and shares from IEPF Authority by submitting an online application in the prescribed e-Form-IEPF-5 available on the website www.iepf.gov.in and the procedure prescribed thereon.
Mr. Umakanta Barik is the Nodal Officer who was appointed by the Company under the provisions of IEPF.
Your Company have constituted a Risk Management Committee pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company''s enterprise risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, Information Technology, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Risk Management Procedure shall be reviewed by the Risk Management Committee and Board of Directors on a half- yearly basis at the time of review of Financial Results of the Company.
The policy is available in the Company website: www.heritagefoods. in>Investor> policies
mechanism has been established for employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the Audit Committee in exceptional cases. The Audit Committee reviews periodically the functioning of whistle blower mechanism. No complaint have been received during the Financial Year ended March 31, 2022. No personnel have been denied access to the Audit Committee during the Financial Year 2021-22.
The details of said vigil mechanism are given in Corporate Governance Report, which forms part of this Annual Report. A copy of the Whistle Blower Policy is available in the company''s website i.e. www.heritagefoods.In.
Indian Accounting Standards (Ind AS)
The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2017 pursuant to Ministry of Corporate Affairs'' notification of the Companies (Indian Accounting Standards) Rules, 2015. The standalone and consolidated financial statements of the Company, forming part of the Annual Report, have been prepared and presented in accordance with all the material aspects of the Indian Accounting Standards (''Ind AS'') as notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs (''MCA'')) and Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 as amended and relevant amendment rules issued thereafter and guidelines issued by the Securities Exchange Board of India ("SEBIâ). There was no revision of Financial Statements (Standalone & Consolidated) and Board Reports during the year under review.
Prevention of Insider Trading Code
As per SEBI (Prohibition of Insider Trading) Regulation, 2015 as amended from time to time, the Company has adopted a Code of Conduct for Prevention of Insider Trading. The Company has appointed Mr. Umakanta Barik, Company Secretary of the Company as Compliance Officer, who is responsible for setting forth procedures and implementation of the code of conduct for trading in Company''s securities. During the year under review, there has been due compliance with the said code.
Acknowledgement and Appreciation
The Board takes this opportunity to thank all farmers, consumers, customers, vendors, investors, bankers and Statutory Authorities for their continued support during the year. The Board also wishes to place on record its sincere appreciation of the effort/ contribution made by its employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an industry leader. The Company''s consistent growth was made possible by their hard work, solidarity, cooperation and support and look forward to their continued support in the future.
For and on behalf of the Board of Directors N. BHUVANESWARI N. BRAHMANI
Place : Hyderabad Vice Chairperson & Managing Director Executive Director
Date : May 27, 2022 (DIN: 00003741) (DIN : 02338940)
Mar 31, 2018
To the members,
The Directors have great pleasure in presenting the 26th Annual Report of the Company together with the Standalone & Consolidated Audited statement of accounts for the Financial Year ended March 31, 2018.
FINANCIAL RESULTS
(Rs. In Lakhs)
Particulars |
Standalone |
||
FY 2017-18 |
FY 2016-17 |
||
Net Sales |
234385.51 |
183309.59 |
|
Revenue from transaction with discontinued operation |
- |
3759.63 |
|
Other operating income |
15.59 |
74.35 |
|
Total Revenue |
234401.10 |
187143.57 |
|
Add: Other Income |
716.95 |
360.68 |
|
Fair value gain on FVTPL Equity Shares |
39537.07 |
24681.01 |
|
Less: Total Expenditure |
221699.95 |
168635.18 |
|
Purchase transaction with discontinued operation |
- |
3913.54 |
|
Loss due to change in Fair valuation of derivative transaction |
38703.86 |
3854.87 |
|
Profit before Finance Cost, Depreciation and Tax |
14251.31 |
35781.67 |
|
Less: Finance costs |
1745.45 |
963.24 |
|
Depreciation & Amortisation |
3698.54 |
2487.07 |
|
Profit / (Loss) before tax |
8807.32 |
32331.36 |
|
Less: Provision for current taxation (Incl. tax. earlier yrs) |
2829.39 |
2600.07 |
|
Less: Provision for deferred taxation |
(60.23) |
471.15 |
|
Profit / (Loss) after tax |
6038.16 |
29260.14 |
|
PERFORMANCE OF THE COMPANY (STANDALONE)
Your Company, during the year under review earned revenue from operations (Gross) of Rs.2,34,401 Lakhs, achieved an increase of 25.25% over the previous year. The profit before Finance Cost, depreciation & amortization and tax was of Rs.14,251 Lakhs (6.08% on total revenue) as against Rs.35,782 Lakhs (19.10% on total revenue) in the previous year. The operating profit after depreciation was amounted to Rs.10,553 Lakhs (4.50% to revenue) as against Rs.33,295 Lakhs (17.79% to revenue) in the previous year
DIVIDEND
Your Directors have pleasure in recommending a dividend of Rs.2/- (40%) per equity share face value of Rs.5/- each for the financial year ended March 31, 2018, amounting to Rs.928 lakhs. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.
The Register of Members and Share Transfer Books will remain closed from Thursday, August 23, 2018 to Thursday, August 30, 2018 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2018. The Annual General Meeting is scheduled to be held on August 30, 2018
The dividend payout for the year under review has been finalized in accordance with shareholdersâ aspirations and the Companyâs policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.
SHARE CAPITAL
The paid up Equity Share Capital as at March 31, 2018 stood at Rs.23,19,90,000/- divided into 4,63,98,000 equity shares face value of Rs.5/- each. During the year under review, your Board of Directors recommended for sub-division of Equity Shares of Rs.10/- each into two Equity Shares face value of Rs.5/- each which was approved by the Shareholders through postal ballot on September 26, 2017. Accordingly the Equity Shares of face value of Rs.10/- each were sub-divided into two Equity Shares of face value of Rs.5/- each by way of corporate action to the shareholders who held the shares as on the Record Date i.e. October 11, 2017.
DEPOSITS
Your Company has not accepted any deposits from the Directors/Shareholders/Public and as such, no amount of principal or interest on public deposits was outstanding as at the Balance Sheet date.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
PARTICULARS OF CONTRACT OR ARRANGEMENTS MADE WITH RELATED PARTIES
The particulars of contracts or arrangements with related parties as per the Section 188 of the Companies Act, 2013 entered by the Company during the financial year ended March 31, 2018 in prescribed Form AOC-2 is annexed to this Boardâs Report (Annexure-1). Further there are no materially significant related party transactions during the year under review with Promoters, Directors, Key Managerial Personnel and their relatives, which may have potential conflict with interest of the company at large.
The related party transactions were placed before the audit committee as also to the Board for approval. The details of the related party transactions during the year are part of the notes on Accounts forming part of the Annual Report.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF REPORT
There are no material changes and commitments affecting financial position of the company between March 31, 2018 and the date of Boardâs Report.
VARIATION IN MARKET CAPITALIZATION
As at March 31, |
Increase / |
||
2018 |
2017 |
(decrease) in % |
|
Market capitalization (Rs. in Crore) Price earnings ratio |
3,199.14 53.00 |
2,497.14 17.07 |
28.11 210.48 |
Note: Data based on share prices quoted on BSE
MANAGEMENTâS DISCUSSION AND ANALYSIS
In terms of the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Managementâs Discussion and Analysis is set out in this Annual Report.
BUSINESS REVIEW
Your Company has Two Divisions in operation in different States in India as on March 31, 2018.
As a part of the strategic business restructuring the Retail, Bakery, Agri & VetCa divisions of the Company were transferred on a going concern basis as a slump sale to M/s. Heritage Foods Retail Limited (HFRL), a wholly owned subsidiary Company. Subsequent to that the Retail, Agri & Bakery verticals of HFRL were transferred to Future Retail Limited (FRL), Mumbai by way of demerger through a Composite Scheme of arrangement as per the provisions of Sections 391 to 394 and Sections 100 to 103 of the Companies Act, 1956 and/or Sections 230 to 232 and Section 66 of the Companies Act, 2013 (as applicable) and Section 52 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 1956 and Companies Act, 2013 (as may be applicable). As per the Composite Scheme of Arrangement the Retail undertaking was taken over by the Future Retail Ltd. by the closing hours of March 31, 2017
The Honâble National Company Law Tribunal (NCLT) Benches at Hyderabad & at Mumbai approved the Composite Scheme of arrangement amongst Heritage Foods Ltd (HFL), Heritage Foods Retail Limited (HFRL) and Future Retail Ltd (FRL) on 03/05/2017 and 11/05/2017 respectively. The order copies have been filed with respective Registrars of Companies (ROC) on 19th May, 2017 to give effect to the Composite Scheme.
Your Company acquired the entire dairy business of Reliance Retail Ltd (RRL) in a slump sale. RRL operates a pan India dairy procurement, processing and distribution platform under two brands âDairy Lifeâ and âDairy Pureâ with wide variety of products such as packaged milk, flavored milk, butter, ghee, curd, dairy whitener, sweets and skimmed milk powder. This acquisition augurs well for your company as it gives new opportunities in states like Punjab, Himachal Pradesh, Uttarakhand, Uttar Pradesh and Rajasthan where your company is not present and strong synergies in markets like Mumbai and Delhi-NCR where your company already commenced its operations.
DAIRY BUSINESS:
With population size of 1.32b growing at 3-4% CAGR, rising urbanization, health awareness and higher disposable income, there is tremendous potential for growth for dairy players. Organized dairy industry is slated to witness higher growth as overall organized sector share in milk products is less than 30%. In fresh milk product category there is huge scope for private dairies as organized market share is as low as 5% in Paneer and 7-8% in curd. Only 20% of total Indian milk production is procured, processed and sold by organized dairies in India. Overall industry clocked 4.5% volume CAGR during FY10-17 with organized segment posting 9.5% volume CAGR over same period. In value terms, dairy sector logged an impressive 16.9% CAGR during this period led by better realization and value-added products (VAP), which grew 23% CAGR Vs 15% for liquid milk. Going forward, we expect industry volumes to post 4.8% CAGR and 14-15% CAGR in value terms to Rs.8.2tn over FY17-20E.
Companies having deep rooted distribution network, efficient procurement systems, optimum product portfolio and consistent track record of quality will be the winners in the long run. Companies having transparency in raw milk procurement have developed long lasting relationships with farmers. Dairy sector contributes 27% to the agriculture GDP of India and involve over 70m rural households in dairying. The overall industry is estimated to record 14-15% CAGR over FY2017-20, to reach Rs.8.2lac crore, underpinned by a growth in volume and realization. India is the worldâs largest milk producer and consumer, accounting for 19% of the worldâs milk production and 21% for global consumption.
Indiaâs per capita milk consumption, at 97 litres per year, is lower than many other major milk markets, except China. Indiaâs per capita milk consumption is estimated to log 3% CAGR versus 1% CAGR globally led by higher population growth and rising yield. Rising population and yield provides further scope for higher per capita consumption, aided by growth in value-added products. Burgeoning demand for dairy products in India is reflected in not only per capita consumption, but is also apparent from rising expenditure on dairy products by householdsâwhich has grown at a faster rate over the past 10 years. Dairy products account for 19% of household expenditure on food on an average.
Indian dairy industry can be classified into Commodity dairy products having low margin but highest asset turn (Pouch milk, Skimmed milk powders, Dairy whitener); Milk Products having higher margins than pouch milk (viz. curd, buttermilk, ice cream and paneer) and Premium Value Added Products having highest margins but low asset turn and return ratios (cheese, spreads, whey). We believe Fresh milk product category is the sweet spot and will see maximum volume growth. Organized industry is even slated to witness higher growth as overall organized share in milk products is less than 25%. In fresh milk product category there is tremendous scope for private dairies as organised market share is as low as 5% in Paneer and 7-8% in curd.
Your Company also a market leader in the curd segment and is now looking to expand its product basket by entering into the fastest growing product like Yoghurt.
The motto of your company is to empower farmers by doing the following activities
- Facilitating loans for the purchase of cattle through commercial banks. NBFCs
- Facilitating cattle insurance;
- Conducting veterinary camps for animals at frequent intervals;
- Supply of high quality cattle feed and fodder seeds;
- Helping to source good productive animals;
- Supply of milk analyzers for ensuring accurate measurement of milk quality.
- And ensuring timely payment to farmers.
In its bid to become a pan India player, your Company has expanded its distribution of products to 15 states in India covering South, West and North India. It has almost 100% direct procurement network of 3 lakh dairy farmers across nine major milk producing states namely, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Gujarat, Rajasthan, Haryana and Punjab. The direct route of milk procurement enables it to maintain quality at lower prices. The company also operates 209 bulk coolers, chilling plants and procures 1.32m liters of milk per day. It operates 16 own processing plants and 2 leased processing plants with installed milk processing capacity of 2.09mn lpd through own plants and 0.15mn lpd through leased plants.
Your company has launched several value added products since 2007 and has increased its contribution to dairy revenues from 10.4% in FY11 to 22.43% in FY18. As on FY18, curd contributes 17 % of total value added products revenue.
Your Company procures 1.32mn litres of milk daily from 3 lakhs farmers across 9 states. 90% of milk is directly procured from farmers which ensures greater consistency in milk quality and consistency in supply. The companyâs installed processing capacity is 2.24mn liters per day and chilling capacity is 2.10mn liters per day. After processing, 1.05 mn litres of milk is sold across 1.50mn households on a daily basis and the remaining is converted into value added products and products are available across 15 states viz. Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Rajasthan, Gujarat, Punjab, Uttar Pradesh, Himachal Pradesh and Uttarakhand.
During the financial year 2017-18, Dairy Division has increased milk Chilling capacity by 4,25,000 LPD by commissioning of 18 units which includes Bulk chilling units, Mini Chilling units, chilling centres and Franchisee Bulk chilling units to increase the milk procurement and to maintain the quality.
RENEWABLE ENERGY DIVISION:
Your Company strongly recognizes the responsibility towards protecting the environment. As a forward-looking enterprise, it is strongly committed to extending the Greenâ footprint.
Your Company is taking a lot of initiatives to improve efficiencies of the company. Renewable energy is the major focus area in the last ten years. Now your Company has 10.39 MW of solar and wind power for captive consumption. Your Company is continuously investing in latest technologies and efficiencies to conserve energy. As a result, Company saved about 14.5% and 10% when it comes to electrical units and thermal units respectively
Renewable Energy Division of your Company had achieved the turnover of Rs.686 Lakhs during the year under review.
SUBSIDIARY / ASSOCIATE COMPANIES
Your Company as on March 31, 2018 is having one Subsidiary Company namely M/s. Heritage Nutrivet Limited (Formerly known as Heritage Foods Retail Limited) (CIN:U15400TG2008PLC062054), one Associate Company M/s SKIL Raigam Power (India) Limited (CIN:U40102TG2009PLC063671) and one Joint Venture Company i.e. M/s. Heritage Novandie Foods Private Limited.
During the year under review the name of the subsidiary Company namely M/s. Heritage Foods Retail Limited has been changed to M/s. Heritage Nutrivet Limited w.e.f. November 14, 2017.
Your Company had incorporated one Joint Venture Company namely M/s. Heritage Novandie Foods Private Limited on November 28, 2017. The joint venture company was incorporated with 50:50 Equity Shareholding between Heritage Foods Limited and Novandie SNC, France, for production & marketing of Yoghurts.
One subsidiary Company namely M/s. Heritage Conpro Limited (CIN:U52100TG2011PLC072132) had resolved to voluntarily winding up pursuant to the provisions of Section 484 of the Companies Act, 1956 read with rule made thereunder. The Honâble High Court of Judicature at Hyderabad for the State of Telangana and Andhra Pradesh had approved voluntary winding up the Company and issued the order ref no: CA N0.568/2017 on July 06, 2017 Your Company had filed the necessary e-forms with the Registrar of Companies, Hyderabad on September 02, 2017
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its Subsidiary & Associate, are available on our website of the Company www. heritagefoods.in. These documents will also be available for inspection during the business hours at our registered office in Hyderabad, India.
QUALITY
Your Company continues the journey of delivering value to its consumers/customers through significant investments in quality programs. While sustaining existing external benchmarks and certifications, your Company added new certifications and further enhanced the programs and initiatives to renew the commitment to the culture of quality.
Your Company adheres to international quality standard certifications such as ISO 22000:2005, (OHSAS) ISO 18001:2007, ISO 14001:2004, (ENMS) ISO 50001:2011 and Halal Certification Hyderabad HFC 15-101 & 102.
Your Company has also received an independent auditorâs assurance report on compliance to ISO 14001 & 18001 (EMS & OHSAS) 2nd Cycle Re-registration and same was submitted to certification body (SGS, Hyderabad).
The Quality department of your Company handles large change management initiatives to drive quality and productivity improvements across the Company, using various techniques.
BRANDING
During the year your Company had launched its new premium range of ice-creams under the brand name Heritage âAlpenvieâ as part of its strategy to strengthen existing product range. In developing the new Heritage âAlpenvieâ range, an effort was made to understand the choices of its target group of college-goers & young adults. This new range of ice creams delivers offerings which celebrate âLittle moments of Happinessâ at an affordable price. The new offerings range from absolutely luxurious chocolate delights, to inclusions which have real fruit like Pineapple, Mango, Strawberry and also traditional offerings like Kulfis and Rajbhog. It has all the diverse formats of ice cream in the form of sticks, bars, cones and scoopable ice-creams for both out-of-home and in-home consumption.
AWARDS & RECOGNITIONS
During the financial year 2017-18 the Company has received the following awards and recognitions.
- The Company declared as the Winner of the FTAPCCI Excellence Awards in Corporate Social Responsibility (Sri Ayyadevara Venkat Radhakrishna Memorial Silver Rolling Trophy)â - Instituted by Sri Srinivas Ayyadevara, Chartered Accountant, Hyderabad. The above award was received by Mrs. N Brahmani, Executive Director of the Company from Sri Bandaru Dattatreya, Honâble Minister of State for Labour & Employment, Govt. of India on June 25, 2017 at Hyderabad.
- The Company has been declared as the Winner of âGolden Peacock Award for Excellence in Corporate Governanceâ for the year 2017 by Institute Of Directors (IOD), India. The above award was presented at London UK, during IOD Indiaâs â17th London Global Convention on Corporate Governance & Sustainabilityâ and Global Business Meet. It is the Second time the Company got this Prestigious Award.
- The Gokul Plant of Dairy Division has received the 2nd Prize in âNational Energy Conservation Awardâ in Dairy sector from the Ministry of Power, Govt of India during the year 2017. This is the seventh time that the energy conservation efforts of the Company are recognized by the Ministry. The Company had won such Awards earlier in 2008, 2010, 2012, 2014, 2015 and 2016.
- Your Company has won âThe Great Indian Ice-cream & Frozen Dessert Contestâ Season-6 held on November 16, 2017 conducted by DUPONT at New Delhi in the following three categories:
- Silver Award for the Best Chocolate Category
- Silver Award for the Standard Vanilla FD Category
- Bronze Award for the Sorbet Category
- The Company has received the Telangana Best Employer Award 2017 from the World CSR Day & World Sustainability during the year 2017
- Mr. K Rajababu, IT Head of the Company has been awarded with the â50 Most Innovative CIO of Indiaâ by The World CSR day, during the year 2017
- Mr. A Prabhakara Naidu, CFO of the Company has been awarded as Hyderabad CFO Leadership Award instituted by the World CSR Day & World Sustainability during the year 2017.
- Mr. Dheeraj Tandon, Head HR of the Company has been awarded with â100 Top HR Mind in India Awardâ by the World HRD Congress, during the year 2017.
- Mr. A. Prabhakara Naidu, Chief Financial Officer of the Company has been conferred with âCA-CFO Award in the Agriculture & Allied Services Sectorâ by The Institute of Chartered Accountants of India in its 11th ICAI Awards, 2017 held in Mumbai on January 19, 2018.
- âIndiaâs 50 Best CFOâs Awards 2017-18â was conferred to Mr. A. Prabhakara Naidu, Chief Financial Officer of the Company by White Page International in association with UK Asian Business Council. The award was presented at The Asian Brand & Leadership Conclave, held in Singapore on March 09, 2018.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. To ensure good human resources management, your Company focused on all aspects of the employee lifecycle. This provides a holistic experience for the employee as well. During their tenure at the Company, employees are motivated through various skill- development, engagement and volunteering programs. Your Company has a structured induction process at all locations and management development programs to upgrade skill of managers. Objective appraisal systems based on Key Result Areas are in place for senior management members.
Your Company is committed to nurturing, enhancing and retaining talent through superior Learning & Organizational Development. This is a part of Corporate HR function and is a critical pillar to support the organizationâs growth and its sustainability in long run.
The total strength of your Company employees at the end of financial year 2017-18 was 2551.
PARTICULARS OF EMPLOYEES
The table containing the names and other particulars of employees in accordance with the provisions of 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 provided in Annexure-2A to the Boardâs report.
A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs.102 lakh or more PA, or employed for part of the year and in receipt of Rs.8.5 lakh or more in a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, is enclosed as Annexure-2B to the Boardâs report.
CORPORATE GOVERNANCE
Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organizationâs brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholdersâ expectations. It is imperative that your companyâs affairs are managed in a fair and transparent manner This is vital to gain and retain the trust of the stakeholders.
Your Company complies with the Securities and Exchange Board of India (SEBI)âs Regulations on corporate governance. Your Company has documented internal policies on corporate governance. During the year, your Company continued to comply with the Companies Act, 2013. Company Corporate governance report for financial year 2017-18 forms part of this Annual Report. All Corporate policies are available in Company website i.e. www.heritagefoods.in Corporate Policies.
AUDITORSâ CERTIFICATE ON CORPORATE GOVERNANCE
As required by SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the auditorsâ certificate on corporate governance is forming part of the Annual Report.
Your Company recognizes and embraces the importance of a diverse board for its success. Your Company believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill and industry experience, cultural and geographical background, age and gender, which will help the Company retain its competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Policy is available in the Company website www.heritagefoods.in>corporate>policies>BD
MEETINGS OF THE BOARD
The Board met Seven times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
POLICY ON DIRECTORâS APPOINTMENT AND REMUNERATION
The current policy is to have an appropriate mix of Executive and Non-executive & Independent and Women Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2018, the Board consists of 6 members, two of whom are Executive/Whole-time directors and four are Non-Executive directors. The Board periodically evaluates the need for change in its composition and size.
The policy of your Company on directorsâ appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 was adopted by the Board. It is affirmed that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company.
DECLARATION BY INDEPENDENT DIRECTORS
Your Company has received necessary declaration from each independent director under Section 149 of the Companies Act, 2013, confirming that he meets the criteria of independence laid down in Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination and Remuneration Committee laid down criteria for performance evaluation of individual directors, the board and its committees. Accordingly, an annual evaluation was carried out for the Boardâs performance, its Committees and individual directors.
Board performance evaluation is carried out through a structured questionnaire which provides a clear and valuable feedback for improving Board effectiveness and highlighting areas for further development.
The following are some of the broad issues that are considered in performance evaluation:
Criteria for evaluation of Board and its Committees:
- Ability to act on a fully informed basis, in good faith, with due diligence and in the best interest of the company and the stakeholders.
- Optimum combination of knowledge, skill, experience and diversity on the Board as well its Committees.
- Relationships and effective communication among the Board members.
- Effectiveness of individual non-executive and executive directors and Committees of Board.
- Quality of the discussions, general information provided on the company and its performance, papers and presentations to the Board.
- Risk management as well as processes for identifying and reviewing risks.
- Well- defined mandate and terms of reference of Committee.
Criteria for evaluation of Individual Directors:
- Attendance at Board as well as Committee Meetings
- Procurement of Information, preparation for Board Meetings and value of contribution at meetings
- Relationships with fellow Board members, the company secretary and senior management and mutual trust and respect they stimulated within the Board.
- Keeping update with the latest developments in the areas of governance and financial reporting
- Willingness to devote time and effort to understand the company and its business
- Providing necessary guidance using their knowledge and experience in development of corporate strategy, major plans of action, risk policy, and setting performance objectives.
- Independence exercised in taking decisions, listening to views of others and maintaining their views with resolute attitude
- Ability in assisting the Company in implementing the best corporate governance practices.
- Capability in exercising independent judgement to tasks where there is potential conflict of interest
- Commitment in fulfilling the directorâs obligations fiduciary responsibilities.
None of the independent directors are due for reappointment.
TRAINING OF INDEPENDENT DIRECTORS
Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of your Company, the executive directors / senior managerial personnel make presentations to the inductees about the Companyâs strategy, operations, product and service offerings, markets, organization structure, quality and risk management etc.
APPOINTMENT/RE-APPOINTMENT
Dr. V Nagaraja Naidu (DIN: 00003730) Non-Executive Director of the Company retire by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting as per the provisions of Section 152 of the Companies Act 2013 and rules made thereof and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
RETIREMENTS AND RESIGNATIONS
During the year none of the Directors resigned from the Board.
KEY MANAGERIAL PERSONNEL
During the year under review, the Company is having the following persons as Key Managerial Personnel.
Name of the Official |
DIN/M. No |
Designation |
Mrs. N. Bhuvaneswari |
00003741 |
Vice Chairperson & Managing Director |
Mrs. N. Brahmani |
02338940 |
Executive Director |
Mr. A Prabhakara Naidu |
FCA 200974 |
Chief Financial Officer |
Mr. Umakanta Barik |
FCS 6317 |
Company Secretary |
Dr. M Sambasiva Rao |
President |
COMMITTEES OF THE BOARD
Currently, the Board has Six committees: the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Management Committee and Risk Management Committee.
A detailed note on the Board and its committees is provided under the Corporate Governance Report section in this Annual Report. The composition of the committees and compliances, as per the applicable provisions of the Act and Rules, are as follows:
Name of the Committee |
Composition of the Committee |
Highlights of duties, responsibilities and activities |
Audit committee |
Mr. D Seetharamaiah Chairperson Mr. N Sri Vishnu Raju Dr V Nagaraja Naidu Mr. Rajesh Thakur Ahuja |
- All recommendations made by the audit committee during the year were accepted by the Board. - Reviewing, with the management, the quarterly financial statements before submission to the Board for approval. - Approval or any subsequent modification of transactions of the Company with related parties. - Reviewing, with the management, the performance of statutory auditors and internal auditors, adequacy of internal control systems, etc. |
Nomination and Remuneration Committee |
Mr. N Sri Vishnu Raju Chairperson Mr. D Seetharamaiah Mr. Rajesh Thakur Ahuja |
- The committee oversees and administers executive compensation, operating under a written charter adopted by our Board of Directors. - The nomination and remuneration committee has framed the nomination and remuneration policy. |
Corporate Social Responsibility Committee |
Mr. D Seetharamaiah Chairperson Mr. N Sri Vishnu Raju Mrs. N Bhuvaneswari |
- To formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy indicating activities to be undertaken by the Company in compliance with provisions of the Companies Act, 2013 and rules made there under. - To monitor the implementation of the CSR Policy of the Company from time to time |
Stakeholders Relationship Committee |
Dr V Nagaraja Naidu Chairperson Mr. D Seetharamaiah Mr. N Sri Vishnu Raju Mrs. N Bhuvaneswari |
- The committee reviews and ensures redressal of investor grievances. - The committee noted that all the grievances of the investors have been resolved during the year. |
Risk |
Mr. Rajesh Thakur Ahuja |
- The purpose of the committee is to assist the Board in fulfilling its |
Management |
Chairperson |
corporate governance with regard to the identification, evaluation |
Committee |
Mr. D Seetharamaiah |
& mitigation of operational, strategic and environmental risks |
Mr. N Sri Vishnu Raju |
efficiently and effectively. |
|
Mrs. N Bhuvaneswari |
- The Company has developed and implemented a risk management framework that includes identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company. |
|
Management |
Mr. D Seetharamaiah |
- Setting the strategic direction to guide and direct the activities |
Committee |
Chairperson |
of the organization; |
Mr. N Sri Vishnu Raju |
- Ensuring the effective management of the organization and its |
|
Mrs. N Bhuvaneswari |
activities; and - Monitoring the activities of the organization to ensure they are in keeping with the founding principles, objects and values. |
POLICIES
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All the corporate policies are available in the Company website (www.heritagefoods.in/Corportate/ policies). The policies are reviewed periodically by the Board and updated based on need and new compliance requirement.
In addition to its Code of Conduct and Ethics, key policies that have been adopted by the Company are as follows:
Name of the |
Brief description |
Web link |
policy |
||
Whistleblower |
The Company has adopted the whistleblower mechanism for directors |
http: //heritagefoods. |
Policy |
and employees to report concerns about unethical behaviour, actual or |
in/ images/HFLWhistle |
(Policy on vigil |
suspected fraud, or violation of the Companyâs code of conduct and |
BlowerPolicy.pdf |
mechanism) |
ethics. It also provides for adequate safeguards against victimization of |
|
employees who avail of the mechanism and also provide for direct access to the Chairperson of the Audit Committee. There has been no change to the Whistleblower Policy adopted by the Company during fiscal 2016. |
||
Insider Trading |
The Company has adopted a Code of Conduct to Regulate, Monitor |
|
Policy and |
& Report Trading by Insiders and Code of Practices and Procedures |
images/COC.pdf |
Code of |
for Fair Disclosure of Unpublished Price Sensitive Information as per |
|
Practices and |
the SEBI (Prohibition of Insider Trading) Regulation 2015, with a view |
|
Procedures for |
to regulate trading in securities by the Directors and designated |
images/COFD.pdf |
Fair Disclosure |
employees of the Company. The Code requires pre- clearance for |
|
of Unpublished |
dealing in the Companyâs shares and prohibits the purchase or sale |
|
Price Sensitive |
of Company shares by the Promoters, Directors and the designated |
|
Information |
employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed and other certain situations. All Board Directors and the designated employees have confirmed compliance with the Code. |
Nomination and Remuneration Policy |
This policy formulates the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of a director (executive / non-executive) and also the criteria for determining the remuneration of the directors, key managerial personnel and senior management of the Company. This policy also lays down criteria for selection and appointment of Board Members. |
http://heritagefoods.in/ images/BD.pdf |
Corporate Social Responsibility Policy |
The policy outlines the Companyâs strategy to bring about a positive impact on Society through programs relating to hunger, poverty, education, healthcare, environment and lowering its resource footprint. |
images/HFL_CSR.pdf |
Policy for Determining Material Subsidiaries |
The policy is used to determine the material subsidiaries and material non-listed Indian subsidiaries of the Company and to provide the governance framework for them. |
images/Subsidiary_ Policy. |
Related Party Transaction Policy |
The policy regulates all transactions between the Company and its related parties. |
images/RPT_Policy.pdf |
Policy on Preservation of Documents |
The policy deals with the preservation of corporate records of the Company and all its subsidiaries. |
images/PD.pdf |
Business Responsibility Policy |
This Policy endorses the Companyâs commitment to follow principles and core elements, in conducting its business, as laid down in the National Voluntary Guidelines on Social, Environmental and Economic responsibilities of Business. |
http://heritagefoods.in/ images /HFL20BR20 POLICYpdf |
Dividend Distribution Policy |
This Policy is to ensure the right balance between the quantum of Dividend paid and amount of profits retained in the business for various purposes. |
images/HFL_Dividend_ Distribution_Policy.pdf |
AUDITORS & AUDITORS REPORT
Statutory Auditors:
M/s. Walker Chandiok & Co. LLP, Chartered Accountants (FRN 001076N/500013) was appointed as Statutory Auditors of the Company at the 25th Annual General Meeting held on August 23, 2017 to hold office till the conclusion of the 30th Annual General Meeting of the Company to be held in the year 2022.
Pursuant to notification no: G.S.R. 432 (E) issued by the Ministry of Corporate Affairs on May 7, 2018 amending section 139 of the Companies Act, 2013 and the Rules framed thereunder, the mandatory requirement for ratification of appointment of Statutory Auditors by the Members at every Annual General Meeting (AGM) has been omitted and hence the Board is not proposing to the members for ratification of appointment of Statutory Auditors at this AGM. The Board of Directors are empowered to fix the remuneration of the Statutory Auditor on yearly basis.
Secretarial Auditor:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board of Directors has appointed M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796), Hyderabad as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year ended 31st March, 2018. The Secretarial Audit Report for the Financial Year ended 31st March, 2018 is appended to this Report as Annexure-3.
The Secretarial Auditorâs Report is self-explanatory and do not call for any comments.
The Board has appointed M/s. Savita Jyoti Associates, Practicing Company Secretaries, as Secretarial Auditor of the Company for the financial year 2018-19 as per the provisions of the Companies Act, 2013 and Rules made thereof and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by he Institute of Company Secretaries of India and that such systems are adequate and operating effectively.
SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATORS
There is no significant order passed by the regulators or Courts during the year under review. However the Honâble NCLT Bench at Hyderabad & Mumbai approved the Composite Scheme of arrangement amongst Heritage Foods Ltd (HFL), Heritage Foods Retail Limited (HFRL) and Future Retail Ltd (FRL) on May 03, 2017 and May 11, 2017 respectively.
EXTRACTS OF ANNUAL RETURN
An Extract of Annual Return in Form MGT-9 as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014, is provided in Annexure-4 to this report. It is also made available in the website of the Company i.e. www.heritagefoods.in.
INTERNAL FINANCIAL CONTROL AND ITS ADEQUACY
Your Company has in place adequate internal financial controls with reference to financial statements. It has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to companyâs policies, 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.
During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
During the year no fraud by the Company or on the Company by its officers or employees has been notices and reported.
INTERNAL AUDIT & CONTROL SYSTEMS
Your Company has a well-defined and documented internal audit & control system, which is adequately monitored. Checks & balances and control systems have been established to ensure that assets are safe guarded, utilized with proper authorization and recorded in the books of account. The Internal control systems are improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements.
These are supplemented by internal audit of your Company carried out by reputed firms of Chartered Accountants across India. Your Company has an Audit Committee consisting of Four Directors in whom all are Non Executive and three are independent Directors. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control system and suggests improvements if any for strengthening them. Your Company has a robust Management Information System which is an integral part of the control mechanism.
The Board of Directors on the recommendation of the Audit Committee has appointed Internal Auditors for the financial year 2018-19 as per the provision of Section 138 of the Companies Act, 2013 and Rules made thereof and as per the SEBI (LO&DR) Regulation, 2015.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has been an early adopter of corporate social responsibility (CSR) initiatives. Along with sustained economic performance, environmental and social stewardship is a key factor for holistic business growth.
CSR activities, as per the provisions of the Companies Act, 2013 and rules made thereof, may be undertaken by the Company or through a registered trust or a registered society. The CSR Committee of the Board evaluated various options to implement the CSR activities and decided to contribute the mandated CSR amount to the NTR Memorial Trust, Hyderabad, to carry out the activities such as promoting education, enhancing the vocational skill & supply of clean drinking water etc., as part of the CSR activities of the Company. As the NTR Memorial Trust is operating since 1997 towards the improvement of health and health outcomes of the needy groups, meeting the educational needs of underprivileged students, advancing the concept of entrepreneurship and self-employment, and offering support and relief during disasters and lot more other initiatives for the up-liftment of the backward and needy population in the society.
These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Companyâs CSR Policy. During the last three years the Company has spent Rs.4 Crores on CSR activities. The Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure-5 forming part of the Boardâs Report.
HERITAGE FARMER WELFARE TRUST (HFWT)
Apart from the mandatory CSR activities under the Companies Act, 2013 your Company continues to voluntarily support the following social initiatives through Heritage Farmers Welfare Trust (HFWT).
- Veterinary care and cattle management practices through Heritage Mobile Veterinary Clinics, (equipped with necessary tools and trained human resources) for providing door-step veterinary services to the Milch Animals and empowering cattle owners with advanced technology and knowledge on best cattle management and feeding practices. The Mobile veterinary vans conduct free health camps in the needy villages.
- Extending Insurance coverage for accidental death of farmer members, Incentive for fodder development & reward for Meritorious Students from farmerâs families.
- The HFWT impact during the year for Mobile Veterinary clinic as follows:
BUSINESS RESPONSIBILITY REPORT (BRR)
Pursuant to regulation 34(2)(f) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 the Annual Report shall contain a Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective. BRR has been designed as a tool to help companies understand the principles and core elements of responsible business practices and start implementing improvements which reflect their adoption in the manner the company undertakes its business. In compliance with the regulation, the Business Responsibility Report is annexed in Annexure-6 to the board report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO
The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act 2013, read with the Companies (Accounts) Rules, 2014 are provided in the Annexure-7 to the Board Report.
TRANSFER OF UN-CLAIMED DIVIDENDS
Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C (2) of the Companies Act, 1956] read with the Investor Education and Protection Fund (awareness and protection of Investors) Rules, 2001 as amended from time to time the unclaimed/unpaid dividend amount of Rs.6,68,044/- (Rupees Six Lakhs Sixty Eight Thousand Forty Four Only) for the year 2009-10 was transferred to the Investor Education and Protection Fund during the financial year 2017-18.
In compliance with the provisions of Section 124 of the Companies Act, 2013, the Company has transferred 6,97,687 noâs of equity shares belongs to 726 shareholders to Investor Education and Protection fund Authority (IEPF) on December 7, 2017 of those shareholders who have not claimed the dividends for a continuous period of 7 years.
RISK MANAGEMENT
Your Company have constituted a Risk Management Committee pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Risk Management Procedure will be reviewed by the Risk Management Committee and Board of Directors on a half-yearly basis at the time of review of Financial Results of the Company.
The policy is available in the Company website: www. heritagefoods.in>corporate>policies>RMPolicy
POLICY ON SEXUAL HARASSMENT
Your Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed off during the year 2017-18
No of complaints received : Nil
No of complaints disposed off : Nil
DIVIDEND DISTRIBUTION POLICY
Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, requires that the top 500 listed companies based on the market capitalization to formulate Dividend Distribution Policy. In compliance with the said requirement, the Company has formulated its Dividend Distribution Policy, the said policy is available on the Companyâs website at: www.heritagefoods.in.
INDIAN ACCOUNTING STANDARDS (IND AS)
The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2017 pursuant to Ministry of Corporate Affairsâ notification of the Companies (Indian Accounting Standards) Rules, 2015. The financials for the financial year 2017-18 were presented as per the Ind As format.
PREVENTION OF INSIDER TRADING CODE
As per SEBI (Prohibition of Insider Trading) Regulation, 2015, the Company has adopted a Code of Conduct for Prevention of Insider Trading. The Company has appointed Mr. Umakant Barik, Company Secretary of the Company as Compliance Officer, who is responsible for setting forth procedures and implementation of the code for trading in Companyâs securities. During the year under review, there has been due compliance with the said code.
DIRECTORâS RESPONSIBILITY STATEMENT AS REQUIRED UNDER SECTION 134 (3)(C) OF THE COMPANIES ACT, 2013
The financial statements are prepared in accordance with the Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except the sale proceeds received under REC Mechanism of the Renewable Energy. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (âthe Actâ), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). There are no material departures from prescribed accounting standards in the adoption of these standards.
The Directors confirm that:
- In the preparation of the annual accounts (Standalone & Consolidated) for the financial year 2017-18, applicable accounting standards have been followed along with proper explanation relating to material departures.
- They 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 2017-18 and of the profit and loss of the Company for that period.
- 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,
- They have prepared the annual accounts of the company on a going concern basis.
- They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
- They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively
GREEN INITIATIVES
The Company started a sustainability initiative with the aim of going green.
Electronic copies of the Annual Report 2017-18 including the Notice of the 26th Annual General Meeting will be sent to all members whose email addresses are registered with the Company/Depository Participant(s).
ACKNOWLEDGMENT
The Board takes this opportunity to thank all customers, farmers, vendors, investors, bankers and Statutory Authorities for their continued support during the year. The Board also wishes to place on record its sincere appreciation of the effort/ contribution made by its employees at all levels. The Companyâs consistent growth was made possible by their hard work, solidarity, cooperation and support and look forward to their continued support in the future.
For and on behalf of
HERITAGE FOODS LIMITED
Registered Office:
6-3-541/C, Punjagutta,
Hyderabad - 500 082
CIN: L15209TG1992PLC014332 D. SEETHARAMAIAH
Ph : 04023391221/2 Chairperson
E-mail : [email protected] (DIN: 00005016)
Place : Hyderabad
Date : May 24, 2018
Mar 31, 2017
To the members,
The Directors have great pleasure in presenting the 25th Annual Report of the Company together with the Standalone & Consolidated Audited statement of accounts for the Financial Year ended 31st March, 2017.
Financial Results
(Rs,In Lakhs)
Particular |
Standalone |
Consolidated |
||
FY 2016-17 |
FY 2015-16 |
FY 2016-17 |
FY 2015-16 |
|
Revenue from Operations (Gross) |
227437.98 |
238162.13 |
264393.14 |
238162.13 |
Less: Excise Duty |
97.82 |
103.80 |
104.22 |
103.80 |
Total Revenue from operations |
227340.16 |
238058.33 |
264288.92 |
238058.33 |
Add: Other Income |
445.17 |
654.96 |
599.55 |
654.96 |
Total Revenue |
227785.33 |
238713.29 |
264888.47 |
238713.29 |
Total Expenditure |
213677.65 |
224977.61 |
250157.78 |
224978.03 |
Profit /(Loss) before Finance Cost, Depreciation & amortization and Tax |
14107.68 |
13735.68 |
14730.68 |
13735.26 |
Finance cost |
1114.17 |
1549.27 |
1122.21 |
1549.27 |
Depreciation & Amortization |
3251.87 |
3451.21 |
3780.63 |
3451.21 |
Profit /(Loss) before Extraordinary and Exceptional Item and Tax |
9741.64 |
8735.20 |
9827.84 |
8734.78 |
- Exceptional Item Tax |
- |
136.95 |
- |
136.95 |
Profit /(Loss) before Tax |
9741.64 |
8598.25 |
9827.84 |
8597.83 |
Tax Expenses - Current & prior period tax |
2600.07 |
3068.44 |
2701.53 |
3068.44 |
- Deferred Tax |
459.11 |
(13.34) |
444.33 |
(13.34) |
Net Profit /(Loss) for the Year |
6682.46 |
5543.15 |
6681.98 |
5542.73 |
Performance of the Company
Your Company, during the year under review earned revenue from operations (Gross) of Rs,264288.92 Lakhs, achieved an increase of 11.02 % over the previous year. The profit before finance cost, depreciation and amortization was of Rs,14730.68 Lakhs (5.56% on total revenue) as against Rs,13735.26 Lakhs (5.75% on total revenue) in the previous year. The operating profit after depreciation was amounted to Rs,10950.05 Lakhs (4.13% to revenue) as against Rs,10147.10 Lakhs (4.25% of revenue) in the previous year.
Dividend
Your Directors have pleasure in recommending a dividend of Rs,4/- (40%) per equity share of ''10/- each for the financial year ended March 31, 2017, amounting to Rs,927.96 lakhs. The above dividend includes a special silver jubilee dividend of Rs,1.00/- (10%) per equity share of Rs,10 each for the financial year ended March 31, 2017. The dividend payout is subject to approval of members at the ensuing Annual General Meeting.
The Register of Members and Share Transfer Books will remain closed from Wednesday, August 16, 2017 to Wednesday, August 23, 2017 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2017. The Annual General Meeting is scheduled to be held on August 23, 2017
The dividend payout for the year under review has been finalized in accordance with shareholdersRs,aspirations and the Company''s policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.
Transfer to Reserves
Your Company proposes to transfer Rs,1000 Lakhs to General Reserve. An amount of Rs,5682.46 Lakhs is proposed to be retained in the Surplus.
Share Capital
The paid up Equity Share Capital as at March 31, 2017 stood at Rs,23,19,90,000 divided into 2,31,99,000 equity shares of 10/- each. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or issued sweat equity share to its employees or directors. As on March 31, 2017, none of the Directors or the Company holds instruments convertible into equity shares of the Company.
Fixed Deposits
Your Company has not accepted any deposits from the public and as such, no amount of principal or interest was outstanding as at the Balance Sheet date.
Particulars of Loans, Guarantees or Investments
Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
Particulars of Contract or Arrangements Made With Related Parties
All related party transactions that were entered into during the financial year were at arm''s length basis and were in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 are not attracted. Thus the disclosure in form AOC-2 is not required. Further there are no materially significant related party transactions during the year under review with Promoters, Directors, Key Managerial Personnel and their relatives, which may have potential conflict with interest of the company at large.
The related party transactions if any are placed before the audit committee as also to the Board for approval. The details of the related party transactions during the year are part of the notes on Accounts forming part of the Annual Report.
Material changes and commitments affecting financial position between the end of the financial year and date of report
There are no material changes and commitments affecting financial position of the company between 31st March and the date of Board''s Report except to give effect the Composite Scheme of arrangement amongst Heritage Foods Ltd (HFL), Heritage Foods Retail Limited (HFRL) and Future Retail Ltd (FRL).
Variation in market capitalization
As at March 31, |
Increase / |
||
2017 |
2016 |
(decrease) in % |
|
Market capitalization (Rs,in Crore) |
2,497.14 |
1185.47 |
110.65 |
Price earnings ratio |
37.37 |
21.39 |
15.98 |
Note: Data bases on share prices quoted on BSE
Management''s Discussion and Analysis
In terms of the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Management''s Discussion and Analysis is set out in this Annual Report.
Business Review
Your Company has Two Divisions in operation in different States in India as on March 31, 2017.
As a part of the strategic business restructuring the Retail, Bakery, Agri & VetCa divisions of the Company has transferred on a going concern basis as a slump sale to M/s. Heritage Foods Retail Limited (HFRL), a wholly owned subsidiary Company. Subsequent to that the Retail, Agri & Bakery verticals of HFRL shall be transferred to Future Retail Limited (FRL), Mumabi by way of demerger through a Composite Scheme of arrangement as per the provisions of Sections 391 to 394 and Sections 100 to 103 of the Companies Act, 1956 and/or Sections 230 to 232 and Section 66 of the Companies Act, 2013 (as applicable) and Section 52 of the Companies Act, 2013 and other applicable provisions of the Companies Act, 1956 and Companies Act, 2013 (as may be applicable).
The Hon''ble NCLT Bench at Hyderabad & Mumbai approved the Composite Scheme of arrangement amongst Heritage Foods Ltd (HFL), Heritage Foods Retail Limited (HFRL) and Future Retail Ltd (FRL) on 03/05/2017 and 11/05/2017 respectively. The order copy has filed with respective Registrar of Companies (ROC) on 19th May, 2017 to give effect the Composite Scheme. The four divisions (viz., Retail, Bakery, Agri & Vetca) of your company has merged with the business of the HFRL a wholly owned subsidiary w.e.f. 1st November, 2016 (slump sale appointed date) as a slump sale basis with a consideration of Rs,135 Crores. HFRL shall issue 1,40,00,000 (One Crore forty lakhs only) equity shares of Rs,10 each with a premium of Rs,86.43 to the Company to discharge the slump sale consideration. There after the three divisions (viz., Retail, Bakery & Agri) of HFRL has demerged with the resulting Company i.e.
FRL w.e.f. 31st March, 2017 (demerged appointed date) . The FRL shall issue 1,78,47,420 equity shares of Rs,2 each with a premium of Rs,165.29 to the HFL being a shareholder of the HFRL to discharge the demerger consideration of Rs,295 Crores.
Your Company acquired the dairy business of Reliance Retail Ltd (RRL) in a slump sale. RRL operates a pan India dairy procurement, processing and distribution platform under two brands ''Dairy Life'' and ''Dairy Pure'' with wide variety of products such as packaged milk, flavored milk, butter, ghee, curd, dairy whitener, sweets and skimmed milk powder. This acquisition augurs well for your company as it gives new opportunities in states like Punjab, Uttarakhand and Rajasthan where your company is not present and strong synergies in markets like Mumbai and Delhi-NCR where your company already commenced its operation.
Dairy Business:
Your company sells dairy products under the "Heritage" brand across 10 states in India through 6,098 distributors and 1,457 ''Heritage Parlours''. Your Company enjoys a leadership position in Andhra Pradesh and Telangana and holds a sizable market share in Tamil-Nadu and Karnataka. 80% of the company''s dairy revenues come from South India and from here on further growth in this region will be targeted at by scaling Tier - II & Tier - III towns. Your Company is trying to make inroads into North and West India markets; It entered NCR Delhi & Maharashtra markets and is setting up its milk procurement infrastructure and capacities there.
The company launched several value added products Since 2007 and has increased its contribution to dairy revenues from 10.4% in FY11 to 23% in FY17. As on FY17, curd contributes 77% of total value added products'' revenue followed by Frozen Dessert, paneer, flavored milk and sweets.
Steady increase in contribution of Value added products
Your Company is also a market leader in the curd segment and is now looking to expand its product basket by entering into the fastest growing products like Cheese and Yoghurt.
Milk Production & Consumption in India: India has come a long way since the milk-deficit days to becoming the world''s largest producer as well as consumer of milk. Globally, the EU, India and the United States are currently the largest milk and dairy product producers and consumers. These countries account for 20.3%, 18.3% and 11.9% shares respectively in global dairy production.
There are two structural themes that are expected to pan out in the Indian dairy industry owing to favorable demographics which will drive multi-year growth in the industry. The tailwinds arising with the shift from ''unorganized'' to ''organized'' market and consumer up gradation from ''pouch milk/ powders'' to ''value-added dairy products'' (VADP) will provide strong growth opportunities.
In India, the unorganized segment comprising of ''local vendors'' and ''self-consumption'' commands a lion''s share of 80% by value. The organized segment is divided between ''cooperatives'' and ''private dairy companies''. The share of organized segment has gradually inched up from 16.7% in FY10 to 20.7% in FY17.
Shift from raw milk/ milk powders to Value Added Dairy Products (VADP): Raw milk, skimmed milk powders (SMP) and dairy whiteners (DW) are classified as traditional commodities with low margin dairy products. However, with rising disposable incomes and bourgeoning proportion of working women, there will be greater consumption of branded VADP like cheese, table butter, flavored milk, UHT milk, shrikhand, paneer, buttermilk, etc.
Your Company procures 1.03mn litres of milk daily from 3 lakh farmers across 8 states which are chilled in 144 bulk coolers and further processed and packaged in 15 packaging plants. 90% of milk is directly procured from farmers which ensures greater consistency in milk quality and consistency in supply. The company''s installed processing capacity is 1.53mn liters per day and chilling capacity is 1.73mn liters per day. After processing,
0.9mn litres of milk is sold across 11.5mn households on a daily basis and the remaining is converted into value added products (majorly curd and ice-cream) and sold across 10 states viz Andhra Pradesh, Delhi, Haryana, Karnataka, Kerala, Maharashtra, Odisha, Rajasthan, Telangana and Tamilnadu.
During the financial year 2016-17, Dairy Division has increased milk Chilling capacity by 1,00,000 LPD by commissioning of 16 units which includes Bulk mini chilling units, Mini Chilling units, chilling centres and Franchisee Bulk mini chilling units to increase the milk procurement and to maintain the quality. The Turnover has grown by 5.73% from Rs, 176880 Lakhs to Rs, 187010 Lakhs.
Renewable Energy Division:
The Renewable Energy Division strongly recognizes the responsibility towards protecting the environment. As a forward-looking enterprise, it is strongly committed to extending the Green'' footprint. In line with this thinking, the Division has set up the following plants:
> Commissioned 2.34 MW Solar Power Plant at Adavi Masjid Village, Mulugu Mandal, Medak Dist, Telangana on 29th September, 2013.
> Commissioned 1st Wind Power Plant of 2.1 MW Capacity at Chinahothur Village, Vajrakarur Mandal, Ananthapur District, Andhra Pradesh on 27th March 2016.
> Commissioned 2nd Wind Power Plant 2.1 MW Capacity at Sy No. 291, 292, Vajrakarur, Ananthapur District, Andhra Pradesh, India on 20th September, 2016.
> Commissioned (Off Grid) Distributed Captive Solar Power Plants at its six various locations/plants with total capacity of 1.66 KWp on 29/03/2017 with key objective to optimize energy mix by use of Clean & Green (Renewable) Energy sources to reduce carbon emissions and to secure Energy at Low Cost.
Renewable Energy Division of your Company had achieved the turnover of Rs, 521.30 Lakhs during the year under review.
Subsidiary / Associate Companies
Your Company is having two Subsidiaries Company''s namely M/s. Heritage Foods Retail Limited (CIN: U15400TG2008PLC062054) & M/s. Heritage Conpro Limited (CIN:U52100TG2011PLC072132) and one Associate Company M/s SKIL Raigam Power (India) Limited (CIN:U40102TG2009PLC063671).
M/s. Heritage Conpro Limited is not doing any business since its Incorporation, the company had resolved to voluntarily wind up pursuant to the provisions of Section 484 of the Companies Act, 1956 read with rule made there under and appointed the Liquidators for winding up the affairs of the company. All the required documents has been submitted by Official Liquidator awaiting for the final order from from the Hon''ble High Court of Judicature at Hyderabad for the State of Telangana and Andhra Pradesh .
During the year, the Board of Directors reviewed the activities of the subsidiaries, associate Companies and noted that the Heritage Foods Retail Limited, accounts has been consolidated from the effect date (i.e. 1st November, 2016) as per the Composite Scheme of Arrangement. The Associate Company namely M/s. SKIL Raigam Power (India) Limited is in process for various stages for implementation & completion of Hydel Power project. However in accordance with Section 129(3) of the Companies Act,
2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has prepared consolidated financial statements of its Subsidiary & Associate Company in accordance with relevant Accounting Standards Viz. AS-21, AS-23 & AS-27 issued by the Institute of Chartered Accountants of India and form part of the Annual Report. Further, a statement containing the salient features of the financial statement of the
Subsidiary & Associate Companies in the prescribed format AOC-1 is appended in financial statement of the report. The statement also provides the details of performance, financial positions of each of the subsidiary & Associate.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its Subsidiary & Associate, are available on our website of the Company www.heritagefoods.in. These documents will also be available for inspection during the business hours at our registered office in Hyderabad, India.
Quality
Your Company continues the journey of delivering value to consumers/customers through significant investments in quality programs. While sustaining existing external benchmarks and certifications, your Company have added new certifications and further enhanced the programs and initiatives to renew the commitment to the culture of quality.
Your Company adheres to international quality standard certifications such as ISO 22000:2005, (OHSAS) ISO 18001:2007, ISO 14001:2004, (ENMS) ISO 50001:2011 and HALAL CERTIFICATION HYDERABAD HFC 15-101 & 102. Your Company has also received an independent auditor''s assurance report on compliance to ISO 14001 & 18001 (EMS & OHSAS) 2nd Cycle Re-registration and same was submitted to certification body (SGS, Hyderabad).
The Quality department of your Company handles large change management initiatives to drive quality and productivity improvements across the Company, using various techniques.
Branding
On the eve of the silver jubilee of the company, the brand identity of your Company has undergone an evolutionary change. In evolving Heritage''s identity, one of the objectives was to create a bridge between the last 25 years and the future of the brand. The evolution of the brand is done keeping the key elements of the older identity intact i.e., the green and the red in the logo, the oval shape etc, the italics in the fonts etc. The other key task was visualize the brand promise of "Health & Happiness". "Health" is a glass of Heritage milk and "Happiness" is an expression. This identity is taken to all the brand faces of Heritage, may it be any form of mass media or permanent visibility. This unification of identity shall make it simpler for a Heritage consumer to identify Heritage at its key distribution points
Besides evolving Identity, there is a complete changeover of the packaging of Heritage range of products. The key objective here is to have one unified look, which helps to take the brand national and ensure that consumer experiences the brand promise irrespective of where the brand is consumed. We currently service 1.5 Million consumers on a daily basis and with the above initiative, we believe that the brand will be ready for its next million consumers.
Awards & Recognitions
During the financial year 2016-17 the Company has received the following awards and recognitions.
> The Company has been declared as the Winner of ''Golden Peacock Award for Excellence in Corporate Governance'' for the year 2016 by Institute Of Directors (IOD), India. The above award was received by Mrs. N Bhuvaneswari, Vice Chairperson & Managing Director of the Company from Ms. Baroness Sandip Verma, Global Chairperson, Advisory Council, Institute Of Directors, India and Chairperson, European External Affairs Committee, at a specially organized "Golden Peacock Awards Nite" presentation ceremony was held at London, United Kingdom, W1K 2HP, UK, in the presence of distinguished business leaders from INDIA & UK, during IOD India''s "16th London Global Convention on Corporate Governance & Sustainability" and Global Business Meet.
> The Uppal Plant of Dairy Division has received the 1st Prize in ''National Energy Conservation Award'' in Dairy sector from the Ministry of Power, Govt of India during the year 2016. this is the Sixth time that the energy conservation efforts of Heritage Foods are recognized by the Ministry. The Company had won such Awards earlier in 2008, 2010, 2012, 2014 and 2015.
> The Retail Division of the Company has received ''COCA COLA Golden Spoon Award'' 2016 for being the Most Admired Food & Grocery Retailer of the Calendar Year'' 2016.
> The Chief Financial Officer (CFO) of the Company has been conferred an Award by the London-based Chartered Institute of Management Accountants (CIMA), there by joining the elite list of CIMA''s "100 Most Influential CFOs" during the year 2016.
> The IT Head of the Company has been awarded among those conferred with the "100 Most Innovative CIO of India" by The World CSR day, Mumbai during the year 2016.
Human Resources and Industrial Relations
Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. To ensure good human resources management, your Company focused on all aspects of the employee lifecycle. This provides a holistic experience for the employee as well. During their tenure at the Company, employees are motivated through various skill-development, engagement and volunteering programs. Your
Company has a structured induction process at all locations and management development programs to upgrade skill of managers. Objective appraisal systems based on Key Result Areas are in place for senior management members.
Your Company is committed to nurturing, enhancing and retaining talent through superior Learning & Organizational Development. This is a part of Corporate HR function and is a critical pillar to support the organization''s growth and its sustainability in long run.
The total strength of your Company at the end of financial year 2016-17 was 2420.
Particulars of Employees
The table containing the names and other particulars of employees in accordance with the provisions of 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 provided in Annexure-1A to the Board''s report.
A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs, 102 lakh or more PA, or employed for part of the year and in receipt of Rs, 8.5 lakh or more in a month, under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time, is enclosed as Annexure-1B to the Board''s report.
Corporate Governance
Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization''s brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders'' expectations. It is imperative that your company affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of the stakeholders.
Your Company complies with the Securities and Exchange Board of India (SEBI)''s Regulations on corporate governance. Your Company has documented internal policies on corporate governance. During the year, Company continued to comply with the Companies Act, 2013. Company Corporate governance report for financial year 2016-17 forms part of this Annual Report. All Corporate policies are available in Company website i.e. www.heritagefoods.in Corporate Policies
Auditors'' certificate on Corporate Governance
As required by SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the auditors'' certificate on corporate governance is forming part of the Annual Report.
Board Diversity
Your Company recognizes and embraces the importance of a diverse board in its success. Company believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill and industry experience, cultural and geographical background, age and gender, which will help the Company retain its competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Policy is available in the Company website www.heritagefoods.in^corporate^policies^BD
Meetings of the Board
The Board met Seven times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Policy on Director''s Appointment and Remuneration
The current policy is to have an appropriate mix of Executive and Non-executive & Independent and Women Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2017, the Board consists of 6 members, two of whom are Executive/Whole time directors and four are Non-Executive directors. The Board periodically evaluates the need for change in its composition and size.
The policy of your Company on directors'' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub-section (3) of Section 178 of the Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 adopted by the Board. It is affirmed that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company.
Declaration by Independent Directors
Your Company has received necessary declaration from each independent director under Section 149 of the Companies Act, 2013, confirming that he/she meets the criteria of independence laid down in Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Board Evaluation
As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination and Remuneration Committee laid down criteria for performance evaluation of individual directors, the board and its committees. Accordingly, an annual evaluation was carried out for the Board''s performance, its Committees and individual directors.
Board performance evaluation is carried out through a structured questionnaire which provides a powerful and valuable feedback for improving Board effectiveness, maximizing strengths and highlighting areas for further development.
The following are some of the broad issues that are considered in performance evaluation:
Criteria for evaluation of Board and its Committees:
- Ability to act on a fully informed basis, in good faith, with due diligence and care and in the best interest of the company and the stakeholders.
- Optimum combination of knowledge, skill, experience and diversity on the Board as well its Committees.
- Relationships and effective communication among the Board members.
- Effectiveness of individual non-executive and executive directors and Committees of Board.
- Quality of the discussions, general information provided on the company and its performance, papers and presentations to the Board.
- Risk management as well processes for identifying and reviewing risks.
- Well- defined mandate and terms of reference of Committee.
Criteria for evaluation of Individual Directors:
- Attendance at Board as well as Committee Meetings
- Procurement of Information, preparation for Board Meetings and value of contribution at meetings
- Relationships with fellow Board members, the company secretary and senior management and mutual trust and respect they stimulated within the Board.
- Keeping update with the latest developments in the areas of governance and financial reporting
- Willingness to devote time and effort to understand the company and its business
- Providing necessary guidance using their knowledge and experience in development of corporate strategy, major plans of action, risk policy, and setting performance objectives.
- Independence exercised in taking decisions, listening to views of others and maintaining their views with resolute attitude
- Ability in assisting the Company in implementing the best corporate governance practices.
- Capability in exercising independent judgment to tasks where there is potential to conflict of interest
- Commitment in fulfilling the director''s obligations fiduciary responsibilities.
None of the independent directors are due for reappointment.
Training of Independent Directors
Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of your Company, the executive directors / senior managerial personnel make presentations to the inductees about the Company''s strategy, operations, product and service offerings, markets, organization structure, quality and risk management etc.
Appointment/Re-Appointment
Dr. V Nagaraja Naidu (DIN: 00003730) Non-Executive Director of the Company retire by rotation and being eligible offer himself for re-appointment at the ensuing Annual General Meeting as per the provisions of Section 152 of the Companies Act 2013 and rules made thereof and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Retirements and Resignations
Mr. M Siva Rama Vara Prasad (DIN: 00170919) Non-Executive Independent Director of the Company had resigned from the Board w.e.f. 12th May, 2016 due to his personal reasons and other commitments. The Board placed on record the invaluable contribution made by him, towards the progress of the Company from the date of appointment until his resignation.
Mr. N. Lokesh (DIN: 02230945) Non-Executive Director of the Company had resigned from the Board w.e.f. 31st March, 2017 due to his personal reasons. The Board placed on record the invaluable contribution made by him, towards the progress of the company from the date of appointment until his resignation.
Key Managerial Personnel
During the year under review, the Company having the following persons as Key Managerial Personnel.
Name of the Official |
DIN/M.No |
Designation |
Mrs. N. Bhuvaneswari |
00003741 |
Vice Chairperson & Managing Director |
Mrs. N. Brahmani |
02338940 |
Executive Director |
Mr. A Prabhakara Naidu |
FCA 200974 |
Chief Financial Officer |
Mr. Umakanta Barik |
FCS 6317 |
Company Secretary |
Committees of the Board
Currently, the Board has Six committees: the Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Management Committee and Risk Management Committee.
A detailed note on the Board and its committees is provided under the Corporate Governance Report section in this Annual Report. The composition of the committees and compliances, as per the applicable provisions of the Act and Rules, are as follows:
Name of the Committee |
Composition of the Committee |
Highlights of duties, responsibilities and activities |
|
Audit |
Mr. D Seetharamaiah, Chairperson |
- |
All recommendations made by the audit committee during the year were |
committee |
Mr. N Srivishnu Raju |
accepted by the Board. |
|
Mr. M Siva Rama Vara Prasad# |
- |
Reviewing, with the management, the quarterly financial statements before submission to the Board for approval. |
|
Dr. V Nagaraja Naidu |
- |
Approval or any subsequent modification of transactions of the Company with |
|
Mr. N Lokesh* |
related parties. |
||
Mr. Rajesh Thakur Ahuja |
- |
Reviewing, with the management, the performance of statutory auditors and internal auditors, adequacy of internal control systems, etc. |
Name of the Committee |
Composition of the Committee |
Highlights of duties, responsibilities and activities |
|
Nomination |
Mr. N Srivishnu Raju |
- |
The committee oversees and administers executive compensation, operating |
and |
Chairperson |
under a written charter adopted by our Board of Directors. |
|
Remuneration |
Mr. D Seetharamaiah |
- |
The nomination and remuneration committee has framed the nomination and |
Committee |
Mr. M Siva Rama Vara Prasad# Mr. N Lokesh* Mr. Rajesh Thakur Ahuja |
remuneration policy. |
|
Corporate |
Mr. D Seetharamaiah |
- |
To formulate and recommend to the Board, a Corporate Social Responsibility |
Social |
Chariperson |
(CSR) Policy indicating activities to be undertaken by the Company in |
|
Responsibility |
Mr. N Srivishnu Raju |
compliance with provisions of the Companies Act, 2013 and rules made there |
|
Committee |
Mrs. N Bhuvaneswari |
- |
under. To monitor the implementation of the CSR Policy of the Company from time to time |
Stakeholders |
Dr. V Nagaraja Naidu |
- |
The committee reviews and ensures redressal of investor grievances. |
Relationship |
Chariperson |
- |
The committee noted that all the grievances of the investors have been |
Committee |
Mr. D Seetharamaiah Mr. N Srivishnu Raju Mrs. N Bhuvaneswari |
resolved during the year. |
|
Risk |
Mr. M Siva Rama Vara Prasad# |
- |
The purpose of the committee is to assist the Board in fulfilling its corporate |
Management |
Chairperson |
governance with regard to the identification, evaluation & mitigation of |
|
Committee |
Mr. Rajesh Thakur Ahuja |
operational, strategic and environmental risks efficiently and effectively. |
|
Chairperson Mr. D Seetharamaiah Mr. N Srivishnu Raju Mrs. N Bhuvaneswari |
- |
The Company has developed and implemented a risk management framework that includes identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company. |
|
Management |
Mr. D Seetharamaiah |
- |
Setting the strategic direction to guide and direct the activities of the |
Committee |
Chariperson |
organization; |
|
Mr. N Srivishnu Raju |
- |
Ensuring the effective management of the organization and its activities; and |
|
Mr. N Lokesh* Mrs. N Bhuvaneswari |
- |
Monitoring the activities of the organization to ensure they are in keeping with the founding principles, objects and values. |
# Mr. M Siva Rama Vara Prasad Resigned from the Board & Committees w.e.f. 12th May 2016.
* Mr. N Lokesh Resigned from the Board w.e.f. 31st March, 2017
Policies
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All the corporate policies are available in the Company website (www.heritagefoods.in/Corportate/policies). The policies are reviewed periodically by the Board and updated based on need and new compliance requirement.
In addition to its Code of Conduct and Ethics, key policies that have been adopted by the Company are as follows:
Name of the policy |
Brief description |
Web link |
Whistleblower Policy (Policy on vigil mechanism) |
The Company has adopted the whistleblower mechanism for directors and employees to report concerns about unethical behavior, actual or suspected fraud, or violation of the Company''s code of conduct and ethics. It also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairperson of the Audit Committee. There has been no change to the Whistleblower Policy adopted by the Company during fiscal 2016. |
http://heritagefoods.in/ images/HFL% 20Whistle%20 Blower%20Policy.pdf |
Name of the policy |
Brief description |
Web link |
Insider Trading Policy and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information |
The Company has adopted a Code of Conduct to Regulate, Monitor & Report Trading by Insiders and Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information as per the SEBI (Prohibition of Insider Trading) Regulation 2015, with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires preclearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Promoters, 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 and other certain situations. All Board Directors and the designated employees have confirmed compliance with the Code. |
images/COC.pdf images/COFD.pdf |
Nomination and Remuneration Policy |
This policy formulates the criteria for determining qualifications, competencies, positive attributes and independence for the appointment of a director (executive / non-executive) and also the criteria for determining the remuneration of the directors, key managerial personnel and senior management of the Company. This policy also lays down criteria for selection and appointment of Board Members. |
images/BD.pdf |
Corporate Social Responsibility Policy |
The policy outlines the Company''s strategy to bring about a positive impact on society through programs relating to hunger, poverty, education, healthcare, environment and lowering its resource footprint. |
http://heritagefoods.in/ images/HFI__CSR.pdf |
Policy for Determining Material Subsidiaries |
The policy is used to determine the material subsidiaries and material non-listed Indian subsidiaries of the Company and to provide the governance framework for them. |
images/Subsidiary_Policy. |
Related Party Transaction Policy |
The policy regulates all transactions between the Company and its related parties |
images/RPT_Policy.pdf |
Policy on Preservation of Documents |
The policy deals with the preservation of corporate records of the Company and all its subsidiaries. |
images/PD.pdf |
Business Responsibility Policy |
This Policy endorses the Company''s commitment to follow principles and core elements, in conducting its business, as laid down in the National Voluntary Guidelines on Social, Environmental and Economic responsibilities of Business |
http://heritagefoods.in/ images /HFL%20BR%20 POLICY.pdf |
Dividend Distribution Policy |
This Policy is to ensure the right balance between the quantum of Dividend paid and amount of profits retained in the business for various purposes. |
images/HF!__Dividend_ Distribution_Policy.pdf |
Auditors & Auditors Report Statutory Auditors:
As per Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, as amended from time to time, the term of M/s. Raju & Prasad, Chartered Accountants (F No: 003475S), Chartered Accountants, Hyderabad as the Statutory Auditors of the Company expires at the conclusion of the 25th Annual General Meeting of the Company.
The Board of Directors of the Company at their meeting held on 24th March, 2017, on the Recommendation of the Audit
Committee, have made its recommendation for appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants (FRN:001076N/N500013), 7th Floor, Block III, White House, Kundan Bagh, Begumpet, Hyderabad - 500016, as the Statutory Auditors of the Company by the Members at the 25th Annual General Meeting of the Company for an initial term of 5 years. Accordingly, a resolution, proposing appointment of M/s. Walker Chandiok & Co LLP, Chartered Accountants, as the Statutory Auditors of the Company for a term of five consecutive years i.e. from the conclusion of 25th Annual General Meeting, during the year 2017 till the conclusion of 30th Annual General Meeting, during the year 2022 of the Company pursuant to Section 139 of the Companies
Act, 2013, forms part of the Notice of the 25th Annual General Meeting of the Company. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and rules framed there under.
The Report given by M/s. Raju & Prasad, Statutory Auditors on the financial statement of the Company for the Financial year
2016-17 is part of the Annual Report. There has been no qualification, reservation or adverse remark or disclaimer in their Report.
During the year under review, the Auditors had not reported any matter under Section 143 (12) of the Act, therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act. M/s. Raju & Prasad, over many years have successfully met the challenge that the size and scale of the Company''s operations pose for auditors and have maintained the highest level of governance, ethical standards, rigour and quality in their audit. The Board place on record its appreciation for the services rendered by M/s. Raju & Prasad, as the Statutory Auditors of the Company.
Secretarial Auditor:
M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796), was appointed to conduct the Secretarial Audit of the Company for the financial year 2016-17, as required under Section 204 of the Companies Act, 2013 and Rules made thereunder. The secretarial audit report for financial year 2016-17 issued by M/s. Savita Jyoti, Practicing Company Secretary in form MR-3 is provided in the Annexure-2 to the Board''s report.
The Secretarial Auditor''s Report is self-explanatory and do not call for any further comments.
The Board has appointed M/s. Savita Jyoti Associates, Practicing Company Secretaries, as Secretarial Auditor of the Company for the financial year 2017-18 as per the provisions of the Companies Act, 2013 and Rules made thereof and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.
Significant of Material Orders Passed by the Regulators
There is no significant order passed by the regulators or Courts during the year under review.
Extracts of Annual Return
An Extract of Annual Return in Form MGT-9 as per the provisions of Section 92 of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014, is provided in Annexure-3 to this report.
Internal financial control and its adequacy
Your Company has in place adequate internal financial controls with reference to financial statements. It has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, 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.
During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
Internal Audit & Control Systems
Your Company has a well-defined and documented internal control system, which is adequately monitored. Checks & balances and control systems have been established to ensure that assets are safe guarded, utilized with proper authorization and recorded in the books of account. The Internal control systems are improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements.
These are supplemented by internal audit of your Company carried out by reputed firms of Chartered Accountants across India. Your Company has an Audit Committee consisting of Four Directors in whom all are Non Executive and three are independent Directors. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control system and suggests improvements if any for strengthening them. Your Company has a robust Management Information System which is an integral part of the control mechanism.
The Board of Directors on the recommendation of the Audit Committee has appointed Internal Auditors for the financial year 2017-18 as per the provision of Section 138 of the Companies Act, 2013 and Rules made thereof and as per the SEBI (LO&DR) Regulation, 2015
Corporate Social Responsibility (CSR)
Your Company has been an early adopter of corporate social responsibility (CSR) initiatives. Along with sustained economic performance, environmental and social stewardship is a key factor for holistic business growth.
CSR activities, as per the provisions of the Companies Act, 2013 and rules made thereof, may be undertaken by the Company or through a registered trust or a registered society. The CSR Committee of the Board evaluated various options to implement the CSR activities and decided to contribute the mandated CSR amount to the NTR Memorial Trust, Hyderabad, to carry out the activities such as promoting education, enhancing the vocational skill & supply of clean drinking water etc., as part of the CSR activities of the Company. As the NTR Memorial Trust is operating since 1997 towards the improvement of health, education of the needy people in the society and running the school for the poor people and lot more other initiatives for the up-liftmen of the backward and needy population in the society.
These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Company''s CSR Policy. The Report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure-4 forming part of the Board''s Report.
i. Heritage Farmer Welfare Trust (HFWT)
Apart from the CSR activities under the Companies Act, 2013 your Company continues to voluntarily support the following social initiatives through Heritage Farmers Welfare Trust (HFWT).
- Veterinary care and cattle management practices through Heritage Mobile Veterinary Clinic, (equipped with necessary tools and trained human resources) for providing door-step veterinary services to the Milch Animals and empowering cattle owners with advanced technology and knowledge on best cattle management and feeding practices. The Mobile veterinary vans conduct free health camp in the needy villages.
- Extending Insurance coverage for accidental death of farmer members, Incentive for fodder development & reward for Meritorious Students.
- The HFWT impact during the year for Mobile Veterinary clinic as follows:
No of Cattles Treated 159540 |
No of Milk Collection Centers Covered 4529 |
No of Cattle Health Camps Organized 2163 |
No of HFL Locations Covered |
No of Artificial |
No of Video Films |
Inseminations |
Shown |
|
106 |
1561 |
1891 |
Business Responsibility Report
Pursuant to regulation 34(2)(f) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 the Annual Report shall contain a Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective. BRR has been designed as a tool to help companies understand the principles and core elements of responsible business practices and start implementing improvements which reflect their adoption in the manner the company undertakes its business. In compliance with the regulation, the Business Responsibility Report is annexed in Annexure-5 to the board report.
Energy Conservation, Technology Absorption & Foreign Exchange Earnings & Outgo
The particulars as prescribed under Sub-section (3)(m) of Section 134 of the Companies Act 2013, read with the Companies (Accounts) Rules, 2014 are provided in the Annexure-6 to the Board Report.
Transfer of Un-Claimed Dividends
During the year under review, there is no unclaimed/unpaid dividend amount due to transfer to the Investor Education and Protection Fund (IEPF) pursuant to Section 124(5) of the Companies Act, 2013 read with the Investor Education and Protection Fund (awareness and protection of Investors) Rules, 2001 as amended from time to time, because of the company did not declare the dividend during the year 2008-09.
Risk Management
Your Company have constituted a Risk Management Committee pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company''s enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Risk Management Procedure will be reviewed by the Risk Management Committee and Board of Directors on a half-yearly basis at the time of review of Financial Results of the Company.
The policy is available in the Company website: www.heritagefoods.in corporate policies RMPolicy
Policy on Sexual Harassment
Your Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and disposed off during the year 2016-17
No of complaints received : Nil
No of complaints disposed off : Nil
Director''s Responsibility Statement as required under Section 134 (3)(c) of the Companies Act, 2013,
The financial statements are prepared in accordance with the Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except the sale proceeds received under REC Mechanism of the Renewable Energy. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (''the Act''), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). There are no material departures from prescribed accounting standards in the adoption of these standards.
The Directors confirm that:
- In the preparation of the annual accounts (Standalone & Consolidated) for the financial year 2016-17, applicable accounting standards have been followed along with proper explanation relating to material departures.
- They 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 2016-17 and of the profit and loss of the Company for that period.
- 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,
- They have prepared the annual accounts of the company on a going concern basis.
- They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and
- They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Green Initiatives
The Company started a sustainability initiative with the aim of going green and minimizing our impact on the environment.
Electronic copies of the Annual Report 2016-17 including the Notice of the 25th Annual General Meeting will be sent to all members whose email addresses are registered with the Company /Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 201617 includes the Notice of the 25th Annual General Meeting will be sent in the permitted mode. Members requiring physical copies can send a request to the Company.
Acknowledgement
The Board takes this opportunity to thank all customers, farmers, vendors, investors, bankers and Statutory Authorities for their continued support during the year. The Board also wishes to place on record its sincere appreciation of the effort/ contribution made by its employees at all levels. The Company''s consistent growth was made possible by their hard work, solidarity, cooperation and support and look forward to their continued support in the future.
For and on behalf of HERITAGE FOODS LIMITED
D Seetharamaiah
Registered Office: Chairperson
#6-3-541/C, Punjagutta, (DIN: 00005016)
Hyderabad - 500 082
CIN: L15209TG1992PLC014332
Ph: 04023391221/2
E-mail: [email protected]
Date: May 25, 2017
Mar 31, 2015
The Directors have great pleasure in presenting the 23rd Annual Report
of the Company together with the Standalone & Consolidated Audited
statement of accounts for the Financial Year ended 31st March, 2015.
Financial Results (Rs,in Lakhs)
Particular 2014-15 2013-14
Revenue from Operations (Gross) 207402.61 172291.58
Less: Excise Duty 105.96 87.59
Total Revenue from operations 207296.65 172203.99
Add: Other Income 702.66 495.40
Total Revenue 207999.31 172699.39
Total Expenditure 199093.36 162705.84
Profit /(Loss) before Finance Cost, 8905.95 9993.54
Depreciation & amortization and
Tax
Finance cost 1593.01 1322.12
Depreciation & Amortization 3399.03 2500.23
Profit /(Loss) before Extraordinary 3913.91 6171.20
Item and Tax
- Extraordinary Item Tax - 50.00
Profit /(Loss) before Tax 3913.91 6121.20
Tax Expenses
- Current & prior period tax 1168.91 1290.59
- Deferred Tax (76.02) 299.38
Net Profit /(Loss) for the Year 2821.02 4531.23
The above are standalone figures, as the subsidiary companies are yet
to commenced business. Hence consolidated figures are not given.
Performance of the Company
Your Company, during the year under review earned revenue from
operations (Gross) of Rs. 207402.61 Lakhs, achieved an increase of 20.38%
over the previous year. The Gross profit was of Rs. 8905.95 (4.28% on
total revenue) as against Rs. 9993.54 (5.79% on total revenue) in the
previous year. The operating profit after depreciation was amounted to
Rs. 5506.92 (2.64% to revenue) as against Rs. 7443.32 (4.31% of revenue) in
the previous year.
Dividend
Your Directors have recommended a dividend of Rs. 3/- (30%) per equity
share of Rs. 10/- each for the financial year ended March 31, 2015,
amounting to Rs. 837.65 lakhs (Rs. 695.97 Lakhs dividend and Rs. 141.68 lakhs
tax on dividend). The dividend payout is subject to approval of members
at the ensuing Annual General Meeting. Dividend (including dividend
tax) as a percentage of net profit after tax is 29.69 % as compared to
17.96% in the previous year.
The Register of Members and Share Transfer Books will remain closed
from Thursday, 17th September, 2015 to Thursday 24th September, 2015
(both days inclusive) for the purpose of payment of the final dividend
for the financial year ended 31st March 2015, and the Annual General
Meeting. The Annual General Meeting is scheduled to be held on 24th
September, 2015.
The dividend payout for the year under review has been formulated in
accordance with shareholders' aspirations and the Company's policy to
pay sustainable dividend linked to long term growth objectives of the
Company to be met by internal cash accruals.
Transfer to Reserves
Your Company proposes to transfer Rs. 1000 Lakhs to General Reserve. An
amount of Rs. 983.37 Lakhs is proposed to be retained in the Surplus.
Share Capital
The paid up Equity Share Capital as at March 31, 2015 stood at Rs.
23,19,90,000 divided into 2,31,99,000 equity shares of Rs. 10/- each.
During the year under review, the Company has not issued shares with
differential voting rights nor has granted any stock options or issued
sweat equity share to its employees or directors. As on 31st March
2015, none of the Directors or the Company holds instruments
convertible into equity shares of the Company.
Fixed Deposits
Your Company has not accepted any deposits from the public and as such,
no amount of principal or interest was outstanding as of the Balance
Sheet date.
Particulars of Loans, Guarantees or Investments
Loans, guarantees and investments covered under Section 186 of the
Companies Act, 2013 form part of the notes to the financial statements
provided in this Annual Report.
Particulars of Contract or Arrangements Made with Related Parties
All related party transactions that were entered into during the fi
nancial year were at arm's length basis and were in the ordinary course
of the business and that the provisions of Section 188 of the Companies
Act, 2013 are not attracted. Thus the disclosure in form AOC-2 is not
required. Further there are no materially significant related party
transactions during the year under review with Promoters, Directors,
Key Managerial Personnel and their relatives, which may have potential
conflict with interest of the company at large.
All related party transactions are placed before the audit committee as
also to the Board for approval. A statement giving details of all
related party transactions are placed before the Audit committee and
Board for review and approval on a quarterly basis. The details of the
related party transactions during the year are part of the notes on
Accounts forming part of the Annual Report.
Material changes and commitments affecting financial position between
the end of the financial year and date of report
There are no material changes and commitments affecting financial
position of the company between 31st March and the date of Board's
Report.
Variation in market capitalization
As at March 31, Increase
2015 2014 (decrease)
in %
Market Capitalization
(Rs, in Crore) 764.17 464.21 64.61
Price earnings
ratio 27.08 10.25
Note: Data bases on share prices quoted on BSE
Management's Discussion and Analysis
In terms of the provisions of Clause 49 of the Listing Agreement, the
Management's Discussion and Analysis is set out in this Annual Report.
Business Review
Your Company has five Divisions in operation in different States in
India.
Dairy Business:
With the economic slowdown, most sectors have been struggling and have
reported subdued growth in the last couple of years, except the dairy
sector, which has witnessed double digit growth with demand for milk
and milk products rising in the country.
The Dairy sector shot up 12.6 per cent from a year ago this financial
year and is expected to grow at 15.6 per cent in 2015- 16 driven by
strong sector growth both in demand and prices, continued policy and
monetary support from the Centre and an expected improvement in the
economy.
Domestic prices of milk have remained firm in 2014-15 despite the
collapse of global milk and dairy product prices in 2014. The demand
for milk and milk-based products remained high due to changing dietary
habits and rising buying power. As a result, dairy products witnessed a
steep rise in prices in 2014.
The dairy sector will reap benefits from the federal government's
increased focus on dairy development, enhanced availability of quality
fodder and promotion of bovine breeding, among other aspects of raising
milk productivity.
However, despite being the world's largest milk producer, India is not
a significant player in the global dairy market. India's dairy exports
have remained slow due to a drop in international prices, sluggish
global demand, rising cost of domestic milk production and the
abolition of skimmed milk powder export incentives by the government in
July 2014.
Although FY16 is likely to open up new export markets for India in view
of Russia approaching Indian dairy Companies.
Operation Flood' and other initiatives by, several States and central
government to improve the livestock productivity and increase the
availability of quality fodder helped India to become the world's
largest milk producer. The milk production is expected to increase to
151 million tonnes by FY16 from 138 million tonnes in FY14.
During the financial year 2014-15, Dairy Division has increased milk
Chilling capacity by 35,000 LPD by commissioning of 22 units which
includes Bulk mini chilling units, Mini Chilling units, chilling
centres and Franchisee Bulk mini chilling units and Franchisee units to
increase the milk procurement and to maintain the quality. The Turnover
has grown by 17.14% from Rs. 132819.16 Lakhs to Rs. 155585.71 Lakhs.
Retail Division:
Indian Retail sector has been at the helm of India's growth story. The
sector accounts for 22% of the gross domestic product (GDP) and
contributes to 8% of the total employment. Indian Retail sector
continues to grow despite irregular global economic trends. A report
has estimated that the total retail sales in India to grow from $411
billion in 2011 to $804 billion by 2015. Robust economic growth, high
disposable income with the end-consumer and rapid construction of
organized retail infrastructure are key factors behind the forecast.
Over the last decade, the Indian Retail industry has grown phenomenally
with a remarkable shift towards organized retailing formats. However,
more than 90% of the Indian retail sector still falls in the
unorganized sector category. While, the market of organized retail
segment despite the downturn is growing exponentially as economic
growth brings more people into the consuming classes and organized
retail lures more shoppers, its share remains at nascent 7.50%.
Meanwhile, online retail business, which is relatively a new phenomenon
in India, a format, which has high potential for growth in the near
future, has share of 0.50%.
As observed in past years, the organized retail space in the first
decade of this century was viewed as offering enormous potential for
growth in India. However, post FY08 the industry witnessed a sharp
moderation in expectations with most retailers across formats facing
significant head winds in terms of like-to- like growth and viability
of stores. Following the pronounced slowdown, the industry witnessed a
modest recovery in FY10. This recovery gathered further momentum in
the first three quarters of FY11 and yielded strong double-digit
like-to-like growth across most credible retail formats. Consumer
sentiment thereafter was impacted in FY12 and continued to be muted
till the second quarter of FY14 with high infl ation expectations,
pronounced interest rates and economic uncertainty being key
contributing factors. In the recent quarters consumer sentiment
improved, which was seen with retailers reporting an improving trend.
Growing Purchasing Power of Indian Middle Class: This is yet another
driving force for the organized retail industry. Most research studies
suggest rising incomes in the next decade. This is likely to continue
propelling the rise of the middle class whose consumption will become
the largest in the country. Therefore, targeting the mid-market seems
to offer substantial revenue potential. The number of households with
annual income brackets in the range of Rs. 2 lakhs to Rs. 10 lakhs is
expected to increase significantly in the next decade.
During the Financial year 2014-15, Retail Division turnover has grown
by 30.70% from Rs. 37793 Lakhs to Rs. 49397 Lakhs. The Institutional sales
segment achieved sales of Rs. 3049 Lakhs and sales delivered by General
Trade FMCG distribution business of Rs. 191 Lakhs. For comparable stores
in both the years Retail business has grown by 32.32 %, and also the
new stores which are opened this year have delivered more throughput
than previous year.
Agri Division:
India has no doubt provided opportunities for multinationals to
participate in industrial development with new technologies and
resources. However, we cannot neglect agriculture and expect economic
progress sans rural development. The opportunities in agri-business are
enormous and can be encashed with locally available technologies.
With plenty of labour, land and water resources along with tropical
weather conditions, India can compete with other developed countries
and capture the global market, with improved agricultural practices and
water resources management. These crops can be fruits, vegetables, fl
owers and medicinal plants having good export market. The surplus land
can also be utilised to cultivate crops like maize and sugarcane and
the produce can be diverted to industrial production of alcohol, a
substitute for imported petroleum. Such industrial products having good
demand can provide assured market and remunerative price to the
growers.
The farmers should be oriented to make a swift forecast of the demand
for various commodities and exploit the opportunities. There is good
scope for setting up market outlets to reach the customers without
involving middlemen. Business houses can establish a direct link with
farmers' organisations for procuring raw materials. Such agencies can
support farmers with seeds of improved varieties, finance and other
critical inputs for optimising their crop yield.
Your Company, during the year under review apart from the sourcing the
fruits & vegetables and custom farming, started the Veterinary care
business with an aim to provide the quality feed , fodder and vet
medicines to the farmers to increase the productivity of the animals.
Agri Division of your Company had achieved the turnover of Rs. 8400 Lakhs
and 52459 MT with respect to Value & Volume. There is an improvement
in Volume of 22.49% over the financial year 2013-14.
Bakery Division:
The Bakery division of your Company had achieved the turnover of Rs. 589
Lakhs in financial year 2014-15 against Rs. 366 lakhs in financial year
2013-14.
Renewable Energy Division:
The Renewable Energy Division of your Company strongly committed to
extending the 'Green' footprint. In line with this thinking, Company
has embarked on a clean Energy initiative with a 2.34 MW Solar Power
Project which provides captive power to Dairy Plant in Hyderabad.
Renewable Energy Division of your Company had achieved the turnover of
Rs. 257 Lakhs during the year under review.
Subsidiary / Associate Companies
Your Company is having two Subsidiaries Company's namely M/s. Heritage
Foods Retail Limited (CIN:U15400TG2008PLC062054) & M/s. Heritage Conpro
Limited (CIN:U52100TG2011PLC072132) and one Associate Company M/s SKIL
Raigam Power (India) Limited (CIN:U40102TG2009PLC063671).
During the year, the Board of Directors reviewed the activities of the
subsidiaries, associates Companies and noted that these companies are
yet to start the commercial productions. However in accordance with
Section 129(3) of the Companies Act, 2013 and Listing Agreement with
Stock Exchanges, the Company has prepared consolidated financial
statements of all its Subsidiaries & Associates in accordance with
relevant Accounting Standards Viz. AS-21, AS-23 & AS-27 issued by the
Institute of Chartered Accountants of India and form part of the Annual
Report. Further, a statement containing the salient features of the fi
nancial statement of the Subsidiaries & Associate Companies in the
prescribed format AOC-1 is appended as Annexure-1 to the Board's
report. The statement also provides the details of performance, fi
nancial positions of each of the subsidiaries & Associate.
In accordance with Section 136 of the Companies Act, 2013, the audited
financial statements, including the consolidated financial statements
and related information of the Company and audited accounts of each of
its Subsidiaries & Associate, are available on our website
www.heritagefoods.in. These documents will also be available for
inspection during the business hours at our registered Office in
Hyderabad, India.
During the year, Company has not made any investment in the
Subsidiaries & Associate Companies.
Quality
Your Company continues the journey of delivering value to
consumers/customers through significant investments in quality
programs. While sustaining existing external benchmarks and certifi
cations, your Company have added new certifications and further
enhanced the programs and initiatives to renew the commitment to the
culture of quality.
Your Company adheres to international quality standard certifications
such as ISO 22000, (OHSAS) ISO 18001:2007, ISO 14001:2004, SO 2720 and
(ENMS) ISO 50001. Your Company has also received an independent
auditor's assurance report on compliance to ISO 14001 & 18001 (EMS &
OHSAS) 2nd Cycle Re-registration and same was submitted to certifi
cation body (SGS, Hyderabad).
The Quality department of your Company handles large change management
initiatives to drive quality and productivity improvements across the
Company, using various techniques.
Branding
The Heritage brand is a key intangible asset of your Company. The
branding initiative is designed to reposition the Company as the
next-generation company that would help enterprises renew themselves
while creating new avenues to generate value. Marketing reach of your
Company extends nationally through advertisements, public relations and
digital marketing initiatives. Your Company also organizes several
events in various localities to create awareness about the products of
the Company.
Mission & Vision Statement
The Board of Director of your Company adopted the Mission & Vision
statement -2020 of the Company with object to accelerate the growth of
the Company aiming to be a nationally recognized brand with healthy &
fresh products with a revenue of Rs. 6000 Cr by 2020. The full text of
the Mission & Vision and Value statement is the farming part the Annual
Report.
Awards & Recognitions
During the financial year 2014-15 the Company has received the
following awards and recognition.
- The Retail division of your Company has bagged "Most Admired Retailer
of the Year 2014 in Food & Grocery category from India Retail Forum
Mumbai, during September, 2014.
- The Dairy Division of the Company has received the 1st prize in
prestigious 'National Energy Conservation Award' 2014 in Dairy sector
from Ministry of Power, Govt. of India during December, 2014. This is
the 4th time that the Company has been recognised with this award
(previously the Company won the award, 1st prize in the year-2012, 2nd
prize in the year-2010 and 1st prize in the year-2008).
- The Retail Division of your Company was awarded most prestigious
'COCA COLA Golden Spoon Award' 2015 for being the IMAGES Most Admired
Food & Grocery Retailer of the Year - Regional Chain' at India Food
Forum, Mumbai,during the month of January,2015
- Your Company was listed among Prestigious top-500 Indian Companies
list for the year 2014 compiled by The Economic Times, on the basis of
Industry Respect and Key Financial Parameters.
Human Resources and Industrial Relations
Your Company takes pride in the commitment, competence and dedication
shown by its employees in all areas of business. To ensure good human
resources management, your Company focus on all aspects of the employee
lifecycle. This provides a holistic experience for the employee as
well. During their tenure at the Company, employees are motivated
through various skill- development, engagement and volunteering
programs. Your Company has a structured induction process at all
locations and management development programs to upgrade skill of
managers. Objective appraisal systems based on Key Result Areas are in
place for senior management members.
Your Company is committed to nurturing, enhancing and retaining top
talent through superior Learning & Organizational Development. This is
a part of Corporate HR function and is a critical pillar to support the
organization's growth and its sustainability in long run.
The total strength of your Company at the end of financial year
2014-15 was 4244, with an increase of 352 as compared with the end of
the previous financial year.
Particulars of Employees
The table containing the names and other particulars of employees in
accordance with the provisions of 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 provided in
Annexure-2A to the Board's report.
A statement containing the names of every employee employed throughout
the financial year and in receipt of remuneration of Rs. 60 lakh or more
PA, or employed for part of the year and in receipt of Rs. 5 lakh or more
in a month, under Rule 5(2) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, is enclosed as
Annexure-2B to the Board's report.
Corporate Governance
Corporate governance is an ethically driven business process that is
committed to values aimed at enhancing an organization's brand and
reputation. This is ensured by taking ethical business decisions and
conducting business with a firm commitment to values, while meeting
stakeholders' expectations. It is imperative that your company affairs
are managed in a fair and transparent manner. This is vital to gain
and retain the trust of the stakeholders.
Your Company complies with the Securities and Exchange Board of India
(SEBI)'s guidelines on corporate governance. Your Company has
documented internal policies on corporate governance. During the year,
Company continued to comply with the Companies Act, 2013. Company
Corporate governance report for financial year 2014-15 forms part of
this Annual Report. All Corporate policies are available in Company
website i.e. www.heritagefoods.in Corporate Policies
Auditors' certificate on Corporate Governance
As required by Clause 49 of the Listing Agreement, the auditors'
certificate on corporate governance is forming part of the Annual
Report.
Board Diversity
Your Company recognizes and embraces the importance of a diverse board
in its success. Company believe that a truly diverse board will
leverage differences in thought, perspective, knowledge, skill and
industry experience, cultural and geographical background, age and
gender, which will help the Company retain its competitive advantage.
The Board has adopted the Board Diversity Policy which sets out the
approach to diversity of the Board of Directors. The Policy is
available in the Company website
www.heritagefoods.in.corporate.policies.BD
Meetings of the Board
The Board met five times during the financial year, the details of
which are given in the Corporate Governance Report that forms part of
this Annual Report. The intervening gap between any two meetings was
within the period prescribed by the Companies Act, 2013.
Policy on Directors' Appointment and Remuneration
The current policy is to have an appropriate mix of Executive and
Non-executive & Independent and Women Directors to maintain the
independence of the Board, and separate its functions of governance and
management. As on March 31, 2015, the Board consists of 9 members,
three of whom are executive / whole- time directors and six are
Non-Executive directors. The Board periodically evaluates the need for
change in its composition and size.
The policy of your Company on directors' appointment and remuneration,
including criteria for determining qualifications, positive
attributes, independence of a director and other matters provided under
Sub-section (3) of Section 178 of the Companies Act, 2013, adopted by
the Board. It is affirmed that the remuneration paid to the directors
is as per the terms laid out in the nomination and remuneration policy
of the Company.
Declaration by Independent Directors
Your Company has received necessary declaration from each independent
director under Section 149 of the Companies Act, 2013, that he/she
meets the criteria of independence laid down in Section 149 of the
Companies Act, 2013 and Clause 49 of the Listing Agreement.
Board Evaluation
Clause 49 of the Listing Agreement mandates that the Board shall
monitor and review the Board evaluation framework. The Companies Act,
2013 states that a formal annual evaluation needs to be made by the
Board of its own performance and that of its committees and individual
directors. Schedule IV of the Companies Act, 2013 states that the
performance evaluation of independent directors shall be done by the
entire Board of Directors, excluding the director being evaluated.
The evaluation of all the directors and the Board as a whole was
conducted based on the criteria and framework as suggested by
Nomination & Remuneration Committee adopted by the Board. The Board
approved the evaluation results as collated by the nomination and
remuneration committee.
None of the independent directors are due for re-appointment.
Training of Independent Directors
Every new independent director of the Board attends an orientation
program. To familiarize the new inductees with the strategy, operations
and functions of your Company, the executive directors / senior
managerial personnel make presentations to the inductees about the
Company's strategy, operations, product and service offerings, markets,
organization structure, quality and risk management etc.
Further, at the time of appointment of an independent director, your
Company issues a formal letter of appointment outlining his/her role,
function, duties and responsibilities as a director.
Appointment/Re-Appointment
Sri N Lokesh (DIN: 02230945) Non-Executive Directors of the Company
retire by rotation and being eligible offer himself for re-appointment
at the ensuing Annual General Meeting as per the provisions of Section
152 of the Companies Act 2013 and rules made thereof.
During the year Sri K Durga Prasada Rao (DIN06888949) has been
appointed as a Whole Time Director effective from 1st August, 2014 as
per the provisions of 196 & 197 and rules made thereof and read with
Schedule V of the Companies Act, 2013.
During the year Sri M Siva Rama Vara Prasad (DIN: 00170919) has been
appointed as Non-Executive Independent Director w.e .f . 1st August
2014 in accordance with Section 149,152,161(1) read with Schedule IV
and other applicable provisions of the Companies Act, 2013 rules made
thereof.
Retirements and Resignations
During the year A Appa Rao (DIN: 00003745), Non Executive Independent
Director of the Company had passed away on 30th April, 2014. On sudden
/ untimely death of A Appa Rao, the Board of Directors had expressed
their deep condolence to the departed soul. The Board placed on record
the invaluable contribution made by him towards the progress of the
company from the date of appointment (27th January 2000) until his
death.
During the year Dr N R Siva Swamy (DIN:00003749) Non- Executive
Independent Director of the Company had resigned from the Board w.e.f.
16th July, 2014 due to his personal reasons and other commitments. The
Board placed on record the invaluable contribution made by him, towards
the progress of the company from the date of appointment until his
resignation.
Sri N P Ramakrishna (DIN: 00003751) Non-Executive Director of the
Company retire by rotation and being eligible for re- appointment but
he expressed his intention not to seek re- appointment. The vacancy in
the Board caused by his retirement shall not be filled up for the time
being. The members of the Board place on record their deep sense of
appreciation for services rendered by Sri N P Ramakrishna during his
tenure as member of the Board.
Key Managerial Personnel
During the year under review, the Company has appointed following
persons as Key Managerial Personnel.
Name of the Official DIN/M. No Designation
Smt N Bhuvaneswari 00003741 Vice Chairperson &
Managing Director
Smt N Brahmani 02338940 Executive Director
Sri A Prabhakara Naidu FCA 200974 Chief Financial Officer
Sri Umakanta Barik FCS 6317 Company Secretary
Committees of the Board
Currently, the Board has Six committees: the Audit Committee,
Nomination and Remuneration Committee, Corporate Social Responsibility
Committee, Stakeholders Relationship Committee, Management Committee
and Risk Management Committee.
A detailed note on the Board and its committees is provided under the
Corporate Governance Report section in this Annual Report. The
composition of the committees and compliances, as per the applicable
provisions of the Act and Rules, are as follows:
Name of the Composition of the Highlights of duties, responsi-
bilities and activities
Committee Committee
Audit committee Sri D Seetharamaiah - All recommendations made by the
audit committee during the year
were Chairperson accepted by
the Board.
Sri N Sri Vishnu
Raju - Reviewing, with the management,
the quarterl financial
statements before
Dr A Appa Rao* submission to the Board for
approval.
Dr N R Siva Swamy# - Approval or any subsequent
modification of transactions
of the Company
Sri M Siva Rama
Vara Prasad with related parties
Dr V Nagaraja Naidu
Sri N Loksh - Reviewing, with the
management, the performance of
statutory auditors and
internal auditors, adequacy
of internal control systems,
etc.
Nomination and Sri N Sri Vishnu
Raju - The committee oversees and
administers executive
compensation,
Remuneration Chairperson operating under a written
charter adopted by our
Board of Directors.
Committee Sri D Seetharamaiah - The nomination and remuneration
committee has framed the
nomination
Dr A Appa Rao* and remuneration policy.
Dr N R Siva Swamy#
Sri M Siva Rama
Vara Prasad
Sri N Lokesh
Corporate
Social Sri D Seetharamaiah - To formulate and recommend to
the Board, a Corporate Social
Responsibility Chariperson Responsibility (CSR) Policy
indicating activities to be
undertaken by the
Committee Sri N Sri Vishnu Raju Company in compliance with
provisions of the Companies
Act, 2013 and
Smt N Bhuvaneswari rules made there under.
- To monitor the implementation
of the CSR Policy of the
Company from time to time
Stakeholders Dr V Nagaraja Naidu - The committee reviews and
ensures redressal of
investor grievances.
Relationship Chariperson - The committee noted that all
the grievances of the
investors have been
Committee Sri D Seetharamaiah resolved during the year.
Dr A Appa Rao*
Sri N Sri Vishnu
Raju
Smt N Bhuvaneswari
Management Sri D Seetharamaiah - Setting the strategic
direction to guide and
direct the activities of the
Committee Chariperson organization;
Dr A Appa Rao* - Ensuring the effective
management of the organization
and its activities;
Sri N Sri Vishnu
Raju and
Sri N Lokesh - Monitoring the activities of
the organization to ensure
they are in keeping
Smt N Bhuvaneswari with the founding principles,
objects and values.
Risk Management Sri M Siva Rama
Vara Prasad - The purpose of the committee
is to assist the Board in
fulfilling its corporate
Committee Chairperson governance with regard to the
identification, evaluation &
mitigation of
Sri D Seetharamaiah operational, strategic and
environmental risks effi-
ciently and effectively.
Sri N Sri Vishnu
Raju - The Company has developed and
implemented a risk management
Smt N Bhuvaneswari framework that includes
identification of elements
of risk, if any, which in
Sri K Durga Prasada
Rao the opinion of the Board may
threaten the existence of the
Company.
* Dr A Appa Rao, Passed away on 30th April, 2014 & Ceased to be
Director from the Board & Committees w.e.f. 30th April, 2014.
# Dr. N R Siva Swamy Resigned from the Board w.e.f. 16th July, 2014.
Auditors & Auditors Report Statutory Auditors:
At the Annual General Meeting held on 26th September, 2014, M/s. Raju &
Prasad, Chartered Accountants (F No: 003475S), Hyderabad were appointed
as statutory auditors of the Company to hold office till the
conclusion of the 25th Annual General Meeting to be held in the
calendar year 2017. In terms of the first provision to Section 139 of
the Companies Act, 2013, the appointment of the auditors shall be
placed for ratification at every Annual General Meeting. Accordingly,
the appointment of M/s. Raju & Prasad, Chartered Accountants, as
statutory auditors of the Company, is placed for ratification by the
shareholders. In this regard, the Company has received a certificate
from the auditors to the effect that if they are reappointed, it would
be in accordance with the provisions of Section 141 of the Companies
Act, 2013.
The notes on Standalone & Consolidated Financial statement referred to
in the Standalone & Consolidated Auditor's Report are self-explanatory
and do not call for any further comments.
Secretarial Auditor:
M/s. Savita Jyothi, Practicing Company Secretary (CP No:1796), was
appointed to conduct the Secretarial Audit of the Company for the fi
nancial year 2014-15, as required under Section 204 of the Companies
Act, 2013 and Rules made thereunder. The secretarial audit report for
financial year 2014-15 issued by M/s. Savita Jyothi, Practicing
Company Secretary in form MR-3 is provided in the Annexure-3 to the
Board's report.
The Secretarial Auditor's Report is self-explanatory and do not call
for any further comments.
The Board has appointed M/s. Savita Jyothi, Practicing Company
Secretaries, as Secretarial Auditor of the Company for the financial
year 2015-16 as per the provisions of the Companies Act, 2013 and Rules
made thereof and the applicable provisions of Listing Agreement.
Cost Audit Report:
The Cost Audit Report for the previous financial year 2013- 14 signed
by M/s Sagar & Associates, Cost Accountant (F No: 00118), Hyderabad was
filed in extensible Business Reporting Language (XBRL) made on 3rd
September 2014, within due date.
Significant of Material Orders Passed by the Regulators
There is no order passed by the regulators or Courts during the year
under review.
Extracts of Annual Return
In accordance with Section 134(3)(a) of the Companies Act, 2013 an
extract of the annual return is prescribed in form MGT-9 is provided in
Annexure-4 to this report.
Internal Audit & Control Systems
Your Company has a well-defined and documented internal control system,
which is adequately monitored. Checks & balances and control systems
have been established to ensure that assets are safe guarded, utilized
with proper authorization and recorded in the books of account. The
Internal control systems are improved and modified continuously to
meet the changes in business conditions, statutory and accounting
requirements.
These are supplemented by internal audit of all divisions of your
Company carried out by reputed firms of Chartered Accountants across
India. Your Company has an Audit Committee consisting of Five Directors
in whom all are Non Executive and three are independent Directors. The
Audit Committee of the Board of Directors, Statutory Auditors and the
Business Heads are periodically apprised of the internal audit fi
ndings and corrective actions taken. The Audit Committee of the Board
of Directors reviews the adequacy and effectiveness of internal control
system and suggests improvements if any for strengthening them. Your
Company has a robust Management Information System which is an integral
part of the control mechanism.
The Board of Directors on the recommendation of the Audit Committee has
appointed Internal Auditors for the financial year 2015-16 as per the
provision of Section 138 of the Companies Act, 2013 and Rules made
thereof and as per the provisions of the Listing Agreement with Stock
Exchanges.
Corporate Social Responsibility (CSR)
Your Company has been an early adopter of corporate social
responsibility (CSR) initiatives. Along with sustained economic
performance, environmental and social stewardship is a key factor for
holistic business growth.
CSR activities, as per the provisions of the Companies Act, 2013 and
rules made thereof, may be undertaken by the Company or through a
registered trust or a registered society. The CSR Committee of the
Board evaluated the various options to implement the CSR activities and
decided to transfer the mandated CSR amount to the NTR Memorial Trust,
Hyderabad, to carry out the activities such as promoting education,
enhancing the vocational skill & supply of clean drinking water etc.,
as part of the CSR activities of the Company. As the NTR Memorial Trust
is operating since 1997 towards the improvement of health, education of
the needy people in the society and running the school for the poor
people and lot more other initiative for the up-liftmen of the backward
and needy population in the society. The Company works with NTR
Memorial Trust, Hyderabad towards promoting education, enhancing
vocational skill and supply of clean water, apart from its own trust
namely Heritage Farmers Welfare Trust
These projects are in accordance with Schedule VII of the Companies
Act, 2013 and the Company's CSR Policy. The Report on CSR activities as
required under Companies (Corporate Social Responsibility Policy)
Rules, 2014 is set out as Annexure-5 forming part of the Board's
Report.
Apart from the CSR activities under the Companies Act, 2013 your
Company continues to voluntarily support the following social
initiatives through Heritage Farmers Welfare Trust (HFWT).
- Veterinary care and cattle management practices through
Heritage Mobile Veterinary Clinic, (equipped with necessary tools and
trained human resources for providing door-step veterinary services to
the Milch Animals and empowering cattle owners with advanced technology
and knowledge on best cattle management and feeding practices through
entertainment cum education mode). The Mobile veterinary van reaches to
needy places for educational video film in the evening and free health
camp on the next day morning in a village.
- Extending Insurance coverage for natural death, Incentive for fodder
development & reward for Meritorious Students.
- Extended relief activities and distributed cattle feed with subsidy
in Srikakulam, Vijayanagaram and Visakhapatnam during the Cyclone
HUDHUD.
Your Company's CSR committee comprises Sri D Seetharamaiah
(Chairperson), Sri N Sri Vishnu Raju, and Smt N Bhuvaneswari. The
committee is responsible for formulating the CSR policy and monitoring
the CSR expenditure of the Company.
The policy is available in the Company website
www.heritagefoods.in.corporate.policies.CSR
Energy Conservation, Technology Absorption & Foreign Exchange Earnings
& Outgo
The particulars as prescribed under Sub-section (3)(m) of Section 134
of the Companies Act 2013, read with the Companies (Accounts) Rules,
2014 are provided in the Annexure-6 to the Board Report.
Transfer of Un-Claimed Dividends
Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C (2)
of the Companies Act, 1956] read with the Investor Education and
Protection Fund (awareness and protection of Investors) Rules, 2001 as
amended from time to time the unclaimed/unpaid dividend amount of Rs.
7,00,965/- (Rupees Seven Lakh Nine Hundred Sixty Five Only) for the
year 2006-07 was transferred to the Investor Education and Protection
Fund during the financial year 2014-15 and the unclaimed/unpaid
dividend for the year 2007-08 is due for transfer to the fund during
the current Financial year 2015-16.
Risk Management
During the year, your Directors have constituted a Risk Management
Committee pursuant to Section 134 (3) (n) of the Companies Act, 2013 &
Clause 49 of the listing agreement, which has been entrusted with the
responsibility to assist the Board in (a) Overseeing and approving the
Company's enterprise wide risk management framework; and (b) Overseeing
that all the risks that the organization faces such as strategic, fi
nancial, credit, market, liquidity, security, property, IT, legal,
regulatory, reputational and other risks have been identified and
assessed and there is an adequate risk management infrastructure in
place capable of addressing those risks.
The Committee had formulated a Risk Management Policy for dealing with
different kinds of risks which it faces in day to day operations of the
Company. Risk Management Policy of the Company outlines different kinds
of risks and risk mitigating measures to be adopted by the Board. The
Risk Management Procedure will be reviewed by the Risk Management
Committee and Board of Directors on a half-yearly basis at the time of
review of Financial Results of the Company.
The policy is available in the Company website:
www.heritagefoods.in.corporate.policies.RMPolicy
Vigil Mechanism / Whistle Blower Policy
During the year, the Board of Directors of your Company have adopted
Whistle Blower Policy as per the provisions of Section 177 (9) of
Companies Act, 2013 and as per the Amendment to the Clause 49 of the
Listing Agreement as amended form time to time. The Whistle Blower
Policy aims for conducting the affairs in a fair and transparent manner
by adopting highest standards of professionalism, honesty, integrity
and ethical behaviour. All permanent employees of the Company are
covered under the Whistle Blower Policy.
A mechanism has been established for employees to report concerns about
unethical behaviour, actual or suspected fraud or violation of code of
conduct or ethics of the Company. It also provides for adequate
safeguards against victimization of employees who avail of the
mechanism and also provide for direct access to the Chairperson of the
Audit Committee. The guidelines are meant for all members of the
Organization from the day they join and are designed to ensure that
they may raise any specific concern on integrity, value adherence
without fear of being punished for raising that concern.
The Whistle Blower Policy is available in the company's website:
www.heritagefoods.in.corporate.Policy.WBPolicy
Prevention of Insider Trading:
The Company has adopted a Code of Conduct to Regulate, Monitor & Report
Trading by Insiders and Code of Practices and Procedures for Fair
Disclosure of Unpublished Price Sensitive Information as per the SEBI
(Prohibition of Insider Trading) Regulation 2015, 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 Promoters, 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 and
other certain situations. The Board is responsible for implementation
of the Code.
All Board Directors and the designated employees have confirmed
compliance with the Code
The Code of Conduct to Regulate, Monitor & Report Trading by Insiders
as per the SEBI (Prohibition of Insider Trading) Regulation 2015 is
available in the Company website:
www.heritagefoods.in.corporate.Policies.Code of Conduct
The Code of Practices and Procedures for Fair Disclosure of Unpublished
Price Sensitive Information as per the SEBI (Prohibition of Insider
Trading) Regulation 2015 is available in the Company website:
www.heritagefoods.in.corporate. Policies-Code of fair disclosure
Nomination and Remuneration Policy
The Board of Directors of your Company has framed a policy which lays
down a framework in relation to remuneration of Directors, Key
Managerial Personnel and Senior Management of
the Company. This policy also lays down criteria for selection and
appointment of Board Members.
The Policy is available in the company's website:
www.heritagefoods.in.corporate.R&MPolicy
Policy on Sexual Harassment
Your Company has in place an Anti Sexual Harassment Policy in line with
the requirements of The Sexual Harassment of Women at the Workplace
(Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints
Committee (ICC) has been set up to redress complaints received
regarding sexual harassment. All employees (permanent, contractual,
temporary, trainees) are covered under this policy.
The following is a summary of sexual harassment complaints received and
disposed off during the year 2014-15
No of complaints received : Nil
No of complaints disposed off : Nil
Director's Responsibility Statement as required under Section 134
(3)(c) of the Companies Act, 2013,
The financial statements are prepared in accordance with the Generally
Accepted Accounting Principles (GAAP) under the historical cost
convention on accrual basis except the sale proceeds received under REC
Mechanism of the Renewable Energy. GAAP comprises mandatory accounting
standards as prescribed under Section 133 of the Companies Act, 2013
('the Act'), read with Rule 7 of the Companies (Accounts) Rules, 2014,
the provisions of the Act (to the extent notified ) and guidelines
issued by the Securities and Exchange Board of India (SEBI). There are
no material departures from prescribed accounting standards in the
adoption of these standards.
The Directors confirm that:
- In the preparation of the annual accounts for the financial year
2014-15, applicable accounting standards have been followed along with
proper explanation relating to material departures.
- They 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 2014-15 and of the profit
and loss of the Company for that period.
- 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,
- They have prepared the annual accounts of the company on a going
concern basis.
- They have laid down internal financial controls to be followed by
the company and that such internal financial controls are adequate and
were operating effectively; and
- They have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems were adequate
and operating effectively.
Green Initiatives
The Company started a sustainability initiative with the aim of going
green and minimizing our impact on the environment.
Electronic copies of the Annual Report 2014-15 and Notice of the 23rd
Annual General Meeting were sent to all members whose email addresses
are registered with the Company / Depository Participant(s). For
members who have not registered their email addresses, physical copies
of the Annual Report 2014-15 and the Notice of the 23rd Annual General
Meeting are send in the permitted mode. Members requiring physical
copies can send a request to the Company.
Acknowledgement
The Board takes this opportunity to thank all customers, farmers,
vendors, investors, bankers and Statutory Authorities for their
continued support during the year. The Board also wishes to place on
record its sincere appreciation of the effort/ contribution made by its
employees at all levels. The Company consistent growth was made
possible by their hard work, solidarity, cooperation and support and
look forward to their continued support in the future.
For and on behalf of
HERITAGE FOODS LIMITED
D SEETHARAMAIAH
Chairperson
DIN: 00005016
Registered Office:
6-3-541/C, Punjagutta,
Hyderabad  500 082
CIN : L15209TG1992PLC014332
Ph : 04023391221/2
E-mail : hfl @heritagefoods.in
Date : 22nd July, 2015
Mar 31, 2014
Dear members,
The Directors have great pleasure in presenting the 22nd Annual Report
of the Company together with the Audited statement of accounts for the
Financial Year ended 31st March, 2014.
FINANCIAL RESULTS
(Rs. in Lakhs)
Particular 2013-14 2012-13
Revenue from Operations (Gross) 172291.58 160259.49
Less: Excise Duty 87.59 78.21
Add: Other Income 495.40 419.95
Total Revenue 172699.39 160601.23
Total Expenditure 162705.84 150072.33
Profit / (Loss) before Finance 9993.54 10528.90
Cost, Depreciation &
amortization and Tax
Finance cost 1322.12 1670.20
Depreciation & Amortization 2500.23 2202.03
Profit / (Loss) before 6171.20 6656.67
Extraordinary Items and Tax
-Extraordinary Item Tax 50.00 291.34
Profit / (Loss) before Tax 6121.20 6365.33
-Current Tax 1291.05 1275.80
-Prior period Tax (0.46) (44.39)
-Deferred Tax 299.38 137.76
Net Profit / (Loss) for the Year 4531.23 4996.16
The above are standalone figures, as the Subsidiary Companies &
Associate Company are yet to commence business. Hence consolidated
figures are not given.
PERFORMANCE OF THE COMPANY
Your Company, during the year under review earned revenue from
operations (Gross) of Rs. 172291.58 Lakhs achieved an increase of 7.51
% over the previous year. Your Company registered a net profit of Rs.
4531.23 Lakhs.
DIVIDEND
Your Directors have recommended a dividend of Rs. 3.00 (30%) per equity
share of Rs. 10/- each for the financial year ended March 31, 2014,
amounting to Rs. 814.25 lakhs (Rs. 695.97 Lakhs dividend and Rs.
118.28 lakhs tax on dividend). The dividend payout is subject to
approval of members at the ensuing Annual General Meeting.
The dividend will be paid to members whose names appear in the Register
of Members as on the record date in respect of shares held in
dematerialised form & Physical form.
The dividend payout for the year under review has been formulated in
accordance with shareholders'' aspirations and the Company''s policy to
pay sustainable dividend linked to long term growth objectives of the
Company to be met by internal cash accruals.
INCREASE OF AUTHORISED CAPITAL
During the year the Company has increased the Authorized Share Capital
of the Company from Rs. 20,00,00,000/- (Rupees Twenty Crores Only)
divided into 1,80,00,000 (One Crore Eighty Lakhs) Equity Shares of Rs.
10/- each and 20,00,000 (Twenty Lakhs) Preference Shares of Rs. 10/-
each to Rs. 50,00,00,000/- (Rupees Fifty Crores Only) divided into
4,80,00,000 (Four Crores Eighty Lakhs) Equity Shares of Rs. 10/- each
and 20,00,000(Twenty Lakhs only) Preference Shares of Rs. 10/- each
ISSUE OF BONUS EQUITY SHARES
During the year under report the Board of Directors of the Company
approved/allotted Bonus Shares to the existing Equity Shareholders of
the company as on the record date i.e 29th July 2013 in proportion of 1
(One) Bonus Equity Share of Rs. 10/- (Rupees Ten Only) each credited as
fully paid-up for every 1 (One) eligible existing fully paid-up Equity
Shares of Rs. 10/- (Rupees Ten Only ) each by capitalizing of Rs.
11,59,95,000/- (Rupees Eleven crores Fifty Nine lakhs Ninety Five
thousand only) out of the sum outstanding to the credit of security
premium account/General Reserve of the Company.
After the allotment of Bonus shares, the Paid up Capital of the Company
has increased from 11,59,95,000/-(Rupees Eleven Crores Fifty Nine Lakhs
Ninety Five Thousand only) divided into 1,15,99,500 (One Crore Fifteen
Lakh Ninty Nine Thousand Five Hundred) Equity Shares of Rs. 10/- each,
to 23,19,90,000/- (Rupees twenty Three Crores Ninteen Lakhs Ninty
Thousand only) divided into 2,31,99,000 (Two Crore Thity one Lakhs
Ninty Nine thousand only) Equity Shares of Rs. 10/- each.
CHANGE OF NAME OF THE COMPANY
During year the shareholders of the Company had approved the change of
name of the company from "Heritage Foods (India) Limited" to "Heritage
Foods Limited" by deleting the word ''(India)'' in the existing name of
the Company. The Company has received the fresh incorporation
Certificate with the change of name from Registrar of Companies, Andhra
Pradesh, Hyderabad and the company had also received necessary
approvals for change of name from the Stock Exchanges (Bombay Stock
Exchange Ltd and National Stock Exchange of India Limited) where the
shares of the Company are listed. The change of name of the Company as
aforesaid does not change the legal status or constitution of the
Company, nor does it affect any rights or obligations of the Company.
CHANGE OF CORPORATE IDENTIFICATION NUMBER (CIN) OF THE COMPANY
Due to the division of state (united Andhra) into State of Telangana
and State of Andhra Pradesh on June 2nd 2014,The Ministry of Corporate
Affairs, Govt. of India, had changed /allotted the New Corporate
Identification Number (CIN) of the Company from L15209AP1992PLC014332
to L15209TG1992PLC014332.
TRANSFER TO RESERVES
The Company proposes to transfer Rs. 1000.00 Lakhs to General Reserve.
Dairy Business: Dairy industry is of crucial importance to the growth
of Indian economy. Dairy comes under fragmented industry as per the
definition of Dairy by uber guru on strategy Michael Porter, which
means "local requirements have to be met through local supplies as the
production is scattered and available locally". The strategy for dairy
development till date lies with decentralising the production and
centralizing the processing and marketing.
India has one of the largest livestock populations in the world which
contains Fifty percent of the buffaloes and twenty percent of the
cattle in the world are found in India. Milk is one of the most
important item of common vegetarian diet of Indian people. With an
estimated 86.8 million tons of annual milk production from animals
managed by nearly 70 million farmers. Milk and milk products are rated
as one of the most promising sectors. The total milk production is over
72 million tonnes whereas the demand is estimated at around 80 million
tonnes. The per capita milk availability is about 296 grams per day.
India is the world''s largest consumer of dairy products, consuming
almost 100% of its milk produce (about 15% of world''s production).
Going forward, according to industry reports, the current market size
of US$10bn of the Indian dairy industry is expected to grow at a CAGR
of 13-15% till FY 2020. Robust growth is expected on the back of
various reasons- A) Milk considered as an inevitable part of Indian
diet B) Rising health consciousness C) Heightened consumer interest in
protein diets; all coupled with D) Rising disposable incomes.
According to the Indian Dairy Association (IDA), the organised sector
(cooperatives, producer companies and private players) handles 30% of
the marketable milk suppliers. However in the interest of both
producers and consumers, it is necessary to increase the share of the
organised sector. Hence, the National Dairy Plan (NDP) has set a target
to increase this share to 65% by 2030. Consequently, efforts towards
increasing the organised sector''s share are expected to benefit our
Compny and drive its future growth.
The Company has its major milk sales concentrated in four states i.e
Andhra Pradesh, Telangana, Tamil Nadu and Karnataka, contributing 93%
to the revenue. Barring to expand the boundaries might have an impact
on the margins of the company eventually. Also, the unrest owing to
separation of Telangana as an independent State can hinder the
inter-state milk supply (a perishable commodity) and thereby affect the
company''s sales.
During the financial year 2013-14, Dairy Division has increased milk
Chilling capacity by 138000 LPD by commissioning 26 units which
includes Bulk mini chilling units, Mini Chilling units, chilling
centres and Franchisee Bulk mini chilling units and Franchisee units to
increase the milk procurement and to maintain the quality. The Turnover
has grown by 4.69% from Rs. 126862 Lakhs to Rs. 132819 Lakhs.
Retail Division: Retail-which literally means to put on the market, is
a very important aspect of every city. Without a well organized retail
industry we would not have our necessities and luxuries fulfilled.
Though organized retailing industry began much earlier in the developed
nations, India has not actively participated. However with its vast
expanse and young population, India in the 21st century emerges as a
highly potential retail market. The journey of retailing in India has
been riveting and the future promises further growth.
At present the Retail industry in India is accelerating. Though India
is still not at an equal pace with other Asian counterparts, it is
geared to become a major player in the Retail Market. Also with a
highly diverse demography, India provides immense scope for companies
brining in different products targeting different consumers.
According to the Global Retail Development Index, India is positioned
as the foremost destination for retail investment and business
development. The factor that is presently playing a significant role
here is the fact that a large section of Indian population is in the
age group of 20-34 with a considerably high purchasing power; this has
caused the increase in the demand in the urban market resulting in
consistent growth in the Retail business.
As the market becomes more and more organized the Indian retail
industry will gain greater worth. The Retail sector in the small towns
and cities will increase by 50 to 60 % pertaining to easy and
inexpensive availability of land and demand among consumers.
Purchasing power of Indian urban consumer is growing and branded
merchandise in categories like Apparels, Cosmetics, Shoes, Watches,
Beverages, Food and Jewellery, are slowly becoming lifestyle products
that are widely accepted by the urban consumers.
The Retail Division of your Company achieved a sale of Rs. 37793 Lakhs
during the Financial Year 2013-14. The Institutional sales segment
achieved Rs. 2257 Lakhs and sales delivered by General Trade FMCG
distribution business of Rs. 945 Lakhs. For comparable stores in both
the years Retail business has grown by 10.45 %, and also the new stores
which are opened this year have delivered more throughput than previous
year.
Agri Division: Agriculture is the third largest sector of India''s
economy after services and industry. It Contributes 25% of Gross
Domestic Product (GDP) of the country. The Current average growth rate
of the agriculture sector is 2.2%. The sector which requires consistent
monitoring, creating a conducive environment for farmers to increase
their productivity and sell their products at competitive prices. There
is still a lot of scope for increasing the productivity in India by
adopting scientific methods of cultivation. During the past five years
agriculture sector has witnessed spectacular advances in the production
and productivity of food grains, oilseeds, commercial crops, fruits,
vegetables, food grains, poultry and dairy. India has emerged as the
second largest producer of fruits and vegetables in the world besides
being the largest overseas exporter of cashews and spices.
Agri Division of your Company had achieved the turnover of Rs. 6783
Lakhs and 42550 MT with respect to Value & Volume. However, there is
an improvement in Volume by 62% over the financial year 2012-13.
Bakery Division:
Bakery Division of your Company had achieved the turnover of Rs. 366
Lakhs.
Renewable Energy Division:
It is great pleasure to inform you that your Company had Set
up/Commissioned 2.34 MW solar power plant at, Masjid Adavi Village,
Mulugu Mandal, Medak Dist, Telangana on 29th September, 2013, to meet
for the captive power requirement.
The 2.34 MWp Solar Power Plant is equipped to supply 3.75 million units
of clean and green energy annually. It is expected to displace nearly
3,300 MT of CO2 annually. The plant, spread across an area of 14 acres
of land comprises of 9,360 Solar PV modules using multi crystalline
technology.
The SWOT Analysis:
Strengths
* The vast livestock population of the country could prove to be a
vital asset for the country and unlike many other natural resources
which will deplete over the years, a sustainable livestock production
system will continue to propel Indian economy.
* Purchasing power of the consumers is on the upswing with growing
economy & continually increasing population of middle class.
* Milk consumption in India is a regular part of the dietary programme
irrespective of the region and hence demand is likely to rise
continuously.
* Vast pool of highly trained and qualified technical manpower is
available at all levels to support R&D as well as industry operations
* The income of an average Indian is increasing and thus there is a
proportional increase in the purchasing power.
* Indian economy and its policies are also becoming more and more
liberal making way for a wide range of companies to enter Indian
market.
* Employment opportunities both direct and indirect have been
increased. Farmers get better prices for their products through
improvement of value added food chain,
* A high growth industry has significant future potential.
* Technology proven, with low operation and maintenance costs, and
scalable.
* Availability of soft loans and government incentives for growth and
expansion
Weaknesses
* Though cross breeding programmes have significantly improved animal
productivity, milk production system in many parts of the country is
still largely dominated by low yielding animals.
* Poor condition of roads and erratic power supply remain a major
challenge for procurement and supply of good quality raw milk.
* Maintenance of cold chain is still a major handicap. For organized
marketing of milk, the milk produced is required to be transported to
nearby processing plant which incurs cold storage and transportation
costs which are quite high.
* It will mainly cater to high-end consumers placed in metros and will
not deliver mass consumption goods for customers in villages and small
towns.
* Retail chain are yet to settle down with proper merchandise mix for
the outlets.
* Small size outlets are also one of the weaknesses in the Indian
retailing
* Owing to high capital costs, the business needs external incentives
to be economically feasible, thus increasing dependence on governmental
policies.
* The capital intensive nature of the business might favour larger
businesses over smaller ones.
* The distributed and intermittent nature of solar energy makes it
difficult for utilities to rely on solar PV for their base load.
Opportunities
* Expanding market will see creation of enormous job and self
employment opportunities.
* Economy is growing at the rate of nearly 8% of GDP. Consequently,
the investment opportunities are also increasing continually.
* Demand for dairy products is income elastic. Continued rise in middle
class population will see shift in the consumption pattern in favour of
value added products besides the growth in demand for liquid milk.
* Greatly improved export potential for indigenous as well as western
milk products.
* Opening of the world market offers opportunities for utilization of
byproducts of the dairy industry for manufacturing value added products
for import substitution.
* Difficult to target all segments of society,
* Emerge of hyper and super markets trying to provide customer with
value, variety and volume,
* The unorganized sector has dominance over the organized sector
because of low investment needs.
* Governments ambitious targets and attractive policies opens up many
avenues for investment,
* Opportunities exist all along the solar PV business value chain, not
just for power plants.
* It can become one of the largest industries in terms of numbers of
employees and establishments,
Threats
* Excessive grazing pressure on marginal and small community lands has
resulted in almost complete degradation of land.
* Indiscriminate crossbreeding for raising milk productivity could lead
to disappearance of valuable indigenous breeds.
* There is a gross lack of awareness among farmers about the quality
parameters, including microbiological and chemical contaminants as well
as residual antibiotics.
* Entry of multinationals could result in a large portion of milk being
diverted towards value added products which, though it augers well for
the producers, is likely to affect the availability of liquid milk
supply for mass consumption especially for the poor urban class
* Rural retailing is still unexploited Indian market.
* Off-peak seasons reduce cash flow.
* Industry is new, so finding skilled workforce could be a problem.
EXEMPTION FROM ATTACHING THE BALANCE SHEETS, ETC. OF THE SUBSIDIARY
COMPANIES WITH THE BALANCE SHEET OF THE COMPANY
The Ministry of Corporate Affairs ("MCA") has granted a general
exemption under Section 212(8) of the Companies Act, 1956 from
attaching copies of the Balance Sheet, Statement of Profit and Loss,
Directors'' Report and Auditors'' Report of its subsidiary companies with
the Balance Sheet of the Company, subject to fulfillment of certain
conditions.
In terms of the said circular, copies of the Balance Sheet, Statement
of Profit and Loss, Report of the Board of Directors and the Report of
the Auditors of the Subsidiary Companies have not been attached to the
Balance Sheet of the Company. The Company has presented Consolidated
Financial Statements comprising Heritage Foods Ltd (HFL) and its
subsidiaries duly audited by the Statutory Auditors of the Company. The
Consolidated Financial Statements prepared by the Company are in
compliance with the Accounting Standard (AS-21) as prescribed by the
Companies (Accounting Standards) Rules, 2006 and the Listing Agreement
with the Stock Exchanges. The annual accounts and related documents of
all the Subsidiary Companies are made available for inspection to the
shareholders of the Company and its subsidiaries at the Registered
Office of the Company from Monday to Friday between 11.00 A.M. to 1.00
P.M. The Company will also make available physical copies of such
documents on request by any Member of the Company (or its subsidiaries)
interested in obtaining the same and the same would also be made
available on the website of the Company
DIRECTORS
Dr. A. Appa Rao (DIN: 00003745), Non Executive Independent Director of
the Company had passed away on 30th April, 2014. On sudden / untimely
death of Dr A. Appa Rao, the Board of Directors had expressed their
deep condolence to the departed soul. The Board placed on record the
invaluable contribution made by him towards the progress of the company
from the date of appointment (27th January 2000) until his death.
Dr.VNagaraja Naidu (DIN: 00003730), Non-Executive Director of the
Company retires by rotation and being eligible offer himself for
reappointment at the ensuing Annual General Meeting as per the
provisions of Section 152 of the Companies Act 2013 and rules made
thereof.
The Board of Directors of the Company has appointed Sri D.Seetharamaiah
(DIN: 00005016), Director as Non-Executive Independent Director
(designated as Chairman of the Company) for a term upto 5 years as per
the provisions of Section of 149 & 152 of the Companies Act, 2013 and
rules made thereof from the conclusion of this Annual General Meeting
till the conclusion of 27th Annual General Meeting to be held in 2019,
not liable to retire by rotation.
The Board of Directors at their meeting held on 22nd October, 2013
appointed N. Sri Vishnu Raju (DIN: 00025063) as an Additional Director
in accordance with Section 161 read with Schedule IV and other
applicable provisions of the Companies Act, 2013 and rules made thereof
and in terms of the Articles of Association of the Company. N. Sri
Vishnu Raju is proposed to be appointed for a term upto 5 Years as a
Non-Executive Independent Director from this Annual General Meeting
till the conclusion of 27th Annual General Meeting to be held in 2019,
not liable to retire by rotation.
The Board of Directors at their meeting held on 30th July, 2014, has
appointed Sri. M. Siva Rama Vara Prasad (DIN: 00170919) as an
Additional Director in accordance with Section 161 read with Schedule
IV and other applicable provisions of the Companies Act, 2013 and rules
made thereof and in terms of the Articles of Association of the
Company. Sri. M.Siva Rama Vara Prasad is proposed to be appointed for a
term upto 5 Years as a Non- Executive Independent Director from this
Annual General Meeting till the conclusion of 27th Annual General
Meeting to be held in 2019, not liable to retire by rotation.
The Board of Directors at their meeting held on 30th July, 2014
appointed Sri. K. Durga Prasada Rao (DIN: 06888949) as an Additional
Director w.e.f. 1st August, 2014 in accordance with Section 161 read
with Schedule V and other applicable provisions of the Companies Act,
2013 and the Companies (Appointment and Qualification of Directors)
Rules, 2014 and in terms of Articles of Association of the Company.
Sri. K.Durga Prasada Rao has been appointed as a Whole Time Director
for a term upto 5 years effective from 1st August, 2014 as per the
provisions of Sections 196 & 197 and rules made thereof and read with
Schedule V of the Companies Act, 2013.
The Board at its meeting held on 30thJuly, 2014 on recommendation of
Nomination & Remuneration Committee and subject to the approval of the
members at the ensuing Annual General Meeting had re-appointed Smt. N.
Bhuvaneswari as whole time Director designated as Vice Chairperson &
Managing Director of the Company, for a period of 5 (five) years with
effect from 1st July, 2014 as per the provisions of Sections 196 & 197
and rules made thereof and read with Schedule V of the Companies Act,
2013.
The Board at its meeting held on 30th July, 2014 on recommendation of
Nomination & Remuneration Committee and subject to the approval of the
members at the ensuing Annual General Meeting had re-appointed Smt. N.
Brahmani as whole time Director designated as Executive Director of the
Company, for a period of 5 (five) years with effect from 1st June, 2014
as per the provisions of Sections 196 & 197 and rules made thereof and
read with Schedule V of the Companies Act, 2013.
During the year under report Dr Arvind Pandalai (DIN: 00352809), who
was appointed as an Additional Director by the Board of Directors at
their meeting held 22nd October 2013 has submitted his resignation from
the office of Director due to his personal reasons and resigned from
the Board on 23rd October 2013.
Dr. N.R Sivaswamy (DIN: 00003749), Non - Executive Independent Director
of the Company had resigned from the Board w.e.f 16th July, 2014 due to
his personal reasons and other commitments. The Board placed on record
the invaluable contribution made by him, towards the progress of the
company from the date of appointment until his resignation.
The Board of Directors of the Company appointed Smt N.Bhuvaneswari,
Vice Chairperson & Managing Director, Smt N.Brahmani, Executive
Director, Sri A Prabhakara Naidu, Chief Financial Officer (CFO) and Sri
Umakanta Barik, Company Secretary as Key Managerial Persons (KMP) as
per the provisions of Section 203 of the Companies 2013, during the
year under review.
Brief resume of the Directors proposed to be appointed, nature of their
expertise in specific functional areas and names of companies in which
they hold directorship and membership/ chairmanship of the
Board/Committee as stipulated by Clause 49 of the listing agreement
with the stock exchange are provided elsewhere in the Annual Report.
AUDITORS AND AUDITORS'' REPORT
Statutory Auditors: M/s. Raju & Prasad, Chartered Accountants,
Hyderabad, Statutory Auditors of the Company, hold office till the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment.
As per the Section 139 of the Companies Act 2013 M/s. Raju & Prasad,
Chartered Accountants, Hyderabad Statutory Auditors of the Company will
be appointed for a period of three years from the conclusion of this
Annual General Meeting till the conclusion of the Twenty Fifth Annual
General Meeting and the Company has received letters from them to the
effect that their reappointment, if made, would be within the
prescribed limits under section 141 of the Companies Act 2013 and rules
made thereof The Notes on Financial Statements referred to in the
Auditors'' Report are self-explanatory and do not call for any further
comments.
Secretarial Auditor: As a measure of good corporate governance practice
and as per the Section 204 of the Companies Act, 2013 and rules made
thereof , the Board of Directors of the Company appointed Ms. Savita
Jyoti, Practicing Company Secretary, to conduct Secretarial Audit. The
Secretarial Audit Report for the financial year ended March 31, 2014,
is provided in the Annual Report.
Cost Auditor: The Central Government had approved the appointment of
M/s. Sagar & Associates, Cost Accountants, Hyderabad as Cost Auditor of
the Company for the financial year 2013-14. The Cost Audit Report will
be filed with Central Government within 180 days from the close of the
Financial Year. The Cost Audit Report for the previous financial year
2012-13 signed by M/s. Sagar & Associates. Cost Accountants, Hyderabad
was filed in extensible Business Reporting Language (XBRL) mode on
September 06, 2013, within due date.
INTERNAL AUDIT & CONTROL SYSTEMS
Your Company has a well-defined and documented internal control system,
which is adequately monitored. Checks & balances and control systems
have been established to ensure that assets are safe guarded, utilized
with proper authorization and recorded in the books of account. The
Internal control systems are improved and modified continuously to meet
the changes in business conditions, statutory and accounting
requirements.
These are supplemented by internal audit of all divisions of the
Company carried out by reputed firms of Chartered Accountants. Your
Company has an Audit Committee consisting of Five Directors; in whom
two are Non Executive and remaining of them are Non-Executive
Independent Directors. The Audit Committee of the Board of Directors,
Statutory Auditors and the Business Heads are periodically apprised of
the internal audit findings and corrective actions taken. The Audit
Committee of the Board of Directors reviews the adequacy and
effectiveness of internal control system and suggests improvements if
any for strengthening them. The Company has a robust Management
Information System which is an integral part of the control mechanism.
The Board of Directors has appointed Internal Auditors for the FY
2014-15, as per the provision of Section 138 of the Companies Act, 2013
and rules made thereof
CONSTITUTION & RESTRUCTURING OF COMMITTEES:
i. Constitution of Corporate Social Responsibility Committee: The Board
of Directors at their meeting held on 21st March 2014 has constituted
the Corporate Social Responsibility Committee (CSR Committee) w.e.f.
1st April, 2014, as per the provisions of the Section 135 and other
applicable provisions of the Companies Act, 2013 and Companies
(Corporate Social Responsibility Policy) Rules 2014 comprising of Sri.
D. Seetharamaiah as the Chairman and N. Sri Vishnu Raju & Smt N.
Bhuvaneswari as members.
The said Committee has been entrusted with the responsibility of
formulating and recommending to the Board, a Corporate Social
Responsibility Policy (CSR Policy) indicating the activities to be
undertaken by the Company, monitoring the implementation of the
framework of the CSR Policy and recommending the amount to be spent on
CSR activities etc.
ii. Stakeholders Relationship Committee: During the year the Board of
Directors of the Company has changed/altered the name of the Share
Transfer and Investor Grievance Redressal Committee to Stakeholders
Relationship Committee w.e.f. 1st April,2014, as per the provisions of
Section 178 of the Companies Act, 2013 and Clause 49 of the Listing
Agreement.
iii. Nomination & Remuneration Committee: During the year the Board of
Directors of the Company had changed/ altered the name of the
Remuneration Committee to Nomination & Remuneration Committee w.e.f.
1st April, 2014 as per the provisions of Section 178 of the Companies
Act, 2013 and Clause 49 of the Listing Agreement.
The details of the Committee members are provided in the corporate
information Page.
INDUSTRIAL RELATIONS
Industrial relations in all the locations of your Company remained
cordial and peaceful throughout the year.
INSURANCE
All the assets and insurable interest of your Company including
inventories, buildings, plant & machineries etc., are adequately
insured.
AWARDS & RECOGNITIONS
It is great honour to state that during the year Smt.N.Bhuvaneswari,
Vice Chairperson & Managing Director of your Company, named as one of
the most powerful business women in India, and placed at 45th Rank in
the list of Fortune-50 Most Powerfull Business Women in India for the
year 2013.
During the year your Company enlisted into the list of top 500
companies across the Country and also recognized as one of the top 16
Companies based in Hyderabad, that figured in top 500 Companies in
India, listed by Economic Times for the year 2013. Your Company has
positioned at 477th rank in the List of ET- top 500 Companies in India.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are required
are annexed to the Directors'' Report. Having regard to the provisions
of Section 219(1) (b) (iv) of the said Act, the Annual Report excluding
the aforesaid information is being sent to all the members of the
Company and others entitled thereto. Any member interested in obtaining
such particulars may write to the Company Secretary at the Registered
Office of the Company.
TRANSFER OF UN-CLAIMED DIVIDENDS
Pursuant to Section 205C (2) of the Companies Act, 1956 read with the
Investor Education and Protection Fund (awareness and protection of
Investors) Rules, 2001 as amended from time to time the unclaimed
dividend amount of Rs. 6,51,006/- (Rupees Six Lakh Fifty one Thousand
and Six Only) for the year 2005-06 was transferred to the Investor
Education and Protection Fund during the year and the unclaimed
dividend for the year 2006-07 is due for transfer to the fund during
the current Financial year.
FIXED DEPOSITS
The Company has not accepted any public deposits and as such, no amount
on account of principal or interest on public deposits was outstanding
as on the date of the balance sheet.
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 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are provided in the Annexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
In compliance with the requirements of Clause 49 of the Listing
Agreement, a separate Report contains a detailed Management Discussion
and Analysis, forms an integral part of this Report.
CORPORATE GOVERNANCE
In compliance with the requirements of Clause 49 of the Listing
Agreement, a separate Report on Corporate Governance along with the
Auditors Certificate on its compliance forms an integral part of this
Report.
CSR ACTIVITIES
As a corporate citizen with enduring relationships in rural India, your
Company has a history of collaboration with communities to enhance
dairy productivity and the rural resource base. Inspired by the vision
of making a contribution to the improvement of quality of life of dairy
farmers your Company has started implementing the CSR activities
through registered trust namely Heritage Farmers Welfare trust (HFWT).
The trust has chosen Health, Safe drinking water and Livelihoods as the
thrust areas for discharging its activities. Apart from the above
thrust areas, your company strives to serve the society through various
other measures like distribution of clothes and relief materials during
natural calamities etc.
In the month of October, 2013 the Cyclone Phailin has hit Gopalpur in
Odisha and Sompeta, Tekkali and Gara mandals of Srikakulam district in
Andhra Pradesh and devastated trees, crops and cattle. To help the
needy people your Company through its trust reached the victims and
interacted with the people to understand their concerns and announced
cyclone relief package, and started conducting 42 free veterinary
health camps and supplied 1020 subsidised cattle feed bags those needy
villages.
The Trust has Launched 6 Heritage Mobile Veterinary Clinic (HMVC) for
providing door- step veterinary services to the Milch Animals and
empowering cattle owners with advanced technology and knowledge on best
cattle management and feeding practices through entertainment cum
education mode. It is a Mobile Clinic equipped with necessary tools
and trained human resources on Veterinary treatment and cattle
management practices.
During the year your Company has started:-
Fodder resource development: Various locations of the Company
distributed the fodder strips to the producers / farmers free of cost
to produce consistency in milk production apart from improvement in the
general health of the animals and quality of milk.
Veterinary Health Care Services: Various preventive and curative health
care services are offered including medicines for free of cost by
veterinary doctors through Heritage Mobile Veterinary Clinics.
Feed Ingredients supply: In view of the non-availability of good
quality animal feed, the trust initiated to supply good quality of feed
ingredients to the farmers at subsidized price.
Insurance: Group Personal Accident Scheme with Medical Extension &
Disability Compensation  to the MCC Members and the Farmers Members
enrolled in the Heritage Farmers Welfare Trust
DIRECTOR''S RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that,
* In the preparation of the annual accounts, applicable accounting
standards have been followed along with proper explanation relating to
material departures.
* They 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 2013-14 and of the profit
for that period;
* They have taken Proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities; and
* They have prepared the annual accounts of the company on a going
concern basis.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, distributors, farmers,
bankers and all other business associates, and from the neighborhood
communities of the various locations. We look forward to continued
support of all these partners in progress.
Your Directors look forward to the future with confidence.
For and on behalf of
HERITAGE FOODS LIMITED
Registered Office:
#6-3-541/C, Punjagutta,
Hyderabad - 500 082
CIN : L15209TG1992PLC014332
Ph : 04023391221/2
e-mail : [email protected] D. SEETHARAMAIAH
Chairman
Date : 30th July, 2014 (DIN: 00005016)
Mar 31, 2013
Dear Members,
The Directors have great pleasure in presenting the 21st Annual Report
of the Company together with the Audited statement of accounts for the
Financial Year ended 31st March, 2013.
FINANCIAL RESULTS
The financial performance for the Financial Year 2012-13 is summarised
in the following table:
(Rupees in Lakhs)
Year ended Year ended
Particular March 31, March 31,
2013 2012
Revenue from Operations (net) 160181.28 139340.57
Other Income (net) 419.95 320.73
Total Income 160601.23 139661.30
Operating Expenditure 150072.33 134207.70
Profit before Finance Cost,
Depreciation & Amortization and Tax 10528.90 5453.59
Finance cost 1670.20 1977.28
Depreciation & Amortization 2202.03 2118.65
Profit before Taxes and Extraordinary items 6656.67 1357.67
Extraordinary Items 291.34 0.00
Profit before Taxes 6365.33 1357.67
Tax Expenses 1369.17 424.24
Net Profit for the Year 4996.16 933.42
The above are standalone figures, as the subsidiary companies are yet
to commence business. Hence consolidated figures are not given.
PERFORMANCE OF THE COMPANY
Your Company, during the year under review earned revenue from
operations (net) of Rs.160181.29 Lakhs representing an increase of
14.96% over the previous year. Your Company has registered a net profit
of Rs.4996.16 Lakhs, as compared to previous year''s net profit of
Rs.933.42 Lakhs.
The increase in the profitability is due to economies of scale,
leveraging on a pan India presence of milk products leading to
increased turnover and better margins, rationalization of logistics
costs, elimination of wastages and effective cost control measures.
DIVIDEND
Your Directors have recommended a dividend of Rs.3 per Equity Share
(30%) face value of Rs.10/- each for the Financial Year ended March 31,
2013, amounting to Rs.405.13 Lakhs (T346.28 Lakhs as dividend and
Rs.58.85 lakhs tax on dividend). The dividend will be paid, subject to
the approval of the members at the ensuing Annual General Meeting to
those members whose names appear in the Register of Members as on
record date.
The dividend payout for the year under review has been formulated in
accordance with shareholders'' aspirations and the Company''s policy
to pay sustainable dividend linked to long term growth objectives of
the Company to be met by internal cash accruals.
SHARE CAPITAL
The Paid up Capital of the Company has increased from Rs.11,52,95,000/-
(Rupees Eleven Crore Fifty Two Lakhs Ninty Five Thousand only) divided
into 1,15,29,500 (One Crore Fifteen Lakh Twenty Nine Thousand Five
Hundred ) Equity Shares of Rs.10/- each to. Rs.11,59,95,000/-(Rupees
Eleven Crores Fifty Nine Lakhs Ninety Five Thousand only) divided into
1,15,99,500 (One Crore Fifteen Lakh Ninty Nine Thousand Five Hundred)
Equity Shares of Rs.10/- each, due to allotment of 70,000 (Seventy
Thousand only) Sweat Equity Shares during the year. The details of the
above issue is as follows as per the provisions of Act
Number of shares issued to an employee of the company 70,000 (Seventy
Thousand only) face value of Rs.10/- each to Dr. M. Sambasiva Rao,
President of the Company
The pricing formula the pricing of the Share arrived as per the SEBI
(Issue of Sweat equity shares) Regulations, 2002
The total number of shares arising as a result of issue of sweat equity
shares 70,000 (Seventy Thousand only) face value of Rs.10/- each
Money realized or benefit accrued to the company from the issue of
sweat equity shares
The share issued to Dr. M. Sambasiva Rao, Employee of the company
designated as president for a consideration other than cash in
recognition of value addition to the business of the Company and for
creating the aspiration and motivation to achieve the further growth of
the company.
Diluted earnings per share after issuance of sweat equity shares 43.28
Your Board of Directors had obtained a certificate from the M/s. Raju &
Prasad Statutory Auditors of the Company regarding the issue of Sweat
Equity shares in accordance with the SEBI (Issue of Sweat Equity
Shares) Regulations 2002 & applicable provisions of the Companies Act
1956. The copy of the certificate is forming part of the Annual Report.
CHANGE OF NAME OF THE COMPANY
The Board of Directors had approved to change the name of the company
from "Heritage Foods (India) Limited" to "Heritage Foods
Limited" by deleting the word ''(India)'' in the existing name of
the Company subject to approval of share holders and statutory
Authorities. The Company has received the approval for name
availability from Registrar of Companies, Andhra Pradesh, Hyderabad.
The change of name of the Company as aforesaid does not change the
legal status or constitution of the Company, nor does it affect any
rights or obligations of the Company.
TRANSFER TO RESERVE
The Company proposes to transfer Rs.2500.00 Lakhs to General Reserve.
BUSINESS REVIEW
Dairy Business: Dairy industry is of crucial importance to the growth
of Indian economy. Our country is the world''s largest milk producer,
accounting for more than 17% of world''s total milk production. It is
also the world''s largest consumer of dairy products, consuming almost
100% of its own milk production. Dairy products are a major source of
nutritious food to millions of people in India and the only acceptable
source of animal protein for large vegetarian segment of Indian
population. Dairying has been considered as one of the activities
aimed at alleviating the poverty and unemployment especially in the
rain- fed and drought-prone rural regions. In India, about three-fourth
of the population live in rural areas. The progress in this sector will
result in a more balanced development of the rural economy,
particularly among the landless, small or marginal farmers.
Considering the current scenario, the Milk demand is expected to reach
180MiHion MT by 2021-22.An Annual Incremental growth of 5-6million MT
is estimated over the next 10 years to meet the growing demand of Milk
in the country. The Industry is to witness a boom in the demand for
milk in the next decade due to the following factors:
- Milk serves as an important source of protein for a sizeable
portion of India''s large vegetarian population
- Rising income and aspiration levels further accelerated by impact
of the 6th pay commission in urban India.
- Advent of urbanization leading to demand for greater variety of
value added dairy products.
- Rising health consciousness driving product innovations in the
global dairy market like pro-biotics and other fortified dairy
products.
During the financial year 2012-13, Dairy Division of your Company has
increased milk procurement capacity by 72000 LPD by commissioning of 21
units which includes Bulk Coolers/Mini Chilling Units and Franchisee
units to increase the milk procurement and to maintain the quality. The
Turnover has grown by 15.96% from Rs.109397.20 Lakhs to Rs.126862.15
Lakhs. The liquid milk Turnover grown by 12.08% and Value Added
Products by 27.43%.
Retail Business: The Indian Retail Industry is the largest among all
the industries, accounting for over 10% of the country''s GDP and
around 8% of the employment. The Retail Industry in India has comeforth
as one of the most dynamic and fast paced industries with several
players entering the market. But all of them have not yet tasted
success because of the heavy initial investments that are required to
break-even.
Recently the Government of India had allowed Foreign Direct Investment
(FDI) upto 51% in multi brand retail and the impact of this policy is
to be seen yet.
Purchasing power of Indian urban consumer is growing and branded
merchandise in categories like Apparels, Cosmetics, Shoes, Watches,
Beverages, Food and Jewellery are widely accepted by the urban
consumers.
The Retail Division of your Company has achieved a sale of Rs.32657.46
Lakhs during the year 2012-13. The Institutional sales segment achieved
a sales of 2063 Lakhs and sales delivered by General Trade FMCG
distribution business of Rs.1438 Lakhs. For comparable stores in both
the years Retail business has grown by 6.51%. Average bill value has
grown by 14% and also the new stores which are opened this year have
delivered more throughput.
Your company entered in the trading & manufacturing (except Bread) of
Bakery products. The business shall be nurtured during the current
financial year. Bakery product sales remain same over the last
financial year with the improvement in Dairy & Retail Channel. The
direct sales channel de grew as it discontinued few kiosk models out of
IT Parks and Fresh Outlets due to non viability.
Agri Division: Agriculture is the third largest sector of India''s
economy after services and industry. It requires consistent monitoring,
creating a conducive environment for farmers to increase their
productivity and sell their products at competitive prices. There is
still a lot of scope for increasing the productivity in India by
adopting scientic methods of cultivation. India has emerged as the
second largest producer of fruits and vegetables in the world besides
to being the largest overseas exporter of cashews and spices.
Agri Division of your Company had achieved the turnover of Rs.3993.67
Lakhs and 26479 MT with respect to Value and Volume. There is an
improvement in Volume of 62% over the financial year 2011-12.
EXEMPTION FROM ATTACHING THE BALANCE SHEETS, ETC. OF THE SUBSIDIARY
COMPANIES WITH THE BALANCE SHEET OF THE COMPANY
The Ministry of Corporate Affairs ("MCA") has vide its Circular No.
02/2011 dated 8th February, 2011, granted a general exemption under
Section 212(8) of the Companies Act, 1956 from attaching copies of the
Balance Sheet, Statement of Profit and Loss, Directors'' Report and
Auditors'' Report of its subsidiary companies with the Balance Sheet
of the Company, subject to fulfillment of certain conditions.
In terms of the said circular, copies of the Balance Sheet, Statement
of Profit and Loss, Report of the Board of Directors and the Report of
the Auditors of the Subsidiary Companies have not been attached to the
Balance Sheet of the Company. The Company has presented Consolidated
Financial Statements comprising Heritage Foods (India) Ltd and its
subsidiaries duly audited by the Statutory Auditors of the Company. The
Consolidated Financial Statements prepared by the Company are in
compliance with the Accounting Standard AS-21 as prescribed by the
Companies (Accounting Standards) Rules, 2006 and the Listing Agreement
with the Stock Exchanges. The statement required under Section 212 of
the Companies Act, 1956 is attached to the annual accounts of the
Company. The annual accounts and related documents of all the
Subsidiary Companies shall be made available for inspection to the
shareholders of the Company and its subsidiaries at the Registered
Office of the Company from Monday to Friday between 11.00 a.m. to 1.00
p.m. The Company will also make available physical copies of such
documents upon request by any Member of the Company (or its
subsidiaries) interested in obtaining the same and the same would also
be made available on the website of the Company.
DIRECTORS
Sri D.Seetharamaiah, Chairman and Sri N.P Ramakrishna, Directors retire
by rotation and being eligible offer themselves for reappointment at
the ensuing Annual General Meeting.
The Board at its meeting held on May 30, 2013 on recommendation of
Remuneration Committee and subject to the approval of the members at
the ensuing Annual General Meeting had appointed Smt. N.Bhuvaneswari as
Vice Chairperson & Managing Director of the Company, for a period of 5
(five) years with effect from 1st July, 2013.
During the year on the recommendation of Remuneration Committee, the
Board of Directors had recommended to the Shareholders for the
re-appointment and revision of remuneration of Sri. Nara Lokesh as
Executive Director of the Company for a period of three years w.e.f 1st
October, 2012. The Shareholders had approved the appointment through
postal Ballot, the result of which was declared on 08th December, 2012.
Smt. N.Brahmani was appointed as an Additional Director of the Company
w.e.f 22nd April 2013, to hold office upto date of the ensuing Annual
General Meeting. Notice was received from members under Section 257 of
the Companies Act, 1956 proposing her candidature as the Director of
the Company. The Board at its meeting held on May 30, 2013, on
recommendation of Remuneration Committee and subject to the approval of
the members at the ensuing Annual General Meeting had appointed Smt.
N.Brahmani as a Wholetime Director designated as an Executive Director
of the Company, for a period of 5 (five) years with effect from 1st
June, 2013.
Sri N.Lokesh has submitted his resignation from the office of Executive
Director, but he will continue as non Executive Director in the Board
of the Company, with the same terms as applicable to the Non-executive
Directors of the Board. The Members of the Board place on record their
deep sense of appreciation for services rendered by Sri N. Lokesh
during his tenure as an Executive Director of the Company.
AUDITORS AND AUDITORS'' REPORT
Statutory Auditors: M/s. Raju & Prasad, Chartered Accountants,
Hyderabad, Statutory Auditors of the Company, hold office till the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment.
The Company has received letters from them to the effect that their
reappointment, if made, would be within the prescribed limits under
Section 224(1B) of the Companies Act, 1956 and that they are not
disqualified for reappointment within the meaning of Section 226 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.
Cost Auditor: M/s. Sagar & Associates, Cost Accountants, Hyderabad were
appointed as the Company''s Cost Auditors subject to the consent of
the Government of India to conduct an audit of Cost Accounting records
relating to Packaged Food Products and for issuance of Cost Audit
Report for the financial year 2013 - 2014.
Secretarial Auditor: As a measure of good corporate governance
practice, the Board of Directors of the Company appointed Ms. Savita
Jyoti, Practicing Company Secretary, to conduct Secretarial Audit. The
Secretarial Audit Report for the financial year ended March 31, 2013,
is provided in the Annual Report.
INTERNAL AUDIT & CONTROL SYSTEMS
Your Company has a well-defined and documented internal control system,
which is adequately monitored. Checks & balances and control systems
have been established to ensure that assets are safe guarded, utilized
with proper authorization and recorded in the books of account. The
Internal control systems are improved and modified continuously to meet
the changes in business conditions, statutory and accounting
requirements.
These are supplemented by internal audit carried out by reputed firms
of Chartered Accountants. Your Company has an Audit Committee
consisting of four Directors; all of them are Non- Executive
Independent Directors. The Audit Committee of the Board of Directors,
Statutory Auditors and the Business Heads are periodically apprised of
the internal audit findings and corrective actions taken. The Audit
Committee of the Board of Directors reviews the adequacy and
effectiveness of internal control system and suggest improvement(s) if
any. The Company has a robust Management Information System which is an
integral part of the control mechanism.
CORPORATE SOCIAL RESPONSIBILITY
The core theme of your company''s Corporate Social Responsibility
policy (CSR Policy) is giving back to the society from which it draws
its resources by extending a helping hand to the needy and the
underprivileged. To implement the CSR policy effectively, the Company
makes need based allocation of funds from its earnings through Heritage
Farmers Welfare Trust (The Trust). The trust has chosen Health, Safe
drinking water and Livelihoods as the thrust areas for discharging its
Corporate Social Responsibility. Apart from the above thrust areas,
your company strives to serve the society through various other
measures like distribution of clothes and relief materials during
natural calamities etc.
Your Company has been extending help to villages where the Company
plants are located, as part of our Corporate Social Responsibility.
Your Company had started through the trust, free veterinary services
through mobile veterinary clinic with a fully equipped instruments and
trained Doctors/Staff, and through audio visuals presentations. Your
company organized several free health camps at various places at part
of the CSR activities during the year under review.
INDUSTRIAL RELATIONS
Industrial relations in all the locations of your Company remained
cordial and peaceful throughout the year.
OTHER EVENTS
The following unfortunate incidents happened after close of the
Financial year before the date of the Board''s Report.
On Sunday the 07th April 2013 at the refrigeration section 2 (under
trial commissioning) at Bayyavaram packing station, Vishakhapatnam
district, fire broke due to an electro-mechanical failure, resulting in
loss of life of three workers employed by M/s. Thermal Engineers and
contractors, excuting the works and damaging the assets worth around
Rs.30 Lakhs. There is proper insurance coverage for the assets. In
addition to the financial assistance available under workmen''s
compensation act covered by the contractor, the company has decided to
extend an additional financial assistance of Rs.10 Lakhs per each
family of the deceased. One willing member of each family will be
provided regular employment in Company and further support towards
education of the children will also be extended.
Another incident occurred at Pamarru Packing Station at Endagandi
Village, East Godavari District on 06th of May 2013. Two Children
brought their Cattle for grazing at open land of the company outside
the compound wall, unfortunately these two children had got in to the
pond adjacent to the open land for swimming and drowned. The Company
had extended a financial assistance of Rs.5 Lakhs to each family of
deceased persons.
Another incident occurred on 21st of May 2013 at Pamarru Packing
station. One of the workers had attempted to unplug the electronic
weighing machine without switching of the supply and died due to
electric shock. The Company had extended a financial assistance of
Rs.10 Lakhs to deceased family and offered regular employment to one of
his family members.
There was no impact on the performance/operations of the
Plants/Company. Your company has taken various preventive measures,
such as safety training to the employees, warning boards at appropriate
places, safety rules displayed at the prominent places of the plants.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended from time to time, the names and other particulars of the
employees required are annexed to the Directors'' Report. Having
regard to the provisions of Section 219(1) (b) (iv) of the said Act,
the Annual Report excluding the aforesaid information is being sent to
all the members of the Company and others entitled thereto. Any member
interested in obtaining such particulars may write to the Company
Secretary at the Registered Office of the Company.
TRANSFER OF UN-CLAIMED DIVIDENDS
Pursuant to Section 205C (2) of the Companies Act, 1956 read with the
Investor Education and Protection Fund (awareness and protection of
Investors) Rules, 2001 as amended from time to time, the unclaimed
dividend of Rs.9,74,208 (Rupees Nine Lakh Seventy Four Thousand and Two
Hundred and Eight Only) for the year 2004-05 was transferred to the
Investor Education and Protection Fund during the year and the
unclaimed dividend for the year 2005-06 is due for transfer to the
fund.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits from the public during
the year under review.
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 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are provided in the Annexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
An Annexure to this Report contains a detailed Management Discussion
and Analysis, which, inter alia, covers the following:
- Over view of the Economy
- Industry structure and development
- Opportunities and Threats
- Risks and Concerns
- Internal control systems and their adequacy
- Discussion on financial and operational performance
- Segment-wise performance
CORPORATE GOVERNANCE
The Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms part of the Annual Report.
The Certificate from the Statutory Auditors of the Company confirming
compliance with the conditions of Corporate Governance as stipulated
under the aforesaid Clause 49 of the lising Agreement is attached to
this Report.
DIRECTOR''S RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that,
- In the preparation of the annual accounts, applicable accounting
standards have been followed along with proper explanation relating to
material departures.
- They have selected such accounting policies and applied them
consistently and made judgements 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 2012-13 and of the profit
for that period;
- They have taken Proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities; and
- They have prepared the annual accounts of the company on a going
concern basis.
ACKNOWLEDGEMENT
The Board takes this opportunity to thank all its employees for their
dedicated service and firm commitment to the goals of the Company. The
Board also wishes to place on record its sincere appreciation for the
wholehearted support received from shareholders, suppliers, farmers,
customers, bankers and all other business associates, and from the
neighborhood communities of the various locations.
Your Directors look forward to the future with confidence.
For and on behalf of the Board of Directors
Place: Hyderabad D. SEETHARAMAIAH
Date: 30th May 2013 Chairman
Mar 31, 2012
The Directors have pleasure in presenting the 20th Annual Report
of the Company together with the audited statement of accounts
for the year ended 31st March, 2012.
FINANCIAL RESULTS
The financial performance for the Financial Year 2011-12 is summarised
in the following table:
(Rs. in Lakhs)
Particulars 2011-12 2010-11
Total Income from operations 139340.57 109608.61
Total Expenditure 136332.90 108020.76
Profit from operations before other
Income, finance costs & exceptional 3007.67 1587.84
items
Other Income 320.73 480.66
Profit from ordinary activities after 1357.57 294.61
1357.57 294.61
Finance costs and exceptional items
Profit from ordinary activities before 1357.67 294.61
1357.67 294.61
Tax
Net Profit for the period 933.42 111.93
Basic and diluted EPS before 8.10 0.97
Extraordinary items for the period
The above figures are standalone figures, as the subsidiary companies,
are yet to commence business; hence consolidated figures are not given.
DIVIDEND
Your Directors have recommended a dividend of Rs. 2 per Equity Share
(20%) for the financial year ended March 31, 2012, amounting to Rs.
268.00 lakhs (Rs.. 230.59 Lakhs dividend Rs.. 37.41 lakhs tax on
dividend). The dividend will be paid to members whose names appear in
the Register of Members as on record date if, approved at the forth
coming Annual General Meeting.
The dividend payout for the year under review has been formulated in
accordance with shareholders' aspirations and the Company's policy to
pay sustainable dividend linked to long term growth objectives of the
Company to be met by internal cash accruals.
RESULTS FROM OPERATIONS
The Financial Year 2011-12 was a challenging year. The global economy,
continue to witness lower growth, resulting primarily from the Euro
Zone debt crisis. India being one of the growth engines of the global
economy was forced to tighten liquidity to tame rising inflation.
Despite of these constraints and the challenging environment, the
Company performed reasonably well and the highlights of the performance
are as under:
- Revenue from operations increased by 27 % to Rs. 139340.57 lakhs
- Profit from operations before other income, finance costs &
exceptional items increased by 89% to Rs. 30.07 Crores
- Profit from ordinary activities after finance costs and operational
items increased by 361% to Rs. 13.57 Crores
- Net Profit increased by 733 % to Rs. 9.33 Crores BUSINESS REVIEW
Dairy Business: The Dairy Industry plays a vital role in the
development of Agriculture Sector. Demand for milk and milk products is
increasing day by day. Milk and milk products are second largest
agricultural commodity produced in our country next to rice. Milk is
the only agro-based commodity that offers immediate marketability and
consistent revenue to the farmers. Considering the demand for milk and
milk products, there is still a lot of scope for increasing the milk
production in India by adopting scientific methods of breeding and
nutrition.
During the financial year Dairy Division has increased milk handling
capacity by 1,06,000 LPD by commissioning of 33 units which includes
Bulk Coolers / Mini Chilling Units and Franchisees units to increase
the milk procurement and to maintain the quality. The Turnover has
grown by 21.2% from Rs. 860.60 Crores to Rs..1093.97 Crores. The liquid
milk Turnover grown by 22.7% and Value Added Products by 60%. During
the year Dairy Division has exported 25 Metric Tonnes of butter to
Kingdom of Bahrain.
During the year the Dairy Division of the company has taken- up
effective measures to reduce / minimize inward freight cost by altering
the route distances or re-organizing milk routes and closure of
unviable milk routes. Several steps were taken up to improve the clean
milk production across all locations, reduced the operational costs as
compared to previous year. The Kalluru Chilling Centre has been
upgraded as a Packing Station and commenced packing operations w.e.f
27th June' 2011. To encourage the farmers for increasing their milk
production, technical inputs program is being implemented across the
location which includes animal health camps, supply of feed and fodder
seeds, Vaccination etc.
During the financial year Heritage Institute of Milk Sciences (HIMS)
first batch of 23 students have successfully completed their Dairymen
course and were placed at various locations in Dairy Division. Second
batch of 26 students have completed the theory classes. Admission
process for the 3rd batch has been initiated in the months of April/May
2012.
Retail Business: Organized retail represents a large untapped market in
India that is likely to see tremendous growth in the coming years. The
Retail Industry in India is evolving as one of the most dynamic and
fast growing industry. New entrants are bound to see large returns.
However, they must adapt themselves to the unique state of retail in
India where infrastructure and regulations provide little support. They
must also understand the tastes of the Indian consumers, who have only
recently started treating retail as a form of leisure.
Your Retail Division achieved a sale of Rs. 250.28 crores during the year
2011-12. The Institutional sales segment achieved a sales of 18.75
Crores and sales delivered by General Trade FMCG distribution business
of Rs..13.31 crores. For comparable stores in both the years Retail
busness has grown by 8%. On all inclusive store bases we have grown by
17%. Average bill value has grown
by 14% and also the new stores which are opened this year have
delivered more throughput than previous year.
Private Label Strategy is built around providing exceptional value to
customers. It was focused on optimising private Label sales mix, which
witnessed tremendous customer acceptability across categories like
instant food, snacks, beverages, culinary etc. During the year Retail
Division has initiated several measures through private label to create
new business comprising general trade, parlor etc., During the year the
private label products reached to 149 distributors and 20649 Outlets.
Your company entered with the trading & manufacturing (except Bread) of
Bakery products. The business shall be nurtured during the financial
year. Bakery product Sales remains same over the last financial year
with the improvement in Dairy & Retail Channel. The direct sales
channel de grew in sales as it discontinued few kiosk models out of IT
Parks and Fresh Outlets due to non viability.
Agri Division: The agriculture sector requires consistent monitoring,
creating a conducive environment for farmers to increase their
productivity and sell their products at competitive prices. There is
still a lot of scope for increasing the productivity in India by
adopting scientific methods of cultivation and farming.
Agri Division had achieved the turnover of Rs.. 33.04 Crores and 31749 MT
with respect to Value & Volume. However, there is an improvement in
Volume of 18% over the financial year10-11.
The present fill rate is 69% against the requirement of Retail Business
& efforts are being made to deliver 75% supply across regions,
Developing new sourcing bases in coordination with other retailers to
meet the Retail requirement of off season & non local SKU's,
Procurement of SKUs at competitive price through all available
channels.
Agri Division has planned for extension of services i.e. Strengthened
extension activities to the custom farmers and facilitating farmers to
get crop loans, subsidies on power tiller and drip irrigation schemes,
weekly training classes for field staff on Pests and disease control,
trained the farmers and field staff on Soil treatment & Land Management
and the importance of Crop Rotation and water conversation.
SUBSIDIARY COMPANIES
During the year under review the Company has two subsidiary Companies
namely M/s. Heritage Foods Retail Limited and M/s. Heritage Conpro
Limited. M/s SKIL Raigam Power (India) Limited ceased to be a
subsidiary of the Company as per the provision of the Section 4 of the
Companies Act, 1956. In accordance with the general circular issued by
the Ministry of Corporate Affairs, Government of India, the Balance
Sheet, Statement of Profit and Loss and other documents of the
subsidiary companies need not be attached with the Balance Sheet of the
Company. However the financial information of the subsidiary companies
is disclosed in the Annual Report in compliance with the said circular.
The Company will make available the annual accounts of the subsidiary
companies and the related detailed information to any member of the
Company who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection at the Registered Office of the Company. The Consolidated
Financial Statements presented by the Company include the financial
results of its subsidiary companies.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Clause 32 of the Listing Agreement with Stock Exchanges and
in accordance with the Accounting Standard AS- 21 on Consolidated
Financial Statements read with Accounting Standard AS-23 on Accounting
for Investments in Associates, the audited Consolidated Financial
Statements are provided in the Annual Report.
ENVIRONMENT AND SAFETY
The Company is conscious of the importance of environmentally clean and
safe operations. The Company's policy requires the conduct of all
operations in such a manner so as to ensure safety of all concerned,
compliance of statutory and industrial requirements for environment
protection and conservation of natural resources to the extent
possible.
DIRECTORS
Dr. A. Appa Rao and Dr. V. Naga Raja Naidu Directors retire by rotation
and being eligible; offer themselves for reappointment at the ensuing
Annual General Meeting.
During the year on the recommendation of Remuneration Committee, the
Board of Directors had recommended to the Shareholders for the
re-appointment of Smt. Nara Bhuvaneswari as Vice Chairperson & Managing
Director of the Company for a period of three years w.e.f 1st April,
2012. The Shareholders had approved the appointment through postal
Ballot, the result of which was declared on 9th May, 2012.
AUDITORS AND AUDITORS' REPORT
Statutory Auditors: M/s. Raju & Prasad, Chartered Accountants,
Hyderabad Statutory Auditors of the Company, hold office until the
conclusion of the ensuing Annual General Meeting and are eligible for
reappointment.
The Company has received letters from them to the effect that their
reappointment, if made, would be within the prescribed limits under
Section 224(1B) of the Companies Act, 1956 and that they are not
disqualified for re-appointment within the meaning of Section 226 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. Cost
Auditor: As per the requirement of the provisons of Sec. 209(1 )(d)
and Section 233B of the Companies Act, 1956 and pursuant to the
Companies (Cost Accounting Records) Rules, 2011, your Company carries
out an audit of Cost Accounting records relating to Packaged Food
Products for the year 2011-12. Subject to the approval of the Central
Government, the Company has appointed M/s. Sagar & Associates, Cost
Accountants, as Cost Auditor of the Company for the Financial Year
2012-13.
Secretarial Auditor: As a measure of good corporate governance
practice, the Board of Directors of the Company appointed Ms. Savita
Jyothi, Practicing Company Secretary, to conduct Secretarial Audit. The
Secretarial Audit Report for the financial year ended March 31, 2012,
is provided in the Annual Report.
The Secretarial Audit Report confirms that the Company has complied
with all the applicable provisions of the Companies Act, 1956,
Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996 and
all the Regulations and Guidelines of the Securities and Exchange Board
of India (SEBI) as applicable to the Company, including The Securities
and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011, The Securities and Exchange Board of
India (Prohibition of Insider Trading) Regulations, 1992 and Listing
Agreements with the Stock Exchanges.
CORPORATE SOCIAL RESPONSIBILITY
Your Company is committed to good corporate citizenship and makes
constant efforts to build and nurture long lasting relationships with
members of the society in general and the communities around its
operating facilities in particular.
The core theme of this company's CSR Policy is giving back to the
society from which it draws its resources by extending a helping hand
to the needy and the underprivileged. To implement the CSR policy
effectively, the company makes need based allocation of funds from its
earnings through trust. The trust has chosen Health, Education and
Livelihoods as the thrust areas for discharging its Corporate Social
Responsibility. Apart from the above thrust areas, your company strives
to serve the society through various other measures distribution of
clothes and relief materials during natural calamities etc..
Your Company has started supporting small scale Industry Producers,
through the Private Labels and encouraged them by marketing the
products through Heritage Fresh and Heritage Parlours.
INTERNAL CONTROL SYSTEMS
Your Company has a well-defined and documented internal control system,
which is adequately monitored. Checks and balances and control systems
have been established to ensure that assets are safe guarded, utilized
with proper authorization and recorded in the books of account. The
Internal control system are improved and modified continuously to meet
the changes in business conditions, statutory and accounting
requirements.
There is a proper definition of roles and responsibilities across the
organization to ensure information flow and monitoring. These are
supplemented by internal audit carried out by reputed firms of
Chartered Accountants. Your Company has an Audit Committee consisting
of four Directors, all of them are independent directors. The Audit
Committee of the Board of Directors, Statutory Auditors and the
Business Heads are periodically appraised of the internal audit
findings and corrective actions taken. The Audit Committee of the Board
of Directors actively reviews the adequacy and effectiveness of
internal control system and suggests improvements, if any for
strengthening them. The Company has a robust Management Information
System which is an integral part of the control mechanism.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 217(2A) of the Companies Act,
1956, read with the Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are required
to be annexed to the Directors' Report. Having regard to the
provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report
excluding the aforesaid information is being sent to all the members of
the Company and others entitled thereto. Any member interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
DEPOSITORY SYSTEM
As the Shareholders are aware, your Company's Shares are tradable in
electronic form and the Company has established connectivity with both
the Depositories i.e. National Securities Depository Limited and
Central Depository Services (India) Limited. In view of the advantages
offered by the Depository System, the shareholders are requested to
avail the facility of dematerialization of the Company's shares.
TRANSFER OF UN-CLAIMED DIVIDENDS
Pursuant to Section 205C (2) of the Companies Act, 1956 read with the
Investor Education and Protection Fund (awareness and protection of
Investors) Rules, 2001 as amended from time to time the unclaimed
dividend amount of Rs. 7,30,198 (Rupees Seven Lakhs Thirty Thousand and
One Hundred and Ninety Eight Only) for the year 2003-04 was transferred
to the Investor Education and Protection Fund during the year and the
unclaimed dividend for the year 2004-05 is due for transfer to the
fund.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits from the public during
the year.
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 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 are provided in the Annexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis on the Industry structure,
developments, opportunities, threats and review of operational
performance and risk as required under Clause 49 of the Listing
Agreement with the Stock Exchanges forms part of the Annual Report.
CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate
Governance and adhere to the Corporate Governance requirements as set
out by the Securities and Exchange Board of India (SEBI). The Company
has also implemented several best Corporate Governance practices.
The Report on Corporate Governance as stipulated under Clause 49 of the
Listing Agreement forms part of the Annual Report.
The requisite Certificate from the Statutory Auditors of the Company
confirming compliance with the conditions of Corporate Governance as
stipulated under the aforesaid Clause 49 is attached to this Report.
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that,
- In the preparation of the annual accounts, applicable accounting
standards have been followed along with proper explanation relating to
material departures.
- They have selected such accounting policies and applied them
consistently and made judgements 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 2011-12 and of the profit
for that period;
- They have taken Proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities; and
- They have prepared the annual accounts of the company on a going
concern basis.
APPRECIATION
Your Directors would like to express their appreciation for the
assistance and co-operation received from the financial institutions,
banks, Government authorities, customers, vendors, farmers,
distributors, franchise and members during the year under review. Your
Directors also wish to place on record their deep sense of appreciation
for the committed services by the executives, staff and workers of the
Company.
Your Directors look forward to the future with confidence.
For and on behalf of
HERITAGE FOODS (INDIA) LIMITED
Place: Hyderabad D. SEETHARAMAIAH
Date: 30th July, 2012 Chairman
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the 19th Annual Report of
the Company together with the audited statement of accounts for the
year ended 31st March, 2011.
Your Directors believe that the Company remained sensitive to the need
for effi cient and sustainable utilization of resources and following
its basic approach to business to Create Shared Value, it continued to
inspire happiness to its shareholders and the communities where it
operates. Your Company continued to invest resources both in terms of
talent and capital in the areas of water, Nutrition and rural
development because these are also the areas where stakeholders'
interest and the interests of society strongly intersect and where your
company can create signifi cant value for both, in an inclusive manner.
FINANCIAL RESULTS
The financial performance for the Finanacial Year 2010-11
is summarised in the following table:
(Rs. in lakhs)
Particulars 2010-11 2009-10
Net Sales / Income from 109608.61 90038.47
Operations
Add: Other Income 516.89 292.59
Total Income 110125.50 90331.06
Less: Total Expenditure 106199.89 85628.49
Profit before Interest, 3925.61 4702.57
Depreciation and Tax
Less: Interest 1596.57 1667.47
Depreciation & Amortisation 1993.98 1964.25
Profit before tax 335.06 1070.85
Less: Provision for
current taxation 64.04 195.52
Less: Provision for
deferred taxation 119.73 302.95
Profit/(loss) after tax 151.29 572.38
Less: Prior period expenses & 39.36 12.79
taxation
Profit after prior period expenses 111.93 559.59
Balance brought forward 267.59 Ã
Amount available for 379.52 559.59
appropriation
Appropriations
General Reserve 15.00 50.00
Dividend 138.35 207.53
Tax on Dividend 22.45 34.47
Balance carried to Balance Sheet 203.72 267.59
Total 379.52 559.59
The above figures are standalone figures, as three subsidiary companies
are yet to commence business; hence consolidated figures are not given.
DIVIDEND
The Board of Directors are happy to recommend a dividend of Rs. 1.20
per Equity Share (12 percent) aggregating to Rs. 138.35 lakhs
(excluding dividend tax) for the year 2010-11. The dividend, if
approved at the forthcoming Annual General Meeting, will be paid to all
eligible equity shareholders.
OPERATING RESULTS
During the year under review your Company registered a total income of
Rs. 110125.50 lakhs as compared to previous years of Rs. 90331.06
lakhs. Your Company registered a Profit before interest depreciation
and Tax (PBIDT) of Rs. 3925.61 lakhs as compared to previous year's
PBIDT of Rs. 4702.57 lakhs.
OPERATIONS
Your Company is aware that the emerging and the increasing competition
requires us to be even more efficient, as we go forward. The process of
sales automation that was initiated earlier is now fully implemented
and provides a robust and integrated distribution management solutions,
that support our efficiency in primary and secondary sales.
We strive to improve the availability of our products with a clear
focus on building distribution by going deep & wide across urban and
rural geographies. This has resulted in improving our reach through
more than 1000 franchisee outlets by end of this financial year. Your
company is committed to continuous excellence in the operations. During
the year the focus was on building additional capacity through the
willing and able distributors who are long- term associates of your
Company and provide the front line fi eld force the support and
know-how to improve their capability.
Your Company has been growing at a healthy rate in recent years with
continuing focus across its businesses. This market leadership position
and India's positive economic environment coupled with a progressive
population provides opportunities for growth. Your Company is
therefore, accelerating investment in capacities to provide consumers a
wide product range, from Popularly Positioned Products for low-income
consumers to premium offerings. In the recent past some signifi cant
investments have already been initiated. Your Directors are hopeful
that the Government continues to support the Food Processing Sector so
that your Company can continue to expand manufacturing, employment
opportunities and to provide consumers with affordable products. In
order to fi nance this accelerated capital expenditure trajectory your
company would have a judicious mix of Ãinternal Accruals' and ÃDebt'.
BUSINESS REVIEW
Dairy Business: The Dairy Industry plays a vital role in the
development of Agriculture Sector. Milk is the only agro-based
commodity that offers immediate marketability and consistent revenue to
the farmers. Considering the demand for milk and milk products, there
is still a lot of scope for increasing the milk production in India by
adopting scientifi c methods of breeding and nutrition.
Your Company is well aware of the industrial scenario and being alert,
focuses mainly on long term goals, steady and profi table development.
Its strong brand coupled with the varied product portfolio enables it
to meet adverse conditions confidently and overcome it. Your Company
therefore remains confi dent of its long term business prospects and
its ability to provide a fair return to the shareholders.
During the current financial year, your Company proposes to invest over
Rs. 2549 lakhs for setting up of New units like Bulk coolers in
various regions like Ongole, Tirupathi, Vizag, Hyderbad and Vijayawada
and for setting up packing facilities at Kavali and Guraja in AP and at
Nagarcoil, Tirunelveli District in Tamilnadu and other supporting
facilities to improve the performance and effective utilisation of
existing installed capacities of existing packing and processing
plants.
Retail Business: Demand for organic food and processed food is
increasing in conventional food supply stores because of development of
private labels and increasing interest of large retailers to sell
organic products. The organic food and beverages market is also
expected to benefi t from subsidies, financial aids and R&D programs
conducted by different government and non- government organizations
such as FIBL (Switzerland), APEDA (India) and USDA (U.S.) to support
conventional farmers to switch to organic farming.
Your company's plan to enhance the portfolio of the existing brands by
bringing in more product categories and sub-categories under "Heritage"
which draws 15% of its turnover from Private Label. Your Company plans
to double the contributions from private labels in the next financial
year.
FMCG Private Labels comprise about 5% of a store's sale. Your company
had increased the percentage of its own brands in the stores, it also
initiated to local advertising through hoardings and radio jingles.
Your company entered with the trading & manufacturing (except Bread) of
Bakery products. The business shall be nurtured during the financial
year. Your Company's Private Label Strategy is built around providing
exceptional value to customers. It was focused on optimising private
Label sales mix, which witnessed tremendous customer acceptability
across categories like instant food, snacks, beverages and culinary
etc.
Agri Division: The Agriculture sector recorded a growth of 0.2% of GDP
inspite of worst ever monsoon. However, last year's drought impacted
agricultural production.The agricultural sector requires consistent
monitoring, creating a conducive environment for farmers to increase
their productivity and sell their products at competitive prices. There
is still a lot of scope for increasing the productivity in India by
adopting scientific methods of cultivation and farming. Your Company
has undertaken custom-farming activity directly with farmers for
certain fruits, vegetables and expanded the cold storage facilities at
its pack-houses.
SUBSIDIARY COMPANIES
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India the Balance Sheet,
Profit and Loss Account and other documents of the subsidiary companies
are not being attached with the Balance Sheet of the Company. Financial
information of the Subsidiary Companies, as required by the said
exemption, is disclosed in the Annual Report.The audited annual
accounts and related information of subsidiaries as applicable will be
made available upon request.
In our earlier communication we had communicated that the company had
entered in power sector through its Subsidiary Company. During the year
the Company has completed the project viability report and appointed a
consulting Company for preparing detailed project report. Once the
detailed project report is received by the Company the process for
financial closure will be commenced. The detailed project report is
expected to be ready in the third quarter of 2011-12.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Clause 32 of the Listing Agreement with Stock Exchanges,
applicable provisions of the Companies Act, 1956 and as per Accounting
Standard (AS) 21, (AS) 17 and other applicable accounting standards,
Consolidated Financial Statements and the Segment Reporting for the
year ended on 31st March 2011 are provided in the Annual Report.
ENVIRONMENT
Your Company is sensitive to the fragility of non-renewable resources
and continues to work towards creating and increasing awareness for
environmental sustainability. Emphasis on conservation of resources is
a priority within the factories. There is a continuous effort to
minimise consumption of natural resources and reduce waste and
omission, while maximising production.
At the same time wastewater discharge per tonne of produce is reduced
by almost 60% as a result of the reusing of water and more efficient
processes that reduce water need. The carbon footprint has been
significantly reducing through focus on technologies that improve
combustion and emphasis on utilising renewable fuels such as coconut
shells and process waste to replace non-renewable fuels. In recognition
of our efforts, the Ministry of Energy, Govt. of India, had awarded
first prize on conservation of energy in Dairy Sector during the year
under report. This is the second time we had received the award from
Ministry of Energy, Govt. of India in a period of last three years.
SUPPLY CHAIN
The current volatile and complex economic environment requires
efficient and cost effective processes. During the year 2010-11 your
Company has ensured timely and efficient supply of materials to run the
factories, accelerating the development of local suppliers. The
distribution of finished goods to consumers across the country
continues to be cost effective.
HUMAN RESOURCES
Your Company strongly believes that people are its assets and they are
key to drive competitive advantage. Recognising the importance of Human
Resources, all efforts have been put by your Company to ensure that
best talent is recruited, trained and retained. During the year, your
Company has put emphasis on performance driven culture and appropriate
HR tools and processes have been deployed to ensure clear linkage with
rewards.
TRADE RELATIONS
Your Company believes in fostering trust and mutual respect in employee
relations. Your Company engaged employees with trust and respect by
continuously transparently sharing information through various forums,
dialogue and other communication means. These efforts have received
excellent reciprocation from employees and in its Industrial Relations.
Your Company maintained healthy, cordial and harmonious industrial
relations at all levels. Despite severe competition, the enthusiasm and
unstinting efforts of the employees have enabled the Company to remain
at the forefront of the Industry.
Your Company continued to receive co-operation and unstinted support
from the distributors, retailers, suppliers and others associated with
the Company as its trading partners. The Directors wish to place on
record their appreciation for the same and your Company will continue
in its endeavor to build and nurture strong links with trade, based on
mutuality, respect and co-operation with each other and consistent with
consumer interest.
DIRECTORS
In accordance with Article 107 of the Articles of Association of your
Company and provisions of Section 255, 256 and other applicable
provisions, if any, of the Companies Act, 1956, Dr. N. R. Siva Swamy
and Sri K. Kannan retire by rotation and being eligible for
re-appointment. Dr. N.R. Siva Swamy offer himself for re-appointment
but Sri. K. Kannan expressed his intention not to seek re-appointment.
The vacancy in the Board caused by his resignation will not be filled
up for the time being. The members of the Board place on record their
deep sense of appreciation for services rendered by Sri K. Kannan
during his tenure as member of the Board.
During the year on the recommendation of Remuneration Committee, the
Board of Directors had recommended to the Shareholders for the
re-appointment of Sri. N. Lokesh as Executive Director of the Company
with remuneration payable of Rs. 3.35 (Rupees Three Lakhs Thirty Five
Thousand Only) Lakhs Per month (Exclusive of all perquisites) for a
period of three years w.e.f 1st July, 2011.
AUDITORS
M/s. Raju & Prasad, Chartered Accountants, Statutory Auditors of the
Company hold office until the conclusion of the ensuing Annual General
Meeting and are eligible for re-appointment. The company has received
letters from the Auditors to the effect that their re-appointment, if
made, would be within the prescribed limits under Section 224 (1B) of
the Companies Act, 1956 and that they are not disqualified for such
re-appointment within the meaning of Section 226 of the said Act.
The notes on accounts referred to in the Auditors' Report are self Ã
explanatory and therefore do not call for any further comments.
CORPORATE SOCIAL RESPONSIBILITY
The strong 19-year plus legacy of your Company has seen evolve with
much in Corporate Social Responsibility (CSR) as in business. The CSR
philosophy of your Company is embedded in its commitment to all
stakeholders, farmers, consumers, employees, the environment and the
society. Your Company believes that it is this commitment, which will
deliver competitive, profi table and sustainable growth.
Your Company has started supporting small scale Industry Producers,
through the Private Labels and encouraged them by marketing the
products through Heritage Fresh and Heritage Parlours. Sanitation,
malnutrition, water scarcity and lack of health facilities are just
some of the challenges that are facing the Indian villages. As a part
of Corporate Social Responsibility your Company has initiated some of
the activities such as sanitation, drinking water supply, health
facilities and other community development activities through the
Heritage Farmers Welfare Trust.
INTERNAL CONTROL SYSTEMS
Your Company has implemented SAP based ERP in Dairy business during the
year, which not only adds to the controls, but has led to faster
information, analysis and improved decision making.
Your Company has a well-defined and documented internal control system,
which is adequately monitored. Checks and balances and control systems
have been established to ensure that assets are safe guarded, utilized
with proper authorization and recorded in the books of account.
There is a proper definition of roles and responsibilities across the
organization to ensure information flow and monitoring. These are
supplemented by internal audit carried out by Chartered Accountant
firms. Your Company has an Audit Committee consisting of four
Directors, all of whom are independent directors. The Committee
reviews the internal audit reports, statutory audit reports, the
quarterly and annual financial statements.
PERSONNEL
Your directors would like to place on record their deep sense of
appreciation of the devoted services of the executives, staff and
workers of your Company. In terms of the provisions of Section 217(2A)
of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended from time to time, the names and
particulars of the employees are required to be set out in the Annexure
to the Directors report. Having regard to the provisions of Section 219
(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the Company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the registered office of the
Company.
DEPOSITORY SYSTEM
As the Shareholders are aware, your Company's Shares are tradable in
electronic form and the Company has established connectivity with both
the Depositories i.e. National Securities Depository Limited and
Central Depository Services (India) Limited. In view of the advantages
offered by the Depository System, the shareholders are requested to
avail the facility of dematerialization of the Company's shares.
TRANSFER OF UN-CLAIMED DIVIDEND
Pursuant to Section 205C (2) of the Companies Act, 1956 read with the
Investor Education and Protection Fund (awareness and protection of
Investors) Rules, 2001 as amended from time to time the unclaimed
dividend amount of Rs. 9,39,728 (Rupees Nine Lakhs Thirty Nine
Thousand Seven Hundred and Twenty Eight Only) for the year 2002-03 was
transferred to the Investor Education and Protection Fund during the
year and the unclaimed dividend for the year 2003-04 is due for
transfer to the fund.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits from the public during
the year.
CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO
Information required under Section 217 (1) (e) of the Companies Act,
1956 read with Rule 2 of the Companies (Disclosure of Particulars in
the Report of Board of Directors) Rules, 1988 as amended from time to
time is given in the Annexure forming part of this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis on the Industry structure,
developments, opportunities, threats and review of operational
performance and risk as required under Clause 49 of the Listing
Agreement with the Stock Exchanges forms part of the Annual Report.
CORPORATE GOVERNANCE
In compliance with the requirements of Clause 49 of the Listing
Agreement with Stock Exchanges, a separate report on Corporate
Governance along with Auditors certificate on its compliance are given
in the Annual Report.
SECRETARIAL AUDIT REPORT
In tune with your Company's belief in transparent Corporate Governance
practices, Your Company has voluntarily subjected to Audit of all its
secretarial records maintained under various statutes and rules,
regulations, bye-laws etc. made there under.
The Secretarial Audit report, given by Ms. Savita Jyoti, Practicing
Company Secretary, forms part of the Annual Report.
DIRECTOR'S RESPONSIBILITY STATEMENT
Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors
confirm that,
- In the preparation of the annual accounts, applicable accounting
standards have been followed.
- They have selected such accounting policies and applied them
consistently and made judgements 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 for that
period;
- They have taken Proper and sufficient care for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the company and for
preventing and detecting fraud and other irregularities; and
- They have prepared the annual accounts of the company on a going
concern basis.
APPRECIATION
Your Directors thank the Company's Bankers and the Financial
Institutions for their help and co-operation extended throughout the
year. Your Directors place on record their appreciation for the support
and co-operation that the Company received from its stakeholders,
customers and suppliers. Your Directors also record their appreciation
for the excellent operational performance of the staff of the Company
that contributed to the achievements of the Company. The Directors also
acknowledge with much gratitude, the continued trust and confidence
reposed by the franchises of the Company.
Your Directors look forward to the future with confidence.
For and on behalf of
HERITAGE FOODS (INDIA) LIMITED
D. SEETHARAMAIAH
Chairman
Place : Hyderabad
Date : 28th July, 2011
Mar 31, 2010
The Directors have pleasure in presenting the 18th Annual Report of
the Company together with the audited statement of accounts for the
year ended 31st March 2010.
FINANCIAL RESULTS
The financial performance for the Finanacial year 2009-10 is summarised
in the following table:
(Rupees in lakhs)
Particulars 2009-10 2008-09
Net Sales / Income from Operations 90038.47 79602.86
Add:Other Income 292.59 322.56
Less:Total Expenditure 85628.49 79925.42
Profit before Interest,Depreciation and Tax 4702.57 342.86
Less: Interest 1667.47 1458.31
Depreciation & Amortisation 1964.25 1722.43
Profit before tax 1070.85 (2837.87)
Less:Provision for current taxation 195.52 0.00
Less:Provision for deferred taxation 302.95 612.89
Less:Provision for Fringe Benefit Tax 0.00 45.02
Profit/(loss) after tax 572.38 (3495.77)
Less:Prior period expenses & taxation 12.79 65.52
Profit after prior period expenses 559.59 (3561.29)
Balance brought forward 0.00 1210.70
Amount available for appropriation 559.59 (2350.59)
Appropriations
General Reserve 50.00 0.00
Dividend 207.53 0.00
Tax on Dividend 34.47 0.00
Balance carried to Balance Sheet 267.59 (2350.59)
Total 559.59 (2350.59)
The above figures are standalone figures, as two subsidiary companies
which are yet to commence the business therefore consolidated figures
are not given.
DIVIDEND
The Board of Directors are happy to recommend a dividend of Rs. 1.80
per Equity Share (18 percent) aggregating to Rs. 2.42 Crores (including
dividend tax) for the year 2009-10. The dividend, if approved at the
forthcoming Annual General Meeting, will be paid to all eligible equity
shareholders on or after 30th July 2010(within the statutory time limit
of 30 days). The dividend pay out for the year under review has been
formulated in accordance with the Companys policy of striving to pay
stable dividend linked to performance. Your Directors believe that this
would increase shareholders value and eventually lead to a higher
return and wealth creation to all the stakeholders.
OPERATING RESULTS
During the year under review your Company registered a turnover (Net
Sales) of Rs 900.38 crores an increase of 13.11% over that of the
previous year. Your Company registered a gross profit of Rs.47.03
Crores, as compared to previous years profit of Rs 3.43 Crores.
OPERATIONS
The financial year 2009-10 was significant for the company in terms of
growth. The company has further strengthened its leadership position in
the fields of Dairy, Retail and Agri Divisions. Last half of the year
has witnessed a unexpected floods in the state of Andhra Pradesh, where
your company has substantially operation with respect to Dairy and
Retail Division and there is no material impact of the operations of
the business of the company due to floods in the state of Andhra
Pradesh during the year under review.
EQUITY SHARE CAPITAL
The Authorised Capital of the Company is Rs.20, 00,00,000 (Rupees
Twenty Crores only) divided into 1,80,00,000 (One Crore Eighty Lakhs)
Equity Shares of Rs.10 (Rupees Ten only) each and 20,00,000 (Twenty
Lakhs) Preference Shares of Rs.10 (Rupees Ten only) each. 2,60,500
convertible warrants issued/ allotted to Smt.N.Bhuvanewari and 8,00,000
convertible warrants issued / allotted to Sri Nara Lokesh were
forfeited during the year under review due to non-payment of balance
amount within the time prescribed.
BUSINESS REVIEW
Dairy Business: During the year milk and various milk products were
launched and new areas in the States of Maharastra, Kerala and Orissa
have been covered. New facilities for making various products such as
Cup curd, Doodh Peda, Paneer, Ice Cream, Ghee are added in the existing
plants. Your Companys market share with respect to milk and milk
products in South India increased during the year under review.
During the current financial year, your Company proposes to invest over
Rs.22.95 Crores for setting up of supporting facilities to improve the
performance and effective utilisation of existing installed capacities
of packing and processing plants. To increase the revenue share from
products, your Company is establishing / increasing the production
capacities for value added products and planning to tie up for UHT
packaging for Milk, Cream and Flavoured Milk.
The major thrust areas in the current financial year would be in the
domestic Dairy Ingredients, Milk Products and Ice Cream apart from
Milk. This will help your Company to diversify its product profile and
enable it to maintain its leadership position.
Retail Business: The retail industry is going through difficult time in
the country in general and with the global meltdown adversely affecting
the Indian economy In response to the difficult external environment,
your company focused on factors that are under its control viz: i)
restricting the roll out of new stores to ensure alignment with
business model ii) monitoring and control of inventory and iii)
vigorous pursuit of various cost reduction initiatives undertaken
including closure / shifting of non performing and unviable stores,
rationalising manpower in line with sales, rent/size reduction in
stores, reduction in rent/surrender of office space, brokerage and
restrictions on travel etc. All these efforts not only helped the
company in minimizing the cash burden in the short term but has built a
strong foundation to enable delivery of improved performance on
sustainable basis in the future. Your company also taken the steps to
take the advantages of Hygenic, good quality and modern bakery products
demand to met at the retail stores and outside of the retail stores
through bakery division of the company.
Private Label: Your Company is renowned for its high quality, private
label offering. This is a key driver of footfalls at Heritage retail
stores. A key focus is to further improve private label offering by
introducing new unique products. Your company is committed to
significantly increase the share of private labels of its total
business and has initiated countrywide marketing and promotional
efforts in this direction.
Brand enhancement: Your Company has the benefit of a strong 18 years
old brand which is uniquely positioned in the minds of the South Indian
consumer.
Agri Division: Your Company has undertaken custom farming activity
directly with farmers for certain fruits, vegetables and established
two pack houses and cold storage facilities, one is near Hyderabad and
the other in Chittoor District of Andhra Pradesh.
SUBSIDIARY COMPANIES
Ministry of Corporate Affairs, Government of India has granted approval
that the requirement to attach various documents in respect of
subsidiary companies, as set out in sub-section (1) of Section 212 of
the Companies Act, 1956, shall not apply to the Company. Accordingly,
the Balance Sheet, Profit and Loss Account and other documents of the
subsidiary companies are not being attached with the Balance Sheet of
the Company. Financial information of the subsidiary companies, as
required by the said approval, is disclosed in the Annual Report. The
Company will make available the Annual Accounts of the subsidiary
companies and the related detailed information to any member of the
Company who may be interested in obtaining the same. The annual
accounts of the subsidiary companies will also be kept open for
inspection at the Registered Office of the Company and that of the
respective subsidiary companies.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Clause 32 of the Listing Agreement with Stock Exchanges,
applicable provisions of the Companies Act, 1956 and as per Accounting
Standard (AS) 21, (AS) 17 and other applicable accounting standards,
Consolidated Financial Statements and the Segment Reporting for the
year ended on 31st March 2010 have been provided DIRECTORS
In accordance with Article 107 of the Articles of Association of your
Company and provisions of Section 255, 256 and other applicable
provisions, if any, of the Companies Act, 1956, Sri D.Seetharamaiah and
Sri N.P.Ramakrishna retire by rotation and being eligible, offer
themselves for re-appointment.
AUDITORS
M/s. Raju & Prasad, Chartered Accountants, Statutory Auditors of the
company hold office until the conclusion of the ensuing Annual General
Meeting and are eligible for re-appointment. The company has received
letters from the Auditors to the effect that their re- appointment, if
made, would be within the prescribed limits under section 224 (1B) of
the Companies Act, 1956 and that they are not disqualified for such
re-appointment within the meaning of Section 226 of the said act.
The notes on accounts referred to in the Auditors Report are self -
explanatory and therefore do not call for any further comments.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has co-ordinated various Community Development Activities
during the year. Your Company has organized free eye camps at various
places and has made arrangements for clean drinking water, Ready to eat
food packets, clothes etc., in flood-affected areas in the states of
Andhra Pradesh and Karnataka.
Your company created/ generated small ENTREPRENEURS through the
Heritage Parlour where the huge employment potential was generated.
Your company also helped the MARGINAL AND SMALL FARMERS cultivate in a
modern Agri format by using latest technology and cost effective under
the custom firming format. During the year your company also
established a trust for the welfare of the farmers for providing the
facilities such as education, health, drinking water and commodity
development activities. INTERNAL CONTROL SYSTEMS
The company has established a good system of internal controls in all
spheres of its activities. These have been designed to provide
reasonable assurance with regard to recording and providing reliable
financial and operational information, complying with applicable
statutes, safeguarding the assets from unauthorised uses (or losses),
executing the operations with proper authorisation and ensuring
compliance of corporate policies.
The company has also appointed Chartered Accountant firms across the
business locations to oversee and carryout internal audit of the
companys activities. The audit is based on the internal audit plan,
which is reviewed each year in consultation with the Statutory Auditors
and the Audit Committee.
The Audit committee met the Companys Statutory Auditors to ascertain
inter alia, their views on the adequacy of the internal control systems
in the company and keep the Board of Directors informed of its
observations from time to time. INDUSTRIAL RELATIONS
Industrial relations in all the units and branches remained cordial and
peaceful throughout the year.
DEPOSITORY SYSTEM
As the Shareholders are aware, your Companys Shares are tradable in
electronic form and the Company has established connectivity with both
the Depositories i.e. National Securities Depository Limited and
Central Depository Services (India) Limited. In view of the advantages
offered by the Depository System, the shareholders are requested to
avail of the facility of dematerialization of the Companys shares.
CONSERVATION OF ENERGY/TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS
AND OUTGO
The particulars required in accordance with the Companies (Disclosure
of Particulars in the Report of Board of Directors) Rules, 1988, in
respect of Conservation of Energy, Technology Absorption and Foreign
Exchange Earnings and Outgo are furnished in the prescribed format as
Annexure -1 to this report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis on the Industry structure,
developments, opportunities, threats and review of operational
performance and risk as required under clause 49 of the listing
agreement with the stock exchanges, is given as a separate statement in
the Annual Report.
TRANSFER OF UN-CLAIMED DIVIDENDS
Pursuant to section 205C (2) of the Companies Act, 1956 read with the
Investor Education and Protection Fund (awareness and protection of
Investors) Rules, 2001 the unclaimed dividend amount for the year
2001-02 was transferred to the Investor Education and Protection Fund
during the year and the unclaimed dividend for the year 2002-03 is due
for transfer in July 2010.
FIXED DEPOSITS
Your Company has not accepted any fixed deposits from the public
during the year.
CORPORATE GOVERNANCE
Our efforts are widely recognized by investors in India and overseas.
For fiscal year 2010, the compliance report is provided in the
Corporate Governance section of the Annual Report. The auditors
certificate on compliance with the mandatory provisions of Corporate
Governance is also provided in the Annual Report.
COMPLIANCE CORPORATE GOVERNANCE VOLUNTARY GUIDELINES 2009
During the year, the Ministry of Corporate Affairs, Government of
India, published the Corporate Governance Voluntary Guidelines 2009.
These Guidelines have been published keeping in view the objective of
encouraging the use of better practices through voluntary adoption,
which not only serves as a benchmark for the corporate sector but also
helps them in achieving the highest standard of corporate governance.
These guidelines provide corporate India a framework to govern
themselves voluntarily as per the highest standards of ethical and
responsible conduct of business. The Ministry hopes that adoption of
these guidelines will also translate into a much higher level of
stakeholders confidence, which is crucial to ensure the long-term
sustainability and value generation by business. The guidelines broadly
focuses on areas such as Board of Directors, responsibilities of the
Board, audit committee functions, roles and responsibilities,
appointment of auditors, Compliance with Secretarial Standards and a
mechanism for whistle blower support.
SECRETARIAL AUDIT REPORT
In tune with your Companys belief in transparent Corporate Governance
practices, Our Company has voluntarily subjected to Audit of all its
secretarial records maintained under various statutes and rules,
regulations, bye-laws etc. made there under. The
Secretarial Audit report, given by Ms. Savita Jyoti, Practicing Company
Secretary, forms part of the Annual Report.
PERSONNEL
Your directors would like to place on record their deep sense of
appreciation of the devoted services of the executives, staff and
workers of your Company. In terms of the provisions of section 217(2A)
of the Companies Act, 1956 read with the Companies (Particulars of
Employees) Rules, 1975 as amended, the names and other particulars of
the employees are required to be set out in the Annexure to the
Directors report. Having regard to the provisions of Section 219
(1)(b)(iv) of the said Act, the Annual Report excluding the aforesaid
information is being sent to all the members of the Company and others
entitled thereto. Any member interested in obtaining such particulars
may write to the Company Secretary at the registered office of the
Company.
DIRECTORS RESPONSIBILITY STATEMENT Pursuant to the requirement under
Section 217(2AA) of the Companies Act, 1956 with respect to Directors
Responsibility Statement, it is hereby confirmed that,
(i) In the preparation of the annual accounts, applicable accounting
standards have been followed.
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgements 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, 2010 and of the profit or loss of the
Company for the year ended on that date;
(iii) The Directors have taken Proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities; and
(iv) The Directors have prepared the annual accounts of the company on
a going concern basis.
ACKNOWLEDGEMENTS
Your Directors thank the Companys Bankers and the Financial
Institutions for their help and co-operation extended throughout the
year. Your Directors place on record their appreciation for the support
and co-operation that the Company received from its stakeholders,
customers and suppliers. Your Directors also record their appreciation
for the excellent operational performance of the staff of the Company
that contributed to the achievements of the Company. The Directors also
acknowledge with much gratitude, the continued trust and confidence
reposed by the franchisees of the Company.
For and on behalf of
HERITAGE FOODS (INDIA) LIMITED
Place : Hyderabad D. SEETHARAMAIAH
Date :27 May, 2010 Chairman
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