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Advanced Enzyme Technologies

BSE: 540025|NSE: ADVENZYMES|ISIN: INE837H01020|SECTOR: Pharmaceuticals
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Download Annual Report PDF Format 2016
Directors Report Year End : Mar '17    Mar 16

Dear Members,

The Directors are pleased to present 28th Annual Report of your Company along with the audited financial statements for the year ended March 31, 2017.

FINANCIAL HIGHLIGHTS

The financial performance of your Company for the financial year ended March 31, 2017 is summarized below:

(Rs, in Millions)

Particulars

Standalone

Consolidated

Year ended 31.03.2017

Year ended 31.03.2016

Year ended 31.03.2017

Year ended 31.03.2016

Revenue from operations (Gross)

1,836.89

1,485.32

3,442.10

3,044.58

Less: Excise Duty

98.86

93.91

128.51

106.96

Revenue from operations (Net)

1,738.03

1,391.41

3,313.59

2,937.62

EBIDTA

532.23

372.25

1,529.66

1,388.52

Less:

Finance charges & interest (Gross)

27.48

43.71

41.74

78.56

Amortization and Depreciation

83.74

73.85

122.09

87.19

Profit Before Tax & Exceptional Items

421.01

254.89

1,365.83

1,222.77

Exceptional Items

40.96

Profit Before Tax

421.01

254.89

1,365.83

1181.81

Less: Provision for Taxation

Current tax

84.55

54.59

455.36

363.42

Deferred tax

(4.57)

9.89

(4.75)

69.46

MAT credit entitlement

(0.90)

(18.53)

(2.38)

(18.53)

(Excess)/Short provisions for last year

6.61

-

(6.02)

(0.01)

Profit after tax (Before Minority Interest)

335.32

208.94

923.62

767.47

Share of Minority

-

-

17.13

8.97

Profit after Tax (After Minority Interest)

335.32

208.94

906.49

758.50

Surplus Brought Forward from Previous Year

1,199.19

1,015.99

2,531.92

1,820.84

Amount Available for Appropriations

1,534.51

1,199.19

3,446.14

2,531.92

Earnings Per Share (Amount in Rs,)

Basic

15.15

9.60

40.95

34.85

Diluted

15.14

9.60

40.93

34.85

RESULTS FROM OPERATIONS

Revenue - Consolidated

Your Company''s revenue from operations on consolidated basis increased to Rs,3,313.59 Million in the financial year 2016-17 from Rs,2,937.62 Million in the previous financial year, a growth rate of 12.80%. The total revenue comprises International sales amounting to Rs, 2,035.92 Million (previous year Rs, 1,867.06 Million) increased by 9.04% and Domestic sales amounting to Rs, 1,277.67 Million (previous year Rs, 1,070.56 Million) increased by 19.35%.

Your Company''s domestic sales constitutes 38.56% of revenue from operations during financial year 2016-17 as compared to 36.44% of revenue from operations during financial year 2015-16. International sales were 61.44% of revenue from operations as compared to 63.56% of revenue from operations during previous year.

Revenue - Standalone

Your Company''s revenue from operations on standalone basis increased to Rs, 1,738.03 Million from Rs, 1,391.41 Million in the previous year i.e. at a growth rate of 24.91%. The total revenue comprises of International sales of Rs, 627.93 Million (previous year Rs,471.71 Million) increased by 33.12% and Domestic sales Rs,1,110.10 Million (previous year Rs,919.70 Million) increased by 20.70%.

The domestic Sales constitutes 63.87% of revenue from operations during financial year 2016-17 as compared to 66.10% of revenue from operations during financial year 2015-16. International sales were 36.13% of revenue from operations as compared to 33.90% of revenue from operations during financial year 2015-16.

Profits - Consolidated

EBIDTA (Earnings before interest, depreciation, tax and amortization including other income) margin during financial year 2016-17 was Rs,1,529.66 Million (46.16%) as compared to Rs, 1,388.52 Million (47.27%) during financial year 2015-16, increase of about 10.17%, primarily due to increase in sales of your Company.

Profit before exceptional item and tax stood at Rs, 1,365.83 Million during financial year 2016-17 as against Rs, 1,222.77 Million in the previous year, a growth of 11.70%. Profit after exceptional items before tax was at Rs, 1,365.83 Million during financial year 2016-17 as compared to Rs, 1,181.81 Million in the previous year. Profit after tax (before minority interest) stood at Rs,923.62 Million during financial year 2016-17 as compared to Rs,767.47 Million during the financial year 2015-16, a growth of 20.35%.

Profits - Standalone

EBIDTA margin during the year under review was at Rs, 532.23 Million (30.62%) as compared to Rs, 372.25 Million (26.76%) in the previous financial year, a growth of 42.90%. Profit before tax stood at Rs,421.01 Million during financial year 2016-17 as compared to Rs,254.89 Million in the financial year 2015-16, a growth of 65.17%. Profit after tax stood at Rs,335.32 Million during financial year 2016-17 as compared to Rs, 208.94 Million during financial year 2015-16, a growth of 60.48%.

DIVIDEND

The Board of Directors in their meeting held on May 27, 2017 has recommended a final dividend @ 20% i.e. Rs, 0.40/- per equity share of face value of Rs,2/- each for the financial year ended March 31, 2017, aggregating to Rs, 44.65 Million (excluding Dividend Distribution Tax) as compared to Interim dividend @ 10% i.e. Rs, 1/- per equity share of face value of Rs, 10 each for financial year 2015-16.

The dividend payout is subject to approval of Members at 28th Annual General Meeting of your Company (Rs,AGM'').

RESERVES

During the financial year 2016-2017, the Company has not transferred any amount to the general reserves.

INITIAL PUBLIC OFFER (IPO)

During the year under review, your Company has come out with its Initial Public Offer (IPO) of 4,594,875 Equity shares of Rs, 10 each at an issue price of Rs, 896 per Equity share ( Rs, 810 per Equity share for eligible employees), consisting of fresh issue of 560,405 Equity shares and an Offer for Sale of 4,034,470 Equity shares by Selling Shareholders. The said offer was overall subscribed 82.06 times. Out of 560,405 Equity shares, 24,691 Equity shares were subscribed and allotted to eligible employees. Your Company raised a sum of Rs,499.99 Million through the IPO to invest in Equity/Debt Instruments of Advanced Enzymes USA, Inc., the wholly owned subsidiary, primarily for repayment / pre-payment of certain loans availed from Advanced Enzymes USA, Inc. The details of utilization of IPO proceeds are provided in Note no. 5 (g) of the Standalone Financial Statements of your Company forming part of this Annual report. Your Company''s equity shares were listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) on August 01, 2016 at an opening market price of '' 1,210 on both the exchanges.

SUB-DIVISION OF SHARES

The sub-division of equity shares of your Company from face value of Rs, 10/- each to face value of Rs,2/- each (Stock Split) and consequent alteration in Capital Clause of Memorandum of Association of your Company was approved by the Members on May 04, 2017, through Postal Ballot.

The ''Record Date'' for the purpose of ascertaining the Members entitled to receive the said sub-divided equity shares of the Company was fixed by the Board of Directors of your Company as ''May 26, 2017''. Subsequently, your Company has issued five (5) sub-divided equity shares of Rs,2/- each in lieu of one (1) equity share of Rs, 10/- each to the eligible Members of the Company. In case of Members holding equity shares of your Company in physical form, the Company, without requiring the surrender of old share certificate(s), has directly issued and dispatched the new share certificate(s) of the Company for the sub-divided equity shares of Rs, 2/- each. The said new share certificate(s) were issued in lieu of the old share certificate(s), which were deemed to have been automatically cancelled and be of no effect. In the case of equity shares of the Company held in dematerialized form, the sub-divided equity shares have been duly credited to the respective beneficiary accounts of the Members with the respective Depository Participants, as per the existing credits representing the equity shares of the Company.

In view of the aforesaid Stock Split, the number of equity shares of your Company and price of underlying equity share in the stock markets has been correspondingly adjusted by the Stock Exchanges, where the Company''s shares are listed (i.e. BSE and NSE).

The details of the Authorized and Paid-up share capital of the Company (pre & post Stock Split) is as follows:

Particulars

Authorized Capital

Paid - up Capital

No. of shares

Amount ('')

No. of shares

Amount ('')

Pre Stock Split

3,50,00,000

35,00,00,000

2,23,26,005

22,32,60,050

Post Stock Split

17,50,00,000

35,00,00,000

11,16,30,025

22,32,60,050

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated financial statements of the Company are prepared in accordance with the provisions of Section 129 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (as amended from time to time) and forms part of this Annual Report.

SUBSIDIARIES

During the year under review, your Company acquired 1,43,10,000 equity shares at Rs, 35/- per share of JC Biotech Private Limited (JCB), aggregating to Rs,50,08,50,000, 70% of the paid-up share capital of JCB. In view of this JCB became subsidiary with effect from December 1, 2016.

Following are the subsidiaries of your Company as on March 31, 2017:

1. Advanced Bio-Agro Tech Limited, India (60%);

2. Advanced EnzyTech Solutions Limited, India (100%);

3. JC Biotech Private Limited, India (70%) [with effect from December 01, 2016];

4. Advanced Enzymes Inc., USA (100%);

5. Advanced Supplementary Technologies Corporation (Subsidiary of Advanced Enzymes USA);

6. Cal-India Foods International Inc. (doing business as Specialty Enzymes and Biotechnologies) (Subsidiary of Advanced Enzymes USA);

7. Dynamic Enzymes, Inc. (Subsidiary of Advanced Enzymes USA);

8. Enzyfuel Innovation Inc. (Subsidiary of Advanced Enzymes USA); and

9. Enzyme Innovation, Inc. (Subsidiary of Cal-India Foods International, Step-down subsidiary of Advanced Enzymes USA).

During the year under review, no company has become or ceased to be a subsidiary, joint venture entity or associate entity except as mentioned above.

The individual financial statements and other reports of the Company''s Subsidiaries have not been attached to the financial statements of the Company for the financial year 2016-17. Any Member seeking information on the annual financial statements of the Company''s Subsidiaries may write to the Company Secretary at the registered office of the Company. The financial statements of the Company''s Subsidiaries will be kept open for inspection at the registered office of the Company, from 11.00 a.m. to 3.00 p.m. on all working days, except Saturdays and Sundays, up to the date of the 28th AGM of the Company.

A separate statement containing the salient features of the financial performance of subsidiaries in the prescribed form AOC-1 is annexed to the Directors'' Report as Annexure I and forms part of this report. The Audited Consolidated financial statements together with Auditors'' Report form part of the Annual Report.

Breif on operations of the Subsidiaries (including date of the incorporation / acquisition) is provided in Management Discussion and Analysis Section and forms part of this report.

INVESTMENTS / ACQUISITIONS

Your Directors are pleased to inform on the material updates, post the end of the financial year under review.

(a) Investment in Advanced Biodiesel Limited:

The Board of Directors of your Company has approved the investment to be made in Advanced Biodiesel Limited [CIN: U74999MH2017PLC291474] (ABL) with the objective to scale up and demonstrate the use / application of Company''s products (i.e. enzymes) in the manufacturing of Biodiesel and thereby expand business. ABL is yet to commence its operations; i.e. manufacturing of biodiesel using enzymatic route.

The investment of your Company in ABL shall be way of acquiring / subscribing, in one or more tranches, up to 15% of paid up share capital of ABL for an amount not exceeding Rs,37,500,000/- (Rupees Thirty Seven Million Five Hundred Thousand). Investment by your Company in ABL will be made in a phased manner and is expected to be completed in a period of 18 months effective April 2017. The contemplated investment in ABL, being a related party transaction, will be done at face value of equity shares as it''s a new company and is on arm''s length basis.

(b) Investment / Acquisition of Advanced Enzymes (Malaysia) Sdn Bhd [erstwhile Palm Techno Ventures Enzyme Sdn Bhd], Malaysia:

Your Company has completed the acquisition of 80% shareholding of Advanced Enzymes (Malaysia) Sdn Bhd (AEM), Malyasia, by way of subscription to 200,000 equity shares at its face value of MYR 1/- each (i.e. Malaysian Ringgit) of AEM on July 03,2017. In view of this, AEM has become subsidiary of your Company on the said date. The primary purpose of the acquisition of AEM is expansion of business of your Company in Malaysian market. AEM shall be engaged in the business of supplying and providing enzyme based solutions for extraction of palm oil from palm fruits.

(c) Incorporation of wholly owned subsidiary in Netherlands:

Pursuant to the approval of the Board of Directors, your Company has completed the incorporation of a wholly owned subsidiary in Netherlands (i.e. Advanced Enzymes Europe B.V.) on July 11, 2017, mainly to expand your Company''s Business in European Market.

(d) Binding agreement to acquire shares of evoxx technologies GmbH:

Your Company''s wholly owned subsidiary, Advanced Enzymes Europe BV has entered into a binding agreement on July 26, 2017 with Germany based evoxx technologies GmbH, to acquire its 100% stake for a consideration of € 7.65 Million. The acquisition is expected to close by mid of August 2017. On completion of this acquisition, evoxx would become a step down subsidiary (100%) of your Company.

evoxx technologies GmbH (''Evoxx'') is an industrial biotech company focused on the development & production of industrial enzymes and few specialized carbohydrates for nutritional applications. Evoxx has a team of more than 35 scientists & technicians across its two sites in Germany.

The acquisition would give your Company a stronger foothold in Germany and in Europe, and would also help strengthen Research & Development capabilities.

The other details for the aforementioned Investments are provided on the website of the Company at www.advancedenzymes.com/investors-other-compliances.aspx

MANAGEMENT DISCUSSION AND ANALYSIS

A detailed review of the operations, performance and future outlook of your Company, its businesses and subsidiaries business are given in the Management Discussion and Analysis, and forms a part of this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134 of the Companies Act 2013, (Act) your Directors confirm that:

a. in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. appropriate accounting policies have been selected and applied consistently and judgments and estimates are made reasonably and prudently so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit of the Company for the year ended on that date;

c. Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual accounts have been prepared on a ''going concern'' basis;

e. Proper internal financial controls are devised and laid down to ensure compliance with all the provisions of the applicable laws and that such internal financial controls are adequate and are operating effectively; and

f. Proper systems are devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

RISK MANAGEMENT

Your Company understands that controlling risks through a formal programme is necessary for the well-being of your Company. Your Company has adopted a formal Risk Management policy whereby risks are broadly categorized into Strategic, Operational, Compliance, Financial & Cyber Risks etc. The Policy initially has outlined the broad based parameters of identification, assessment, monitoring and mitigation of various risks

Your Company has initiated the process of transition to an Integrated Enterprise Risk Management, Internal Controls Management and Assurance Frameworks and processes to drive a common integrated view of risks, optimal risk mitigation responses and efficient management of internal control and assurance activities.

RELATED PARTY TRANSACTIONS

During the financial year 2016-17, the transactions entered with related parties, as defined under the Companies Act, 2013 and provisions of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 were in the ordinary course of business and on an arm''s length basis. Approval of the Audit Committee and Board of Directors has been obtained by the Company for Related party transactions of the Company, as per the provisions of the Companies Act, 2013. A quarterly update has been provided to the Audit Committee and the Board of Directors on the Related Party Transactions undertaken by the Company for their review. Approval of the Members of the Company is also obtained in case any related party transaction exceeds the prescribed limits.

The Policy on materiality of Related Party Transactions and dealing with related party transactions, as approved by the Board, is available on the Company''s website and can be accessed at www.advancedenzymes.com/investors-codes-policies.aspx

As prescribed by Section 134 (3) (h) of the Companies Act, 2013 read with Rule 8 (2) of the Companies (Account) Rules, 2014, particulars of contracts/arrangements with related parties are given in Form AOC-2, annexed as Annexure II to this report.

TRANSFER TO UNPAID DIVIDEND ACCOUNT

Unclaimed dividend of '' 28,280 pertaining to financial year 2009-10 has been transferred by your Company to the Investor Education and Protection Fund (IEPF), as required under the Companies Act, 2013 and rules made there under. Details of unclaimed dividend due for transfer are provided in the Notes to Notice for 28th Annual General Meeting of the Company (AGM) and in the Corporate Governance Report which forms part of this report.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act, 2013, your Company had constituted the Corporate Social Responsibility Committee.

The Annual Report on Corporate Social Responsibility Activities have been provided in Annexure-III and forms part of this report. The Composition of CSR Committee is disclosed in the said Annual Report on CSR Activities.

The Corporate Social Responsibility Policy may be accessed on the Company''s website at www.advancedenzymes.com/investors-codes-policies.aspx.

CHANGE IN DIRECTORS AND KEY MANAGERIAL PERSONNEL Directors:

During the financial year 2016-17, there has been change in the composition of Board and Key Managerial Personnel of your Company. During the year under review, Mr. Pradip Bhailal Shah and Mr. K.V. Ramakrishna ceased to be Directors of the Company w.e.f. September 15, 2016. Further, Mr. Pramod Kasat has been inducted as an Additional Director (Independent Director) on the Board with effect from December 14, 2016, to hold the office till the date of 28th agm. Notice under section 160 of the Companies Act, 2013 has been received by your Company proposing candidature of Mr. Pramod Kasat for the office of Independent Director of the Company for a period of five years with effect from December 14, 2016. The Board recommends the Ordinary resolution for the said appointment of Mr. Pramod Kasat as an Independent Director in item 7 of AGM Notice.

The present term of Mr. Mukund Kabra as Whole-time Director of the Company ended on March 31, 2017. Accordingly, based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors has approved his re-appointment as the Whole-time Director (& Key Managerial Personnel ) of the Company for a period of five years effective from April 01, 2017, subject to approval of the Members at this 28th agm. The Board recommends the Special Resolution for the said re-appointment of Mr. Mukund Kabra as Whole-time Director in item 8 of AGM Notice.

Mr. Vasant Rathi, the existing Non -Executive Promoter Director of the Company has been appointed as Chairman with effect from March 25, 2017 in place of Mr. Kedar Desai. Mr. Kedar Desai continues to be the Independent Director of the Company.

Key Managerial Personnel:

Mr. Sanjay Basantani has been appointed as Company Secretary and Head-Legal with effect from February 14, 2017. Mr. Sanjay Basantani is a qualified Company Secretary, a member of Institute of Company Secretaries of India (ICSI) and has also completed L.L.B. from Mumbai University. Further, Mr. Prabal Bordiya the then Company Secretary has been deputed as a Company Secretary of JC Biotech Private Limited, subsidiary company, and ceased to be Company Secretary of Advanced Enzyme Technologies Limited with effect from February 13, 2017.

RETIRE BY ROTATION

Mr. Vasant Rathi, Chairman (Director) who is liable to retire by rotation at the AGM, and being eligible, offers himself for re-appointment. The Board of Directors, therefore, recommends his re-appointment as Director of the Company.

DECLARATION BY THE INDEPENDENT DIRECTORS

During the year under review, declarations were received from all Independent Directors of the Company that they satisfy the ''criteria of Independence'' as defined under Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) and Section 149(6) of the Companies Act, 2013 read with Schedule IV and the relevant Rules made there under.

AUDITORS AND AUDITORS'' REPORT

Pursuant to provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (as amended), BSR & CO LLP, Chartered Accountants (BSR) were appointed as Statutory Auditors for a term of five years to hold office from the conclusion of 27th Annual General Meeting up to the conclusion of the 32nd Annual General Meeting, subject to ratification at every Annual General Meeting.

In view of the above, the approval of Members is being sought for ratification of appointment of BSR as Statutory Auditors of the Company and to fix their remuneration.

The Auditors'' Report to the Members on the Financial Statements of the Company for the year ended March 31, 2017 does not contain any qualification, reservation or adverse remark.

CORPORATE GOVERNANCE REPORT

The Report on Corporate Governance and the Certificate of the Auditors of the Company regarding compliance of the conditions of Corporate Governance as stipulated in Part C of Schedule V of SEBI Listing Regulations, 2015, are enclosed as Annexure VII. A declaration signed by the Managing Director in regard to compliance with the Code of Conduct by the members of the Board and Senior Management Personnel also forms part of this Report.

SECRETARIAL AUDITOR

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, the Company has appointed Mr. Shiv Hari Jalan, Company Secretary (FCS No. 5703; C.P.No.4226) to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2016-17 is annexed as Annexure - VIII and forms an integral part of this Report.

The Secretarial Audit Report for the year ended March 31, 2017 does not contain any qualification, reservation or adverse remark.

COMMITTEES OF THE BOARD

Currently, the Board has mainly five committees viz., the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee and Transfer Committee. Consequent to the resignation of Mr. K. V. Ramakrishna from the directorship of Company w.e.f. September 15, 2016, the Committees were reconstituted. The details of the composition of these Committees are provided in the Corporate Governance Report and form part of this Report.

VIGIL MECHANISM

The Board had adopted Whistle Blower Policy / Vigil Mechanism Policy pursuant to the provisions of Section 177(9) of the Companies Act, 2013 and the Companies (Meetings of Board and Its Powers) Rules, 2014 and Regulation 22 of SEBI Listing Regulations. Details on the Vigil Mechanism of your Company have been outlined in Corporate Governance Report which forms part of this Report.

The Vigil Mechanism Policy may be accessed on your Company''s Website at: www.advancedenzymes.com/investors-codes-policies.aspx.

MEETINGS OF THE BOARD

During the year, seven meetings of the Board of Directors were held. The requisite details of the Board Meetings and the details of the Directors present are provided in the Corporate Governance Report, which forms part of this Report.

EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEES AND OF DIRECTORS:

Pursuant to the provisions of the Companies Act, 2013 and SEBI Listing Regulations, the Board of Directors has undertaken an annual evaluation of its own performance, its various Committees and individual directors. The manner in which the performance evaluation has been carried out has been given in detail in the Corporate Governance Report, annexed to this Report.

The Board Evaluation policy can be accessed on your Company''s website at: www.advancedenzymes.com/investors-codes-policies.aspx.

We affirm that the remuneration paid to the Directors is as per the terms laid out in the Nomination and Remuneration

Policy of the Company.

FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS

Pursuant to provisions of Regulation 25(7) of the SEBI Listing Regulations, the detail of familiarization program is available at website of your Company at www.advancedenzymes.com/investors-codes-policies.aspx. Further, at the time of the appointment of an Independent Director, the Company issues a Letter of appointment outlining his / her role, function, duties and responsibilities. The format of the letter of appointment is available on our website at www.advancedenzymes.com/investors-appointment-letter.aspx.

CODE OF CONDUCT FOR PROHIBITION OF INSIDER TRADING

Your Company has in place a Code of Conduct for Prohibition of Insider Trading, which lays down the process of trading in securities of the Company by the designated employees and the connected persons and to regulate, monitor and report trading by the employees and the connected persons of your Company either on his/her own behalf or on behalf of any other person, on the basis of unpublished price sensitive information.

The aforementioned Code is available on the website of your Company at: www.advancedenzymes.com/investors-codes-policies.aspx.

INTERNAL CONTROL AND ITS ADEQUACY

Your Company has adopted procedures and systems for ensuring the orderly and efficient conduct of its business, including adherence to the 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 disclosures. Your Company maintains appropriate and adequate Internal Control Systems / Internal Financial Controls commensurate to its size and nature of operations. Your Company''s Internal control systems are tested and certified by the Internal Auditors and Statutory Auditors of the Company.

The Audit Committee periodically reviews the report(s) of the independent Internal Auditors along with the adequacy and effectiveness of Internal Control systems.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and its future operations.

CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in business and in the nature of business of your Company during the year under review.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN AND SECURITIES PROVIDED

The details of loans and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014, for the financial year 2016-17 are given in the standalone financial statements (Please refer to Note 14 and 15 to the standalone financial statements). Your Company has not provided any guarantee or security under Section 186 of the Companies Act, 2013 during the financial year 2016-17.

EXTRACT OF ANNUAL RETURN

Extract of Annual Return of the Company in Form MGT-9 is annexed herewith as ANNEXURE IV to this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in ANNEXURE V and forms part of this Report.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to with Section 197(12) of the Act read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is disclosed in ANNEXURE IX to this report.

The statement containing particulars of remuneration of employees as required under section 197(12) of the Act, read with the Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in an Annexure X to the Annual Report. In terms of section 136(1) of the Act, the Annual Report is being sent to the Members excluding the said Annexure X. However, this Annexure is available for inspection by the Members at the Registered office of the Company during business hours on all working days except Saturdays and Sundays up to the date of the AGM. Any Member desirous of obtaining a copy of the said Annexure may write to the Company Secretary of the Registered office address of your Company.

FIXED DEPOSIT

Your Company did not invite or accept deposits covered under Chapter V of the Companies Act, 2013 and there are no such deposits outstanding with the Company.

CREDIT RATING

During the year under review, your Company has received the rating of CRISIL A/Stable for outstanding Bank facilities (outstanding facilities), by Credit Rating Information Services of India Limited (CRISIL).

EMPLOYEES STOCK OPTION PLAN

The details of Employees Stock Option Scheme 2015 [ as amended] (ESOP 2015) and Employees Incentive Plan 2017 (Plan 2017) are provided in Annexure VI and forms part of this Report. The said details are also published on the website of the Company at www.advancedenzymes.com/investors-codes-policies.aspx

ESOP 2015:

During the year under review, your Company has granted 44,000 Stock Options to all its eligible employees under ESOP 2015.

Plan 2017:

The Members of the Company has also approved the AETL Employees Incentive Plan 2017 (Plan 2017) through trust route and related matters on May 4, 2017 through a Postal Ballot. Your Company has received In-Principle approval from BSE Limited and National Stock Exchange of India Limited. As on the date of this report, no Stock Options / Stock Appreciation Rights have been granted under the Plan 2017.

ESOP 2015 and Plan 2017 are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2014, Companies Act, 2013 and SEBI Listing Regulations (as amended from time to time).

ESOP 2015 and Plan 2017 are published on the website of your Company at: www.advancedenzymes.com/investors-codes-policies.aspx

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a. Neither the Managing Director nor the Whole-time Directors of your Company receive any remuneration or commission from any of its subsidiaries.

b. Your Company has not issued shares with differential rights as to dividend, voting or otherwise.

c. Your Company has also devised a policy on Prevention of Sexual Harassment, as per the provision of the Sexual Harassment Of Women at Workplace (Prevention, Prohibiton and Redressal) Act, 2013. The said Policy is hosted on Company''s website at www.advancedenzymes.com/investors-codes-policies.aspx.

There were no cases / grievances reported or pending during the year under review.

ACKNOWLEDGMENTS

Your Directors acknowledge with gratitude the support received by your Company from the Banks, Government Agencies/ organizations and employees of the organization.

Your Directors also acknowledge with thanks the faith reposed by the investors in the Company and look forward to their continued support for times to come.

For and on behalf of the Board of Directors of

Advanced Enzyme Technologies Limited

Vasant Rathi Chairman

DIN: 01233447

Thane, August 09, 2017

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