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Hatsun Agro Products Ltd.

BSE: 531531 | NSE: HATSUN |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE473B01035 | SECTOR: Food Processing

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Annual Report

For Year :
2018 2017 2016 2015 2013 2012 2011 2010 2009

Director’s Report

To the Members,

The Directors have great pleasure in presenting their 33rd Report along with the audited financial statements for the financial year ended March 31, 2018.

FINANCIAL RESULTS

Your Company has adopted the Indian Accounting Standards (IND AS) as applicable with effect from April 1, 2017 and the financials for the year ended 31st March 2018 have been prepared in accordance with the recognition and measurement principles as laid down under IND AS and in accordance with Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 together with the comparative period data as at and for the year ended 31st March 2017.

The financial results of the Company for the year ended 31st March, 2018 are summarised below:

(Rs. In Lakhs)

PARTICULARS

CURRENT YEAR ENDED 31st MARCH, 2018

PREVIOUS YEAR ENDED 31st MARCH, 2017

Revenue from Operations (net)

4,28,980

4,20,541

Other Income

831

678

Total Income

4,29,811

4,21,219

Operating Expenditure

3,91,815

3,82,740

Profit before Interest, Depreciation and Amortisation and Tax (PBDIT)

37,996

38,479

Finance Costs (net)

8,764

7,020

Depreciation and Amortisation

17,364

14,287

Profit before Taxes

11,868

17,172

Tax Expenses

2,579

3,783

Income tax pertaining to earlier years

205

(150)

Net Profit for the Year

9,084

13,539

Balance Brought Forward from Previous Year

21,319

9,681

Amount Available for Appropriation

30,403

23,220

Appropriations

Interim Dividends on Equity Shares

6058

1522

Tax on Dividends

1267

310

Transfer to General Reserve

-

-

Balance carried to Balance Sheet

23,078

21,388

PERFORMANCE OF THE COMPANY

During the year, your Company registered a total income of Rs.4,29,811 Lakhs representing an increase of 2.04 % over that of the previous year. The PBDIT has marginally reduced from Rs.38,479 Lakhs (FY 2016-2017) to Rs.37,996 Lakhs (FY 2017-2018) owing to increase in the cost of materials and other overheads. The net profit during the year was Rs.9,084 Lakhs in comparison with previous year which stood at Rs.13,539 Lakhs.

DIVIDEND

During the year, your Company on 13th July 2017 has declared and paid first interim dividend of Rs. 1/- per equity share and on 21st May 2018, has declared and paid second interim dividend of Rs. 3.00/- per equity share thereby totalling to 400% on equity share capital. The cash outflow on account of first interim dividend excluding dividend tax for the year 2017-18, aggregated to Rs.1,522 Lakhs and the cash outflow on account of second interim dividend for the year 2017-18 excluding dividend tax aggregated to Rs.4,565 Lakhs thereby resulting in a total payout of 67% of the net profits of the Company.

During the year 2017-18, an amount of Rs.2,57,034/- being unclaimed dividend pertaining to the financial years 2009-10 (Interim dividend), 2010-11 (First Interim dividend) and 2010-11 (Second Interim dividend) was transferred to Investor Education & Protection Fund (IE&PF).

SHARE CAPITAL

During the year, the share capital of the company as of 31st March 2018 stood at 15,21,68,307 equity shares of Rs.1 each totalling to Rs.15,21,68,307.

RIGHTS ISSUE

During the year, on 6th December 2017, the Board of Directors approved raising funds for the Company by way of issue of securities (the “Issue”) to the existing equity shareholders of the Company on a rights basis aggregating up to Rs.900 Crores.

Subsequently on 21st May 2018, the Board of Directors decided to Issue 1 (one) partly paid Equity Shares for every 16 (Sixteen) fully paid equity shares aggregating to 95,10,519 partly paid up equity shares (the “Issue”) of face value of Rs.1 each for cash at a price of Rs.555 (including a premium of Rs.554) per equity share (“Rights Equity Shares”) for an amount aggregating to Rs.52,783.38 Lakhs on a rights basis to the Eligible Equity Shareholders of the Company as on the record date of 1st June 2018.

With the final approval from SEBI the Issue was opened for the Eligible Equity Shareholders from June 14, 2018 to July 05, 2018 and the basis of allotment was decided on July 11, 2018 in consultation with BSE Limited, the designated Stock Exchange.

The Board allotted 95,10,519 partly paid equity shares on July 12, 2018 to the Shareholders of the Company as on the record date fixed for the purpose of Rights Issue and further obtained the listing approvals from BSE Limited and National Stock Exchange of India Limited on July 13, 2018 and July 16, 2018 respectively

TRANSFER TO RESERVES

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

FINANCE

The total borrowings as increased from Rs.91,928.85 Lakhs to Rs.1,29,895.46 Lakhs on account of increased Capex expenditure to meet the growing needs of your Company. In addition, we believe that the leverage capacity of our Company will improve our ability to raise further resources in the future to fund potential business development opportunities and plans to grow and expand our business.

The Company continues to focus on judicious management of its working capital and has taken care to ensure that the Company’s borrowings are obtained at very competitive rates. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public, outstanding and unclaimed as at 31st March, 2018, was Rs. 1.53 Lakhs out of which a sum of Rs.0.92 Lakhs represents three accounts of Fixed/Non Cumulative Deposits and Rs.0.61 Lakhs represents two accounts of Cumulative Deposits.

(a) Accepted during the Year

NIL

(b) Remained unpaid or unclaimed as at the end of the year. (Including interest thereon)

Principal - Rs. 1.53 Lakhs

Interest - Rs.0.15 Lakhs

Total - Rs. 1.68 Lakhs

((c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved:

i. As at 1st April, 2017

ii. Maximum during During April, 2017 to March, 2018

iii. As at 31st March, 2018

No deposits have been accepted by the Company during the year and there did not arise any default during the year.

NIL

NIL

NIL

d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act

NIL

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Particulars of investments covered under Section 186 forms part of the notes on financial statements provided in this Annual Report.

BOARD’S APPRECIATION TO MR. N. CHANDRASEKARAN, ERSTWHILE INDEPENDENT DIRECTOR OF THE COMPANY

Your Board wishes to record its appreciation in this report for the association and support rendered by Mr. N. Chandrasekaran during his tenure as Independent Director who resigned from his said position with effect from 31st March 2018 to pursue his personal ambitions and devote more time for other activities.

Mr. N. Chandrasekaran had served the Board as Independent Director of the Company and has been an active member of the Audit Committee.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments and Resignations

During the year under review, Mr. N. Chandrasekaran resigned from his position as Independent Director of the Company with effect from 31st March 2018.

RE-APPOINTMENTS

As per provisions of the Companies Act, 2013, Shri. R. G. Chandramogan is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors recommends his re-appointment.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the financial year ended March 31, 2018.

UPDATE ON SETTLEMENT COMMISSION

With respect to filing of application for Settlement of Cases under Income Tax Act, 1961 with the Settlement Commission relating to the claim for deduction under Section 80 IB of Income Tax Act, 1961 the Assistant Commissioner of Income Tax had issued the Orders dated 30th November 2017 giving effect to the Order of the Settlement Commission working out the tax liability/refund for all Assessment Years from 2008-09 to 2014-15, arising out of the Order of the Hon’ble Settlement Commission. The net tax liability as per the Orders after adjusting refunds worked out to Rs.2,07,54,472/- (Rupees Two Crores Seven Lakhs Fifty Four Thousand Four Hundred and Seventy Two Only) which was remitted to the Income Tax Authorities during the year.

BUSINESS RESPONSIBILITY REPORT

Your Company being among the top 500 entities based on market capitalisation has to present the Business Responsibility Report as required under Regulation 34 (2) (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Business Responsibility Report forming part of this Annual Report elaborates on principles as prescribed by SEBI vide its Circular CIR/CFD/CMD/10/2015 dated November 04, 2015.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year seven (7) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.

The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

BOARD COMMITTEES

The primary four committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee and Corporate Social Responsibility Committee. Other than the above said primary committees, the Board also has the following additional committees viz., Sub-Committee, Share Transfer Committee, Risk Management Committee, Core Committee and Rights Issue Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of this Board’s Report. The composition of the Primary Committees and their meeting dates are given below:

NAME OF THE COMMITTEE

COMPOSITION

DETAILS OF MEETINGS HELD DURING THE YEAR

Audit Committee

With the resignation of Mr. N. Chandrasekaran, Independent Director, the Committee which earlier had five Non-Executive Independent Directors now comprise of four Non-Executive Independent Directors. The Chairman of the Committee is an Independent Director.

Five meetings were held during the year on the following dates:-27th May, 2017,

13thJuly, 2017 16th October, 2017 16th January, 2018 31st March, 2018

Nomination and Remuneration Committee

With the resignation of Mr. N. Chandrasekaran, Independent Director, the Committee which earlier had five Non-Executive Independent Directors now comprise of four Non-Executive Independent Directors. The Chairman of the Committee is an Independent Director.

One meeting was held during the year on the following date:-31st March 2018

Stakeholders’ Relationship Committee

With the resignation of Mr. N. Chandrasekaran, Independent Director the Committee which earlier had five Non-Executive Independent Directors and one Non-Executive and Non Independent Director now comprise of four Non-Executive Independent Directors and one Non-Executive and Non Independent Director. The Chairman of the Committee is an Independent Director

Four meetings were held during the year on the following dates:-13thJuly, 2017 16th October, 2017 16th January, 2018 31st March, 2018

Corporate Social Responsibility Committee

The Committee comprises of one Executive Director, one Non-Executive Independent Director and one Non-Executive and Non Independent Director. The Chairman of the Committee is an Independent Director

One meeting was held during the year on following date:-31st March, 2018

Details of recommendations of Audit Committee which were not accepted by the board along with reasons

The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried out the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations unaccepted by the Board of Directors of the Company during the year under review.

DETAILS OF POLICIES DEVELOPED BY THE COMPANY (I) Nomination and Remuneration Policy

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable Rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The objective of this policy is to ensure:

- The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

- Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

- Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance with short and long-term performance objectives appropriate to the working of the company and its goals

This policy is being governed by the Nomination and Remuneration Committee comprising of members of the Board, as stated above, comprising of four Independent Directors, The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors and Key Management Personnel, Salient features of the Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report. The detailed policy is hosted on the website of the Company and the weblink for same is httpV/www.hap.in/mvestors-poliaes.htmL

AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF THE COMPANY

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. This policy governs the criteria for deciding the remuneration for Directors and Key Management Personnel. It is affirmed that the remuneration to Directors and Key Management Personnel is being fixed based on the criteria and parameters mentioned in above mentioned policy of the Company.

BOARD DIVERSITY

The Company recognises and values the importance of a diverse board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

(II) CORPORATE SOCIAL RESPONSIBILITY POLICY (CSR)

Your Company recognises that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organisations.

Your Company endeavours to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Your Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of members of the Board, as stated above, and the Chairman of the Committee is Non-Executive and Independent Director. The said Committee has formulated and approved the CSR policy for the Company with its major focus on:-

- Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring.

- Make sustainable contributions to communities.

- Identify socio-economic opportunities to perform CSR activities.

- Focus on social welfare activities as envisaged in Schedule VII of Companies Act, 2013.

The Policy also focuses on the constitution of CSR Committee, roles and responsibilities of CSR Committee, CSR activities to be undertaken and allocation of funds for carrying out such CSR activities, implementation and monitoring the execution of CSR activities for the Company. The CSR Committee shall recommend to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of Companies Act, 2013. Annual Report on CSR activities as required under the provisions of Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

(III) RISK MANAGEMENT POLICY

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management. The Company has formed a Risk Management Committee comprising of three members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimising the risk and monitor the risk management for the Company.

The policy broadly defines the scope of the Risk Management Committee which comprises of:-

- Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company.

- Ensuring that the Company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

- Evaluating significant risk exposures of the Company and assess management’s actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as business continuity planning and disaster recovery planning & testing).

- Co-ordinating its activities with the Audit Committee in instances where there is any overlap with audit activities (e.g. internal or external audit issue relating to risk management policy or practice).

- Reporting and making regular recommendations to the Board.

(IV) WHISTLE-BLOWER POLICY - VIGIL MECHANISM

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle-Blower) mechanism provides a channel to the Employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or Policy. The mechanism provides for adequate safeguards against victimisation of employees and directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle-Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place/suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy. The Managing Director is also empowered to bring about necessary changes to this Policy, if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances

(V) DIVIDEND DISTRIBUTION POLICY

According to the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended, your company falling under top 500 listed entities based on the market capitalisation (calculated as on March 31 of every financial year) has framed the Dividend Distribution Policy which is attached in this Annual Report marked as Annexure E.

EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non-Executive and Independent Directors is being conducted through a survey which contains a questionnaire capturing each Board and Committee Member’s response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. The methodology adopted by each Director who responded to the survey has graded their peers against each survey item from P1 to P3 with P1 marking the lower efficiency and P3 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and Committee as a whole.

The Independent Directors evaluation was done with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., active participation in strategic planning, fiduciary responsibilities, participation in Board and Committee meetings, etc.

Apart from the above, the performance of Non Independent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in bona fide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company was also carried out to evaluate their performance.

The performance evaluation of the Non Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of the Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any businesses of the Board during their Meetings and addressed them at the best interest of the Company.

As per the SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2018/79 dated 10 th May 2018, the followings details are being provided on Board evaluation.

Observations of board evaluation carried out for the year

There were no observations arising out of board evaluation during the year as the evaluation indicates that the Board has functioned effectively within its powers as enumerated under Companies Act, 2013 and in consonance with the Articles of Association of the Company.

Previous year’s observations and actions taken.

There were no observations during the previous year.

Proposed actions based on current year observations.

As there were no observations, the action to be taken does not arise.

TRAINING AND FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Every Independent Director on being inducted into the Board attends an orientation program. To familiarise the new directors with the strategy, operations and functions of our Company, the Executive Directors/ Senior Managerial Personnel make presentations to the inductees about the Company’s strategy, operations, product offerings, organisation structure, human resources, technologies, facilities and risk management. Further, at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation program for Independent Directors is hosted on the website of the Company and the weblink for same is http:/ /www.hap.in/investors-policies.html

COMPLIANCE WITH SECRETARIAL STANDARDS The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, have been duly followed by the Company.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR.

Your Company has no subsidiaries, joint ventures or associate companies and hence the disclosure does not arise.

AUDITORS

Statutory Auditors

At the Annual General Meeting held on 24thJuly 2017, M/s. Deloittc Haskin & Sells, Chartered Accountants, (Firm Registration number 117366W /W100018) were appointed as Statutory Auditors of the Company to hold office till the conclusion of Thirty Seventh Annual General Meeting of the Company to be held in the calendar year 2022. The Company has received a certificate from the Auditors to the effect they are not disqualified to continue as Auditors of the Company.

The Notes on financial statement referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation, adverse remark or disclaimer.

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 Company has appointed Mr. S. Dhanapal, Senior Partner, M/s. S. Dhanapal & Associates, a firm of Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2017-2018 is annexed herewith marked as Annexure C and forms part of this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Cost Auditor

Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read with sub section (3) of Section 148 of the Companies Act, 2013, the Company has appointed M/s. Ramachandran & Associates, Cost Auditors (Firm Registration No.000799) as Cost Auditor of the Company to conduct the audit of the cost accounting records maintained by the Company relating to those products as mandated by the Companies Act, 2013 and the Companies (Cost records and audit) Rules, 2014 as amended in respect of all the units of the Company for the financial years 2018-19.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Details as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) Details of top ten employees in terms of remuneration drawn*:

Name of the employee

Designation of the employee

Remuneration received (Amount in Rs. Per- annum)

Nature of employment, whether contractual or otherwise

Qualifications and experience of the employee

Age of such employee

Last employment held by such employee before joining the company

Percentage of Equity Shares held by the employee in the Company by himself or along with his spouse and dependent children, being not less than two percent of the Equity Shares of the Company

Whether any such employee is a relative of any Director or Manager of the Company and if so, name of such Director or Manager.

John Henry Ne,ize,nt

SPECIALIST -DAIRY’ HERD DEVELOPMENT

74,18,712

Permanent

PHD in Agronomy/Paras-itology /Nutrition

57

Brownes Dairy

Nil

None

Ramachandran H.

CHIEF FINANCIAL OFFICER

56,40,939

Permanent

AICWA, ACS

54

Bay Forge Ltd.,

Nil

None

Ratnakar P Sundara Rajan

AVP- SOURCING & COMMERCIAL

52,63,632

Permanent

B.Com.,

PG.D.R.M

57

Nilgiris Dairy Farms Pvt Ltd.,

Nil

None

Anil Kumar PA.

AVP - QA

50,40,909

Permanent

M.SC., Dairy Microbiology

59

Heritage, Food India Ltd.,

Nil

None

PrusmuiaVenkateshJ.

AVP-MARKETING & SALES

46,89,867

Permanent

B.SC., PG.D.B.A

53

Henkel SPIC

Nil

None

Ulhas Vasant Ambre

GENERAL MANAGER-PLANT

37,55,064

Permanent

IDD

46

Delmote Food

(LAE) Fze

Nil

None

JeromeJ.

AVP-SALES

33,15,921

Permanent

B.SC.,

58

Rasna Pvt ltd.,

Nil

None

SamJoseph A.

SENIOR GENERAL MANAGER-SOURCING

29,04,081

Permanent

B.E

44

Srinivasa Fine Arts Pvt Ltd.,

Nil

None

Shanmugapriyan J.

SENIOR GENERAL MANAGER - IA & PROCESS

26,37,357

Permanent

M.COM

40

First Employement in HATSUN

Nil

None

Shanavaz

Mohammad

GENERAL MANAGER - DI OPERATION

24,93,894

Permanent

B.Tech Dairy Technology

42

Tirumala Milk Products Pvt Ltd

Nil

None

*The top 10 employees does not include executive directors as their remuneration details are shown separately in the Board’s report.

(ii) Details of the employees employed throughout the year and drawing remuneration which in the aggregate is not less than Rupees One Crorc and Two Lakhs per annum, during the financial year. - Nil

(ii) Employees employed for a part of the financial year, was in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Eight Lakhs and Fifty Thousand per month, during the financial year.- Nil.

(iii) None of the employees except Managing Director and Executive Director employed throughout the financial year or part thereof, hold by himself/herself or along with his/her spouse and dependent children, more than two per cent of the equity shares of the Company

Details required as per Section 197 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

NAME OF DIRECTOR/KMP

AMOUNT OF REMUNERATION PER ANNUM(IN RS.)

RATIO OF REMUNERATION TO MEDIAN REMUNERATION OF EMPLOYEES FOR THE FY

% INCREASE IN REMUNERATION DURING THE FY

Mu R. G. Chandramogan, Managing Director

66,81,200

57.10 times

Nil

Mr. C. Sathyan, Executive Director

60,81,200

53.09 times

Nil

Mr. H. Ramachandran Chief Financial Officer

56,40,939

40.02 times

8.50%

Mi: S. Narayan Company Secretary

16,71,285

11.77 times

7.46%

Percentage increase in the median remuneration of employees in the financial year

The median remuneration of Employees for the Financial Year 31st March, 2018 was arrived at Rs.12,100/- per month and the median remuneration of Employees for the previous financial year 31st March, 2017 was arrived at Rs.12,480/- per month and accordingly, there was a decrease of 3.04% in the median remuneration of employees in the financial year.

Number of permanent employees on the rolls of the company as on 31.03.2018

The Number of permanent employees on the rolls of the Company as of 31st March 2018 stood at 5173 employees.

Average percentiIe increase aIready made in the saIaries of empIoyees other than the manageriaI personneI in the Iast financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average percentage increase was about 8.84 % for all employees who went through the compensation review cycle in the year. For the managerial personnel, the compensation levels remained same as that of previous year as they are in receipt of a fixed remuneration determined by the Shareholders for a defined term as stipulated under the Companies Act, 2013.

The compensation decisions are taken after considering at various levels of the benchmark data and the compensation budget approved for the financial year. The Nomination and Remuneration Committee recommends to the Board of Directors any compensation revision of the managerial personnel which is further approved by the Shareholders.

DetaiIs of pecuniary reIationship or transactions of the Non-Executive Directors vis-a-vis the company

All Non-Executive Directors are entitled to only Sitting fees of Rs.50,000 for every board meeting they attend and Sitting fee of Rs.10,000 for every committee meeting they attend as Members of respective committees pursuant to revision in the sitting fees approved by the Board at its meeting held on 27 th April 2017

Mr. P. Vaidyanathan, Non-Executive and Independent Director holds 9,00,000 Equity shares as of 31st March 2018 in the name of P. Vaidyanathan (SHUF).

Mr. K.S. Thanarajan, Non-Executive and Non Independent Director holds 5,06,200 Equity shares as of 31st March 2018.

Other than the Sitting fees, they do not have any pecuniary relationship or transactions with the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The term Internal Financial Controls has been defined as the policies and procedures adopted by the company to ensure orderly and efficient conduct of its business, including adherence to company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Your Company has adequate and robust Internal Control Systems, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of Internal Audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. The Audit Committee also conducts discussions about Internal Control Systems with the Internal and Statutory Auditors and the Management of the Company and satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The 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 Company has not received any complaint on sexual harassment during the financial year ended 31.03.2018.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

During the year there are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2018 TILL THE DATE OF THIS REPORT

There are no material changes and commitments affecting the financial position of the company which has occurred since 31.03.2018 till the date of this report.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in form MGT-9 is annexed herewith marked as Annexure D and forms part of this report.

RELATED PARTY TRANSACTIONS

As required under Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the Company’s website. The weblink for same is http:/ /www.hap.in/investors-policies.html

There were no related party transactions entered into during the financial year by the company with its Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large other than the remuneration paid to the Executive Directors and Dividend received by them from the Company in proportion to the shares held by them.

The details of Related Party Transactions are provided in the Notes to the Accounts.

CORPORATE GOVERNANCE REPORT

The Company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance including Management Discussion and Analysis report under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a certificate from Mr. N. Ramanathan, Partner, M/s. S. Dhanapal & Associates, a firm of Practising Company Secretaries, confirming the compliance is annexed herewith marked as Annexure E and forms part of this report.

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

The details on conservation of energy, technology absorption, foreign exchange earnings and outgo is annexed herewith as marked as Annexure G and forms part of this report.

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the Directors would like to state that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review.

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

6. The Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.

DEPOSITORY SYSTEM

As the members 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 (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company’s shares.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

ACKNOWLEDGEMENTS

The Directors wish to thank the business associates, customers, vendors, bankers, farmers, channel partners and investors for their continued support given by them to the Company. The Directors would also like to thank the employees for the contributions made by them at all levels.

For and on behalf of the Board of Directors

Sd/-

R.G. Chandramogan

Chairman & Managing Director

Place: Chennai

Date: July 19, 2018

Director’s Report