Overview of an annual report

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Notice to Shareholders


The 29th Annual General Meeting was held on 31st July,2014 at T.Naagar, Chennai 017 where they transacted the following business:

Ordinary Business:

  1. Receive, consider and adopt the financial statements of the Company for the year ended 31st March 2014.
  2. Ratifying and confirming the payment of interim dividends on equity shares for the financial year 2013-14.
  3. Appointing a new Director in place of Shri. K. S. Thanarajan, who retires by rotation and being eligible, offers himself for re-appointment.
  4. Resolved to appoint M/s. S. R. Batliboi & Associates as Auditors and fixing their remuneration.

Special Business:

  1. Appointing Shri. Balasubramanian Thenamuthan as an Independent Director.
  2. Appointing Shri. P. V. Vaidhyanathan as an Independent Director.
  3. Appointing Shri. N. Chandrashekaran as an Independent Director.
  4. Resolved to not fill the vacancy created by retirement of Shri. S. Thiagarajan.
  5. Resolved to appoint M/s. STR & Associates, Cost Accountants as cost auditors by the Board of Directors of the Company.

Director’s Report

The 29th annual director’s report had the following features:

  1. Performance of the company

The company earned an income Rs. 250,202.99 lakhs in the year 13-14 which is 15% more than the previous year’s total income. It has earned a net profit of Rs. 8,168.57 which is an increase of 83% over the previous year.

  1. Dividend

Dividends of the amount totalling Rs. 2.30/- per equity share have been declared by the company in the current financial year. The total cash outflow has been aggregated to Rs. 2,692.29 lakhs on account of dividend excluding dividend tax for the current year.

  1. Transfer to reserves

An amount of Rs. 816.86 Lakhs has been proposed to be transferred to the general reserve out of the amount available for appropriations and an amount of Rs. 7,316.99 Lakhs is proposed to be kept in the Profit and Loss Account.

  1. Exports

The current year recorded an export value of 20,638.46 lakhs representing 8.28% of net revenue from operations.

  1. Future Plan

The company made the acquisitions of Cattle Food Plant in Karur, Tamil Nadu and Jyothi Pvt. Ltd., Andhra Pradesh to help it strengthen its presence and enable it to maintain its numero uno position.

  1. Directors

Appointments/Inductions

The company’s Board of Directors appointed Shri. Balasubramanian Thenamuthan as an additional director of the company w.e.f 23rd January, 2014 as a Non-Executive and Independent Director till the date of 31st of March 2019.

Re-Appointments

Shri. K. S. Thanarajan has been allowed to retire under the provisons of the companies Act,2013 with the Board of Directors confirming his re-appointment.

Independent Directors

The Board of Directors have proposed the appointment of Shri. P. Vaidhyanathan and Shri. N. Chandrashekaran as Independent Directors of the company for five consecutive years till the date of 31st March, 2019 under the Section 149 of the Companies Act, 2013.

Retirements and Resignations

Shri. B. S. Mani has resigned from his post of Non-Executive Director w.e.f 23rd January 2014 due to health reasons. Shri. S. Thiagarajan, the Non-Executive Director & Independent director is liable to retire.

  1. Directors’ Responsibility statement

On the basis of Companies Act,1956 & 2013 and on the guidelines of SEBI, the directors’ confirmed that

  • The company has followed the prescribed accounting standards as per Companies Rules, 2006.
  • The state of affairs of the company have been shown in the right way by the use of proper accounting policies.
  • Proper accounting records have been maintained in accordance with the Companies Act, 2013.
  • Accounting records have been prepared on a Going Concern basis.
  1. Corporate Governance Report & Management Discussion Analysis

The Company has complied with all rules with regard to Corporate Governance as prescribed under the Listing Agreement entered into with the stock exchanges.

  1. Fixed Deposits

As of 31st March, 2014 , the total fixed deposits from public outstanding and unclaimed was calculated to be Rs. 2.49 lakhs which further is segregated into Rs. 1.88 lakhs ( 7 accounts of Fixed/Non Cumulative Deposits) and Rs. 0.61 lakhs (2 accounts of Cumulative deposits)

  1. Finance

The company ran its operation through borrowings which were properly maintained.

  1. Depository System

The Shares of the Company are tradable in electronic form through enabled connectivity with NSDL AND CDSL.

  1. Auditors’ report

Following were the explanations provided for the remarks of the Auditors.

  • The Company has used funds raised on short term basis from banks to purchase Rs. 7,890.14 lakhs of certain fixed assets.
  • A centralised treasury system is used to store all loans and borrowings in addition to cash generated from operations. These loans are obtained through banks for both long-term and short-term purposes.
  • Loans applied for in February/March 2014, would only be drawn in the next financial year, specifically in May/June 2014.
  1. Industrial Relations

Industrial relations remained peaceful in all branches of the company throughout the year.

  1. Conservation of Energy, Technology absorption and Forex Outgo

The annexure attached to the report contains all particulars as per section 217 (1) (e) of the Companies Act, 1956 and Companies Rules, 1988.

  1. Corporate Social Responsibility
  • Help is provided to nearby villages.
  • Financially empowering the villages to make avail of roads and better transport.
  • Free eye camps have also been organised in villages like Edapadi, Rasipuram and Mecheri.
  1. Acknowledgements

Appreciation has been conveyed to the business associates along with employess, members,bankers among others for their support and contribution to the Company.

Report on Corporate Governance

  1. Company’s philosophy on corporate governance

Company has committed itself to highest levels of transparency, integrity and accountability in their conduct of the business. It emphasises focus on its resources, strengths and strategies to achieve its vison of brand building and maximising shareholders return. It also has a strong legacy of transparent, ethical and fair govenance practices which it has accomplished through a particular code of conduct for all Directors and Senior Managemnet Personnel.

  1. Board of Directors

The Company has 7 Directors which occupy the following positions.

R.G.Chandramogan

Chairman and Managing director

K.S.Thanarajan

Joint Managing Director

C.Sathyan

Executive Director

P.Vaidhyanathan

BOD

S.Thiagarajan

BOD

N.Chandrasekaran

BOD

B.Thenamuthan

BOD

S.Chandrasekar

Company Secretary

The Board has met eight times in the current year. None of the Non-Executive Directors hold any equity shares of the Company. The Company follows an established risk assessment and minimizing system. The Board has access to all information pertaining to the Company.

The Board of Directors possess the following profiles and qualifications.

Profile of the Directors

Sr.no.

Name

Profile

Date of

Appointment

Shareholding in company

1

Shri. B. Thenamuthan

Masters Degree in Communication and journalism. Managing Director of Karnataka News Publication

23rd January 2014

Nil

2

Shri. K. S. Thanarajan

PG in Economics.

28th June 1995

10,33,000 equity shares

3

Shri. P. Vaidhyanathan

Member of ICAI. Associate member of ICSI and ICWAI.

29th March 1999

Nil

4

Shri. N. Chandrashekaran

Mechanical Engineer

28th March 2005

Nil

  1. Audit committee

The Committee plays an important role in overseeing the internal and the financial reporting system of the Company. It comprises of three members all of whom are Independent and Non-Executive Directors.

AUDIT COMMITTEE

P.Vaidhyanathan

S.Thiagarajan

B.Thanamuthan

The members have the following functions within the committee

  • Supervising of Company’s financial reporting process.
  • Passing of recommendations to the board with regard to appointment and re-appointment or even the removal or replacement of auditors.
  • Approval of payment to statuatory auditors for other services rendered by them.
  1. Nomination and Remuneration Committee

The Committee has three Non-Executive and Independent Directors.

NOMINATION AND REMUNERATION COMMITTEE

P.Vaidhyanathan

S.Thiagarajan

B.Thanamuthan

The following roles are fulfilled by this committee

  • Identification of people who are qualified to become Directors and appoint the same on these positions.
  • Recommendation of such identified people to the Board or remove the member by consulting the Board.
  • Evaluation of every Director’s performance
  • Formulation f criteria for determining qualifications, positive attribute and independence of Directors.
  • Formulation of policy relating to remuneration for Directors, key managerial personnel and other positions.
  1. Shareholders’ / Investors’ Grievance Committee

It comprises of three members all of whom are Non-Executive and Independent Directors.

INVESTORS’ GRIEVANCE COMMITTEE

P.Vaidhyanathan

K.S.Thanarajan

R.G.Chandramogan

The Committee supervises the mechanism for redressal of shareholders’/investors’ grievances and ensures cordial relations in the following two ways.

  • Redressal of grievances through transfer of shares, non-receipt of annual report, non-receipt of declared dividends, etc.
  • Scrutinise the performance of the Registrar & Share Transfer Agent and recommends measures for overall improvement of the quality of service.
  1. Other Committees

A. Share Transfer Committee

The Committee comprises three members as shown below.

SHARE TRANSFER COMMITTEE

P.Vaidhyanathan

S.Thiagarajan

K.S.Thanarajan

This Committee carries out the following functions.

  • Transfer/Transmission/Split/Sub-division/Consolidation of shares.
  • Issue of duplicate share certificates.
  • Registration of Power of Attorneys.
  • Dematerialisation/Rematerialisation of shares.

B. Sub-Committee

This Committee comprises of four members of the Board as below.

SUB COMMITTEE

K.S.Thanarajan

R.G.Chandramogan

B.Thanamuthan

C.Sathyan

The Committee performs the following functions.

  • Reviewing of fund position of the Company, borrowing funds for the purpose of business, negotiate and finalize the terms of lender borrowings.
  • Reviewing the risk management policy of the Company Management.
  • Exercising all powers and doing things delegated by the Board of Directors from time-to-time.

C. Core Committee

According to SEBI Regulations, the committee comprises of three members.

CORE COMMITTEE

R.G.Chandramogan

C.Sathyan

K.S.Thanarajan

D. CSR Committee

In accordance to Section 135 of Companies Act 2013, the Company has three members in this committee.

CSR COMMITTEE

R.G.Chandramogan

K.Thiagarajan

K.S.Thanarajan

The Committee carries out the following functions.

  • Formulation and recommendation of a CSR policy to the Board.
  • Recommendation of the amount of expenditure required to carry out CSR activities.
  • Monitoring of CSR policy of the company from time to time.
  1. Disclosures
  • No significant transactions of the Company are going against the policies of the Company.
  • No penalties as such have been imposed on the Company as it has been in accordance with all regulations imposed on it.
  • The Company has also fulfilled the non-mandatory requirements like a Nomination and Remuneration Committee and a Whistle-Blower policy.
  1. Means of Communication

The Company maintains its website and discloses all information like quarterly results through the website only.

Management Discussion & Analysis

  1. Overview

Hatsun Agro Product Limited is in the business of production and sale of milk and milk products and Ice cream. The Company prepares financial statements in accordance with the accounting standards and accepts responsibility for the integrity and and objectivity of the financial statements.

  1. General Economic Scenario and Industry Structure

Thanks to the reforms and polcies implemented by the Government to curb inflation and improve growth rate, there is a possibility of the growth rate to go back to 8% from 4.7% in 13-14. India occupies a 17% of share in milk and milk products in the world possessing almost 133MT of milk in the year 12-13.

  1. Opportunities

Milk is the single largest agricultural commodity in value with it forming a regular part of the dietary programme in addition to the higher disposable income, greater awareness to health and nutrition has created greener pastures for the Company.

  1. Threats

At the moment, the organised dairy industry holds only 28% of the milk produced in the country which shows the lack of control of the Company on the production and distribution of milk. Infrastructure facilities like good roads, continuous power supply and adequate transport supply are lacking in the country on an efficient level causing a less than efficient output for the Company.

  1. Internal Control System and their Adequacy

The CEO and CFO certification section of the Corporate Governance Report discusses the adequacy of the Company’s internal control system and procedures.

  1. Information Technology

Successful implementation of SAP ERP systems and also the online MIS system, which has contributed in centralizing the operations of the Company. The hardware and network infrastructure have been constantly upgraded to stay updated with the latest technological improvements thereby enabling an improvement of bandwidth and reduction of operation costs.

  1. Material Developments in Human Resources

The Human Resources department is considered as a significant part of the Company and the Company focuses to attract, retain and develop talent as a resource. The employees are always kept abreast of the current business situation through constant communication which has helped the company to build mutual trust and confidence among the employees.

  1. Forward Looking Statements

The company has made certain forward looking statements which highlight the Company’s objectives. But, these objectives might vary a little from those mentioned in the statements but nothing would go against the company policy. The investors have therefore been asked to make their own independent assessments and judgements by considering all relevant factors before making an investment decision.

  1. Independent Auditors’ Report

The independent auditors’ report covers the following points.

  • Report on financial statements
  • Management’s Responsibility for the financial statements
  • Auditor’s responsibility
  • Opinion
  • Other legal and regulatory requirements report

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