Ambica Agarbathies Aroma & Industries Ltd Directors Report.

To

The Members,

Your Directors have pleasure in presenting herewith the 24th Annual Report of Company together with the Audited Accounts for the financial year ended 31st March, 2019

1. FINANCIAL RESULT

(Amounts in Rupees)

PARTICULARS 31.03.2019 31.03.2018
Revenue from operations 1,382,064,683 125,35,75,154
Other Income 28,215,910 1,59,01,187
Total Income 1,410,280,594 1,269,476,341
Expensess 1,374,644,975 1,443,039,919
Net profit before tax 35,635,619 -173,563,578
Tax -66,833,978 4,655,011
Profit after tax 102,469,597 -178,218,589

2. STATE OF COMPANYS AFFAIR:

During the financial year under review the overall performance of the Company was good and the overall turnover of the Company was Rs. 138,20,64,683 as compare to Rs 125,35,75,154 Previous year and the Net Profit Rs. 102,469,597 as compare to loss of Rs. -178,218,589 in previous year.

3. TRANSFER TO RESERVES

The Board of Directors of the Company have not recommended for transfer of any amount to the General Reserve for the Financial Year ended March 31, 2019

4. DIVIDEND:

Your Directors do not recommend any Dividend for the Financial Year 2018-2019 as the profits are planned to be ploughed back into the business operations.

5. SUBSIDIARIES:

During the year Company did not have any subsidiary or joint venture or associate company.

6. DEPOSITS:

The Company has neither accepted nor renewed any deposits falling within the provisions of Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 from its member and public during the Financial Year.

7. MEETINGS

During the year under review, Six board meetings were held on, 18/04/2018, 11/05/2018, 11/06/2018, 13/08/2018, 14/11/2018; 11/02/2019 the maximum time-gap between any two consecutive meetings was within the period prescribed under the Companies Act, 2013.

8. BOARD EVALUATION

The Board of Directors evaluated the annual performance of the Board as a whole, its committees and the directors individually in accordance with the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the following manner

I. Structured evaluation forms, as recommended by the Nomination and Remuneration Committee, after taking into consideration inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance, for evaluation of the performance of the Board, its Committees and each director were circulated to all the members of the Board along with the Agenda Papers.

ii. The members of the Board were requested to evaluate by filling the evaluation forms and the duly filled in evaluation forms were required to be sent to the Company Secretary in a sealed envelope or personally submitted to the Chairman at the concerned meeting.

iii. Based on the individual evaluation of the Directors, the Board initiated a detailed discussion at the concerned meeting on the performance of the Board / Committee/Individual Director, and formulated a final collective evaluation of the Board. The Board also provided an individual feedback to the concerned director on areas of improvement, if any.

A separate meeting of Independent Directors was held on 08th, March 2019 to evaluate the performance evaluation of the Chairman, the Non Independent Directors, the Board and flow of information from management.

9. DIRECTORS:

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Ambica Siva Kumar Alapati (DIN- 00392295), retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Sri Ambica Ramachandra Rao was appointed as a Whole Time Director of the Company in the meeting of the Board of Directors held on 11th February 2019 for a period of 3 years subject to the approval of the members in the General meeting, the proposed resolution for his appointment is placed before the Members in the ensuing Annual General meeting.

Sri Venkatesan Sreedharan is proposed to be re-appointed as an Independent Director for second term of five consecutive years from conclusion of 24th AGM till the conclusion of 29th AGM. The proposed resolution for his appointment is placed before the Members in the ensuing Annual General meeting.

P Kishore Thandava is proposed to be re-appointed as an Independent Director for second term of five consecutive years from conclusion of 24th AGM till the conclusion of 29th AGM. The proposed resolution for his appointment is placed before the Members in the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed Both under sub-section (6) of Section 149 of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 .

For Directors seeking appointment/re-appointment in the forthcoming Annual General Meeting of the Company; the particulars as required to be disclosed in accordance Regulations 17 to 27 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Para C, D & E of Schedule V Companies Act-2013.

10. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134(3) (c) of the Companies Act, 2013, and subject to disclosures in the Annual Accounts, as also on the basis of the discussion with the Statutory Auditors of the Company from time to time, and to the best of their knowledge and information furnished, the Board of Directors states:

(I) That in preparation of the Annual Accounts for the year ended 31st March, 2019, all the applicable Accounting Standards Prescribed by the Institute of Chartered Accountants of India have been followed along with proper explanation relating to material departures, if any.

(ii) That the Directors have adopted such accounting policies, as selected in consultation with Statutory Auditors, and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the financial year ended 31st March, 2019.

(iii) That the Directors 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.

(iv) That the Annual Accounts for the year ended 31st March, 2019, has been prepared on a going concern basis.

(v) Those proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

(vi) That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively

11. STATUTORY AUDITORS

In terms of section 139(1) of the Companies Act, 2013 M/s. Ramasamy Koteswara Rao & Co, LLP (FRN: 010396S), Chartered Accountants, Hyderabad were appointed as the Statutory Auditors of the Company to hold office for the period of 5 years from the conclusion of 23rd Annual General Meeting till the conclusion of 28th Annual General Meeting.

12. INTERNAL AUDITORS:

The Board of Directors based on the recommendation of the Audit Committee has reappointed T.V.V. Satyanarayana Chartered Accountants, as the Internal Auditors on your Company. The Internal Auditors are submitting their Reports on quarterly basis pursuant to the provisions of section 138 and rule 13 of companies (Accounts) rules, 2014.

13. VIGIL MECHANISM / WHISTLE BLOWER POLICY

Pursuant to the provisions of section 177 (9) and read with all other applicable provisions of the Companies Act, 2013 and the Companies (meetings of board and its powers) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force) and Regulation 22 Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has a Whistle Blower Policy framed to deal with instance of fraud and mismanagement, if any in the Group. The details of the Policy are explained in the Corporate Governance Report and also posted on the website of the Company and the web link is http://www.ambicaagarbathi.com.

14. RISK MANAGEMENT

Pursuant to the provisions of section 134 (3) (n) and read with all other applicable provisions of the Companies Act, 2013 and the Companies (Accounts) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force) and as per SEBI (LODR) Regulations, 2015 the Risk management is Not applicable to the Company.

15. REMUNERATION POLICY

The Board of Directors, on recommendation of the Nomination and Remuneration Committee framed a Nomination and Remuneration policy for selection, appointment and remuneration of Directors, KMP and Senior Management and matters covered u/s 178(3) of the Companies Act 2013. The details of the same are provided in the Corporate Governance Report and website of the company.

16. MANAGEMENT DISCUSSION AND ANALYSIS:

Aspects of Management Discussion and Analysis are enclosed as "Annexure I" to this report

17. CORPORATE GOVERNANCE:

Report on Corporate Governance including Auditors Certi cate on Compliance with Regulations 17 to 27 and clauses (b) to (i) of sub-regulation 2 of Regulation 46 and Para C, D & E of Schedule V of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the following manner is enclosed as "Annexure II" to this report

18. SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules framed there under, the Board of Directors, on recommendation of the Audit Committee, appointed M/s P S Rao and Associates, Practicing Company Secretaries to undertake the secretarial audit of the Company. The secretarial audit report issued by M/s P S Rao and Associates, Practicing Company Secretaries for the financial year ending 31st March, 2019 is given in the FORM NO: MR - 3 is herewith annexed as "Annexure (III)" attached hereto and forms part of this Report. There are no qualifications, reservations or adverse remarks made by the secretarial auditor and the observation made is self explanatory and requires no further explanation from the Board.

19. RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All related party transactions are placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee is obtained as per Regulation 23 SEBI (Listing Obligations & Disclosure Requirements) 2015 for the transactions which are of a foreseen and repetitive nature. The Company has developed a Policy on Related Party Transactions for the purpose of identification and monitoring of such transactions.

The particulars of contracts or arrangements with related parties referred to in sub-section (1) of Section188 of the Companies Act, 2013 in Form AOC-2 is herewith annexed as "Annexure IV" to this report.

20. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure V" to this report.

21. PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 (12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company is herewith annexed as "Annexure VI".

In terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company does not have any employee who is employed throughout the financial year and in receipt of remuneration of Rs 1,02,50,000 per annum, or employees who are employed for part of the year and in receipt of Rs 8,50,000 per month.

22. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Company has not provided any loan to any person or body corporate or given any guarantee or provided security in connection with such loan or made any investment in the securities of any body corporate pursuant to Section 186 of the Companies Act, 2013. The Company has given advance against salary to some employees in terms of the applicable policies of the Company.

23. CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of section 135 (1) and read with all other applicable provisions of the Companies Act, 2013 and the Companies (Corporate social responsibility policy) Rules, 2014 (including any statutory modification(s) or re-enactment thereof for the time being in force). Not Applicable to the Company

24. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

25. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information on conservation of energy, technology absorption and foreign exchange earnings and Outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014

A. Conservation of Energy: The present operation of the Company does not involve high energy consumption. However steps being taken to minimize energy consumption where ever possible

B. Research & Development: The Research and Development division of Agarbathies department continues to focus on introducing of new brands.

C. Technology Absorption: Not Applicable

D. Foreign Exchange Earnings & Outgo (In Rs. Lakhs)
2018-19 2017-18
Foreign Exchange earnings Nil Nil
Foreign Exchange outgo Nil Nil

26. POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORK PLACE:

Your Company strongly supports the rights of all its employees to work in an environment free from all forms of harassment. The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. The policy aims to provide protection to Employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where Employees feel secure. The Company has also constituted an Internal Committee, known as Anti Sexual Harassment Committee to address the concerns and complaints of sexual harassment and to recommend appropriate action. The Company has not received any complaint on sexual harassment during the year

27. ACKNOWLEDGEMENTS:

Your Directors place on record, their appreciation for the co-operation and support from the Bankers, Financial Institutions, the stockiest and distributors, Supplier and Customers.

Your Directors would also like to place on record their sincere appreciation and gratitude to the Shareholders, Central and State Government agencies etc for their support and co-operation. Your Directors express their heartfelt gratitude to the employees for their exceptional commitment and loyalty to the Company.

For and on behalf of the Board
AMBICA AGARBATHIES AROMA & INDUSTRIES LIMITED
Sd/- Sd/-
AMBICA KRISHNA SATYAVATHI PERLA
CEO & PRESIDENT WHOLETIME DIRECTOR
DIN: 07141289
Sd/-
AMBICA RAMACHANDRA RAO
Place: Eluru WHOLE TIME DIRECTOR
Date: 22.08.2019 DIN: 01678538

DETAILS OF RELATED PARTY TRANSACTIONS

FORM NO. AOC 2

Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

1. Details of contracts or arrangements or transactions not at arms length basis: No transactions.

2. Details of material contracts or arrangement or transactions at arms length basis

(Amount in Lakhs)
S.No. Name of the Related party Nature of Relationship Nature of year Transaction For the year Ended 31st march-2019
1. Ambica Krishna Chief Executive Officer & President Remuneration 24,00,000
2. Ambica Ramachandra Rao Executive Director Remuneration 4,00,000
3. A B N V R A Hanuma CFO Remuneration 12,00,000
4. A Siva Kumar Executive Director Remuneration 14,00,000
5. P Satyavathi Executive Director- Chairperson Remuneration 10,00,000
6. ACP Industries Ltd Entity in which Director/Promoters is related Sales 15,921,630
Purchase 420,249,288
7. Elite Agro Trading Entity in which Director/Promoters is related Sales 315,194,486
Purchase 0
8. Om Trading Entity in which Director/Promoters is related Sales 22,344,763
Purchase 251,083,701

 

For and on behalf of the Board
AMBICA AGARBATHIES AROMA & INDUSTRIES LIMITED
Sd/- Sd/-
AMBICA KRISHNA SATYAVATHI PERLA
CEO & PRESIDENT WHOLETIME DIRECTOR
DIN: 07141289
Sd/-
AMBICA RAMACHANDRA RAO
Place: Eluru WHOLE TIME DIRECTOR
Date: 22nd August, 2019 DIN: 01678538

ANNEXURE V

Information pursuant to Section 197 of the Act

Read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

A. The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary during the financial year 2018-19 and Ratio of the remuneration of each director to the median remuneration of the employees of the company for the financial year 2018-19:

Name of the Director/ Key Managerial Personnel Remuneration of Director KMP for the financial year 2018-19 % increase in Remuneration in the financial year 2018-19 Ratio of the remuneration to the median remuneration of the employees
Ambica Krishna 24,00,000 No Increase 17.52%
Ambica Ramachandra Rao 4,00,000 Decrease 8.76%
Saraswathi Perla 10,00,000 Decrease
Ambica Siva Kumar alapati 12,00,000 No Increase
Ambica Hanuma 12,00,000 No Increase 8.76%
Umagayathri 1,80,000 No Increase 1.31%

Note: The median remuneration of employees of the Company during the financial year was Rs.135000

B. The percentage increase in the median remuneration of employees in the financial year:6.12%

C. The number of permanent employees on the rolls of company: 380

D. The explanation on the relationship between average increase in remuneration and company performance:

The average increase in the employee remuneration effected during the year 2018-19 is based on the individual performance and Companys performance during the previous financial year 2017-18. The other factors considered for revision in remuneration is based on market survey, functional expertise, industry standards etc

E. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last 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 increase in the salaries of employees other than the managerial personnel in 2018-19 was 79.83%. The Percentage increase in the managerial remuneration for the same financial year was Nil

F. Affirmation that the remuneration is as per the remuneration policy of the company.

It is hereby affirmed that the remuneration paid to the Directors and Key Managerial Personnel are as per the Nomination and Remuneration Policy of the Company.

For and on behalf of the Board
AMBICA AGARBATHIES AROMA & INDUSTRIES LIMITED
Sd/- Sd/-
AMBICA KRISHNA SATYAVATHI PERLA
CEO & PRESIDENT WHOLETIME DIRECTOR
DIN: 07141289
Sd/-
AMBICA RAMACHANDRA RAO
Place: Eluru WHOLE TIME DIRECTOR
Date: 22.08.2019 DIN: 01678538