Heritage Foods Ltd Directors Report.

To the members,

Your Directors have a great pleasure in presenting the 28th

Annual Report together with the Standalone & Consolidated

Audited Financial Statements of your Company for the Financial Year ended March 31, 2020.

Financial Results

(Rs. in Lakhs)

Standalone

Particulars FY 2019-20 FY 2018-19
Net Sales 2,67,959.37 2,47,946.42
Other Operating Income 151.26 288.51
Total Revenue 2,68,110.63 2,48,234.93
Add: i) Other Income 832.39 1,109.60
ii) Gain due to changes in fair value of derivative Liability 29,448.87 13,109.85
Total Income 2,98,391.89 2,62,454.38
Less: i) Total Expenditure 2,54,814.66 2,30,036.03
ii) Fair value loss on FVTPL equity securities 51,160.56 13,109.85
Pro t before Finance cost, Depreciation, (7,583.33) 19,308.50
Amortisation Expenses and distribution Tax strategies of
Less: i) Financecost 2,080.72 2,068.64
ii) Depreciation and 4,803.59 4,371.04
Amortisation Expenses
Pro t /(Loss) before tax (14,467.64) 12,868.82
Less: i) Provision for current Tax (including Taxation of earlier years) 1,850.47 4,228.00
ii) Provision for deferred taxation (317.67) 296.63
Pro t / (Loss) after tax (16,000.44) 8,344.19

Performance of the Company

Your Company, during the year under review earned revenue from operations (Gross) of Rs. 2,68,111 Lakhs, achieved an increase profit/(loss) 8.01% over the previous year. The before Finance Cost, depreciation & amortization and tax was of Rs. (7,583) Lakhs as against Rs. 19,308 Lakhs in the previous year. Your Company has complied with all the acts, rules, regulations and guidelines issued/prescribed by the Securities Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs and other statutory authorities.

Transfer to General Reserves

Your Directors do not propose to transfer any amount to general reserves for the financial year ended March 31, 2020.

Dividend

Your Directors have pleasure in recommending a dividend of (50%) i.e.Rs. 2.50/- per equity share of face value of Rs. 5/- each for the financial year ended March 31, 2020, amounting to Rs. 1159.95 lakhs. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. The Register of Members and Share Transfer Books will remain closed from Friday, August 21, 2020 to Friday, August 28, 2020 (both days inclusive) for the purpose of payment of dividend for the financial year ended March 31, 2020. The Annual General Meeting is scheduled to be held on August 28, 2020. The dividend payout for the year under review has been finalized in accordance with the companys dividend distribution policy and the Companys policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.

Dividend Distribution Policy

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Company has formulated and adopted a Dividend Distribution Policy with the objective of providing clarity to its stakeholders During onthe profit the year, the said Policy has been reviewed by the Board of Directors of the Company and hosted on the website of the Company at https://www.heritagefoods.in /uploads/investors/ pdf/15579009416hfl-dividend distribution policy.pdf

Share Capital

The paid up Equity Share Capital as on March 31, 2020 stood at Rs. 23,19,90,000/- divided into 4,63,98,000 equity shares face value of Rs. 5/- each. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or issued sweat equity share to its employees or directors. As on March 31, 2020, none of the Directors or the Company holds any instruments convertible into equity shares of the Company.

Deposits

Your Company has not accepted any deposits from the Directors/ Shareholders/Public pursunt to Section 73 of the Companies Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014, and there are no unpaid/unclaimed deposits nor amount of principal or interest on public deposits was outstanding as on the Balance Sheet date.

Buy Back of shares and disinvestment

The Company has not bought back any of its securities and there were no disinvestment during the Financial Year ended March 31, 2020.

Particulars of Loans, Guarantees or Investments

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 forms part of the notes to the standalone financial statements provided in this Annual Report.

However the Board has given corporate guarantee as at 31st March, 2020 of Rs. 2675/- Lakhs for the credit facilities availed by its wholly owned subsidiary Company namely M/s. Heritage Nutrivet Limited (the outstanding as on March 31, 2020 was Rs. 2049/- Lakhs) and Rs. 2200/- Lakhs for the credit facilities availed by its joint venture Company namely Heritage Novandie Foods

Private Limited (the outstanding as on March 31, 2020 was Rs. 580/- Lakhs).

Particulars of Contract or Arrangements made with Related Parties

The particulars of contracts or arrangements with related parties as per Section 188 of the Companies Act, 2013 and rules made thereof and as per the Related Party Transaction (RPT) policy the Company during the financial year ended March 31, 2020 in prescribed Form AOC-2 is annexed to this Boards Report (Annexure-1). Further there are no materially under significant review with Promoters, Directors, Key Managerial Personnels and their relatives, which may have potential conflict with interest of the company at large. The related party transactions were placed before the audit committee as also to the Board at their respective meetings for approval. All related party transactions entered during the year were in the ordinary course of business and on arms length basis. The details of the related party transactions during the year are part of the financial statements forming part of this Annual Report.

Material changes and commitments affecting financial position between the end of the financial year and date of report

There are no material changes and commitments affecting financial position of the company, which occurred after the end of the financial year i.e., March 31, 2020 except the impact COVID-19, pandemic on the business operations of the Company as follows,

Impact of the CoVID-19 pandemic on the business;

The Company is categorised under "Essential Commodities" as per the notification issued by Ministry of Home Affairs (MHA) Govt. of India, for supply of Milk and Milk Products. The pandemic has not had any material adverse impact on the companys business, although the sales of milk and value-added products have come down because of the lockdown. Transportation has also been impacted initially to some extent due to absenteeism of drivers. All the milk supplied by farmers was procured and processed during the lockdown period. However, the availability of raw materials and the supply chain of the company are not affected The Company has taken conscious decision to balance uninterrupted operations and ensuring a safe working environment. To ensure this, some team members have been asked to report to work from their locations. The Company has also made necessary arrangements by obtaining passes from appropriate authorities as per the Guidelines issued by the Government of India and respective States, for vehicles and individuals and conducted proper sanitization of work place to ensure that staff were safe and comfortable at work place. The rest of the staff have been asked to report to the workplace on alternate days based on their convenience, thereby ensuring seamless operations, reporting and controls. Your Company has complied the COVID-19 guideline issued by the Securities Exchange Board of India. In view of the same and considering the MCA circulars, your Company be convening the 28th AGM through VC/ OAVM without the physical presence of the members at a common venue. However the deemed venue for the AGM shall be the Registered Office of the Company.

Schedule, if any, for restarting the operations;

Since the Companys operations are fully functional, this question does not arise.

Steps taken to ensure smooth functioning of operations

The Company has put in place strict monitoring process for Covid-19 precautions ensuring the following

Sanitizing the premises and vehicles on regular basis

Maintenance of social distancing at all work places

Enforcing wearing of masks and regular cleaning of hands with soap water

Regular update of the health of all the employees and their families

Thermal scanning all the employees while entering the office premises

A sking all employees to install Aarogya Setu App

The Company has been regularly conducting awareness programs for all its employees. All employees of the Company have been communicated about the measures taken by the Company through mails and video conferencing calls which includes video-clip discussions from the desk of Vice Chairperson & Managing Director and Executive Director of the Company explaining about the steps required to be taken by individuals to maintain safety.

Estimation of the future impact of CoVID-19 on its operations;

As explained above, there has not been any material adverse impact on the Companys performance in terms of top-line and bottom-line. We expect further improvements as the Central & State Governments are taking initiatives for opening of the trade and commerce.

Capital and nancial resources

The Company does not plan to raise any capital in the near future and hence there is no impact. Presently, the Company doesnt need any additional funding from Banks/ Financial Institutions. However, already sanctioned long-term loans and working capitals are honoured by the Banks/ Financial Institutions without any additional rate of interest and covenants

Pro tability

As mentioned earlier, the profits are not adversely impacted. The transportation segment which acts as an enabler is marginally impacted. As of now, it can be concluded that the Covid-19 impact on profits will not be material

Liquidity position

The Company operates on cash-and-carry basis of its substantial business, however collection from some of the debtors has been impacted marginally with some of the customers requested for a deferred payment schedule which the company keeping in mind the long term relationship has accepted. The Company has been meeting all its financial obligations.

Ability to service debt and other assets / nancing arrangements

The Company has not availed moratorium for any of its installment payments and has never defaulted on any interest or loan installment and does not see any issue meeting future obligations too. None of the assets of the Company have been impacted or impaired by the Covid-19.

Internal nancial reporting and control

The Company has robust Internal Financial Control (IFC) system in place and all its locations are well networked with S4 Hana SAP System. Even during the lockdown with a combination of staff working from the plants and/ offices etc., and all others working from home, all reporting systems worked seamlessly without any disruption

Supply chain

Being the Company categorized under "essential commodities" by Central Government, there has been less impact of supply chain inward-and-outward. The situation is although improving and we expect normal operations in this segment very soon.

Demand for its products/services

During the crisis, there has been no impact on the supplies though there was a drop in sales in absence of consumption out of home.

Existing contracts/agreements where non-ful llment of the obligations by any party will have signi cant impact on the listed entitys business

The Company is in a position to honor all agreements with its vendors and consumers. The vendors from whom the Company avails product or services, those are few in numbers and are not in any way impacted by the pandemic.

Repayment of Loan installments

The Company has been repaying all the loan instalments without any default. Even though Reserve Bank of India allowed for moratorium/ deferment of instalment payments, the Company didnt opt for it.

Payments to Employee

During the period, the Company has paid to all its working employees and none of the Employees were terminated from the services. The Company also covered all its employees under various insurance policies

Payments to Suppliers/Creditors

During this period, the Company didnt default any of its payment to its suppliers/ creditors.

Contributed to Covid-19

Your Company has contributed Rs. 1,00,00,000 (Rupees

One Crore only) towards fight against Covid-19 pandemic to the following State Govt Relief Fund/ Disaster Management Fund on 1st week of ApriI 2020 out of its CSR Amount of FY 2020-21

i. Chief Minister/Disaster Relief Fund Andhra Pradesh-Rs.30 Lakhs

ii. Chief Minister/Disaster Relief Fund Telangana-Rs.30 Lakhs

iii. Chief Minister/Disaster Relief Fund Karnataka-Rs.10 Lakhs

iv. Chief Minister/Disaster Relief Fund Tamil Nadu-Rs.10 Lakhs

v. Chief Minister/Disaster Relief Fund Maharashtra-Rs.10 Lakhs

vi. Chief Minister/ Disaster Relief Fund Delhi-Rs.10 Lakhs

Variation in market capitalization

As at March 31,

Increase /
2020 2019 (decrease) in %
Market capitalization 988.97 2527.07 (60.86)
Rs. ( in Crore)
Price earnings ratio (6.18) 30.29 (122.98)

Note: Data based on share prices quoted on BSE

Management Discussion and Analysis

In terms of the provisions of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 as amended from time to time, the Managements Discussion and Analysis is provided in a separate section and forms an integral part of this Report.

Business Review

The Board of Directors noted on the loss before tax incurred by the Company, as reported in the Standalone & Consolidated Financial Statements for the Quarter and Year ended March

31, 2020, Profit & Loss impact was due to changes in the fair value of investment in equity shares of Future Retail Limited and fair value of corresponding derivative liabilities as per the Agreement entered with them and in accordance with Ind AS accounting principles as follows:

Financial Information

(Rs. in lakhs)

Particulars

Standalone

Year Ended

Consolidated Year Ended

31.03.2020 31.03.2019 31.03.2020 31.03.2019
before tax Adjustments: (14,467.64) 12,868.82 (15,337.72) 12,752.40
Gain due to changes in the fair value of derivative liabilities 29,448.87 13,109.85 29,448.87 13,109.85
Loss due to changes in the FVTPL equity securities (51,160.56) (13,109.85) (51,160.56) (13,109.85)
Profit after above adjustments 7,244.05 12,868.82 6,373.97 12,752.40

Your Company has not changed its nature of business during the period under review. Your Company has Two Divisions in operation in different States in India as on March 31, 2020.

Dairy Business:

Indian Dairy Industry

India has been the leading producer and consumer of dairy products worldwide since 1998 with a sustained growth in the availability of milk and milk products. Dairy activities form an essential part of the rural economy, serving as an important source of employment and income. India also has the largest bovine population in the world. However, the milk production per animal is significantly low in our country as compared to the other major dairy producers country. Moreover, nearly all of the dairy produce in India is consumed domestically, with the majority of it being sold as fluid milk. On account of this, the Indian dairy industry holds tremendous potential for value-addition and overall development.

As of 2019-20, India is the leading milk producing country in the world, accounting for 21% of the global market share. The milk processing industry in India is expected to expand at a compound annual growth rate (CAGR) of 16% between FY 2019-20 and FY 2023-24.

Indian Dairy Market Structure

India: Dairy Market Forecast (in Billion INR)

As per the research report by IMARC Group, it is estimated that the Indian dairy industry was worth a value of INR 10,527 Billion in 2019 and it anticipates the market to reach a value of INR 21,971 Billion by 2024, exhibiting a CAGR of around 16% during the 2019-2024.

Organized & Unorganized Dairy Market in India

Being one of the primary dairy consumables in India, the demand increase for milk in the country is owed to the increasing population. As of FY 2019-20, ~81.1% of the Indian dairy and milk processing market was part of the unorganized sector.

State-wise segment insights:

Uttar Pradesh, Rajasthan, Madhya Pradesh, Gujarat and Andhra Pradesh have been the major milk producing states in India. Uttar Pradesh is the largest milk-producing State because it is home to the highest buffalo population and the second-highest cattle population in the country. The majority of the rural population in this state is engaged in livestock rearing and dairying. Gujarat has numerous cooperative dairy milk unions and primary milk cooperative societies, which play crucial role in the production of milk in the state.

Value-added product wise insights:

Apart from milk, the revenue of the Indian dairy and milk processing industry is generated from several value-added products such as curd, paneer, flavoured milk, cheese and yogurt. During the period

FY 2016 to FY 2020, the market size of butter is expected to grow by 14.5%, curd by 14.4%, paneer by 14.1%, and ghee by 14.1%, among others.

Export: From India, the export of dairy products has increased to countries like Bhutan, Afghanistan, Canada, Egypt, and the United Arab Emirates.

Key growth drivers of the market:

Indias livestock sector is regarded as one of the largest in the world with a bovine population of 299.90 Mn, which comprises of cows and buffalos. The growth of the Indian dairy and milk processing market is ensured by the steady supply of milk which is the primary raw material for this industry. The major challenge faced by the Dairy Industry is the organization of the supply chain and logistics. The good part is that challenges are nothing but opportunities in disguise and in order to meet this challenge headon, proactive steps need to be taken to empower farmers and provide a stronger supply chain for them to rely on. Even though India is the largest producer of milk in the world, the industry itself is largely unorganized, with only 28 percent of the total milk produced being channelized to countering anorganizedmanner. The first this would be to shift the focus to smaller dairy farms, which sometimes lack veterinary facilities and basic nutritious fodder etc.

Increasing Demand for Milk and Value-Added Products

With an increase in the spending power of the population, the demand for milk and other value-added dairy products is expected to increase in the coming years. In order to meet the rising demand, there needs to be a marked shift from the unorganized to the organized sector. Moreover, consumers now-a-days are not only hold greater buying power but also health conscious regarding what they consume. There is thus a necessity to provide healthy dairy products which can be readily consumed. This creates an opportunity for boutique dairy farms to set up local operations providing fresh cow or buffalo milk to consumers. Over and above with people having less time these days, the demand for premium value added products such as probiotic yoghurt, cheese, milk shakes etc. are on the rise. These products not only have a higher margin but also have a longer shelf life which makes the supply chain easier and cost effective.

The organised dairy sector is poised for healthy growth in coming years. Milk production CAGR of 5% over FY12-FY19 coupled with 5-6% inflation indicates 10% growth in revenue terms. Organised players account for just 28% of the overall milk market and expect their share to grow going forward. Also expect rising milk procurement prices to be passed on by B2C players, resulting in stable margins. Your Company is a market leader in the curd segment and is now looking to expand its product basket by entering into the fastest growing product like Yoghurt, through a Joint Venture Company. The motto of your company is to empower farmers by doing the following activities

? F acilitating loans for the purchase of cattle through commercial banks/ NBFCs

??Facilitating cattle insurance;

??Conducting veterinary camps for animals at frequent intervals;

??Supply of high quality cattle feed and fodder seeds;

??Helping to source good productive animals;

??Supply of milk analyzers for ensuring accurate measurement of milk quality and

??Ensuring timely payment to farmers.

In its bid to become a pan India player, your Company has expanded its collection and distribution of products to 12 states in India covering South, West and North India. It has almost 100% direct procurement network of 3 lakh dairy farmers across eight major milk producing States namely, Andhra Pradesh, Telangana, Karnataka, Tamil Nadu, Maharashtra, Rajasthan, Uttar Pradesh and Haryana. The direct route of milk procurement enables it to maintain quality. The company also operates 188 bulk coolers, chilling plants and procures 13.77 lakh liters of milk per day. It operates 16 own processing plants with installed milk processing capacity of 25.70 lakh liters per day.

Your Company procures 13.77 lakh litres of milk daily from 3 lakh farmers across eight states. The milk is directly procured from farmers which ensures greater consistency in milk quality and consistency in supply. The companys installed processing capacity is 26.70 lakh liters per day and chilling capacity is 20.51 Lakhs LPD. After processing 11.10 lakh litres of milk is sold to about 15 lakh households on a daily basis and the remaining is converted into value added products and products are available across 11 states viz. Andhra Pradesh, Telangana, Karnataka, Kerala, Tamil Nadu, Maharashtra, Odisha, NCR Delhi, Haryana, Uttar Pradesh and Uttarakhand.

The Board of Directors expressed their satisfaction about the way company has handled the business during the period of COVID-19 outbreak. The initial period of the outbreak i.e. second half of March, 2020 the sales of the Company was reduced by 20%, the ice-cream/Frozen Dessert sale was insignificant, however other value added product sales has reduced marginally subsequently it has gone up. During the period of COVID-19 outbreak the procurement price of milk has come down and volum increased.

During the financial year 2019-20, Dairy Division has increased milk Chilling capacity by 0.50 lakh LPD by commissioning of 7 units which includes Bulk chilling units, Mini Chilling units and chilling centres.

Renewable Energy Division:

Your Company strongly recognizes the responsibility towards protecting the environment. As a forward-looking enterprise, it is strongly committed to extending the Green footprint.

Your Company is taking a lot of initiatives to improve efficiencies of the company. Renewable energy was the major focus area in the last ten years. Now your Company has 10.39 MW of solar and wind power for captive consumption. Your Company is continuously investing in latest technologies and efficiencies to conserve energy. Renewable Energy Division of your Company had achieved the turnover of Rs. 939 Lakhs during the year under review

Subsidiary / Associate Companies

Your Company as on March 31, 2020 is having following subsidiary/associate/joint venture Companies:

Heritage Nutrivet Limited (CIN:U15400TG2008PLC062054)

A wholly owned Subsidiary Company operating with Animal

Nutrition and one of the leading Live Stock Feed & Feed

Supplements Company in Southern and Western India, covering over 3 lakh farmers spread across five states viz., Andhra Pradesh, Telangana, Tamil Nadu, Karnataka and Maharastra. Product quality is pivotal in endeavor towards "HEALTHY MILCH ANIMAL HAPPY FARMER"

Skil Raigam Power (India) Ltd (CIN:U40102TG2009PLC063671)

A associate Company is under process to setup a hydro power plant at Raigam, in Arunachal Pradesh. Your Company is having 44.83% of shareholding in this Company.

Heritage Novandie Foods Pvt Ltd (CIN:U74999TG2017PTC120860)

A 50:50 Joint Venture Company between Heritage Foods Limited (HFL), Hyderabad, India and NOVANIDE, Maromme, France with an object to manufacture and market various types of Yoghurt and other dairy products in India. Heritage Novandie

Foods Private Limited (HNFPL) is in the process of building its manufacturing facility in Palghar District, Maharashtra.

The details of transaction are available in the AOC-1 which is forming part of the Annual Report. The gist of financial performance of the Subsidiary/Associate/Joint Venture companies is as follows.

Rs. in Lakhs

Particulars

Heritage Nutrivet Ltd (Wholly Owned Subsidiary) year ended on

Skil Raigam Power (India) Ltd (Associate) year ended on

Heritage Novandie Foods Pvt Ltd (Joint Venture) year ended on

31/03/2020 31/03/2019 31/03/2020 31/03/2019 31/03/2020 31/03/2019
Total Income 10,458.63 7,403.82 - - 11.46 1.89
Total Expenses 10,388.26 7,367.03 2.21 2.09 151.54 78.59
Profit/ (Loss) before tax 70.37 36.78 (2.21) (2.09) (140.08) (76.70)
Tax expense Reversal of taxes of earlier years - - - - - -
Current tax expense 8.88 31.26 - - - -
Deferred tax benefit (5.87) (89.58) - - - -
Profit/ (loss) for the year 67.36 95.11 (2.21) (2.09) (140.08) (76.70)

During the financial year under review, your Company has not added/removed any subsidiaries, joint ventures or associate companies.

In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and audited accounts of each of its Subsidiary, Associate and Joint Venture are available on the website of your Company www.heritagefoods. in. These documents will also be available for inspection during the business hours of the Company at its registered office in Hyderabad, India.

Quality

Your Company continues the journey of delivering value to its consumers/customers through significant investments in quality programs. While sustaining existing external benchmarks and certifications, your further enhanced the programs and initiatives to renew the commitment to the culture of quality. Your Company adheres to international quality standard certifications such as ISO 22000:2005(FSMS), ISO 9001:2015(QMS), OHSAS 18001:2007, ISO 14001:2015 (EMS), ISO 50001:2011(EnMS) and Halal Certification by JUHF Mumbai.

Your Company has also received renewal of AgMark, BIS and EIA certificates.

The Quality department of your Company handles large change management initiatives to drive quality and productivity improvements across the Company, using various techniques and updated technologies.

Branding

Your Company is working on new products development which is in line with the current consumer trend and our mission of brining health & happiness to every home. On the communication front company is focusing on social & digital media platforms as these have become an important source of seeking information leading to brand evaluation & adoption.

Awards & Recognitions

During the financial year 2019-20 your Company has received the following awards and recognitions.

??The Company has been awarded as "Best Customer

Service Provider of the Year" organized by India Food

Safety Summit Awards 2019 in Delhi during December 2019

??The Company has been awarded as "Technology Innovator of the Year" organized by India Food Safety Summit Awards 2019 in Delhi during December 2019

??The Company has been awarded as "Most Integrated Company" at India Dairy Award 2020 organized by Agriculture Today Group in Delhi during January 2020.

Human Resources and Industrial Relations

Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. To ensure good human resources management, your Company focused on all aspects of the employee lifecycle. This provides a holistic experience for the employee as well. During their tenure at the Company, employees are motivated through various skill- development program, engagement and volunteering programs. Your Company has a structured induction process at all locations and management development programs to upgrade skills of managers. Objective appraisal systems based on Key Result Areas are in place for all employees. Your Company is committed to nurturing, enhancing and retaining talent through superior Learning & Organizational Company added new certifications and

Development. This is a part of Corporate HR function and is a critical pillar to support the organizations growth and its sustainability in long run. The total strength of your Company employees at the end of financial year 2019-20 was 3130

Investor Relationship

Your Company continuously strives for excellence in its Investor Relationship (IR) engagement with Domestic and International investors and has set up feedback mechanism to measure IR effectiveness. Structured conference calls and periodic investor/analyst interactions, participation in investor conferences, quarterly earnings calls and annual analyst meet with the Executive Director, President and Business Heads were organised during the year. Your Company always believes in leading from the front with emerging best practices in IR and building a relationship of mutual understanding with investor/ analysts. Your Company ensures that relevant information about the Company is available to all the investors by uploading all such information at the Companys website and the Stock Exchanges where the shares of the company are listed.

Credit Rating of Securities

The details of the credit rating are as follows:

(a) Credit rating obtained in respect of debts : Heritage Foods Limited

(b) Name of the credit rating agency : Credit Rating Information Services of India Limited (CRISIL) i. Long term Rating : CRISIL A/Stable ii. Short term Rating : CRISIL A1

(c) Date on which the credit rating was obtained : 17th Aprl, 2020

(d) Revision in the credit rating : No

(e) Reasons provided by the rating agency for a downward revision : NA

Particulars of Employees and Related Disclosures

The table containing the names and other particulars of employees in accordance with the provisions of Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. A statement containing the names of every employee employed throughout the financial year and in receipt of remuneration of Rs. 102 lakh or more per annum or employed for part of the year and in receipt of Rs. 8.50 lakh or more in a month under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time are provided in Annexure 2A & Annexure 2B to this report.

Corporate Governance

Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organizations brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders expectations. It is imperative that your companys affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of the stakeholders.

In terms of Regulation 34 of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements)

Regulations, 2015 (hereinafter "Listing Regulations") as amended from time to time, a Report on Corporate Governance

Auditors along with Compliance Certificate of the Company forms integral part of this Annual Report.

Auditors certificate on Corporate Governance

As required by SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the auditors certificate on corporate governance is forming part of the Annual Report.

Board Diversity

Your Company recognizes and embraces the importance of a diverse board for its success. Your Company believes that thought, a truly diverse board will leverage differences perspective, knowledge, skill and industry experience, cultural and geographical background, age and gender, which will help the Company, retain its competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Policy is available in the Company website i.e. www.heritagefoods.in > Investor > Policies.

Meetings of the Board

The Board met Eight (8) times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Policy on Directors Appointment and Remuneration

The current policy is to have an appropriate mix of Executive and Non-executive & Independent and Women Directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2020, the Board consists of 7 members, 2 of them are Executive/Whole-time directors, 1 is Non-Executive Director, 1 is Non-Executive Independent Woman Director and 3 are Non-Executive Independent Directors. The Board periodically evaluates the need for change in its composition and size. The policy of your Company on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters as provided under Subsection (3) of Section 178 of the

Companies Act, 2013, and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 was adopted by the Board. It is affirmed that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company.

Declaration from Directors

Your Company has received necessary declaration from all directors stating that they are not debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Reserve Bank of India, Ministry of Corporate Affairs or any such other Statutory Authority.

Declaration by Independent Directors

Your Company has received necessary declaration from each independent director stating that they meet the criteria prescribed for independence under Section 149 of the Companies Act, 2013 and Regulation 25 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and the Board has confirmed its veracity and taken the same on record.

Board Evaluation

As per the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time the Nomination and Remuneration Committee laid down criteria for performance evaluation of individual director(s), the board and its committee(s). Accordingly, an annual evaluation was carried out for the Boards performance, its Committees and individual director(s). The Board performance evaluation is carried out through a structured questionnaire which provides a clear and valuable feedback for Board effectiveness and highlighting areas for further development. The following are some of the broad issues that are considered in performance evaluation questionnaire

Criteria for evaluation of Board and its Committees:

??Ability to act on a fully informed basis, in good faith, with due diligence and in the best interest of the company and the stakeholders.

??Optimum combination of knowledge, skill, experience and diversity on the Board as well its Committees.

??Relationships and effective communication among the Board members.

??Effectiveness of individual non-executive and executive directors and Committees of Board.

??Quality of the discussions, general information provided on the company and its performance, papers and presentations to the Board.

??Risk management as well as processes for identifying and reviewing risks.

??Well- defined mandate and terms of reference of Committee.

Criteria for evaluation of Individual Directors:

??Attendance at Board as well as Committee Meetings

??Procurement of Information, preparation for Board Meetings and value of contribution at meetings

??Relationships with fellow Board members, the company secretary and senior management and mutual trust and respect they stimulated within the Board.

??Keeping update with the latest developments in the areas of governance and financial reporting

??Willingness to devote time and effort to understand the company and its business

??Providing necessary guidance using their knowledge and experience in development of corporate strategy, major plans of action, risk policy, and setting performance objectives.

??Independence exercised in taking decisions, listening to views of others and maintaining their views with resolute attitude

??Ability in assisting the Company in implementing the best corporate governance practices.

??Capability in exercising independent judgement to tasks where there is potential conflict of interest

??Commitment in fulfilling the directors obligations fiduciary responsibilities.

The Board of Directors received all evaluations from each Director including Board as a whole and its committee based on the above criteria, discussed various points and all points are satisfactory, no further action is required. There were no actions pending from the previous year observations. The detailed format of Board evaluation is available in the website of the Company i.e. https://www.heritagefoods.in/uploads/ investors/pdf/15870145475Board_&_Director_Evaluation_ Framework.pdf

Training of Independent Directors

Every new independent director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of your Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Companys strategy, operations, product and service offerings, markets, organization structure, quality and risk management etc.

Appointment/Re-Appointment

Dr. V Nagaraja Naidu (DIN: 00003730) Non-Executive Director of the Company retire by rotation and being eligible offers himself for reappointment at the ensuing Annual General Meeting as per the provisions of Section 152 of the Companies Act 2013 and other applicable provisions, if any, read with the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modifications(s) or re-enactment(s) thereof for the time being in force) and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015.

Retirements and Resignations

During the year none of the Directors retired or resigned from the Board.

Key Managerial Personnel

During the year under review, the Company is having the following persons as Key Managerial Personnel.

Name of the Official DIN/M. No Designation
Mrs. N. Bhuvaneswari 00003741 Vice Chairperson & Managing Director
Mrs. N. Brahmani 02338940 Executive Director
Mr. A Prabhakara Naidu FCA 200974 Chief Financial Officer
Mr. Umakanta Barik FCS 6317 Company Secretary
Dr. M Sambasiva Rao President

Committees of the Board

Currently, the Board has six committees i.e. Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Management Committee and Risk Management Committee. A detailed note on the Board and its committees is provided under the Corporate Governance Report section in this Annual Report. The composition of the committees and compliances, as per the applicable provisions of the Act and Rules, are as follows:

Name of the Committee Composition of the Committee Highlights of duties, responsibilities and activities
Audit Mrs. Aparna Surabhi (C) All recommendations made by the audit committee during the year were
committee Mr. D Seetharamaiah (M) accepted by the Board.
Mr. Rajesh Thakur Ahuja (M) Reviewing, with the management, the quarterly financial statements
Mr. N Sri Vishnu Raju (M) before submission to the Board for approval.
Dr V Nagaraja Naidu (M) Approval or any subsequent modification of transactions of the Company with related parties. Reviewing, with the management, the performance of statutory auditors and internal auditors, adequacy of internal control systems, etc.
Nomination and Mr. N Sri Vishnu Raju (C) The committee oversees and administers executive compensation, operating
Mr. D Seetharamaiah (M) under a written charter adopted by our Board of Directors.
Remuneration Committee Mr. Rajesh Thakur Ahuja (M) The nomination and remuneration committee has framed the nomination and remuneration policy.
Corporate Social Responsibility Mr. D Seetharamaiah (C) To formulate and recommend to the Board, a Corporate Social Responsibility
Committee Mr. N Sri Vishnu Raju (M) (CSR) Policy indicating activities to be undertaken by the Company in compliance with provisions of the Companies Act, 2013 and rules made there under.
Mrs. N Bhuvaneswari (M) To monitor the implementation of the CSR Policy of the Company from time to time
Stakeholders Dr. V Nagaraja Naidu (C) The committee reviews and ensures redressal of investor grievances.
Relationship Mr. D Seetharamaiah (M) The committee noted that all the grievances of the investors have been resolved during the year.
Committee Mr. N Sri Vishnu Raju (M)
Mrs. N Bhuvaneswari (M)
Risk Management Committee Mr. Rajesh Thakur Ahuja (C) The purpose of the committee is to assist the Board in fulfilling its corporate governance with regard to the identification, evaluation & mitigation of operational, strategic and environmental risks efficiently and effectively.
Mr. D Seetharamaiah (M)
Mr. N Sri Vishnu Raju (M)
Mrs. N Bhuvaneswari (M) The Company has developed and implemented a risk management framework that includes identification of elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company.
Management Mr. D Seetharamaiah (C) Setting the strategic direction to guide and direct the activities of the organization; management of the organization and its activities; Ensuringtheeffective and Monitoring the activities of the organization to ensure they are in keeping with the founding principles, objects and values.
Committee Mr. N Sri Vishnu Raju (M)
Mrs. N Bhuvaneswari (M)

C- Chairperson M-Member

Policies

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All the corporate policies are available in the Company website (www.heritagefoods.in/Corportate/ policies).

The policies are reviewed periodically by the Board and updated based on need and new compliance requirement.

In addition to its Code of Conduct and Ethics, key policies that have been adopted by the Company are as follows:

Name of the policy Brief description Web link
Whistleblower Policy (Policy on vigil mecha- nism) The Company has adopted the whistleblower mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the Companys code of conduct and ethics. It also provides for adequate safeguards against victimization of employees who availed the mechanism and also provides for direct access to the Chairperson of the Audit Committee. https://www.heritagefoods. in/uploads/investors/pdf/ 15578994930whistle-blow- er-policy.pdf

 

Insider Trading Policy and Code of Practices and Procedures for Fair The Company has adopted a Code of Conduct to Regulate, Monitor & https://www.heritagefoods.
Report Trading by Insiders and Code of Practices and Procedures for in/uploads/investors/pd-
Fair Disclosure of Unpublished Price Sensitive Information as per the f/15578999759code-of-practic-
Disclosure of Unpub- lished Price Sensitive Information SEBI (Prohibition of Insider Trading) Regulation 2015, with a view to es.pdf regulate trading in securities by the Directors and Designated Persons while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed and other certain situations. All Board of Directors and the designated employees have confirmed compliance with the Code.
Nomination and Remuneration Policy This policy formulates the criteria for determining qualifications, https://www.heritagefoods. competencies, positive attributes and independence for the in/uploads/investors/ appointment of a director (executive / non-executive) and also pdf/15579001597board-diver- the criteria for determining the remuneration of the directors, key sity- managerial personnel and senior management of the Company. remuneration-policy.pdf
Corporate Social Responsibility Policy The policy outlines the Companys strategy to bring about a positive https://www.heritagefoods. impact on Society through programs relating to hunger, poverty, in/uploads/investors/ pd- education, healthcare, environment etc., as per the provisions of the f/15578997634csr-policy.pdf Companies Act, 2013.
Policy for Determining Material Subsidiaries The policy is used to determine the material subsidiaries and material https://www.heritagefoods. non-listed Indian subsidiaries of the Company and to provide the in/uploads/investors/ governance framework for them. pdf/15589549991policy-onde- termination- of-materialityevents.pdf
Related Party Transac- tion Policy The policy regulates all transactions between the Company and its https://www.heritagefoods. related parties in/uploads/investors/ pdf/15578998544rpt-policy.pdf
Policy on Preservation of Documents The policy deals with the preservation of corporate records of the https://www.heritagefoods. Company. in/uploads/investors/ pdf/15579003020 policy-on- preservation- of-doc.pdf
Archival Policy The policy deals with the retention and archival of corporate records https://www.heritagefoods. of the Company. in/uploads/investors/ pdf/ 15589549355archival-policy.pdf
Business Responsibility Policy This Policy endorses the Companys commitment to follow principles https://www.heritagefoods. and core elements, in conducting its business, as laid down in the in/uploads/investors/ National Voluntary Guidelines on Social, Environmental and Economic pdf/15579004658hfl-br-policy. responsibilities of Business. pdf
Dividend Distribution Policy This Policy is to ensure the right balance between the quantum of https://www.heritagefoods. Dividend paid and amount of profits retained in the business for var- in/uploads/investors/pdf/ ious purposes. 15579009416hfl-dividenddistri - bution-policy.pdf
Policy on Determination of Materiality of Events The Policy is to determine materiality of events or information relat- https://www.heritagefoods. ing to the Company and to ensure timely and accurate disclosure on in/uploads/ investors/pd- all material matters concerning the Company. f/15589549991policy-ondeter- mination-of-materialityevents. pdf

Auditors & Auditors Report

Statutory Auditors:

As per Section 139 of the Companies Act, 2013 (‘the Act), read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company at the 25th Annual General Meeting held in the year 2017, approved the appointment of M/s. Walker Chandiok

& Co. LLP, Chartered Accountants (FRN 001076N/500013), as the Statutory Auditors of the Company for a term of 5 years i.e. from the conclusion of 25th Annual General Meeting till the conclusion of 30th Annual General Meeting of the Company to be held in the year 2022.

Pursuant to amendments in Section 139 of the Companies Act, 2013, the requirements to place the matter relating to such appointment for ratification by members at every annual general meeting has been omitted with effect from 7th May, 2018. The Board of Directors are empowered to fix the remuneration of the Statutory Auditor on yearly basis.

The Audit reports issued by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors on the Companys standalone and consolidated financial statements for the financial year ended 2019-20 is part of the Annual Report. There has been no qualification, reservation or adverse remark in their Report.

In terms of the Section 148 of the Companies Act, 2013 (‘the Act) read with Rule 8 of the Companies (Accounts) Rules, 2014, it is stated that the cost accounting records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013. As your Company is dealing with Skimmed Milk Powder, which require to maintain the cost records. Your Company has maintained all the required records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013 and the appointment of Cost Auditor is not applicable.

Secretarial Auditors and Secretarial Standards

The Secretarial Audit was carried out by Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Secunderabad - 500 094 for the financial year 2019-20. The Report issued by the Secretarial Auditors is annexed as Annexure-3 and forms integral part of this Report. There has been no qualification, reservation or adverse remark in their Report.

In terms of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board of Directors appointed Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Secunderabad - 500 094 as the Secretarial Auditors of the Company in relation to the financial year 2020-21. Your Company had received the written consent that the appointment will be in accordance with the applicable provisions of the Act and rules framed thereunder. In terms of the amended SEBI (Listing Obligation and Disclosure Requirements) Regulation, 2015 the Company has obtained Jyoti, theSecretarial Compliance certificate Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Secunderabad - 500 094 which is annexed as Annexure-3(i) and forms part of the Annual Report and the same was also intimated to the Stock Exchanges where the shares of the Company are listed.

Pursuant to Regulation 34(3) and Schedule V Para C clause (10) (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Company has obtained a certificate from Mrs. Savita Jyoti, Partner, M/s. Savita Jyoti Associates, Practicing Company Secretary (CP No:1796, M.No.3738), Secunderabad - 500 094 which is annexed as Annexure-3(ii) and forms part of the Annual Report and the same was also intimated to the Stock Exchanges where the shares of the Company are listed. You Company also has obtained a secretarial Audit Report of its wholly owned subsidiary company namely Heritage Nutrivet Limited from Mrs. Khusboo Laxmi Bhagat, Partner of M/s. KLB & Associates, Practicing Company Secretary (CP No:14703, M.No.9376), Hyderabad- 500016 which is annexed as Annexure-3(iii) and forms part of the Annual Report.

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India, New Delhi and that such systems are adequate and operating effectively.

Internal Auditors

The Company has external firms of Chartered Accountants across India acting as internal auditors that review internal controls and operating systems and procedures as per the scope of there audit. The Internal Audit Reports of the company are reviewed by the Audit Committee on monthly basis. The Internal Auditors across the company sends the quarterly audit observation to the Audit committee of the Board of Director and the same were presented quarterly by the lead internal auditor of the Company namely Mr. J Venkateswarulu, Partner of M/s. JVSL Associates, Chartered Accountants Hyderabad. The Audit Committee along with Statutory Auditors and the management of the Company were meets all Internal Auditors of the Company once in a year to review the internal control and its adequacy. The Board of Directors on recommendation of the Audit Committee has appointed/re-appointed the Internal Auditors of your Company every year in compliance with Section 138 of the Act read with the Companies (Accounts)

Rules, 2014. The detail list of Internal Auditors were provided in the corporate information section in the Annual Report.

Listing and Custodian Fees

The equity shares of your Company were listed at BSE Limited, Mumbai and National Stock Exchange of India Limited, Mumbai. The applicable annual listing fees were paid before the due date. The annual custodian fees has also been paid to the depositories before the due date.

Significant Material Orders Passed by the Regulators material orders passed by any There were no significant Regulators/Courts that would impact the going concern status of the Company and its future operations.

Extracts of Annual Return

An Extract of Annual Return in Form MGT-9 as per the provisions of Section 92 (3) and Section 134(3) of the Companies Act, 2013 and Rule 12 of Companies (Management and Administration) Rules, 2014 as amended from time to time, is provided in Annexure-4 to this report. It is also made available in the website of the Company i.e. www.heritagefoods.in.

Internal financial control and its adequacy

The Board has inter alia reviewed the adequacy and effectiveness of the Companys internal financial controls relating to its financial statements.

The Board has discussed with the Management of the Company the major financial risk exposures and the steps taken by it to monitor and control such exposures, overseen and reviewed the functioning of the Whistle Blower Mechanism and the findings in respect of the investigations conducted on frauds if any, which were material in nature and the actions taken by the Management, in this regard.

Your Company has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, given by the accuracy and completeness of the accounting records, and the timely preparation of financial information.

During the year, such controls were tested and no reportable material weakness in the design or operation was observed by the consultant appointed by the Board of Directors and Statutory Auditors of the company During the year no fraud by the Company or on the Company by its officers or employees has been notices and reported.

Internal Audit & Control Systems

Your Company has a well-defined and documented internal audit & control system, which is adequately monitored. Checks & balances and control systems have been established to ensure that assets are safe guarded, utilized with proper authorization and recorded in the books of account. The Internal control systems are improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements.

These are supplemented by internal audit of your Company carried out by reputed firms of Chartered Accountants across the locations of the Company. Your Company has an Audit Committee consisting of Four Non-Executive Independent Directors and one Non-Executive Director. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken. The Audit Committee of the Board of Directors reviews the adequacy and effectiveness of internal control system and suggests improvements if any for strengthening them. Your Company has a robust Management Information System which is an integral part of the control mechanism.

Declaration as per Section 134(3)(ca) of the Companies Act, 2013

During the year, the statutory auditors and secretarial auditor have not reported any instances of frauds committed by or against the Company by its Directors/Officers/ Employees to the Audit Committee or Board under section 143(12) of the Companies Act, 2013 and rules made thereof. Therefore no detail is required to be disclosed under Section 134 (3)(ca) of the Act.

CEO & CFO Certification

The Vice Chairperson & Managing Director and the Chief Financial Officer of the Company has given annual certification on financial reporting and internal controls to the Board in terms of Regulation 17(8) of the SEBI (Listing Obligation & Disclosure Requirements) Regulation, 2015. Vice Chairperson & Managing Director and the Chief Financial Officer also give quarterly certification on financial results while placing the financial results before the Board in terms of Regulation 33(2) (a) of the SEBI (Listing Obligation & Disclosure Requirements) the Regulation, 2015. The annual certificate Chairperson and Managing Director and the Chief Financial Officer forms part of this .Report Annual

Corporate Social Responsibility (CSR)

Your Company has been an early adopter of corporate social responsibility (CSR) initiatives. Along with sustained economic performance, environmental and social stewardship is a key factor for holistic business growth and has constituted a Corporate Social Responsibility Committee ("CSR Committee") in accordance with Section 135 of the Companies Act, 2013. CSR activities, as per the provisions of the Companies Act, 2013 and rules made thereof, may be undertaken by the Company or through a registered trust or a registered society. The CSR Committee of the Board evaluated various options to implement the CSR activities and decided to contribute the mandated CSR amount to the NTR Memorial Trust, Hyderabad, to carry out the activities such as promoting education, enhancing the vocational skill & supply of clean drinking water etc., as part of the CSR activities of the Company. As the NTR Memorial Trust is operating since 1997 towards the promoting and preventive of health care of the needy groups, meeting the educational needs of underprivileged students, advancing the concept of entrepreneurship and self-employment and offering support and relief during disasters and lot more other initiatives for the up-liftment of the backward and needy population in the society.

These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Companys CSR Policy. The Report as required under Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 on CSR activities is set out as Annexure-5 forming part of the Boards Report and the Policy has been uploaded on the Companys website at www.heritagefoods.in.

Heritage Farmer Welfare Trust (HFWT)

Apart from the mandatory CSR activities under the Companies Act, 2013 your Company continues to voluntarily support the following social initiatives through Heritage Farmers Welfare Trust (HFWT).

??Veterinary care and cattle management practices through Heritage Mobile Veterinary Clinics, (equipped with necessary tools and trained human resources) for providing door-step veterinary services to the Milch Animals and empowering cattle owners with advanced technology and knowledge on best cattle management and feeding practices. The Mobile veterinary vans conduct free health camps in the needy villages.

??Extending Insurance coverage for accidental death of farmer members, Incentive for fodder development & reward for Meritorious Students from farmers families.

??The HFWT impact during the year for Mobile Veterinary clinic as follows:

No of Cattles No of Cattle Health
Treated 1,63,714 Camps Organized 2,590
NoofArti cial No of Video Films
Inseminations 1,255 Shown 2,486

Business Responsibility Report (BRR)

Pursuant to regulation 34(2)(f) of SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015, top 500 listed entities based on their market capitalisation as on 31st March every year, are required to submit their Business Responsibility Report (BRR) as a part of their Annual Report. The Annual Report shall contain a Business Responsibility Report (BRR) describing the initiatives taken by the Company from an environmental, social and governance perspective. BRR has been designed as a tool to help companies understand the principles and core elements of responsible business practices and start implementing improvements which reflect their adoption in the manner the company undertakes its business. In compliance with the regulation, the Business Responsibility Report is annexed in Annexure-6 to the board report.

Energy Conservation, Technology Absorption & Foreign Exchange Earnings & Outgo

TheparticularsasprescribedunderSub-section(3)(m)ofSection 134 of the Companies Act 2013, read with the Companies (Accounts) Rules, 2014 are provided in the Annexure-7 to the Board Report.

Transfer of Un-Claimed Dividends and Shares

Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C(2) of the Companies Act, 1956] read with the Investor Education and Protection Fund (awareness and protection of Investors) Rules, 2001 as amended from time to time the unclaimed/unpaid dividend amount of 11,13,714/- (Eleven Lakhs Thirteen Thousand Seven Hundred Forteen Only) for the year 2011-12 was transferred to the Investor Education and Protection Fund during the financial year 2019-20. In compliance with the provisions of Section 124 of the Companies Act, 2013, the Company has transferred 20,900 equity shares belongs to 29 shareholders of the company to Investor Education and Protection fund Authority (IEPF) on December 09, 2019 of those shareholders who have not claimed the dividends for a continuous period of 7 years.

Pursuant to Section 124(5) of the Companies Act, 2013 [Section 205C (2) of the Companies Act, 1956] read with the Investor Education and Protection Fund (awareness and protection of Investors) Rules, 2001 as amended from time to time the unclaimed/unpaid dividend and the shares thereof pertaining for the financial year 2012-13 shall be transferred to the Investor Education and Protection Fund during the financial year 2020-21.

The information in respect of unclaimed/unpaid dividend & shares thereto and the last date for claiming the dividend are given below:

Unclaimed/Unpaid Dividend as on March 31, 2020

Financial year ended Date of Declaration of Dividend Last date for claiming unpaid Dividend Amount outstanding No of Shares
(Rs. in Rupees)
2012-13 17-07-2013 19-08-2020 13,02,991 434330
2013-14 26-09-2014 29-10-2021 26,85,012 895004
2014-15 24-09-2015 28-10-2022 23,00,142 766714
2015-16 19-08-2016 22-09-2023 1,797,153 599051
2016-17 23-08-2017 25-09-2024 3,465,584 866396
2017-18 30-08-2018 02-10-2025 1,583,812 791906
2018-19 30-08-2019 02-10-2026 1,510,088 755044

The voting rights on the shares outstanding shall remain frozen till the rightful owner of such shares claims the shares. The company sends reminders to the shareholders concerned to claim the unclaimed and unpaid dividends & shares thereto before they are transferred to the IEPF Authority as per the applicable provisions.

The shareholders whose shares got transferred to IEPF Authority shall claim the dividends and shares from IEPF Authority by submitting an online application in the prescribed Form No. IEPF-5 available on the website www.iepf.gov.in and the procedure prescribed thereon. The frequented asked questions (FAQ) about claim is attached in the annual report for benefit the shareholders.

Mr. Umakanta Barik is the Nodal Officer who was appointed by the Company under the provisions of IEPF.

Risk Management

Your Company have constituted a Risk Management Committee pursuant to Section 134 (3) (n) of the Companies Act, 2013 & Regulation 21 of SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015, which has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Companys enterprise wide risk management framework; and (b) Overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, Information Technology, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.

The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Risk Management Procedure shall be reviewed by the Risk Management Committee and Board of Directors on a half- yearly basis at the time of review of Financial Results of the Company.

The policy is available in the Company website: www. heritagefoods.in>Investor>policies

Policy on Sexual Harassment

The Company has always believed in providing a safe and harassment free workplace for every women working in Companys premises, through various interventions and practices. The Company has adopted policy and constituted the Internal Complaint Committee under Prevention of Sexual Harassment of Women at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has not received any complaints during the year. The Company regularly conducts awareness programmes for its employees.

The following are the summary of sexual harassment complaints received and disposed off during the

Sl No Particulars Status of the No. of complaints received and disposed off
Number of complaints on 1 Nil
sexual harassment received Number of complaints disposed 2 Nil
off during the year Number of cases pending for 3 Not Applicable
more than ninety days Number of workshops or awareness programmes 4 against sexual harassment carried out The Company regularly conducts necessary awareness programmes for its employees
Nature of action taken by the 5 employer or district officer Not Applicable

Vigil Mechanism policy

The Board of Directors of the Company had adopted the Whistle Blower Policy in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)

Regulations, 2015. A mechanism has been established for employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the Chairperson of the Audit Committee in exceptional cases. The Audit Committee reviews periodically the functioning of whistle blower mechanism. No complaint have been received during the Financial Year ended March 31, 2020. No personnel have been denied access to the Audit Committee. The details of said vigil mechanism are given in Corporate Governance Report, which forms part of this Annual Report.

A copy of the Whistle Blower Policy is available in the companys website i.e. www.heritagefoods.In.

Indian Accounting Standards (Ind AS)

The Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2017 pursuant to Ministry of Corporate Affairs notification of the Companies (Indian Accounting Standards) Rules, 2015. The standalone and consolidated financial statements of the Company, forming part of the Annual Report, have been prepared and presented in accordance with all the material aspects of the Indian Accounting Standards (‘Ind AS) as notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules 2015 (by Ministry of Corporate Affairs (‘MCA)) and relevant amendment rules issued thereafter and guidelines issued by the Securities Exchange Board of India ("SEBI").

Prevention of Insider Trading Code

As per SEBI (Prohibition of Insider Trading) Regulation, 2015 as amended from time to time, the Company has adopted a Code of Conduct for Prevention of Insider Trading. The Company has appointed Mr. Umakant Barik, Company Secretary of the Company as Compliance Officer, who is responsible for setting forth procedures and implementation of the code of conduct for trading in Companys securities. During the year under review, there has been due compliance with the said code.

Directors Responsibility Statement as required under Section 134 (3)(c) & (5) of the Companies Act, 2013.

The financial statements are prepared in accordance with the provision of Section 129 of the Companies Act, 2013 read with Schedule III of the Companies Act, 2013 and the rules made thereof, Ind-AS and Generally Accepted Accounting Principles (GAAP) under the historical cost convention on accrual basis except the sale proceeds received under REC Mechanism of the Renewable Energy. GAAP comprises mandatory accounting standards as prescribed under Section 133 of the Companies Act, 2013 (‘the Act), read with Rule 7 of the Companies (Accounts) Rules, 2014, the provisions of the Act and guidelines issued by the Securities and Exchange Board of India (SEBI). There are no material departures from prescribed accounting standards in the adoption of these standards.

The Board Directors to the best of their knowledge and understand confirm that:

??In the preparation of the annual accounts (Standalone & Consolidated) for the financial year 2019-20, the applicable accounting standards have been followed along with proper explanation relating to material departures.

??They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2019-20 and of the profit and loss of the Company for that period.

??They have taken Proper and maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities if any,

??The annual accounts of the company have been prepared on a going concern basis.

??They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;and

??They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Acknowledgement and Appreciation

The Directors regrets the loss of life due to Covid-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety to fight this pandemic.

The Board takes this opportunity to thank all consumers, customers, farmers, vendors, investors, bankers and Statutory Authorities for their continued support during the year. The Board also wishes to place on record its sincere appreciation of the effort/ contribution made by its employees at all levels for their hard work, dedication and commitment. The enthusiasm and unstinting efforts of the employees have enabled the Company to remain an industry leader. The Companys consistent growth was made possible by their hard work, solidarity, cooperation and support and look forward to their continued support in the future.