Hester Biosciences Ltd Directors Report.

Your Directors are pleased to present the Thirty Second Annual Report and the Audited Financial Statements for the financial year ended on 31 March 2019.

FINANCIAL RESULTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014.

The standalone and Consolidated financial performance of the Company, for the financial year ended on 31 March 2019 is summarised below:

Rs. in Million

Standalone

Consolidated

Particulars For the year ended on 31 March 2019 For the year ended on 31 March 2018 For the year ended on 31 March 2019 For the year ended on 31 March 2018
Revenue from operations and other income 1,742.84 1,371.30 1,852.77 1,389.60
Profit before interest, depreciation, amortisation expenses and tax (PBIDT) 708.60 514.73 752.45 498.17
Less: Finance Cost 35.43 23.15 66.34 40.36
Less: Depreciation Amortisation Expenses 75.66 54.51 117.55 96.59
Profit before tax (PBT) 597.51 437.07 568.56 361.22
Less: Tax Expenses 158.99 131.49 161.62 130.55
Profit after tax (PAT) 438.52 305.58 406.94 230.67
Profit for the year 438.52 305.58 406.94 230.67
Attributable to:
Owners 438.52 305.58 415.67 256.21
Non-Controlling Interest - - (8.74) (25.54)
Other Comprehensive Income /(Loss) (2.38) (1.22) (2.51) (1.06)
Total Comprehensive Income 436.14 304.36 404.42 229.61
Attributable to:
Owners 436.14 304.36 413.09 255.08
Non-Controlling Interest - - (8.66) (25.47)
Opening Balance in Retained Earnings 798.95 609.09 728.97 594.88
Amount available for appropriation 1,235.09 913.45 1,133.39 843.47
Less: Dividend (including Dividend Distribution Tax) on equity shares 102.55 64.50 102.55 64.50
Less: Transfer to general reserve - 50.00 - 50.00
Closing Balance in Retained Earnings 1,132.54 798.95 1,030.84 728.97
Earnings Per Share (Basic / Diluted) (Face Value of Share 10 each) 51.55 35.92 47.84 27.12

RESULTS OF OPERATIONS

Sales

Your Company posted a turnover of 1,711.87 million in the financial year ended on 31 March 2019, as compared to 1,352.53 million in the previous year.

Profitability

Your Companys profit before tax for the year ended 31 March 2019 was recorded at 597.51 million, as compared to 437.07 million in the previous year.

Earnings Per Share

EPS was at 51.55 as on 31 March 2019 as against 35.92 as on 31 March 2018.

Net Worth

The Companys net worth as on 31 March 2019 was at 1,794.36 million as compared to 1,460.78 million as on 31 March 2018.

DIVIDEND

During the year, your Directors declared and paid 1st interim dividend of 2.00 per equity share and 2nd interim dividend of 2.00 per equity share for the financial year 2018-19.

The resolution to pay interim dividends was passed in the meeting held on 10 August 2018 and 29 October 2018. Further, your Directors have recommended a final dividend payment of 7.00 per equity share for the financial year 2018-19, making a total of 11.00 per equity share for the financial year as compared to 10 per equity share for the last year. This final dividend is subject to approval by the shareholders at the ensuing Annual General Meeting. The total pay-out of dividend is 21.34 per cent of the stand-alone profit, and is in line with the dividend policy adopted by the Company.

The total dividend appropriation (excluding dividend tax) for the current year is 93,575,515 as against 85,068,650 in the earlier year.

During the year, the unclaimed dividend pertaining to the dividend for the year ended 31 March 2011 was transferred to Investors Education and Protection Fund.

SHARE CAPITAL

The paid-up equity share capital as on 31 March 2019 stood at 85.07 million.

REVIEW OF OPERATIONS

The financial year saw an increase in sales by 27 per cent and an increase in bottom line by 44 per cent.

The growth in sales was as per forecast while the growth in bottom line was more than the forecast.

For better management, we restructured the divisions of the company. The divisions now are follows:

• Poultry Healthcare

• Animal Healthcare

• Veterinary Social Business

The poultry healthcare division, comprising of vaccines and health products, witnessed a growth of 14.71 per cent, an increase in sales to 1,306.20 million from 1,138.74 million in the previous year. The growth has been more than the growth on the poultry industry, thereby indicating that we have improved our market share.

The animal healthcare division witnessed a growth of 98.70 per cent, an increase in sales to 354.85 million as against 178.58 million in the previous year. This growth has come evenly between vaccines and health products. Vaccines growth has come mainly through government tenders while health products have given a good growth in the trade market.

Exports sales registered a growth of 8.87 per cent, an increase in sales to 138.26 million as against 126.99 million in the previous year. Exports were below forecasts.

The attributable factors were mainly external. Delay in registrations and slow international tender movements were the main causes. Our pursuit continues to consolidate international business and we hope to make big strides in this financial year as well as next year.

Our CARE credit rating was reaffirmed and assigned as follows:

• Long-term Bank Facilities rating ‘A-: Stable ("A" Minus, Outlook: Stable)

• Long-term/ Short-term Bank Facilities rating ‘A-: Stable (A" Minus, Outlook: Stable) / ‘A2

• Short-term rating ‘A2

We continue to hold the following certifications:

1. WHO - GMP

2. GLP (Good Laboratory Practices)

3. ISO 9001:2008

4. ISO 14001:2004

5. OHSAS 180001:2007

6. DSIR approved R&D Centre

CONSOLIDATED FINANCIAL STATEMENTS

The Groups consolidated total income from operations is 1,852.77 million and total comprehensive income attributable to owners equity after non-controlling interest is 404.42 million for the financial year 2018-19 as compared to the Groups consolidated total income from operations of 1,389.59 million and total comprehensive income attributable to owners equity after non-controlling interest of 229.61 million for the previous financial year 2017-18. Consolidated financial results include the financial results of following entities:

1. Hester Biosciences Nepal Private Limited - Foreign Subsidiary

2. Texas Lifesciences Private Limited - Subsidiary

3. Hester Biosciences Africa Limited - Foreign Wholly-owned Subsidiary

4. Hester Bioscience Kenya Limited - Foreign Wholly-owned Subsidiary

5. Hester Biosciences Tanzania Limited - Foreign Step-down Subsidiary (Wholly-owned Subsidiary of Hester Biosciences Kenya Limited)

In accordance with the Indian Accounting Standard (Ind AS)

- 110 Consolidation of Financial Statements and as provided under the provisions of the Companies Act, 2013 (hereinafter referred to as "Act") read with Schedule III to the Act and Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, incomes, profits and other details of the Company, its subsidiary Companies after elimination of minority interest, as a single entity.

SUBSIDIARY, JOINT VENTURE AND ASSOCIATE COMPANIES

As on 31 March 2019, your Company has two wholly-owned subsidiary Company namely, Hester Biosciences Africa Limited and Hester Biosciences Kenya Limited; and two subsidiary Companies namely, Hester Biosciences Nepal Private Limited and Texas Lifesciences Private Limited.

Further, there has been no material change in the nature of business of the subsidiaries.

During the year, Hester Biosciences Limited incorporated 100% wholly-owned subsidiary Hester Biosciences Kenya Limited in Kenya.

The audited financial accounts of the Subsidiary Companies will be available for inspection during business hours at our registered office. Further, the financial highlights of Subsidiaries are part of this Annual Report as Annexure-2 as prescribed in Form AOC-1.

As provided under Section 129(3) of the Companies Act, 2013 and Rules made thereunder a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries as approved by the Board may be accessed on the Companys website at the link:https://www.hester.in/s/ Policy-for-Determining-Material-Subsidiaries-9m3y.pdf

The performances of the Subsidiary Companies as under:

Hester Biosciences Nepal Private Limited (HBNPL)

HBNPL is a subsidiary of Hester Biosciences Limited.

Hester India holds 65% stake in HBNPL, hence becoming a subsidiary of Hester Biosciences Limited. HBNPL is in the business of manufacturing veterinary vaccines in Nepal.

Texas Lifesciences Private Limited (Texas Lifesciences)

Teaxs Lifesciences is a subsidiary of Hester Biosciences Limited and holds 54.80% stake. Texas Lifesciences is in the business of manufacturing and supplying pharma formulations, tablets, capsules, powder and oral liquid for human and veterinary markets.

Hester Biosciences Africa Limited (HBAL)

HBAL is 100% wholly-owned subsidiary of Hester Biosciences Limited in Tanzania. HBAL will be in the business of manufacturing veterinary vaccines and animal health product in Tanzania. HBAL may commence commercial production at the end of 2020.

Hester Biosciences Kenya Limited (HBKL)

During the year, Hester Biosciences Limited incorporated a 100% wholly-owned subsidiary in the name of Hester Biosciences Kenya Limited (HBKL) in Kenya. HBKL is in the business of Trading of veterinary vaccines and animal health product in Kenya.

Hester Biosciences Tanzania Limited (HBTL)

During the year, HBKL has incorporated and invested in wholly-owned subsidiary namely, Hester Biosciences Tanzania Limited (HBTL), in Tanzania. HBTL is the step-down subsidiary of Hester Biosciences Limited. HBTL is in the business of Trading of veterinary vaccines and animal health product in Tanzania and other Africa region.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointment and Resignation of Directors

During the year, there is no appointment and resignation was done under review.

None of the Directors of the Company is disqualified for being appointed as Director as specified in Section 164 (2) of the Companies Act, 2013.

Retirement by Rotations

In accordance with the provisions of Section 152 (6) of the Act and in terms of the Articles of Association of the Company, Dr. Bhupendra Gandhi (DIN: 00437907) will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

Profile of Directors seeking Appointment/Re-appointment

As required under Regulation 36 (3) of the SEBI (LODR) Regulations, 2015, particulars of Directors seeking appointment/re-appointment at the ensuing Annual General Meeting are annexed to the notice convening 32nd Annual General Meeting.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013 and16 (b) of the Listing Regulations from Independent Directors confirming that they are not disqualified for continuing as an Independent Director.

Training of Independent Directors

To familiarise the new inductees with the strategy, operations and functions of our Company, the executive directors/ senior managerial personnel make presentations to the inductees about the Companys strategy, operations, product and service offerings, organisation structure, finance, human resources, technology, quality and facilities. Further, the Company has devised a Familiarisation Programme for Independent Directors as per Regulation 46 (2) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same has been placed on the website of the Company at: https:// www.hester.in/s/Policy-on-Familarization-Programme-for-the- Independent-Directors-bwm9.pdf

Key Managerial Personnel

Mr. Rajiv Gandhi, CEO & Managing Director, Mr. Jigar Shah, Chief Financial Officer and Mr. Vinod Mali, Company

Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013. During the year, Mr. Vinod Mali appointed as Company Secretary and Compliance Officer in place of Ms. Amala Parikh, who has resigned from the post of Company Secretary of the Company with effect from 14 May 2018.

Evaluation of Performance of the Board, its Committees and Individual Directors

During the year, the evaluation of the annual performance of individual directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act and relevant Rules and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations, 2015 and the circular issued by SEBI dated 5 January 2017 with respect to Guidance Note on Board Evaluation.

The Nomination and Remuneration Committee had approved the indicative criteria for the evaluation based on the SEBI Guidance Note on Board Evaluation.

The evaluation for the performance of the Board as a whole and of the Committees were conducted by questionnaires.

In a separate meeting of Independent Directors held on 29 January 2019, performance of Non-Independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-Executive Directors.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as structure and diversity of the Board, experience of Directors, strategy and performance evaluation, secretarial support, evaluation of risk, evaluation of performance of the management and feedback, independence of the management from the Board and other indicators. The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as knowledge and competency, fulfillment of functions, availability and attendance, initiative integrity contribution and commitment, independence, independent views and judgement among other components.

Nomination and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy on selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration policy has amended by the Board of Directors in their meeting held on 29 January 2019, on Recommendation of Nomination and Remuneration Committee. The Remuneration Policy is stated in the Corporate Governance Report, which is a part of this Annual Report.

Board of Director Meetings

The Board consists of eight members as on 31 March 2019, four of whom are Promoters and Non-Independent Directors and the remaining four are Independent Directors.

Regular meetings of the Board are held at least once in a quarter, inter-alia, to review the quarterly, half yearly and annual financial results of the Company. Additional Board meetings are convened to discuss and decide on various business policies, strategies and other businesses.

During the year under review, the Board of Directors of the Company met four times: 14 May 2018, 10 August 2018, 29 October 2018 and 29 January 2019.

Committees of Board of Directors

Your Company has several Committees which have been established as part of best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders Grievances and Relationship Committee

• Corporate Social Responsibility Committee

• Management Committee

• Share Transfer Committee

A detailed note on the committees with respect to composition, meetings, powers and terms of reference is provided under the Corporate Governance Report section in this Annual Report.

Terms of References of Committees and Policies

The Board of Directors has amended the Terms of References of Audit Committee, Nomination and Remuneration Committee and Stakeholders Grievances and Relationship Committee in their meeting held on 29 January 2019, on recommendation from respective committee to amend the same. The Board of Directors has also made changes in some policies like, Related Party Transaction Policy,

Policy for Determining Material Subsidiaries, Nomination and Remuneration Policy and Code of Conduct for Board Members and Senior Management Personnel in their Meeting held on 29 January 2019, as SEBI Regulations amended time to time.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE ("CSR")

The CSR Committee is responsible for indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the Corporate Social Responsibility Policy and recommending the amount to be spent on CSR activities. The details of membership of the Committee & the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company and can be accessed through the website of the Company: www.hester.in

Corporate Social Responsibility (CSR) Committee and Statutory Disclosures with respect to CSR Committee and an Annual Report on CSR Activities form part of this Directors Report as Annexure-1.

PUBLIC DEPOSITS

During the period under review, the Company has not accepted deposits from shareholders and public falling within the ambit of Section 73 of the Companies Act, 2013 and rules made thereunder.

FINANCE

During the year, State Bank of India has revised total credit facilities of the Company to 556.80 million for working capital requirement and capital expenditures. The Company has raised the additional finance through Working Capital Demand Loan (unsecured) facility from HDFC Bank Limited and Yes Bank Limited.

INSURANCE

Assets of your Company are adequately insured against various perils.

VIGIL MECHANISM

The Company has established a vigil mechanism and framed a Whistle Blower Policy for Directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or Ethics Policy. The functioning of vigil mechanism is reviewed by the Audit Committee from time to time. No whistle blower has been denied access to the Audit Committee of the Board. The Whistle Blower Policy of the Company is available on the Companys website.

DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has formulated and adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

The Company always endeavours to create and provide an environment to its employees and external individuals engaged with the Company that is free from discrimination and harassment including sexual harassment. The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment.

During the year, under review there were no incidences of sexual harassment reported and received.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and Regulations 17 to 27 and 46 of the SEBI (LODR) Regulations, 2015 and amendments therein. A separate section on detailed report on Corporate Governance practice followed by the Company under SEBI (LODR) Regulations, 2015 along with a certificate from Practicing Company Secretary, confirming the compliance forms a part of this report. The Board of Directors supports the basic principles of corporate governance and lays strong emphasis on transparency, accountability and integrity.

SECRETARIAL STANDARDS

Secretarial Standards for the Board of Directors and General Meetings (SS-1 & SS-2) are applicable to the Company.

The Company has complied with the provisions of both Secretarial Standards.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your attention is drawn to the perception and business outlook of the management for your Company for the current year and for the industry in which it operates including its position and perceived trends in near future.

The Management Discussion and Analysis Report, as required under Regulations 34 of the SEBI (LODR) Regulations, 2015 is attached and forms part of the Annual Report.

AUDITORS

Statutory Auditor and Audit Report

Shah Karia & Associates (Firm Registration No. 131546W), Chartered Accountants, Ahmedabad, was appointed as a statutory auditor of your Company to hold Office until the conclusion of the 32nd AGM.

The Board of Directors of the Company has re-appointed Shah Karia & Associates, Chartered Accountants,

Ahmedabad, as statutory auditor of the Company in their Board meeting held on 7 May 2019, subject to approval of the members in the ensuing Annual General Meeting for a period of one year from the conclusion of Thirty Second Annual General Meeting till the Conclusion of next Annual General Meeting. The Audit Committee has considered the qualifications and experiences of the statutory auditor and has recommended their re-appointment. Written consent of the auditor together with a certificate that the appointment, if made, shall be in accordance with the conditions specified in Rule 4 of the Companies (Audit and Auditors) Rules, 2014 has been received.

The Board has duly reviewed the Statutory Auditors

Report of Shah Karia & Associates for the year ended on 31 March 2019 and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation/ clarification by the Board of Directors as provided under Section 134 of the Companies Act, 2013.

Internal Auditor and Audit Report

Naresh J. Patel & Co., Chartered Accountants, Ahmedabad, has been the internal auditor of the Company for the FY 2018-19. The Internal Auditor is appointed by the Board of Directors of the Company on a yearly basis, based on the recommendation of the Audit Committee. The Internal Auditor reports its findings on the internal audit of the Company to the Audit Committee on a quarterly basis. The scope of internal audit is approved by the Audit Committee.

The Board has appointed Naresh J. Patel & Co., Chartered Accountants, Ahmedabad for the FY 2019-20 as an Internal Auditor of the Company in the Board meeting held on 7 May 2019, after obtaining its willingness and eligibility letter for appointment as Internal Auditor of the Company.

Cost Auditor

Pursuant to provisions of Section 148 read with Companies (Audit & Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013, the Board of Directors had, on recommendation of the Audit Committee, re-appointed Kiran J. Mehta & Co., Cost Accountants, Ahmedabad, as the Cost Auditor of the Company for the financial year 2018-19, on the remuneration terms as approved by the members at the last Annual General Meeting held on 10 August 2018. The Cost Audit report for the financial year 2017-18 was filed within the due date. The due date for submission of the Cost Audit Report for the year 2018-19 is within 180 days from 31 March 2019.

The Board has appointed Kiran J. Mehta & Co., Cost Accountants, Ahmedabad for the FY 2019-20 as a Cost Auditor of the Company in the Board meeting held on 7 May 2019, after obtaining its willingness and eligibility letter for appointment as Cost Auditor of the Company.

As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Kiran J. Mehta & Co. is included in the Notice convening 32nd Annual General Meeting of the Company.

Secretarial Auditor and Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed Mr. Tapan Shah, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the FY 2018-19. The Secretarial Audit Report for the FY 2018-19 is annexed to this Directors Report as Annexure-6. The Board of Directors has duly reviewed the Secretarial Auditors Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation/clarification by the Board of Directors as provided under Section 134 of the Act.

The Board of Directors has appointed Mr. Tapan Shah, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the FY 2019-20 in the Board Meeting held on 7 May 2019.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

EXTRACT OF ANNUAL RETURN

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014, the extract of the Annual Return as at 31 March 2019 in Form MGT-9 is annexed to this report as Annexure-3.

The same is available on the website of the Company and can be accessed through: www.hester.in

RELATED PARTY TRANSACTIONS

All contracts / arrangements / transactions entered by the Company during the previous financial year with the related parties were in the ordinary course of business and on arms length basis. There were no materially significant related party transactions entered by the Company with its Promoters, Directors, Key Managerial Personnel or other persons which may have potential conflict with the interest of the Company.

All Related Party transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval for normal business transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature and accordingly, the required disclosures are made to the Committee on a quarterly basis in terms of the approval of the Committee.

The disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC - 2 is not applicable for the current year. The Related Party Transactions took placed during the financial year 2018-19 have placed in Notes of Financial Statements of the Company.

The policy on Related Party Transactions as approved by the Board may be accessed through the web link: https:// www.hester.in/s/Related-Party-Transaction-Policy-rr76.pdf

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is provided in Annexure-4 and forms part of this report.

PARTICULAR OF EMPLOYEES

The information required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in this Annual Report as Annexure-5.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of financial year and the date of Directors Report.

RISK MANAGEMENT POLICY AND FRAMEWORK

Risk management is embedded in your Companys operating framework. Your Company believes that managing risks helps in maximising returns. The Companys approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee.

INTERNAL FINANCIAL CONTROL SYSTEMS AND ITS ADEQUACY

The Company has its internal audit function which endeavours to make meaningful contributions to the organisations overall governance, risk management and internal controls. The function reviews and ensures sustained effectiveness of Internal Financial Control by adopting a systematic approach to its work.

The Company has designed and implemented a process driven framework for Internal Financial Controls (IFC) within the meaning of the explanation to Section 134 (5) (e) of the Act. For the year ended on 31 March 2019, the Board having opinion that the Company has sound Internal Financial Control commensurate with the size, scale and complexity of its business operations. The Internal Financial Control operates effectively and no material weakness exists.

The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and/ or improved controls whenever the effect of such gaps would have a material effect on the Companys operations.

CREDIT RATING

CARE Ratings Limited has reaffirmed the credit rating of "CARE A- /Stable" for long-term bank facilities and "CARE A-: Stable / CARE A2" for long-term /short-term bank facilities and assigned "CARE A2" for short-term bank facilities of the Company.

TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF) ACCOUNT

During the year, the Company has transferred 20,705 Equity Shares to Investor Education & Protection Fund pursuant to the provisions of Section 124(6) of Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), where the dividends for the last seven consecutive years have not been claimed by the concerned shareholders. The Company has sent letters to shareholders to claim their unpaid dividend before the shares transferred to IEPF Account.

DIRECTORS RESPONSIBILITY STATEMENT

As stipulated in Section 134(3)(c) read with 134(5) of the Companies Act, 2013, Directors subscribe to the "Directors Responsibility Statement" and confirm that:

a) In preparation of annual accounts for the year ended 31 March 2019, the applicable accounting standards have been followed and no material departures have been made from the same;

b) The Directors had selected such accounting policies and applied them consistently and made judgements 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 or loss of the Company for that year;

c) The Directors had 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;

d) The Directors had prepared the annual accounts for the year ended 31 March 2019 on going concern basis;

e) The Directors had laid down the internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

GENERAL

Your Directors state that the Company has made disclosures in this report for the items prescribed in Section 134 (3) of the

Act and Rule 8 of the Companies (Accounts) Rules, 2014, to the extent the transactions took place on these items during the year and no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and ESOS.

3. The Managing Director of the Company has not received any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

ACKNOWLEDGEMENT

Your Directors wish to thank all stakeholders, employees, Companys bankers, various government authorities, members and business associates for their continued support and valuable co-operation.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.

For and on behalf of Board of Directors
Date: 7 May 2019 Rajiv Gandhi Sanjiv Gandhi
Place: Ahmedabad CEO & Managing Director Director