Source Natural Foods & Herbal Supplements Ltd Directors Report.

To,

The Members,

Source Natural Foods and Herbal Supplements Limited. Bangalore

Your Directors take pleasure in presenting this 26th Annual Report on the business and operations of your Company along with the Audited Financial Statements and Auditors Report for the Financial year ended 31st March 2021.The Financial Highlights for the year under review are given below:

1. Financial results

(Rs. in Lakhs)
Particulars 31.03.2021 31.03.2020
Total revenue 2521.98 1361.54
Profit/ (Loss) before exceptional and extraordinary items and tax 404.63 184.74
Exceptional Items 1.47 -
Profit before extraordinary items and tax 403.15 184.74
Extraordinary Items - -
Tax expenses 65.75 20.77
Net Profit/(Loss) carried to Balance Sheet 337.40 163.98
Earnings Per Share (Basic/ Diluted) 5.24 2.55

2. Operations:

The company adopted well planned systems to carry out its operations in an optimised and safe manner to continue catering to consumers without interruption. Being a specialised facility for health care products, all systems were adhered to strictly and extra special care was taken to ensure a safe environment for the workforce. Our focus was on our peoples health & safety, ensuring uninterrupted supplies of the Covid-19 relevant portfolio, meeting the demand of consumers arising out of changed lifestyles and needs during the pandemic, caring for the communities in which we operate, preserving cash and optimising our business model. The year 2020 saw Ayurveda being adopted by new consumers as an effective way to prevent and protect oneself from the adverse effects of a restricted lifestyle and also ailments and viruses. Immunity building herbal products were at the forefront to help people stay healthy and protected.

The Total revenue of the Company for the year ended 31st March, 2021 was Rs. 2521.98 Lakhs, which has increased by 85.22 % as compared to the total revenue in previous year of Rs 1361.54 Lakhs.

The total expenses for the year ended 31st March, 2021 has increased to Rs.2117.35 lakhs compared to Rs. 1176.81 lakhs of the previous year ended 31st March 2020,

3. Future prospects & outlook:

This unprecedented pandemic has encouraged people and organizations to become more conscious of their choices and move towards better lifestyle choices. Ayurveda is an immortal time tested repository of the healthcare system in the world and through the pandemic saw more people relying on its remedies than before.

Indian Ayurvedic products market exhibited strong growth during 2015-2020 and is expanding at a CAGR of around 15% during 2021-2026. A key factor driving the Indian Ayurvedic products market is increasing popularity of effective and pure formulations which consumers can trust. Moreover, catalysed by economic growth and rising incomes, per capita expenditures on healthcare products have increased significantly over the past few years, creating a positive impact on the Ayurvedic products and food supplements market. The distribution network of herbal products have improved significantly, increasing the accessibility of these products across both urban and rural regions. The government of India is also promoting the usage of Ayurvedic products through awareness programmes and campaigns.

With the continuing situation of Covid-19, the demand for specialised and natural Immunity booster products has grown and for that your Company will focus on building widespread awareness for its products both through the offline as well as the online space, simultaneously expand distribution channels and consistently increase its customer base.

In this continue situation of the COVID, the demand for specialised and natural Immunity booster products have grown exponentially and for that your Company will continue to contribute its might to the growth of Ayurveda and Herbal Supplements and at the same time enhance shareholders wealth by accelerated performance.

4. Research and development:

Ayurveda, the traditional Indian medicinal system remains the most ancient yet living traditions with sound philosophical and experimental basis. It is a science of life with a holistic approach to health and personalized medicine. It is known to be a complete medical system that comprised physical, psychological, philosophical, ethical, and spiritual health.

In Ayurveda, each cell is considered to be inherently an essential expression of pure intelligence hence called self-healing science. In addition, to the self-healing concept, the use of herbal treatment is equally important in this Indian traditional system of medicine.

The COVID-19 pandemic has seen unprecedented demand for COVID-19 around the world, it is the time to define Ayurveda itself that whether the use of herbs is Ayurveda or the use of herbs and other treatment modalities as per Ayurvedic principles is Ayurveda. The research methodology should be planned and adopted accordingly.

5. Dividend:

In order to reserve the available resources for future growth, your Directors do not recommend any dividend for the financial year ended 31-03-2021.

6. Amount transferred to reserves:

The amount to be carried to Reserves is Rs. 337.39 Lakhs

7. CHANGE IN THE NATURE OF BUSINESS:

There is no change in nature of business of the Company during the year.

8. Material changes and commitment if any affecting the financial position of the company occurred between the end of the financial year to which these financial statements relate and the date of the report:

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate on the date of this report.

9. Share capital:

The Authorised Share Capital of your Company is Rs. 9,00,00,000/- divided into 90,00,000Equity Shares of Rs. 10/- each. The Paid up Capital is Rs. 6,43,69,310/- divided into 64,36,931 Equity Shares of Rs. 10/- each.

During the year under review, there is no change in the Share Capital of the Company.

A: Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees:

The Company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees as per Rule 16(4) of Companies (Share capital and Debentures) Rules, 2014.

B: Issue of Sweat Equity Shares:

The Company has not issued any sweat equity share during the financial year, in accordance with the provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

C: Issue of Equity Shares with Differential Rights:

The Company has not issued any equity shares with differential voting rights during the financial year, as per Rule 4(4) of Companies (Share capital and Debentures) Rules, 2014.

D: Issue of Employee Stock Option:

The Company has not issued any employee stock option during the financial year, as per Rule 12 of Companies (Share Capital and Debentures) Rules, 2014.

10. Directors:

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Shri Narayanan Narasimhan retires by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The profiles of Directors retiring by rotation is given elsewhere in the Annual Report.

11. Number of meetings of the board and their attendance during the financial year 2020-21

26-06-2020 31-08-2020 12-11-2020 13-02-2021
Mr. N. Narasimhan P P P P
Mr. Arvind Varchaswi P P P P
Mr. Tejagna Katpitia P P P P
Mr. Srinivas Gowra P P P P
Mr. Sriram Chandrasekaran P P P P
Mr. CL Rathi A P P P
Mrs. Bharathy P P P P

12. Number of meetings of the audit committee

During the year 2020-21, the Committee met 4 (Four) times on the following dates, viz, June 26th, 2020, August 31st, 2020, November 12th 2020 and February 13th, 2021.

The following are the details of the Directors, their attendance at the Audit Committee Meeting held during the year 2020-21.

Name Designation in committee Attendance
Mr. Srinivas Gowra Chairman 4
Mr.Sriram Chandrasekaran Member 4
Mr. Chandrakumar L. Rathi Member 3

13. Number of meetings of the stakeholders relationship committee

The Stakeholders Relationship Committee is constituted pursuant to the provisions of the Companies Act, 2013.

During the year one meeting of the Committee was held on 12th November 2020.

The following are the details of the Directors, their attendance at the Stakeholders Relationship Committee Meeting held during the year 2020-21.

Name Designation Attendance
Mr.SriramChandrasekaran Chairman 1
Mr. Srinivas Gowra Member 1
Mr. Arvind Varchaswi N. Member 1

14. Number of meetings of the nomination and remuneration committee

The Nomination and Remuneration Committee is constituted pursuant to the provisions of the Companies Act, 2013.

During the year Two meeting of the Committee was held on 26th June 2020 and 31st August 2020.

The following are the details of the Directors, their attendance at the Nomination and Remuneration Committee Meeting held during the year 2020-21.

Name Designation Attendance
Mrs. Bharthy Chairman 2
Mr. Srinivas Gowra Member 2
Mr. Sriram Chandrasekaran Member 2

15. Details of shareholders meetings held and attendance for the financial year 2019-20

Details of General Meeting Date of Meeting Number of Shareholders
Entitled Attended %
Annual General Meeting 29-09-2020 3060 30 0.98

16. A) Distribution of shareholding as at 31st march, 2021

Category / No of Shares Number of Shareholders % of Total Shareholders Amount in Rs. % of Holdings to Total shareholding
Upto-500 2749 93.19 1963260 3.05
501-1000 88 2.98 669360 1.04
1001-2000 36 1.22 522850 0.81
2001-3000 14 0.47 344900 0.54
3001-4000 9 0.31 304170 0.47
4001-5000 7 0.24 318000 0.49
5001-10000 15 0.51 1082640 1.68
10001 and above 32 1.08 59164130 91.56
Total 2950 100 64369310 100

17. B) Market price data and performance comparison:

1) The market price data High, Low and Close during each month from 1st April, 2020 to 31st March, 2021 are mentioned below:

Monthly Market price details from 01.04.2020 to 31.03.2021
Trade date/Month Open High Low Close
April, 2020 72.30 87.00 70.30 70.30
May, 2020 70.30 70.50 46.05 48.00
June, 2020 46.00 68.25 46.00 68.25
July, 2020 71.65 74.90 60.15 67.10
August, 2020 67.10 176 64.25 171.30
September, 2020 171 178.50 123.05 123.05
October, 2020 120.60 128.35 112.45 125.50
November, 2020 128 176.35 125.50 168.15
December, 2020 171.50 189 159.75 169.95
January, 2021 174 174 126.10 141.25
February, 2021 134.20 188 134.10 149.90
March, 2021 164.75 164.75 130 148

17. Key managerial personnel:

In compliance with Section 203 of the Companies Act, 2013, the following are the Key managerial Personnel of the Company:

Mr. Arvind Varchaswi N Managing Director
Mr. Tejagna K. Katpitia Whole-time Director
Mr. Seshadri Ramaswamy Chief Financial Officer
Mrs. Sweta Gaur ^ Company Secretary

18. Declaration of independent directors:

In accordance with Section 149(7) of the Companies Act, 2013, the Independent Directors of your Company, have given a Declaration that they meet the criteria of Independence as provided in sub section (6)of Section 149 of the Act. There has been no change in terms and conditions of appointment of Independent Directors. The Policy relating to appointment of Independent Directorsis available on the website of the Company: http://www.source-natural.com.

19. Policy on directors appointment, annual perfomance evaluation of the board and policy on remuneration:

Pursuant to the requirement under Section 134(3)(e) and Section 178(3) of the Companies Act, 2013, the policy on appointment of Board members including criteria for determining qualification, positive attributes, independence of a director and the policy on remuneration of Directors, KMP and other employees is available on the website of the Company: http://www.source-natural.com.

In a separate meeting of Independent directors, performance of non-independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive directors and non-executive directors. The same was discussed in the Board meeting that followed, at which the performance of the Board, its Committees and individual directors were discussed.

20. Particulars of remuneration to directors/kmp/employees:

There were no employees during the year 2020-21 covered under the provisions of Section 197of the Companies Act, 2013.

The details of Remuneration paid to the Directors, Key Managerial Personnel and Employees as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Form MGT-9 which is posted on website of the companyhttp://www.source-natural.com/announcements-other.php

21. Directors responsibility statement:

Pursuant to the provisions under Section 134(5) of the Companies Act, 2013, with respect to Directors Responsibility Statement, the Directors confirm:

A: That in the preparation of the Annual Accounts, the applicable Accounting Standards have been followed and no material departures have been made from the same;

B: That 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 on 31st March, 2021 and of the profit and loss of the Company for that period;

C: That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

D: That they have prepared the annual accounts on a going concern basis;

E: That 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

F: That they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

22. Auditors:

In accordance with Section 139(9), 140(4) ,141 ,142 and other applicable provisions if any of the Companies Act, 2013 The Statutory Auditors M/s. Srinaga&Giridharan, Chartered Accountants, Bangalore, having Firm Registration No 004013S, holds office until the conclusion of the ensuing Annual General Meeting and is eligible for reappointment.

Your Company has received confirmation from the Auditors to the effect that their appointment, if made, will be in accordance with the limits specified under the Companies Act, 2013

Your Board is of the opinion that continuation M/s. Srinaga&Giridharan, as Statutory Auditors during FY 2020- 21 will be in the best interests of the Company and therefore, Members are requested to consider their re-appointment as Statutory Auditors of the Company from the conclusion of 26th Annual General Meeting till 31st next Annual General Meeting at remuneration be decided by the Board.

The Audit Report for the financial year 2020-21 as certified by the Statutory Auditors of the Company does not contain any qualification, reservation or adverse remarks and therefore does not require any explanations from the Directors.

23. Secretarial audit report:

The Board appointed Mr. Ajay Suman Shrivastava, Practicing Company Secretary, to carry out Secretarial Audit for the financial year 2020-21, under the provisions of Section 204 of the Companies Act, 2013. The Secretarial Audit Report is annexed to this report as Annexure-1. There are no qualifications made by the Auditor in the report. Annexure 2 is annexed as certificate of Non Dis-Qualification of Directors.

24. Management discussion and analysis:

The Management Discussion and Analysis Report, prepared in accordance with Schedule V of the SEBI Listing Regulations, are annexed to this report as Annexure-3.

25. Details of significant & material orders passed by the regulators or courts or tribunal:

During the year under review, there have been no significant and material orders passed by any regulators or courts or tribunal.

26. Risk management:

The Company has a comprehensive risk assessment and minimization procedure, which are reviewed by the Board and the Audit Committee of the Company. Preparation of Risk Management Plan, reviewing and monitoring the same on regular basis.

The Company identifies risks and control systems to mitigate them are in place. In the opinion of the Board, at present there are no risks which may threaten the existence of the Company

27. Adequacy of internal financial controls with reference to financial statements:

The Act re-emphasizes the need for an effective Internal Financial Control system in the Company which should be adequate and shall operate effectively. Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Boards Report.

The Company has in place adequate internal financial controls which are commensurate and adequate with the size and scale of operations of the Company. During the year under review, such controls were tested and no reportable material weakness in the design or operation were observed. The reports on Internal Audit given by M/s Krishna & Suresh, Chartered Accounts, the Internal Auditors, are placed before the Audit Committee and the Board periodically, for review.

28. Establishment of vigil mechanism:

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, The Company has established a vigil mechanism through which directors, employees and business associates may report unethical behavior, malpractices, wrongful conduct, fraud, violation of Companys code of conduct, leak or suspected leak of unpublished price sensitive information without fear of reprisal. The Vigil Mechanism Policy has been uploaded on the website of the Company- www.source-natural.com.

29. The sexual harassment of woman at workplace (prevention, prohibition and redressal) act, 2013:

The Company has formulated an Anti-Sexual Harassment policy in line with the requirement of the Sexual harassment of Woman at Workplace (Prevention, prohibition and redressal) Act, 2013. There have been NIL complaints of such nature during the period under review.

30. Corporate social responsibility (csr):

As your Companys net worth does not exceed Rs. 500 Crores (or) Companys turnover does not exceed Rs. 1000 Crores or companys net profit does not exceed Rs. 5 Crores for the financial year, the provisions under Section 135 of the Act read with rules made there under, are not applicable. Hence, the compliance to the initiative of Corporate Social Responsibility is not required.

31. Prevention of insider trading:

The Board of Directors have adopted the Insider Trading Policy in accordance with the requirement of the SEBI (Prohibition of Insider Trading) Regulation,2015 as amended from time to time. The Insider Policy of the Company lays down guidelines and procedures to be followed, and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation The policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company securities.

The Code requires pre-clearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Directors and the designated employees have confirmed compliance with the Code. The same has been displayed at the companys website at www.sourcenatural.com

32. Listing:

The shares of your Company are listed at BSE Limited and traded actively during the year. Your Company has duly complied with all the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 during the year under review.

33. General Shareholder Information

1) 26th Annual General Meeting Date and Time : 5th August, 2021,12:00PM

2) Financial Calendar (2021-22) (Tentative) The Financial year of the company is from 1st April of the year to 31st March of the next year.

For the year ending 31st March, 2022 quarterly Un-audited / Annual Audited results shall be announced as follows:

Financial reporting for Proposed Date
Unaudited Results for the Quarter ending: 30th June, 2021 On or before 14th August, 2021
Unaudited Results for the Quarter ending: 30th September, 2021 On or before 14th November, 2021
Unaudited Results for the Quarter ending: 31st December, 2021 On or before 14th February, 2022
Audited Results for the year ended 31st March, 2022 On or before 30th May, 2022
3) Book Closure Date: Thursday, 29th July, 2021 to Thursday 05th August,2021 (Both days inclusive)
4) Registered Office No: 201, Sumeru Towers, 2nd Floor, #54/46, 39th A Cross, 11th Main Road, Jayanagar 4thT Block, Bangalore - 500 041
5) Listing of Equity Shares: BSE Limited, Mumbai (BSE)
6) Listing Fees: Listing fee has been paid to BSE Limited till the year 2021-22
7) Stock Code: 531398
8) ISIN No.: INE679C01027
9) CIN Number: L24231KA1995PLC101742
10) Plant Location: Plot No: 22 & 23, SVCIE, Bachupally, Quthbullapur Mandal, Hyderabad - 500 090.

34. Disclosures:

A: Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

Pursuant to the provisions of Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014, the details of conservation of energy and technology absorption and Foreign exchange earnings and outgo are attached as Annexure-4.

B: Subsidiary, Holding, Associate Companies:

There are no subsidiaries to your Company as on the date of report. In terms of the shareholding, the Company is a subsidiary of Sriveda Sattva Private Limited.

C: Particulars of Loans, Guarantees or Investments made under Section 186 of the Companies Act, 2013:

There were no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the details required to be furnished herein are NIL.

D: Particulars of Contracts or Arrangements made with Related Parties:

All the related party transactions are entered on arms length basis and in the ordinary course of business, in compliance with the applicable provisions of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015.

The details of the transactions with related parties are provided in the Notes to the financial statements.

E: Fixed Deposits:

Your Company has not accepted any Fixed Deposits from the Public within the meaning of Section 73 to 76 of the Companies Act, 2013, during the year under review. The details for the same are filed with the concerned authorities