Directors Report of Hatsun Agro Products Ltd.

Mar 31, 2023

Your Directors are pleased to present their 38th Report along with the audited financial statements for the financial year ended March 31,2023.

FINANCIAL RESULTS

The financial results of the Company for the year ended 31st March, 2023 are summarised below:

(f in Lakhs)
PARTICULARS	CURRENT YEAR ENDED 31st MARCH, 2023	PREVIOUS YEAR ENDED 31st MARCH 2022
Revenue from operations (net)	7,24,697	6,39,648
Other Income	1,056	760
Total Income	7,25,753	6,40,408
Operating Expenditure	6,54,553	5,69,971
Profit before Interest, Depreciation and Amortisation and Tax (PBDIT)	71,200	70,437
Finance Costs (net)	12,592	10,835
Depreciation and Amortisation	36,152	32,064
Profit before Taxes	22,456	27,538
Tax Expenses	5,854	5,669
Income tax pertaining to earlier years	16	78
Net Profit for the Year	16,586	21,791
Other Comprehensive (Income) / Expenses	141	132
Total Comprehensive Income	16,445	21,659
Balance Brought Forward from Previous Year	44,992	36,293
Re-measurement of Defined Benefit Obligations	(141)	(158)
Amount Available for Appropriation	61,437	57,926
Appropriations
Interim Dividends on Equity Shares	12,934	12,934
Tax on Dividends		-
Transfer to General Reserve	-	-
Balance carried to Balance Sheet	48,503	44,992

PERFORMANCE OF THE COMPANY

During the year under review, your Company clocked a total income of f7,25,753 Lakhs as against f6,40,408 Lakhs representing an increase of 13.33 % over that of the previous year. The PBDIT has increased from f70,437 Lakhs (FY 2021-2022) to f 71,200 Lakhs (FY 2022-2023) representing an increase of 1.08%. The Net Profit during the year was f 16,586 Lakhs in comparison with previous year which stood at f 21,791 Lakhs resulting in a decrease of 23.89 %.

DIVIDEND

For the Financial Year 2022-2023, your Company declared an Interim dividend of f6/- (600%) per fully paid up equity share of the face value of f1 per share (ISININE473B01035) on 19th July, 2022 for the Financial Year 2022-23.

The cash outflow on account of Interim Dividend absorbing a sum of f 129,33,79,938/- (Rupees One Hundred Twenty Nine Crores Thirty Three Lakhs Seventy Nine Thousand Nine Hundred Thirty Eight only) including a dividend tax calculated at different rates as per the Certificates/Submissions made by the Shareholders as per the Income Tax Act was paid as Interim Dividend for the financial year 2022-23 out of the accumulated profits of the Company.

During the year 2022-23, a Dividend amount of f23,24,646 (f7,70,652 - declared on 28.05.2015, f9,08,330 - declared on 15.07.2015 and f6,45,664 declared on 20.10.2015) which remained unclaimed for a period of 7 consecutive years) being unclaimed dividend pertaining to the financial year 2015-16 (Interim dividend) was transferred to Investor Education & Protection Fund (IE&PF).

CHANGES IN SHARE CAPITAL

During the Financial Year 2022-23, the Company came out with an issue of 71,85,444 Equity Shares on "Rights Issue" basis to the existing Equity Shareholders of the Company at a price of Re.1 per Rights Equity Share with a Premium of f418 for raising the funds not exceeding f30,107.01 Lakhs. Further to the closure of Rights Issue in the month of January, 2023, the Company, in consultation with the Lead Manager to the Issue viz., Axis Capital Limited and the Registrar to the Issue viz., Linkintime India Pvt. Ltd., allotted 71,84,945 Equity Shares on Rights basis to the eligible Equity Shareholders and kept in abeyance 499 Rights Equity Shares pending disposal of a Suit between the litigants on the title to the Shares by the Court. Upon the allotment of above said 71,84,945 Rights Equity Shares, the paid up Equity Share Capital of the Company got increased from 21,55,63,323 Equity Shares of Re.1 each amounting to f2,155.63 Lakhs to 22,27,48,268

Equity Shares of Re.1 each amounting to f2,227.48 Lakhs compared to the previous financial year. The Company, though received the excess subscription, retained the money of f30,104.92 Lakhs towards the number of Rights Equity Shares allotted i.e., 71,84,945 and refunded the balance excess subscription received.

Out of the issue proceeds of the f30,104.92 Lakhs, your Company has utilised the receipt in full towards full or partial repayment or prepayment of the borrowings availed by the Company from Banks/Financial Institutions. The utilisation of the proceeds has been in accordance with the Objects stated in the Letter of Offer dated 03rd December, 2022 in respect of the Rights Issue of the Company in compliance with Regulation 32(1) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended and there is no deviation as regards the utilisation of funds.

TRANSFER TO RESERVES

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

FINANCE

The total borrowings decreased from f 1,70,827 Lakhs to f 1,44,793 Lakhs due to repayment of some of the high cost debt.

Your Company follows judicious management of its Short Term and Long Term Borrowings with strong relationship with various reputed Banks from whom your Company has availed Credit facilities at very competitive rates.

DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public, outstanding and unclaimed as at 31st March, 2023, was NIL.

(a) Accepted during the Year	NIL
(b) Remained unpaid or unclaimed as at the end of the year. (Including interest thereon)	NIL
(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: i. As at 1st April 2022 ii. Maximum during April 2022 to March 2023. iii. As at 31st March 2023.	No deposit has been accepted by the Company during the year and there did not arise any default during the year. NIL NIL NIL
(d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act	NIL

INVESTOR EDUCATION AND PROTECTION FUND (IE&PF)

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IE&PF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IE&PF Rules"), all the Unpaid or Unclaimed dividends are required to be transferred by the Company to the IE&PF Authority after the completion of seven years. Further, according to the Rules, the Shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IE&PF Authority. During the year 2022-23, a Dividend amount of f23,24,646 (f7,70,652 - declared on 28.05.2015, f9,08,330 - declared on 15.07.2015 and f6,45,664 declared on 20.10.2015) which remained unclaimed for a period of 7 consecutive years) being unclaimed dividend pertaining to the financial year 2015-16 (Interim dividend) was transferred to Investor Education & Protection Fund (IE&PF).

The details in respect of transfer of unclaimed dividends are provided in the Shareholder information section of this Annual Report and are also available on our website, at https://www.hap.in/unclaimed-dividened.php

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Investments under the provisions of Section 186 of The Companies Act, 2013 have been made. Particulars of investments covered under Section 186 form part of the notes on financial statements are provided in this Annual Report.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointments, Resignations and Changes

There were no new appointment or resignations or Changes in the Directors and Key Managerial Personnel that happened during the financial year 2022 - 23 which is under review.

Re-Appointments

As per provisions of The Companies Act, 2013, Mr. P. Vaidyanathan (DIN: 00029503), Non-Executive Director and Mr. K.S. Thanarajan (DIN: 00012285), Non-Executive Director are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board of Directors recommends their re-appointment.

Brief Profile of Directors proposed to be Re-appointed:

Mr. P. Vaidyanathan is a fellow member of the Institute of Chartered Accountants of India, associate member of the Institute of Company Secretaries of India and the Institute of Cost and Works Accountants of India. He has over 30 years of experience in the finance functions and has expertise in the field of Corporate Finance.

Mr. K.S. Thanarajan is a Master in Economics from the University of Madras. He has been in the dairy business for more than 20 years and brings with him a deep functional experience of the dairy industry.

Your Board recommends the reappointment of Mr. P. Vaidyanathan and Mr. K.S. Thanarajan who are retiring by rotation in the ensuing Annual General Meeting.

Declaration by Independent Directors

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the financial year ended March 31, 2023.

Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

As per the requirements of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, your Company presents the Business Responsibility and Sustainability Report (BRSR) in the format as specified by SEBI which is forming part of this report.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year under review, Eight (8) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the time period prescribed under The Companies Act, 2013.

BOARD COMMITTEES

The primary five committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. Other than the above said primary committees, the Board has the following additional committees also viz., Borrowing & Investment Committee and Core Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of

this Board''s Report. The composition of the Primary Committees as of 31st March 2023 (including the changes effected up to the date of this report) and their meeting dates are given below:

NAME OF THE COMMITTEE	COMPOSITION	DETAILS OF MEETINGS HELD DURING THE YEAR
Audit Committee	The Committee comprises of Four Non-Executive Independent Directors and Two Non-Executive Non-Independent Directors. The Chairman of the Committee is an Independent Director.	Four meetings were held during the year on the following dates:- • 27th April, 2022 • 19th July, 2022 • 19th October, 2022 • 19th January, 2023
Nomination and Remuneration Committee	The Committee comprises of Four Non-Executive Independent Directors and Two Non-Executive Non-Independent Directors as on the date of this report. The Chairman of the Committee is an Independent Director.	Two meetings were held during the year on the following dates:- • 19th July, 2022 • 19th January, 2023
Stakeholders'' Relationship Committee	The Committee comprises of Four Non-Executive Independent Directors and Two Non-Executive Non-Independent Directors. The Chairman of the Committee is an Independent Director.	Two meetings were held during the year on the following dates:- • 27th April, 2022 • 19th January, 2023
Corporate Social Responsibility Committee	The Committee comprises of Four Members - One Executive Director, One Non-Executive Independent Director and Two Non-Executive Non-Independent Directors as on the date of this report. The Chairman of the Committee is an Independent Director	One meeting was held during the year on the following date:-• 27th April, 2022
Borrowing & Investment Committee	The Committee comprises of Four Members - One Executive Director, One Non-Executive Independent Director and Two Non-Executive Non-Independent Directors as on the date of this report. The Chairman of the Committee is a Non-Executive NonIndependent Director.	Three meetings were held during the year on the following dates:- • 27th May, 2022 • 11th August, 2022 • 14th February, 2023
Risk Management Committee	The Committee comprises of Four Members - One Executive Director, Two Non-Executive NonIndependent Directors and One Independent Director as on the date of this report. The Chairman of the Committee is a Non-Executive NonIndependent Director.	Three meetings were held during the year on the following dates:- • 19th July, 2022 • 19th October, 2022 • 19th January, 2023

Details of recommendations of Audit Committee which were not accepted by the board along with reasons The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per The Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year the Board of Directors considered all the recommendations made by the Audit Committee accepted and carried out all the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations of Audit Committee unaccepted by the Board of Directors of the Company during the year under review.

DETAILS OF POLICIES DEVELOPED BY THE COMPANY

(i) Nomination and Remuneration Policy

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of The Companies Act, 2013 read along with the applicable Rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The objective of this policy is to ensure:

• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

• Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

• Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance with short and long-term performance objectives appropriate to the working of the Company and its goals.

This policy is being governed by the Nomination and Remuneration Committee comprising of members of the Board, as stated above, comprising of four Independent Directors and two Non-Executive NonIndependent Directors. The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors, Key Managerial Personnel and Senior Management Personnel. Salient features of the Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report. The detailed policy is hosted on the website of the Company and the web link for the same is https://www.hap.in/policies.php.

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

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of The Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,

2015, as amended from time to time. This policy governs the criteria for deciding the remuneration to Directors, Key Managerial Personnel and Senior Management Personnel. It is affirmed that the remuneration to Directors, Key Managerial Personnel and Senior Management Personnel is being fixed based on the criteria and parameters mentioned in the above mentioned policy of the Company.

Board Diversity

The Company recognises and values the importance of a diverse board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

(ii) Corporate Social Responsibility Policy (CSR)

Your Company recognises that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organisations.

Your Company endeavours to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Your Company satisfying the threshold as stipulated under Section 135 of The Companies Act, 2013 has established the CSR Committee comprising of members of the Board and the Chairman of the Committee is a Non-Executive and Independent Director. The said Committee has formulated and approved the CSR policy as per the approach and direction given by the Board pursuant to the recommendations made by the Committee including guiding principles for selection, implementation and monitoring of activities as well as formulation of Annual Action Plan for the Company with its major focus on:-

• Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring.

• Make sustainable contributions to communities.

• Identify socio-economic opportunities to perform CSR activities.

• Focus on social welfare activities and programmes as envisaged in Schedule VII of The Companies Act, 2013.

• Modalities of utilising the funds and implementation of schedules for the Projects or Programmes.

• Monitoring and Reporting mechanism for the Projects or Programmes; and

• Details of need and impact assessment study, if any, for the Projects undertaken by the Company.

The CSR Committee recommends to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of The Companies Act, 2013 as per CSR Policy of the Company. Annual Report on CSR activities as required under the provisions of The Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

(iii) Risk Management Policy

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management. The Company has formed a Risk Management Committee comprising of four members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimise the risk and monitor the risk management for the Company.

The policy broadly defines the scope of Risk Management Committee which comprises of:-

• Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company.

• Ensuring that the Company is taking appropriate

measures to achieve prudent balance between risk and reward in both the ongoing and new business activities.

• Evaluating significant risk exposures of the Company and assess management''s actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as

business continuity planning and disaster recovery planning & testing).

• Co-coordinating its activities with the Audit Committee in instances where there is any overlap with audit activities (e.g. internal or external audit issue relating to risk management policy or practice).

• Reporting and making regular recommendations to the Board.

(iv) Whistle-Blower Policy - Vigil Mechanism

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (WhistleBlower) Mechanism provides a channel to the Employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or Policy. The Mechanism provides for adequate safeguards against victimisation of employees and directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle-Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place/suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy. The Managing Director is also empowered to bring about necessary changes to this Policy, if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances.

(v) Dividend Distribution Policy

According to Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended, your Company falling under top 1000 listed entities based on the market capitalisation (calculated as on March 31 of every financial year) has framed the Dividend Distribution Policy which is attached in this Annual Report marked as Annexure E. Weblink: https://www.hap.in/policies.php.

EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

Pursuant to the provisions of The Companies Act, 2013 and Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non-Executive and Independent Directors is being conducted through a survey which contains a questionnaire capturing each Board and Committee Member''s response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. The methodology adopted by each Director who responded to the survey has graded their peers against each survey item from 1 to 5 with 1 marking the lower efficiency and 5 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and Committees as a whole.

The Independent Directors'' evaluation is being done by the entire Board with a main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., their performance by way of active participation in Board and Committee meetings, discussing and contributing to strategic planning, fulfillment of Independence criteria as specified under SEBI (LODR) Regulations, 2015 as amended and their independence from the Management etc., ensuring non participation of Independent Director being evaluated.

Apart from the above, the performance of NonIndependent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in a bonafide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company was also carried out to evaluate their performance.

The performance evaluation of Non-Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in an unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any business of the Board during their Meetings and addressed them in the best interest of the Company.

As per the SEBI Circular SEBI/HO/CFD/CMD/CIR/ P/2018/79 dated 10th May 2018, the followings details are being provided on Board evaluation.

Observations of board evaluation carried out for the year.	There were no observations arising out of board evaluation during the year as the evaluation indicates that the Board has functioned effectively within its powers as enumerated under The Companies Act, 2013 and in consonance with the Articles of Association of the Company.
Previous year''s observations and action taken.	There were no observations during the previous year warranting any action.
Proposed actions based on current year observations.	As there were no observations, the action to be taken does not arise.

TRAINING AND FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Every Independent Director on being inducted on the Board attends an orientation program. To familiarise the new directors with the strategy, operations and functions of our Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Company''s strategy, operations, product offerings, organisation structure, human resources, technologies, facilities and risk management.

Further, at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation program for Independent Directors is hosted on the website of the Company and the weblink for the same is https://www.hap.in/policies.php.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to ''Meetings of the Board of Directors'' and ''General Meetings'', respectively, have been duly followed/complied with by the Company.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR.

Your Company has no subsidiaries, joint venture or associate companies and hence the disclosure does not arise.

AUDITORS Statutory Auditors

At the Annual General Meeting held on 20th September, 2022, M/s. Deloitte Haskin & Sells, Chartered Accountants,(Firm Registration number 117366W /W100018) were re-appointed as Statutory Auditors of the Company to hold office for a Second and Final Term of 5 consecutive years from the

conclusion of Thirty Seventh (37th) Annual General Meeting of the Company until the conclusion of Forty Second (42nd) Annual General Meeting of the Company to be held in the calendar year 2027.

The Company has received a Certificate from the Statutory Auditors to the effect they are not disqualified to continue as Auditors of the Company.

The Notes to financial statement referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report does not contain any qualification, reservation, adverse remark or disclaimer.

Total Fees for all the Services paid by the Company, on a consolidated basis, to the Statutory Auditors

Total Fees for all the Services paid by the Company, on a Consolidated basis to M/s. Deloitte Haskins & Sells LLP for the financial year 2022-23 was Rs.149.27 Lakhs (excluding tax).

The Board, in consultation with the Statutory Auditors and as per the recommendation of Audit Committee, will decide the payment of Audit Fee payable to the Statutory Auditors for all their services including audit of accounts, tax audit etc., for the financial year 2023-24 excluding out of pocket expenses.

Secretarial Auditor

Pursuant to the provisions of Section 204 of The Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S. Dhanapal, Senior Partner, M/s. S. Dhanapal & Associates, a firm of Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2022-2023 is annexed herewith marked as Annexure C and forms part of this report. As required by the Listing Regulations, the Secretarial Auditors'' Certificate on Corporate Governance is enclosed as Annexure D to the Board''s report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Cost Auditor

Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read with sub section (3) of Section 148 of The Companies Act, 2013, the Company has appointed M/s. Ramachandran & Associates, Cost Auditors (Firm Registration No.000799) as Cost Auditor of the Company to conduct the audit of the Cost Accounting records maintained by the Company relating to those products as mandated by The Companies Act, 2013 and the Companies (Cost records and audit) Rules, 2014 as amended. In this regard the units manufacturing Milk Powder at Palacode, Salem and Kanchipuram have been covered under Cost Audit for the financial year 2022-23.

The Company maintains the Cost Records as specified by the Central Government under Section 148(1) of the Companies Act, 2013 as applicable to the Company.

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instance of fraud committed in the Company by its Officers or Employees to the Audit Committee under Section 143(12) of The Companies Act, 2013 details of which need to be mentioned in this report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Details as required under Section 197 of The Companies Act, 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 :

Details of Top ten Employees in terms of Remuneration drawn*: Name of the Employee	Designation of the Employee	Remuneration received (Amount in ^ Per annum)	Nature of employment, whether contractual or otherwise	Qualifications and experience of the Employee	Date of commencement of employment	Age of such Employee	Last employment held by such Employee before joining the company	Percentage of Equity Shares held by the Employee by himself or along with his /her spouse and dependent Children, being not less than two percent of the Equity Shares of the Company	Whether any such Employee is a relative of any Director or Manager of the Company and if so, name of such Director or Manager
**Prasanna Venkatesh J	AVP Sales & Marketing	58,19,682	Permanent	B.SC PG.D.B.A	03.08.1998	60	Henkal SPIC	Nil	No
Shanmuga Priyan J	Chief Operating Officer	58,58,617	Permanent	M.COM	07.03.2001	46	First Employment in HATSUN	Nil	No
Shahnavaz Mohammad	Senior General Manager - Sourcing	43,80,546	Permanent	B.Sc., Dairy Tech, LLB & EPBM	15.06.2016	47	Tirumala Milk Products Ltd.	Nil	No
Anil Kumar P A	Vice President -Quality Assurance	76,35,367	Permanent	M.SC., Dairy Microbiology	25.03.2009	64	Heritage Food India Ltd.	Nil	No
Sam Joseph A	Senior General Manager -Sourcing & Animal Husbandry	49,60,453	Permanent	B. E	18.11.2009	49	Srinivasa Fine Arts Pvt Ltd.,	Nil	No
***Ratnakar R P.Sundara Raj R	Associate Vice President -Commercial	55,09,826	Permanent	B.Com., PG.D.R.M	04.06.2010	63	Nilgiris Dairy Farms Pvt Ltd.,	Nil	No
Sayyad Mohammad Ghouse	Associate Vice President - Plant Operations	64,63,663	Permanent	Diploma in Dairy Technology	09.08.2021	60	NFPC Mega Plant, Abu Dhabi, UAE.	Nil	No
Anand S	Senior General Manager - Sales	44,83,726	Permanent	Master of Business Administration - Marketing	15.10.2021	49	Devyani Food Industries Ltd.,	Nil	No
Muthusamy S	Associate Vice President -Human Resources	45,43,223	Permanent	B.E	09.11.1998	50	First Employment in HATSUN	Nil	No
Senthilkumar	SGM - Plant Operations	44,51,918	Permanent	M.Sc.,	06.06.2005	43	First Employment in HATSUN	Nil	No

*The Top ten employees do not include Executive Directors as their Remuneration details are shown separately in the Board''s Report.

**Mr. Prasanna Venkatesh J was relieved from the Company on 06.02.2023 upon his Superannuation.

*** Mr. Ratnakar P Sundararaj R was relieved from the Company on 19.11.2022 upon his Superannuation.

(i) Details of the employees employed throughout the year and drawing remuneration which in the aggregate is not less than Rupees One Crore and Two Lakhs per annum, during the financial year. - Nil

(ii) Employees employed for a part of the financial year, who were in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Eight Lakhs and Fifty Thousand per month, during the financial year.- NIL.

(iii) None of the employees except the Managing Director employed throughout the financial year or part thereof, holds by himself/herself or along with his/her spouse and dependent children, more than two per cent of the equity shares of the Company.

Details required as per Section 197 and Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

NAME OF DIRECTOR/KMP	AMOUNT OF REMUNERATION PER ANNUM ( in I )	RATIO OF REMUNERATION TO MEDIAN REMUNERATION OF EMPLOYEES FOR THE FY	% INCREASE IN REMUNERATION DURING THE FY
Mr. C. Sathyan, Managing Director	94,20,367	39.92	16.14
Mr. H. Ramachandran, Chief Financial Officer	85,72,577	36.33	5.75
Mr. G. Somasundaram, Company Secretary	36,03,731	15.27	6.72

*Retirement benefits like Gratuity not included since the same is not comparable.

Percentage increase in the median remuneration of employees in the financial year

The median remuneration of Employees for the Financial Year ended 31st March, 2023 was arrived at T19,671/- per month and the median remuneration of Employees for the previous financial year ended 31st March, 2022 was

arrived at T18,588/- per month and accordingly, there was an increase of 5.83 % in the median remuneration of employees in the financial year.

Number of permanent employees on the rolls of the company as on 31.03.2023

The number of permanent employees on the rolls of the Company as of 31st March, 2023 stood at 5310.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average percentile increase was about 9.31 % for all the employees who went through the compensation review cycle in the year. For the managerial personnel, the compensation has increased marginally for Managing Director, CFO and the Company Secretary, due to annual increment based on their performance. The remuneration for the Managing Director and Executive Director is determined by the Shareholders for a defined term as stipulated under The Companies Act, 2013.

The compensation decisions are taken after considering at various levels of the benchmark data and the compensation budget approved for the financial year. The Nomination and Remuneration Committee recommends to the Board of Directors any compensation revision for the managerial personnel. In respect of Whole-time Directors the remuneration fixed for them is finally approved by the Shareholders.

Details of pecuniary relationship or transactions of the Non-Executive directors vis-a-vis the company

All the Non-Executive Directors are entitled to only the Sitting fees of ''50,000 for every board meeting they attend and a Sitting fee of ''10,000 for every committee meeting they attend as Members of respective committees pursuant to the revision in the Sitting fees approved by the Board at its meeting held on 27th April 2017.

Mr. P. Vaidyanathan, Non-Executive Non-Independent Director held in total 12,41,798 Equity Shares - in the capacity as Karta of Vaidyanathan .P HUF (1,37,977 Equity Shares) and in the capacity as Karta of Panchapagesan Vaidyanathan .S HUF (11,03,821 Equity Shares) as of 31st March 2023.

Mr. K.S. Thanarajan, Non-Executive Non-Independent Director held 6,68,179 Equity shares as of 31st March 2023.

Mr. V.R. Muthu, Non-Executive Independent Director held 59,773 Equity Shares as of 31st March 2023.

Other than the Sitting fees, Mr. D. Sathyanarayan, Non -Executive Non-Independent Director of the Company was paid a Remuneration for the services rendered by him after obtaining the approval of the Members by passing a Special Resolution through Postal Ballot dated 15th January, 2022.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The term Internal Financial Controls has been defined as the policies and procedures adopted by the company to ensure orderly and efficient conduct of its business, including adherence to company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Your Company has a adequate and robust Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit reports are submitted to the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. The Audit Committee also conduct discussions about Internal

Control System with the Internal and Statutory Auditors and the Management of the Company and satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.

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

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All the employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has not received any complaint on sexual harassment during the financial year ended 31.03.2023.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

During the year there are no significant and/or material Orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company''s operations in future.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2023 TILL THE DATE OF THIS REPORT

There have been no material changes and commitments which affect the financial position of the company which have occurred between the end of the financial year i.e., from 31.03.2023 to which the financial statements relate until the date of this report.

EXTRACT OF ANNUAL RETURN

As per the MCA Notification dated 28th August, 2020 making an amendment to Rule 12(1) of The Companies (Management and Administration) Rules, 2014, a weblink of the Annual Return is furnished in accordance with sub section (3) of Section 92 of The Companies Act, 2013 and as prescribed in Form MGT 7 of The Companies (Management and Administration) Rules, 2014. You may please refer to our Company''s weblink https://www.hap.in/annual-return.php.

RELATED PARTY TRANSACTIONS

As required under Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, the Company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the Company''s website. The weblink for the same is https://www.hap.in/policies.php

There were no Related Party Transactions entered into during the financial year by the company with the Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the company at large other than the remuneration paid to the Executive Director/s and NonExecutive Director/s and Dividend received by them from the Company in proportion to the shares held by them, the transactions with HAP Sports Trust by way of contribution towards CSR activities and the payment made to the Registrar and Share Transfer Agents.

The details of Related Party Transactions are provided in the Notes to the Accounts and AOC-2 forming part of the Director''s Report - Marked as Annexure G.

CORPORATE GOVERNANCE REPORT

The Company has complied with the corporate governance requirements under The Companies Act, 2013 and as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended. A report on Corporate Governance including Management Discussion and Analysis under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended along with a certificate from M/s. S Dhanapal & Associates, a firm of Practising Company Secretaries, confirming the compliance is annexed herewith marked as Annexure D and forms part of this report.

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

The details on conservation of energy, technology absorption, foreign exchange earnings and outgo are annexed herewith marked as Annexure F and forms part of this report.

DIRECTOR''S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of The Companies Act, 2013, the Directors would like to state that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

DEPOSITORY SYSTEM

As the members are aware, your Company''s shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL).In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company''s shares.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

DETAILS OF APPLICATION MADE/PROCEEDINGS PENDING UNDER IBC CODE 2016 DURING THE YEAR AND THEIR STATUS AT THE END OF FINANCIAL YEAR

NIL

DETAILS OF ONE TIME SETTLEMENT IF ANY

NIL

ACKNOWLEDGEMENTS

The Directors wish to thank the business associates, customers, vendors, bankers, farmers, channel partners and investors for their continued support given by them to the Company. The Directors would also like to thank the employees for the contributions made by them at all levels.

For and on behalf of the Board of HATSUN AGRO PRODUCT LIMITED

Sd/- Sd/-

R.G. Chandramogan C. Sathyan

Chairman Managing Director

DIN:00012389 DIN: 00012439

Place: Chennai Date: 09th May, 2023

---

Mar 31, 2022

Your Directors are pleased to present their 37 th Report along with the audited financial statement for the financial year ended March 31, 2022.

FINANCIAL RESULTS

The financial results of the Company for the year ended 31st March, 2022 are summarised below:

in Lakhs)
	CURRENT YEAR	PREVIOUS YEAR
PARTICULARS	ENDED	ENDED
	31st MARCH, 2022	31st MARCH, 2021
Revenue from operations (net)	6,39,648	5,56,974
Other Income	760	577
Total Income	6,40,408	5,57,551
Operating Expenditure	5,69,971	4,79,102
Profit belore Interest, Depreciation and Amortisation and Tax (PBDIT)	70,437	78,449
Finance Costs (net)	10,835	11,043
Depreciation and Amortisation	32,064	30,991
Profit before Taxes	27,538	36,415
Tax Expenses	5,669	12,015
Income tax pertaining to earlier years	78	(264)
Net Profit for the Y;ar	21,791	24,635
Other Comprehensive (Income) / Expenses	132	(1)
Total Comprehensive Income	21,659	24,636
Balance Brought Forward from Previous Year	36,293	24,679
Re-measurement of Defined Benefit Obligations	(158)	(87)
Amount Available for Appropriation	57,926	49,227
Appropriations
Interim Dividends on Equity Shares	12,934	12,934
Tax on Dividends		-
Transfer to General Reserve	-	-
Balance carried to Balance Sheet	44,992	36,293

PERFORMANCE OF THE COMPANY

During the year, your Company registered a total income of ''6,40,408 Lakhs as against 5,57,551 Lakhs representing an increase of 14.86% over that of the previous year. The PBDIT has decreased from ''78,449 Lakhs (FY 2020-2021) to ''70,437 Lakhs (FY 2021-2022) representing a decrease of 10.21%. The net profit during the year was ''21,659 Lakhs in comparison with previous year which stood at ''24,636 Lakhs resulting in a decrease of 12.08%.

DIVIDEND

For the Financial Year 2021-2022, your Company declared and paid an Interim dividend of ''6/- (600%) per fully paid up equity shares of the face value of ''1 per share (ISININE473B01035) on 14th July, 2021 for the Financial Year 2021-22 as First Interim Dividend.

The cash outflow on account of Interim dividend absorbing a sum of ''129,33,79,938/- (Rupees One Hundred Twenty Nine Crore Thirty Three Lacs Seventy Nine Thousands Nine Hundreds Thirty Eight only) including a dividend tax calculated at different rates as per the Certificates / Submissions made by the Shareholders as per the Income Tax Act was paid as First Interim Dividend for the financial year 2021-22 out of the accumulated profits of the Company.

During the year 2021-22, a Dividend amount of ''3,83,600 (which was declared on 24.01.2015 and remained unclaimed for a period of 7 consecutive years) being unclaimed dividend pertaining to the financial years 2014-15 (Interim dividend) was transferred to Investor Education & Protection Fund (IE&PF).

CHANGES IN SHARE CAPITAL

Further to the closure of Rights Issue and Bonus Issue which were made in the financial year 2020-21 which resulted in the change in Share Capital, your Company did not effect any change in the Share Capital during the financial year 2021-22 and hence, the paid up Equity Share Capital of the Company stands at 21,55,63,323 Equity Shares of Re.1 each amounting to ''2155.63 Lakhs without change compared to the previous financial year.

During the financial year 2021-22, the Authorised Share Capital of the Company was increased from ''30,00,00,000 comprising of 25,00,00,000 equity shares of Re 1/- each and 5,00,000 redeemable or convertible preference shares of ''100/- each to ''40,00,00,000 comprising of 35,00,00,000 equity shares of Re 1/- each and 5,00,000 redeemable or convertible preference shares of ''100/- each by way of Special Resolution passed at the Annual General Meeting of the Members of the Company held on 1st September, 2021.

TRANSFER TO RESERVES

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

FINANCE

The total borrowings has increased from ''1,41,751 Lakhs to ''1,70,827 Lakhs due to investments in various fixed assets / projects.

Your Company follows the judicious management of its Short Term and Long Term Borrowings with strong relationship with various reputed Banks from whom your Company has availed Credit facilities at very competitive rates.

DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public, outstanding and unclaimed as at 31st March, 2022, was NIL.

(a) Accepted during the Year	NIL
(b) Remained unpaid or unclaimed as at the end of the year. (Including interest thereon)	NIL
(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: i. As at 1st April 2021 ii. Maximum during April 2021 to March 2022. iii. As at 31st March 2022.	No deposit has been accepted by the Company during the year and there did not arise any default during the year. NIL NIL NIL
(d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act	NIL

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“the IEPF Rules”), all the Unpaid or Unclaimed dividends are required to be transferred by the Company to the IEPF Authority after the completion of seven years. Further, according to the Rules, the Shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. During the year 2021-22, a Dividend amount of ''3,83,600 which was declared on 24.01.2015 and remained unclaimed for a period of 7 consecutive years) being unclaimed dividend pertaining to the financial years 2014-15 (Interim dividend) was transferred to Investor Education & Protection Fund (IE&PF).

The details in respect of transfer of unclaimed dividends are provided in the Shareholder information section of this Annual Report and are also available on our website, at https://www.hap.in/unclaimed-dividened.php

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Investments under the provisions of Section 186 of The Companies Act, 2013 have been made. Particulars of investments covered under Section 186 forms part of the notes on financial statements provided in this Annual Report.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments, Resignations and Changes:

Mr. Rajendran Muthu was appointed as an Additional Director by the Board at their Meeting held on 19.10.2020, under the category of Non-Executive Independent Director with effect from 19th October, 2020. His appointment as Additional Director in the capacity of Non-Executive Independent Director continued up to the last Annual General Meeting held on 01st September, 2021. At the Annual General Meeting held on 01st September, 2021, Mr. Rajendran Muthu’s appointment as Non-Executive Independent Director for the first term of 5 consecutive years w.e.f., 19.10.2020 was approved by the Members.

Mr. Rajendran Muthu is a Graduate in Commerce and has rich experience in Business/Commercial spheres over a period of 20 years. He is the Managing Director of V.V.V & Sons Edible Oils Limited possessing the fastest growing oil brand in India named “Idhayam Mantra” which became the famous household name. Besides the above, he holds a Directorship in a Listed Company Thanga Mayil Jewellery Limited. He holds a Directorship in other Unlisted Companies viz., Idhayam - G Finance and Investment Services Limited, Idhayam - G Jagath Nidhi Limited, Virudhunagar Kamaraj Memorial Software Private Limited and Idhayam Parikshan Labs Limited. Also, he holds the Directorship in Virudhunagar Chamber of Commerce and Industry.

Re-appointments

As per the provisions of the Companies Act, 2013, Mr. R. G. Chandramogan, Chairman and Mr. C Sathyan, Managing Director are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board of Directors recommends their re- appointment.

Brief Profile of Directors proposed to be Re-appointed:

Mr. R. G. Chandramogan, aged 73 years is the Chairman of the Company. He has been in the Dairy business for more than four decades.

In February, 2018, the Indian Dairy Association awarded Patronship to Mr. R. G. Chandramogan in recognition of the valuable services rendered by him in furthering the cause of the Indian Dairy Association and the Dairy Industry, through planning and development.

Mr. C. Sathyan, aged 43 years is the Managing Director of our Company. He was conferred with the title of ‘Doctor of Letters’ for his entrepreneurship and philanthropy by the International Tamil University, USA. He has held various executive positions during his career, spanning over 18 years. He is in-charge of the day to day operations of our Company. He is the son of Mr. R. G. Chandramogan, the Chairman of the Company. Except the Managing Directorship held in this Company, Shri C. Sathyan does not hold any Directorship in any other Company.

Your Board recommends the reappointment of Mr. R. G. Chandramogan and Mr. C. Sathyan, Managing Director who are retiring by rotation in the ensuing Annual General Meeting.

Declaration by Independent Directors

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the financial year ended March 31, 2022.

Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV of the Companies Act, 2013.

The Companies Act, 2013 and SEBI LODR Regulations, 2015 as amended, define a person, who, including his/her relatives is/was not a Promoter or Employee or KMP of the Company/its Subsidiaries and they do not have any material pecuniary relationship with the Company/its Subsidiaries during the three immediately preceding financial years or in the current financial year apart from receiving remuneration. The Company abides by the said definition. Further, in the opinion of the Board, the Independent Director/Independent Directors appointed have integrity, expertise and experience (including the proficiency) as required.

BUSINESS RESPONSIBILITY REPORT

As per the amendment made to Regulation 34 (2) (f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 w.e.f., 05.05.2021, the top 1000 listed entities based on Market Capitalisation have to present the Business Responsibility and Sustainability Report (BRSR) in the format as specified by SEBI. However, the above said BRSR is voluntary for the FY 2021-22 and mandatory from the FY 2022-23.

Hence, your Company prefers to present the Business Responsibility Report (BRR) for the FY 2021-22 and BRSR for the FY 2022-23. The Business Responsibility Report forming part of this Annual Report elaborates the principles as prescribed by SEBI vide its Circular CIR/CFD/CMD/ 10/2015 dated November 04, 2015.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year under review, Seven (7) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the time period prescribed under the Companies Act, 2013.

BOARD COMMITTEES

The primary five committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. Other than the above said primary committees, the Board has the following additional committees also viz., Borrowing & Investment Committee and Core Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of this Board’s Report. The composition of the Primary Committees as of 31st March 2022 (including the changes effected up to the date of this report) and their meeting dates are given below:

Details of recommendations of Audit Committee which were not accepted by the board along with reasons The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year, the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried out all the recommendations suggested by the Audit Committee to its satisfaction. Hence there are no recommendations of Audit Committee unaccepted by the Board of Directors of the Company during the year under review.

DETAILS OF POLICIES DEVELOPED BY THE COMPANY

(i) Nomination and Remuneration Policy The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable Rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The objective of this policy is to ensure:

• The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

• Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

• Remuneration to Directors, Key Managerial Personnel and

Senior Management involves a balance with short and long-term performance objectives appropriate to the working of the company and its goals.

This policy is being governed by the Nomination and Remuneration Committee comprising of members of the Board, as stated above, comprising of four Independent Directors and two Non-Executive Non-Independent Directors. The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors and Key Management Personnel. Salient features of the Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report. The detailed policy is hosted on the website of the Company and the web link for same is https://www.hap.in/ policies.php.

Affirmation that the remuneration is as per the remuneration policy of the company:

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. This policy governs the criteria for deciding the remuneration for Directors and Key Managerial Personnel. It is affirmed that the remuneration to Directors and Key Managerial Personnel is being fixed based on the criteria and parameters mentioned in the above mentioned policy of the Company.

Board Diversity

The Company recognizes and values the importance of a diverse board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversify the Board of Directors.

(ii) Corporate Social Responsibility Policy (CSR)

Your Company recognises that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organizations.

Your Company endeavors to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Your Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of members of the Board, as stated above, and the Chairman of the Committee is Non-Executive and Independent Director. The said Committee has formulated and approved the CSR policy as per the approach and direction given by the Board pursuant to the recommendations made by the Committee including guiding principles for Selection, implementation and monitoring of activities as well as formulation of Annual Action Plan for the Company with its major focus on:-

• Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring.

• Make sustainable contributions to communities.

• Identify socio-economic opportunities to perform CSR activities.

• Focus on social welfare activities and programmes as envisaged in Schedule VII of Companies Act, 2013.

• Modalities of utilising the funds and implementation of schedules for the Projects or Programmes.

• Monitoring and Reporting mechanism for the Projects or Programmes; and

• Details of need and impact assessment study , if any, for the Projects undertaken by the Company

The CSR Committee shall recommend to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of Companies Act, 2013. Annual Report on CSR activities as required under the provisions of Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

(iii) Risk Management Policy

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management. The Company has formed a Risk Management Committee comprising of four members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimising the risk and monitor the risk management for the Company.

The policy broadly defines the scope of the Risk Management Committee which comprises of:-

• Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company.

• Ensuring that the Company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

• Evaluating significant risk exposures of the Company and assess management’s actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as business continuity planning and disaster recovery planning & testing).

• Co-coordinating its activities with the Audit Committee in

instances where there is any overlap with audit activities (e.g. internal or external audit issue relating to risk management policy or practice).

• Reporting and making regular recommendations to the Board.

(iv) Whistle-Blower Policy—Vigil Mechanism

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle Blower) mechanism provides a channel to the Employees and Directors to report to the management, concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or Policy.

The mechanism provides for adequate safeguards against victimisation of employees and directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place / suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy. The Managing Director is also empowered to bring about necessary changes to this Policy, if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances

(v) Dividend Distribution Policy

According to the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended, your company falling under top 1000 listed entities based on the market capitalisation (calculated as on March 31 of every financial year) has framed the Dividend Distribution Policy which is attached in this Annual Report marked as Annexure E.

EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

Pursuant to the provisions of The Companies Act, 2013 and Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation ofthe working ofthe Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non Executive and Independent Directors is being conducted through a survey which contains a questionnaire capturing each of the Board and Committee Member’s response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. The methodology adopted by each of the Director who responded to the survey has graded their peers against each survey item from 1 to 5 with 1 marking the lower efficiency and 5 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and it’s Committees as a whole.

The Independent Directors evaluation is being done by the entire Board with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., their

performance by way of active participation in Board and Committee meetings, discussing and contributing to strategic planning, fulfilment of Independence criteria as specified under SEBI (LODR) Regulations, 2015 as amended and their independence from the Management etc., ensuring non participation of Independent Director being evaluated.

Apart from the above, the performance of Non Independent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in a bona fide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company were also carried out to evaluate their performance.

The performance evaluation of the Non-Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of the Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in an unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any business of the Board during their Meetings and addressed them in the best interest of the Company.

As per the SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2018 /79 dated 10th May 2018, the followings details are being provided on Board evaluation.

Observations of board evaluation carried out for the year.	There were no observations arising out of board evaluation during the year as the evaluation indicates that the Board has functioned effectively within its powers as enumerated under Companies Act, 2013 and in consonance with the Articles of Association of the Company.
Previous year’s observations and action taken.	There were no observations during the previous year warranting any action.
Proposed actions based on current year observations.	As there were no observations, the action to be taken does not arise.

TRAINING AND FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Every Independent Director on being inducted into the Board attends an orientation program. To familiarise the new directors with the strategy, operations and functions of our Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Company’s strategy, operations, product offerings, Organisation structure, human resources, technologies, facilities and risk management.

Further, at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation program for Independent Directors is hosted on the website of the Company and the weblink for the same is https://www.hap.in/policies.php.

Meeting of Independent Directors:

The Independent Directors of the Company met on 31.03.2022 without the presence of Chairman, Managing Director, other Non Executive Directors and other Managerial Personnel.

COMPLIANCE WITH SECRETARIAL STANDARDS The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, have been duly followed / complied with by the Company.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR.

Your Company has no subsidiaries, joint venture or associate companies and hence the disclosure does not arise.

AUDITORS Statutory Auditors

At the Annual General Meeting held on 24th July 2017, M/s. Deloitte Haskin & Sells, Chartered Accountants, (Firm Registration number 117366W /W100018) were appointed as Statutory Auditors of the Company to hold office till the conclusion of Thirty Seventh Annual General Meeting of the Company to be held in the calendar year 2022.

The provisions of Section 139 (2) of The Companies Act, 2013 provides for appointment of a “Firm” ofAuditors for appointment as Statutory Auditors for Two terms of Five consecutive years (Sec.139(2)(b) ofThe Companies Act, 2013). Applying the above provision, M/s Deloitte Haskins & Sells LLP Statutory Auditors of the Company are eligible for re-appointment for the second term of five consecutive years from the conclusion of the Annual General Meeting to be held in the year 2022 until the conclusion of the Annual General Meeting to be held in the year 2027.

The Company has received a written consent from the Statutory Auditors for the re-appointment and also has received the Certificate indicating that they satisfy the criteria as mentioned under Section 141 of The Companies Act, 2013. Besides the above, a Certificate from the Statutory Auditors to the effect that they are not disqualified to continue as Auditors of the Company has also been received.

Considering the above provisions of The Companies Act, 2013, satisfying the eligibility conditions, willingness of the Statutory Auditors for such re-appointment and satisfaction of criteria, the Audit Committee at its Meeting held on 27.04.2022 recommended to the Board, the re-appointment of M/s Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company for the second term of five consecutive years. The Board considered the recommendation and approved the reappointment of Statutory Auditors for the second term of5 (five) consecutive years from the conclusion of 37th Annual General Meeting up to the conclusion of 42nd Annual General Meeting to be held in the year 2027 subject to the approval of Members at their ensuing Annual General Meeting (37th Annual General Meeting).

The Members to consider the re-appointment of Statutory Auditors of the Company M/s Deloitte Haskins & Sells LLP for a second term of five consecutive years.

The Notes on financial statement referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation, adverse remark or disclaimer.

The Auditors” Report on the Financial Statements of the company for the financial year ended 31st March 2022 is unmodified i.e., it does not contain any qualification, reservation, adverse remark or disclaimer and notes thereto are self explanatory and do not require any explanation

Total Fees for all the Services paid by the Company, on a consolidated basis, to the Statutory Auditors

Total Fees for all the Services paid by the Company, on a Consolidated basis to M/s. Deloitte Haskins & Sells LLP for the financial year 2021-22 was Rs.92.99 Lacs (excluding tax). towards Fees for Statutory Audit, Limited Review, Tax Audit, GST Audit, GST Retainer, Direct Tax Retainer, Direct Tax Certificate and Out of Pocket Expenses.

The Board, in consultation with the Statutory Auditors and as per the recommendation of Audit Committee, will finalise the payment of Audit Fee to the Statutory Auditors for all their services including audit of accounts, tax audit etc., for the financial year 2022-23 excluding out of pocket expenses and taxes.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S. Dhanapal, Senior Partner, M/s. S. Dhanapal & Associates, a firm of Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2021-2022 is annexed herewith marked as Annexure C and forms part of this report. As required by the Listing Regulations, the Auditors’ Certificate on Corporate Governance is enclosed as Annexure D to the Board’s report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Cost Auditor

Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read with sub section (3) of Section 148 of the Companies Act, 2013, the Company has appointed M/s. Ramachandran & Associates, Cost Auditors (Firm Registration No.000799) as Cost Auditor of the Company to conduct the audit of the Cost Accounting records maintained by the Company relating to those products as mandated by the Companies Act, 2013 and the Companies (Cost records and audit) Rules, 2014 as amended. In this regard the units manufacturing Milk Powder at Palacode, Salem and Kanchipuram have been covered under Cost Audit for the financial year 2021-22.

The Company maintains the Cost Records as specified by the Central Government under section 148(1) ofthe Companies Act, 2013 as applicable to the Company.

During the year under review, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instance of fraud committed in the Company by its officers or employees to the Audit Committee u/s.143(12) of the Companies Act 2013 details of which needs to be mentioned in this report.

Percentage increase in the median remuneration of employees in the financial year

The median remuneration of Employees for the Financial Year 31st March, 2022 was arrived at '' 18,588/- per month and the median remuneration of Employees for the previous financial year 31st March, 2021 was arrived at ''20,799/- per month and accordingly, there was a decrease of 10.63% in the median remuneration of employees in the financial year.

Number of permanent employees on the rolls of the company as on 31.03.2022

The Number of permanent employees on the rolls of the Company as of 31st March, 2022 stood at 4356 employees.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average percentile increase was about 8.31% for all the employees who went through the compensation review cycle in the year. For the managerial personnel, the compensation has increased marginally for Managing Director, CFO and the Company Secretary, due to annual increment based on their performance. The remuneration for the Managing Director is determined by the Shareholders for a defined term as stipulated under the Companies Act, 2013.

The compensation decisions are taken after considering at various levels of the benchmark data and the compensation budget approved for the financial year. The Nomination and Remuneration Committee recommends to the Board of Directors any compensation revision of the Managerial Personnel. In respect of Whole-time Directors the remuneration fixed for them is finally approved by the Shareholders.

Details of pecuniary relationship or transactions of the non-executive directors vis-a-vis the company

All the Non-Executive Directors are entitled to the Sitting fees of ''50,000 for every board meeting they attend and the Sitting fee of ''10,000 for every committee meeting they attend as Members of respective committees pursuant to the revision in the sitting fees approved by the Board at its meeting held on 27th April 2017.

Mr. P Vaidyanathan, Non-Executive Non Independent Director held in total 11,99,999 Equity Shares - in the capacity as Karta of Vaidyanathan P HUF (1,33,333 Equity Shares) and in the capacity as Karta of Panchapagesan Vaidyanathan S HUF (10,66,666 Equity Shares) as of 31st March 2022.

Mr. K.S. Thanarajan, Non-Executive Non Independent Director held 6,45,688 Equity shares as of 31st March 2022.

Other than the Sitting fees, Mr. D. Sathyanarayan, NonExecutive Non-Independent Director ofthe Company was paid a Remuneration for the services rendered by him after obtaining the approval of the Members by passing a Special Resolution through Postal Ballot dated 2nd March, 2021. Even though the approval of Members was obtained by way of passing a Special Resolution dated 2nd March, 2021 for payment of Remuneration to Mr. R .G. Chandramogan, Chairman for the services rendered by him for the financial year 2021-22, he waived his entitlement and did not receive any remuneration for the FY 2021 — 22.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS The term Internal Financial Controls has been defined as the policies and procedures adopted by the company to ensure orderly and efficient conduct of its business, including adherence to company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Your Company has adequate and robust Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit reports are submitted to the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. The Audit Committee also conduct discussions about Internal Control System with the Internal and Statutory Auditors and the Management of the Company and satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All the employees (permanent, contractual, temporary and trainees) are covered under this policy. The Company has not received any complaint on sexual harassment during the financial year ended 31.03.2022.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE During the year, there are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations in future.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2022 TILL THE DATE OF THIS REPORT

There have been no material changes and commitments which affect the financial position of the company which have occurred between the end of the financial year i.e., from 31.03.2022 to which the financial statements relate until the date of this report.

Your Company overcame the problems faced due to restrictions imposed by the Central and State Governments due to Covid 19 and the operations of the Company were normal during the FY 2021 - 22.

ANNUAL RETURN

As per the MCA Notification dated 28th August, 2020 making an amendment to Rule 12(1) of The Companies (Management and Administration) Rules, 2014, a weblink of the Annual Return is furnished in accordance with sub section (3) of Section 92 of The Companies Act, 2013 and as prescribed in Form MGT 7 of The Companies (Management and Administration) Rules, 2014. You may please refer to our Company’s weblink https://www.hap.in/annual-return.php.

RELATED PARTY TRANSACTIONS

As required under Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, the Company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the Company’s website. The weblink for the same is https://www.hap.in/policies.php

There were no related party transactions entered into during the financial year by the company with the Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with the interest of the company at large other than the remuneration paid to the Executive Director/s and Non Executive Director/s and Dividend received by them from the Company in proportion to the shares held by them, the transactions with HAP Sports Trust by way of contribution towards CSR activities and the payment made to Registrar and Share Transfer Agents.

The details of Related Party Transactions are provided in the Notes to the Accounts and AOC-2 forming part of the Director’s Report — Marked as Annexure G.

CORPORATE GOVERNANCE REPORT

The Company has complied with the corporate governance requirements under The Companies Act, 2013 and as stipulated under The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended. A report on Corporate Governance including Management Discussion and Analysis report under Regulation 34 of Securities and Exchange Board oflndia (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a certificate from M/s. S Dhanapal & Associates, a firm of Practising Company Secretaries, confirming the compliance is annexed herewith marked as Annexure D and forms part of this report.

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

The details on Conservation of energy, technology absorption, foreign exchange earnings and outgo are annexed herewith as marked as Annexure F and forms part of this report.

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the

Directors would like to state that:

In the preparation of the annual accounts, the applicable accounting standards have been followed.

The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

The Directors have prepared the annual accounts on a going concern basis.

The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

DEPOSITORY SYSTEM

As the members are aware, your Company’s shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company’s shares.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

Details of application made / proceedings pending under IBC code 2016 during the year and their status at the end of FY An Operational Creditor initiated proceedings under IBC before the Hon’ble National Company Law Tribunal (NCLT), Chennai, the claim of which was disputed by the Company. However, a mutually agreeable compromise settlement has been reached with the said Operational Creditor by the Company. Based on which, the proceedings before the Hon’ble NCLT was dismissed by NCLT "as settled out of Court" vide its Order dated 11.02.2022.

ACKNOWLEDGEMENTS

The Directors wish to thank the business associates, customers, vendors, bankers, farmers, channel partners and investors for their continued support given by them to the Company. The Directors would also like to thank the employees for the contributions made by them at all levels.

For and on behalf of the Board of HATSUN AGRO PRODUCT LIMITED

Sd/-

Sd/- C. Sathyan

R. G. Chandramogan Managing Director

Chairman DIN: 00012439

DIN: 00012389

Place: Chennai Date: 27 th April, 2022

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Mar 31, 2021

13.2 Rights attached to Equity Shares

The Company has only one class of equity shares having par value of Re.1 per share ( March 31, 2020 - Re.1/-). Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees.

During the year ended March 31, 2021, the amount of per share dividend recognised as distributions to equity shareholders was Rs 8.00 /-and Rs 6.40/- for partly paid up shares (March 31, 2020: ^6.00/-and Rs 4.80/- for partly paid up shares ). Also Refer Note 33

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive remaining assets of the Company, after distribution of all preferential payments.The distribution will be in proportion to the number of equity shares held by the shareholders.

13.5 There are no shares reserved for issue under any options.

13.6.The Company received the Rights Call Money on 1064 partly paid up Rights Equity Shares during the quarter ended December 2020 and the same were converted in to fully paid up Equity Shares. The total number of partly paid up Rights Equity Shares converted in to fully paid up Equity Shares (out of the Rights Issue of 9510519 Equity Shares - partly paid up - made in the year 2018) was 9504185 shares. Thus, the balance number of partly paid up Rights Equity Shares amounting to 6334 were forfeited by the Board at its Meeting held on 19.10.2020. All the fully paid up Rights Equity Shares have been listed on the Stock Exchanges. The Company has completed all the formalities as per the provisions of Articles of Association (AoA) and as required under the SEBI(LODR) regulation 2015 with respect to forfeiture of partly paid up Rights Equity Shares.

Unsecured/Secured cash credit carries an interest ranging from 7.30% to 8.80% (March 31, 2020 - 7.65 % to 10.25 % ).

Secured short term loans are secured by charge on plant and machinery, land and building, inventories, receivable and other current assets of the Company. Further, these facilities have been personally guaranteed by the Managing Director and Chairman. Interest rate on secured short term loans ranged from 5.75 % to 8.25 % (March 31, 2020 - 7.80 % to 8.80 %) during the year.

Unsecured short term loans included commercial paper obtained from various banks carried an interest rate ranging from 5.80 % to 8.20 % (March 31, 2020 - 7.10 % to 10.10 % ) during the current year.

The Company had not committed any default in the repayment of loan or payment of interest.

Note: 22.1 Disaggregated revenue information

Based on the management approach as defined in IND AS 108 - Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, the Company has identified Milk & Milk products as its reportable segment. Others primarily comprises Cattle feed and Ready to eat products segments. Refer Note 39 Note: 22.2 Trade Receivables and Contract Balances

A receivable is a right to consideration that is unconditional upon passage of time. The company sells goods on advance payment terms. In case of customers with certain nature of products where the credit is allowed, the same is disclosed in Note 9 - Trade Receivables.

Note 22.3 Transaction price allocated to the remaining performance obligation

Applying the practical expedient as given in Ind AS 115, the Company has not disclosed the remaining performance obligation related disclosures for contracts where the revenue recognised corresponds directly with the value to the customer of the entity''s performance completed to date, typically those contracts where invoicing is on time and material basis.

Note 22.4 Information about major customers

Company has no single customer from whom the revenue is not less than 10 % of the revenue from external customers of the company.

Note: The tax rate used for the year ended March 31, 2021 and March 31, 2020 reconciliations above is the corporate tax rate of 34.944 % and 34.944 % respectively payable by corporate entities in India on book profits under Indian Income Tax Laws.

(c) During the year ended March 31, 2021, the Company has paid dividend to its shareholders. This has resulted in payment of dividend distribution tax (DDT) to the taxation authorities. The Company believes that DDT represents additional payment to taxation authority on behalf of the shareholders. Hence, DDT paid is charged to equity.From financial year 2020-21 DDT has been removed and hence no DDT charge

35. EMPLOYEE BENEFITS

(a) Gratuity benefits provided by the Company

In accordance with applicable Indian laws, the Company has a defined benefit plan which provides for gratuity payments (the "Gratuity Plan") and covers certain categories of employees in India. The Gratuity Plan provides a lump sum gratuity payment to eligible employees at retirement or termination of their employment. The amount of the payment is based on the respective employee''s last drawn salary and the years of employment with the Company. Liabilities in respect of the Gratuity Plan are determined by an actuarial valuation, based upon which the Company makes contributions to the Gratuity Fund maintained with Life Insurance Corporation of India (LIC).

These plans typically expose the Company to actuarial risks such as: investment risk, interest rate risk, longevity risk and salary risk.

Investment risk: The present value of the defined benefit plan liability is calculated using a discount rate which is determined by reference to market yields at the end of the reporting period on government bonds. When there is a deep market for such bonds; if the return on plan asset is below this rate, it will create a plan deficit. Currently, for these plans, investments are made in government securities, debt instruments, Short term debt instruments, Equity instruments and Asset Backed, Trust Structured securities as per notification of Ministry of Finance.

Interest risk: A decrease in the bond interest rate will increase the plan liability; however, this will be partially offset by an increase in the return on the plan''s investments.

Longevity risk: The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and after their employment. An increase in the life expectancy of the plan participants will increase the plan''s liability.

(b) Provident fund benefits

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards provident fund, which is defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to provident fund for the year aggregated to INR. 933.72 (March 31, 2020: INR. 866.46) and is included in "contribution to provident and other funds".

(c) Employee State Insurance benefits

The Company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards Employee State Insurance, which is defined contribution plan. The Company has no obligations other than to make the specified contributions. The contributions are charged to the statement of profit and loss as they accrue. The amount recognised as an expense towards contribution to Employee State Insurance for the year aggregated to INR. 158.17 (March 31,2020: INR. 150.31 ) and is included in "Staff Welfare Expenses".

b) Foreign currency sensitivity:

The Company is mainly exposed to fluctuations in US Dollar and EURO The following table details the Company''s sensitivity to a 5 % increase and decrease against the US Dollar. 5 % is the sensitivity used when reporting foreign currency risk internally to key management personnel and represents management''s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only net outstanding foreign currency denominated monetary items and adjusts their translation at the period end for a 5 % change in foreign currency rates. A positive number below indicates an increase in profit or equity where the Rupee strengthens by 5 % against the US Dollar, EURO. For a 5 % weakening against the US Dollar, EURO, there would be a comparable impact on the profit or equity.

39. SEGMENT INFORMATION1. Products from which reportable segments derive their revenues

Based on the management approach as defined in IND AS 108 - Operating Segments, the Chief Operating Decision Maker (CODM) evaluates the Company''s performance and allocates resources based on an analysis of various performance indicators by business segments. Accordingly, the Company has identified Milk & Milk products as its reportable segment. Others primarily comprises Cattle feed and Ready-to-eat products segments.

The management assessed that trade receivables, cash and cash equivalents, borrowings, trade payables and other liabilities approximate their carrying amounts largely due to the short-term maturities of these instruments.

The fair value of the financial assets and liabilities is included at the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale.

41. Fair value hierarchy

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices).

Level 3 - Inputs for the assets or liabilities that are not based on observable market data (unobservable inputs).

42. FINANCIAL RISK MANAGEMENT OBJECTIVE AND POLICIES

The Company''s principal financial liabilities, comprise loans and borrowings, trade and other payables. The main purpose of these financial liabilities is to finance its operation. The Company''s principal financial assets include trade and other receivables, cash and cash equivalents and bank balances that are derived directly from its operation. The Company also holds FVTOCI investments and enters into derivative transactions.

The Company''s activities are exposed to a variety of financial risks, like credit risk, market risk and liquidity risk. The Company''s primary risk management focus is to minimise potential adverse effects of market risk on its financial performance. The Company''s risk management assessment and policies and processes are established to identify and analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor such risks and compliance with the same. Risk assessment and management policies and processes are reviewed regularly to reflect changes in market conditions and the Company''s activities. The Board of Directors and the Audit Committee is responsible for overseeing the Company''s risk assessment and management policies and processes.

a. Credit risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. Credit risk is controlled by analysing credit limits and creditworthiness of customers on a continuous basis to whom the credit has been granted after obtaining necessary approvals for credit. Financial instruments that are subject to concentrations of credit risk principally consist of trade receivables, investments, derivative financial instruments, cash and cash equivalents, bank deposits and other financial assets. None of the financial instruments of the Company result in material concentration of credit risk.

Trade and other receivables

The Company sells goods on advance payment terms. In cases of customers with certain nature of products where credit is allowed, the average credit period on such sale of goods ranges from 1 day to 45 days depending on the nature of the product. The customer credit risk is managed by the Company''s established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on the individual credit limits are defined in accordance with this assessment and outstanding customer receivables are regularly monitored. The Company'' receivables turnover is

quick and historically, there was no significant defaults on account of those customer in the past.

Ind AS requires an entity to recognise in profit or loss, the amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised in accordance with Ind AS 109. The Company assesses at each date of statements of financial position whether a financial asset or a group of financial assets is impaired. Expected credit losses are measured at an amount equal to the 12 month expected credit losses or at an amount equal to the life time expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition.

The Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on a provision matrix. The provision matrix takes into account historical credit loss experience and adjusted for forward-looking information. Currently the Company has not provided any provision in the books as per Ind AS 109 due to the fact that there are no historical credit losses observed in the past.

Exposure to credit risk:

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk is INR. 907.41 Lakhs and 1,246.89 Lakhs as of March 31, 2021 and March 31, 2020 being the total of the carrying amount of balances with trade receivables.

b. Liquidity risk

Liquidity risk refers to the risk that the Company cannot meet its financial obligations. The objective of liquidity risk management is to maintain sufficient liquidity and ensure that funds are available for use as per requirements. The Company manages liquidity risk by maintaining adequate reserves, banking facilities and borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities. The Company has established an appropriate liquidity risk management framework for it''s short term, medium term and long term funding requirement.

c. Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Such changes in the values of financial instruments may result from changes in the foreign currency exchange rates, interest rates, credit, liquidity and other market changes.

i) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of change in market interest rates. In order to optimise the Company''s position with regards to interest income and interest expenses and to manage the interest rate risk, management performs a comprehensive corporate interest risk management by balancing the proportion of fixed rate and floating rate financial instruments in its total portfolio.

ii) Foreign Currency Risk

The fluctuation in foreign currency exchange rates may have potential impact on the statement of profit or loss and other comprehensive income and equity, where any transaction references more than one currency or where assets / liabilities are denominated in a currency other than the functional currency of the respective entities. Considering the countries and economic environment in which the Company operates, its operations are subject to risks arising from fluctuations in exchange rates in those countries. The risks primarily relate to fluctuations in US Dollar against the functional currencies of the Company. The Company, as per its risk management policy, uses derivative instruments primarily to hedge foreign exchange. The Company evaluates the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks. It hedges a part of these risks by using derivative financial instruments in line with its risk management policies.

43. Capital management

The Company manages its capital to ensure that it is able to continue as a going concern while maximising the return to the stakeholders through the optimisation of the debt and equity balance. The Company determines the amount of capital required on the basis of an annual budgeting exercise, future capital projects outlay etc. The funding requirements are met through equity, internal accruals and borrowings (short term/long term).

45. Estimation uncertainty during COVID-19 outbreak

The Company has considered internal and certain external sources of information including credit reports, economic forecasts and industry reports up to the date of approval of the financial statements in determining the impact on various elements of its financial statements. The Company has used the principles of prudence in applying judgments, estimates and assumptions including sensitivity analysis and based on the current estimates, the Company expects to fully recover the carrying amount of Trade receivables, Inventories, Other financial assets, Other current assets. The eventual outcome of impact of the global health pandemic may be different from those estimated as on the date of approval of these financial statements.

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Mar 31, 2018

To the Members,

The Directors have great pleasure in presenting their 33rd Report along with the audited financial statements for the financial year ended March 31, 2018.

FINANCIAL RESULTS

Your Company has adopted the Indian Accounting Standards (IND AS) as applicable with effect from April 1, 2017 and the financials for the year ended 31st March 2018 have been prepared in accordance with the recognition and measurement principles as laid down under IND AS and in accordance with Companies (Indian Accounting Standards) Rules, 2015 (as amended) read with Section 133 of the Companies Act, 2013 together with the comparative period data as at and for the year ended 31st March 2017.

The financial results of the Company for the year ended 31^st March, 2018 are summarised below:

(Rs. In Lakhs)

PARTICULARS	CURRENT YEAR ENDED 31st MARCH, 2018	PREVIOUS YEAR ENDED 31st MARCH, 2017
Revenue from Operations (net)	4,28,980	4,20,541
Other Income	831	678
Total Income	4,29,811	4,21,219
Operating Expenditure	3,91,815	3,82,740
Profit before Interest, Depreciation and Amortisation and Tax (PBDIT)	37,996	38,479
Finance Costs (net)	8,764	7,020
Depreciation and Amortisation	17,364	14,287
Profit before Taxes	11,868	17,172
Tax Expenses	2,579	3,783
Income tax pertaining to earlier years	205	(150)
Net Profit for the Year	9,084	13,539
Balance Brought Forward from Previous Year	21,319	9,681
Amount Available for Appropriation	30,403	23,220
Appropriations
Interim Dividends on Equity Shares	6058	1522
Tax on Dividends	1267	310
Transfer to General Reserve	-	-
Balance carried to Balance Sheet	23,078	21,388

PERFORMANCE OF THE COMPANY

During the year, your Company registered a total income of Rs.4,29,811 Lakhs representing an increase of 2.04 % over that of the previous year. The PBDIT has marginally reduced from Rs.38,479 Lakhs (FY 2016-2017) to Rs.37,996 Lakhs (FY 2017-2018) owing to increase in the cost of materials and other overheads. The net profit during the year was Rs.9,084 Lakhs in comparison with previous year which stood at Rs.13,539 Lakhs.

DIVIDEND

During the year, your Company on 13th July 2017 has declared and paid first interim dividend of Rs. 1/- per equity share and on 21st May 2018, has declared and paid second interim dividend of Rs. 3.00/- per equity share thereby totalling to 400% on equity share capital. The cash outflow on account of first interim dividend excluding dividend tax for the year 2017-18, aggregated to Rs.1,522 Lakhs and the cash outflow on account of second interim dividend for the year 2017-18 excluding dividend tax aggregated to Rs.4,565 Lakhs thereby resulting in a total payout of 67% of the net profits of the Company.

During the year 2017-18, an amount of Rs.2,57,034/- being unclaimed dividend pertaining to the financial years 2009-10 (Interim dividend), 2010-11 (First Interim dividend) and 2010-11 (Second Interim dividend) was transferred to Investor Education & Protection Fund (IE&PF).

SHARE CAPITAL

During the year, the share capital of the company as of 31st March 2018 stood at 15,21,68,307 equity shares of Rs.1 each totalling to Rs.15,21,68,307.

RIGHTS ISSUE

During the year, on 6th December 2017, the Board of Directors approved raising funds for the Company by way of issue of securities (the “Issue”) to the existing equity shareholders of the Company on a rights basis aggregating up to Rs.900 Crores.

Subsequently on 21st May 2018, the Board of Directors decided to Issue 1 (one) partly paid Equity Shares for every 16 (Sixteen) fully paid equity shares aggregating to 95,10,519 partly paid up equity shares (the “Issue”) of face value of Rs.1 each for cash at a price of Rs.555 (including a premium of Rs.554) per equity share (“Rights Equity Shares”) for an amount aggregating to Rs.52,783.38 Lakhs on a rights basis to the Eligible Equity Shareholders of the Company as on the record date of 1st June 2018.

With the final approval from SEBI the Issue was opened for the Eligible Equity Shareholders from June 14, 2018 to July 05, 2018 and the basis of allotment was decided on July 11, 2018 in consultation with BSE Limited, the designated Stock Exchange.

The Board allotted 95,10,519 partly paid equity shares on July 12, 2018 to the Shareholders of the Company as on the record date fixed for the purpose of Rights Issue and further obtained the listing approvals from BSE Limited and National Stock Exchange of India Limited on July 13, 2018 and July 16, 2018 respectively

TRANSFER TO RESERVES

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

FINANCE

The total borrowings as increased from Rs.91,928.85 Lakhs to Rs.1,29,895.46 Lakhs on account of increased Capex expenditure to meet the growing needs of your Company. In addition, we believe that the leverage capacity of our Company will improve our ability to raise further resources in the future to fund potential business development opportunities and plans to grow and expand our business.

The Company continues to focus on judicious management of its working capital and has taken care to ensure that the Company’s borrowings are obtained at very competitive rates. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public, outstanding and unclaimed as at 31st March, 2018, was Rs. 1.53 Lakhs out of which a sum of Rs.0.92 Lakhs represents three accounts of Fixed/Non Cumulative Deposits and Rs.0.61 Lakhs represents two accounts of Cumulative Deposits.

(a) Accepted during the Year	NIL
(b) Remained unpaid or unclaimed as at the end of the year. (Including interest thereon)	Principal - Rs. 1.53 Lakhs Interest - Rs.0.15 Lakhs Total - Rs. 1.68 Lakhs
((c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: i. As at 1st April, 2017 ii. Maximum during During April, 2017 to March, 2018 iii. As at 31st March, 2018	No deposits have been accepted by the Company during the year and there did not arise any default during the year. NIL NIL NIL
d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act	NIL

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Particulars of investments covered under Section 186 forms part of the notes on financial statements provided in this Annual Report.

BOARD’S APPRECIATION TO MR. N. CHANDRASEKARAN, ERSTWHILE INDEPENDENT DIRECTOR OF THE COMPANY

Your Board wishes to record its appreciation in this report for the association and support rendered by Mr. N. Chandrasekaran during his tenure as Independent Director who resigned from his said position with effect from 31st March 2018 to pursue his personal ambitions and devote more time for other activities.

Mr. N. Chandrasekaran had served the Board as Independent Director of the Company and has been an active member of the Audit Committee.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments and Resignations

During the year under review, Mr. N. Chandrasekaran resigned from his position as Independent Director of the Company with effect from 31st March 2018.

RE-APPOINTMENTS

As per provisions of the Companies Act, 2013, Shri. R. G. Chandramogan is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors recommends his re-appointment.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the financial year ended March 31, 2018.

UPDATE ON SETTLEMENT COMMISSION

With respect to filing of application for Settlement of Cases under Income Tax Act, 1961 with the Settlement Commission relating to the claim for deduction under Section 80 IB of Income Tax Act, 1961 the Assistant Commissioner of Income Tax had issued the Orders dated 30th November 2017 giving effect to the Order of the Settlement Commission working out the tax liability/refund for all Assessment Years from 2008-09 to 2014-15, arising out of the Order of the Hon’ble Settlement Commission. The net tax liability as per the Orders after adjusting refunds worked out to Rs.2,07,54,472/- (Rupees Two Crores Seven Lakhs Fifty Four Thousand Four Hundred and Seventy Two Only) which was remitted to the Income Tax Authorities during the year.

BUSINESS RESPONSIBILITY REPORT

Your Company being among the top 500 entities based on market capitalisation has to present the Business Responsibility Report as required under Regulation 34 (2) (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Business Responsibility Report forming part of this Annual Report elaborates on principles as prescribed by SEBI vide its Circular CIR/CFD/CMD/10/2015 dated November 04, 2015.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year seven (7) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report.

The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

BOARD COMMITTEES

The primary four committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee and Corporate Social Responsibility Committee. Other than the above said primary committees, the Board also has the following additional committees viz., Sub-Committee, Share Transfer Committee, Risk Management Committee, Core Committee and Rights Issue Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of this Board’s Report. The composition of the Primary Committees and their meeting dates are given below:

NAME OF THE COMMITTEE	COMPOSITION	DETAILS OF MEETINGS HELD DURING THE YEAR
Audit Committee	With the resignation of Mr. N. Chandrasekaran, Independent Director, the Committee which earlier had five Non-Executive Independent Directors now comprise of four Non-Executive Independent Directors. The Chairman of the Committee is an Independent Director.	Five meetings were held during the year on the following dates:-27th May, 2017, 13thJuly, 2017 16th October, 2017 16th January, 2018 31st March, 2018
Nomination and Remuneration Committee	With the resignation of Mr. N. Chandrasekaran, Independent Director, the Committee which earlier had five Non-Executive Independent Directors now comprise of four Non-Executive Independent Directors. The Chairman of the Committee is an Independent Director.	One meeting was held during the year on the following date:-31st March 2018
Stakeholders’ Relationship Committee	With the resignation of Mr. N. Chandrasekaran, Independent Director the Committee which earlier had five Non-Executive Independent Directors and one Non-Executive and Non Independent Director now comprise of four Non-Executive Independent Directors and one Non-Executive and Non Independent Director. The Chairman of the Committee is an Independent Director	Four meetings were held during the year on the following dates:-13thJuly, 2017 16th October, 2017 16th January, 2018 31st March, 2018
Corporate Social Responsibility Committee	The Committee comprises of one Executive Director, one Non-Executive Independent Director and one Non-Executive and Non Independent Director. The Chairman of the Committee is an Independent Director	One meeting was held during the year on following date:-31st March, 2018

Details of recommendations of Audit Committee which were not accepted by the board along with reasons

The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried out the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations unaccepted by the Board of Directors of the Company during the year under review.

DETAILS OF POLICIES DEVELOPED BY THE COMPANY (I) Nomination and Remuneration Policy

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable Rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The objective of this policy is to ensure:

- The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

- Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

- Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance with short and long-term performance objectives appropriate to the working of the company and its goals

This policy is being governed by the Nomination and Remuneration Committee comprising of members of the Board, as stated above, comprising of four Independent Directors, The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors and Key Management Personnel, Salient features of the Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report. The detailed policy is hosted on the website of the Company and the weblink for same is httpV/www.hap.in/mvestors-poliaes.htmL

AFFIRMATION THAT THE REMUNERATION IS AS PER THE REMUNERATION POLICY OF THE COMPANY

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. This policy governs the criteria for deciding the remuneration for Directors and Key Management Personnel. It is affirmed that the remuneration to Directors and Key Management Personnel is being fixed based on the criteria and parameters mentioned in above mentioned policy of the Company.

BOARD DIVERSITY

The Company recognises and values the importance of a diverse board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

(II) CORPORATE SOCIAL RESPONSIBILITY POLICY (CSR)

Your Company recognises that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organisations.

Your Company endeavours to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Your Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of members of the Board, as stated above, and the Chairman of the Committee is Non-Executive and Independent Director. The said Committee has formulated and approved the CSR policy for the Company with its major focus on:-

- Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring.

- Make sustainable contributions to communities.

- Identify socio-economic opportunities to perform CSR activities.

- Focus on social welfare activities as envisaged in Schedule VII of Companies Act, 2013.

The Policy also focuses on the constitution of CSR Committee, roles and responsibilities of CSR Committee, CSR activities to be undertaken and allocation of funds for carrying out such CSR activities, implementation and monitoring the execution of CSR activities for the Company. The CSR Committee shall recommend to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of Companies Act, 2013. Annual Report on CSR activities as required under the provisions of Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

(III) RISK MANAGEMENT POLICY

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management. The Company has formed a Risk Management Committee comprising of three members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimising the risk and monitor the risk management for the Company.

The policy broadly defines the scope of the Risk Management Committee which comprises of:-

- Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company.

- Ensuring that the Company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

- Evaluating significant risk exposures of the Company and assess management’s actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as business continuity planning and disaster recovery planning & testing).

- Co-ordinating its activities with the Audit Committee in instances where there is any overlap with audit activities (e.g. internal or external audit issue relating to risk management policy or practice).

- Reporting and making regular recommendations to the Board.

(IV) WHISTLE-BLOWER POLICY - VIGIL MECHANISM

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle-Blower) mechanism provides a channel to the Employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or Policy. The mechanism provides for adequate safeguards against victimisation of employees and directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle-Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place/suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy. The Managing Director is also empowered to bring about necessary changes to this Policy, if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances

(V) DIVIDEND DISTRIBUTION POLICY

According to the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended, your company falling under top 500 listed entities based on the market capitalisation (calculated as on March 31 of every financial year) has framed the Dividend Distribution Policy which is attached in this Annual Report marked as Annexure E.

EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non-Executive and Independent Directors is being conducted through a survey which contains a questionnaire capturing each Board and Committee Member’s response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. The methodology adopted by each Director who responded to the survey has graded their peers against each survey item from P1 to P3 with P1 marking the lower efficiency and P3 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and Committee as a whole.

The Independent Directors evaluation was done with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., active participation in strategic planning, fiduciary responsibilities, participation in Board and Committee meetings, etc.

Apart from the above, the performance of Non Independent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in bona fide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company was also carried out to evaluate their performance.

The performance evaluation of the Non Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of the Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any businesses of the Board during their Meetings and addressed them at the best interest of the Company.

As per the SEBI Circular SEBI/HO/CFD/CMD/CIR/P/2018/79 dated 10 th May 2018, the followings details are being provided on Board evaluation.

Observations of board evaluation carried out for the year	There were no observations arising out of board evaluation during the year as the evaluation indicates that the Board has functioned effectively within its powers as enumerated under Companies Act, 2013 and in consonance with the Articles of Association of the Company.
Previous year’s observations and actions taken.	There were no observations during the previous year.
Proposed actions based on current year observations.	As there were no observations, the action to be taken does not arise.

TRAINING AND FAMILIARISATION PROGRAM FOR INDEPENDENT DIRECTORS

Every Independent Director on being inducted into the Board attends an orientation program. To familiarise the new directors with the strategy, operations and functions of our Company, the Executive Directors/ Senior Managerial Personnel make presentations to the inductees about the Company’s strategy, operations, product offerings, organisation structure, human resources, technologies, facilities and risk management. Further, at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation program for Independent Directors is hosted on the website of the Company and the weblink for same is http:/ /www.hap.in/investors-policies.html

COMPLIANCE WITH SECRETARIAL STANDARDS The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, issued by the Institute of Company Secretaries of India, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, have been duly followed by the Company.

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR.

Your Company has no subsidiaries, joint ventures or associate companies and hence the disclosure does not arise.

AUDITORS

Statutory Auditors

At the Annual General Meeting held on 24thJuly 2017, M/s. Deloittc Haskin & Sells, Chartered Accountants, (Firm Registration number 117366W /W100018) were appointed as Statutory Auditors of the Company to hold office till the conclusion of Thirty Seventh Annual General Meeting of the Company to be held in the calendar year 2022. The Company has received a certificate from the Auditors to the effect they are not disqualified to continue as Auditors of the Company.

The Notes on financial statement referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation, adverse remark or disclaimer.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S. Dhanapal, Senior Partner, M/s. S. Dhanapal & Associates, a firm of Practising Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2017-2018 is annexed herewith marked as Annexure C and forms part of this report. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer.

Cost Auditor

Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read with sub section (3) of Section 148 of the Companies Act, 2013, the Company has appointed M/s. Ramachandran & Associates, Cost Auditors (Firm Registration No.000799) as Cost Auditor of the Company to conduct the audit of the cost accounting records maintained by the Company relating to those products as mandated by the Companies Act, 2013 and the Companies (Cost records and audit) Rules, 2014 as amended in respect of all the units of the Company for the financial years 2018-19.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Details as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) Details of top ten employees in terms of remuneration drawn*:

Name of the employee	Designation of the employee	Remuneration received (Amount in Rs. Per- annum)	Nature of employment, whether contractual or otherwise	Qualifications and experience of the employee	Age of such employee	Last employment held by such employee before joining the company	Percentage of Equity Shares held by the employee in the Company by himself or along with his spouse and dependent children, being not less than two percent of the Equity Shares of the Company	Whether any such employee is a relative of any Director or Manager of the Company and if so, name of such Director or Manager.
John Henry Ne,ize,nt	SPECIALIST -DAIRY’ HERD DEVELOPMENT	74,18,712	Permanent	PHD in Agronomy/Paras-itology /Nutrition	57	Brownes Dairy	Nil	None
Ramachandran H.	CHIEF FINANCIAL OFFICER	56,40,939	Permanent	AICWA, ACS	54	Bay Forge Ltd.,	Nil	None
Ratnakar P Sundara Rajan	AVP- SOURCING & COMMERCIAL	52,63,632	Permanent	B.Com., PG.D.R.M	57	Nilgiris Dairy Farms Pvt Ltd.,	Nil	None
Anil Kumar PA.	AVP - QA	50,40,909	Permanent	M.SC., Dairy Microbiology	59	Heritage, Food India Ltd.,	Nil	None
PrusmuiaVenkateshJ.	AVP-MARKETING & SALES	46,89,867	Permanent	B.SC., PG.D.B.A	53	Henkel SPIC	Nil	None
Ulhas Vasant Ambre	GENERAL MANAGER-PLANT	37,55,064	Permanent	IDD	46	Delmote Food (LAE) Fze	Nil	None
JeromeJ.	AVP-SALES	33,15,921	Permanent	B.SC.,	58	Rasna Pvt ltd.,	Nil	None
SamJoseph A.	SENIOR GENERAL MANAGER-SOURCING	29,04,081	Permanent	B.E	44	Srinivasa Fine Arts Pvt Ltd.,	Nil	None
Shanmugapriyan J.	SENIOR GENERAL MANAGER - IA & PROCESS	26,37,357	Permanent	M.COM	40	First Employement in HATSUN	Nil	None
Shanavaz Mohammad	GENERAL MANAGER - DI OPERATION	24,93,894	Permanent	B.Tech Dairy Technology	42	Tirumala Milk Products Pvt Ltd	Nil	None

*The top 10 employees does not include executive directors as their remuneration details are shown separately in the Board’s report.

(ii) Details of the employees employed throughout the year and drawing remuneration which in the aggregate is not less than Rupees One Crorc and Two Lakhs per annum, during the financial year. - Nil

(ii) Employees employed for a part of the financial year, was in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Eight Lakhs and Fifty Thousand per month, during the financial year.- Nil.

(iii) None of the employees except Managing Director and Executive Director employed throughout the financial year or part thereof, hold by himself/herself or along with his/her spouse and dependent children, more than two per cent of the equity shares of the Company

Details required as per Section 197 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

NAME OF DIRECTOR/KMP	AMOUNT OF REMUNERATION PER ANNUM(IN RS.)	RATIO OF REMUNERATION TO MEDIAN REMUNERATION OF EMPLOYEES FOR THE FY	% INCREASE IN REMUNERATION DURING THE FY
Mu R. G. Chandramogan, Managing Director	66,81,200	57.10 times	Nil
Mr. C. Sathyan, Executive Director	60,81,200	53.09 times	Nil
Mr. H. Ramachandran Chief Financial Officer	56,40,939	40.02 times	8.50%
Mi: S. Narayan Company Secretary	16,71,285	11.77 times	7.46%

Percentage increase in the median remuneration of employees in the financial year

The median remuneration of Employees for the Financial Year 31st March, 2018 was arrived at Rs.12,100/- per month and the median remuneration of Employees for the previous financial year 31st March, 2017 was arrived at Rs.12,480/- per month and accordingly, there was a decrease of 3.04% in the median remuneration of employees in the financial year.

Number of permanent employees on the rolls of the company as on 31.03.2018

The Number of permanent employees on the rolls of the Company as of 31st March 2018 stood at 5173 employees.

Average percentiIe increase aIready made in the saIaries of empIoyees other than the manageriaI personneI in the Iast financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average percentage increase was about 8.84 % for all employees who went through the compensation review cycle in the year. For the managerial personnel, the compensation levels remained same as that of previous year as they are in receipt of a fixed remuneration determined by the Shareholders for a defined term as stipulated under the Companies Act, 2013.

The compensation decisions are taken after considering at various levels of the benchmark data and the compensation budget approved for the financial year. The Nomination and Remuneration Committee recommends to the Board of Directors any compensation revision of the managerial personnel which is further approved by the Shareholders.

DetaiIs of pecuniary reIationship or transactions of the Non-Executive Directors vis-a-vis the company

All Non-Executive Directors are entitled to only Sitting fees of Rs.50,000 for every board meeting they attend and Sitting fee of Rs.10,000 for every committee meeting they attend as Members of respective committees pursuant to revision in the sitting fees approved by the Board at its meeting held on 27 th April 2017

Mr. P. Vaidyanathan, Non-Executive and Independent Director holds 9,00,000 Equity shares as of 31st March 2018 in the name of P. Vaidyanathan (SHUF).

Mr. K.S. Thanarajan, Non-Executive and Non Independent Director holds 5,06,200 Equity shares as of 31st March 2018.

Other than the Sitting fees, they do not have any pecuniary relationship or transactions with the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The term Internal Financial Controls has been defined as the policies and procedures adopted by the company to ensure orderly and efficient conduct of its business, including adherence to company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Your Company has adequate and robust Internal Control Systems, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of Internal Audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. The Audit Committee also conducts discussions about Internal Control Systems with the Internal and Statutory Auditors and the Management of the Company and satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has not received any complaint on sexual harassment during the financial year ended 31.03.2018.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

During the year there are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2018 TILL THE DATE OF THIS REPORT

There are no material changes and commitments affecting the financial position of the company which has occurred since 31.03.2018 till the date of this report.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in form MGT-9 is annexed herewith marked as Annexure D and forms part of this report.

RELATED PARTY TRANSACTIONS

As required under Regulation 23 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the Company’s website. The weblink for same is http:/ /www.hap.in/investors-policies.html

There were no related party transactions entered into during the financial year by the company with its Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large other than the remuneration paid to the Executive Directors and Dividend received by them from the Company in proportion to the shares held by them.

The details of Related Party Transactions are provided in the Notes to the Accounts.

CORPORATE GOVERNANCE REPORT

The Company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance including Management Discussion and Analysis report under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a certificate from Mr. N. Ramanathan, Partner, M/s. S. Dhanapal & Associates, a firm of Practising Company Secretaries, confirming the compliance is annexed herewith marked as Annexure E and forms part of this report.

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

The details on conservation of energy, technology absorption, foreign exchange earnings and outgo is annexed herewith as marked as Annexure G and forms part of this report.

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the Directors would like to state that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review.

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

DEPOSITORY SYSTEM

As the members are aware, your Company’s shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company’s shares.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

ACKNOWLEDGEMENTS

The Directors wish to thank the business associates, customers, vendors, bankers, farmers, channel partners and investors for their continued support given by them to the Company. The Directors would also like to thank the employees for the contributions made by them at all levels.

For and on behalf of the Board of Directors

Sd/-

R.G. Chandramogan

Chairman & Managing Director

Place: Chennai

Date: July 19, 2018

---

Mar 31, 2017

To the Members,

The Directors have great pleasure in presenting their 32nd Report along with the audited financial statement for the financial year ended March 31, 2017.

FINANCIAL RESULTS

The financial results of the Company for the year ended March 31, 2017 are summarised below:

(Rs. in Lakhs)

PARTICULARS	CURRENT YEAR ENDED 31st MARCH,2017	PREVIOUS YEAR ENDED 31st MARCH,2016
Revenue from Operations (net)	4,19,966	3,44,468
Other Income	561	463
Total Income	4,20,527	3,44,931
Operating Expenditure	3,82,020	3,14,000
Pro& before Interest, Depredation and Amortisation and Tax	38,507	30,931
Finance Costs (net)	7,020	6,825
Depreciation and Amortisation	14,560	10,709
Profit before Taxes	16,927	13,397
Tax Expenses	3,681	3,646
Income tax pertaining to earlier years	(150.00)	3702
Net Profit for the Year	13,396	6,049
Balance Brought Forward from Previous Year	9,697	8,880
Amount Available for Appropriation	23,094	14,930
APPROPRIATIONS
Interim Dividends on Equity Shares	1522	4,348
Tax on Dividends	309	885
Transfer to General Reserve	-	-
Balance carried to Balance Sheet	21,262	9,697

PERFORMANCE OF THE COMPANY

During the year, your Company registered a total income of Rs. 4,20,527 Lakhs representing an increase of 21.92 % over that of the previous yean The PBDIT has also increased from Rs. 30,931 Lakhs (FY2015-2016) to Rs. 38,507 Lakhs (FY 2016-2017). The net profit during the year was Rs. 13,396 Lakhs in comparison with previous year which stood at Rs. 6,049 Lakhs representing a remarkable increase of 121% over that of the previous year.

During the financial year under review, your Company registered a healthy growth in revenues from Milk, Ice creams, Curd and other Milk Products over that of the previous year.

DIVIDEND

During the year, your Company on 6th August 2016 has declared and paid first interim dividend of Re. 1 /- per equity share and on 27th April 2017, your Company has declared and paid second interim dividend of Rs. 3.00/- per equity share thereby totalling to 400% on equity share capital. The cash outflow on account of first interim dividend excluding dividend tax for the year 2016-17, aggregated to Rs. 1,522 Lakhs and the cash outflow on account of second interim dividend for the year 2016-17 excluding dividend tax aggregated to Rs.4,565 Lakhs thereby resulting in a total payout of 45.43% of the net profits of the Company.

During the financial year 2016-17, an amount of Rs. 1,92,151/being unclaimed dividend pertaining to the financial year 2008-09 (Interim dividend) was transferred to Investor Education & Protection Fund (IEPF).

SHARE CAPITAL

During the year, on 15th July 2016, the Board of Directors has allotted 4,34,76,659 Equity Shares as Bonus Shares in the ratio of 2 (two) new equity shares of Re. 1 /- each for every 5 (five) existing equity shares of Re. 1 /- each to the Shareholders of the Company as on the record date fixed for the purpose of Bonus Issue. Post the allotment of Bonus Equity Shares the share capital of the Company as of 31st March 2017 stood at 15,21,68,307 Equity Shares of Re. 1 /- each.

TRANSFER TO RESERVES

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

FINANCE

During the year, there has been an increase of 2.85 % in the finance costs on account of term loans availed from few Banks. The Company continues to focus on judicious management of its working capital and has taken care to ensure that the Company borrowings are obtained at very competitive rates. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring

DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public outstanding and unclaimed as at 31st March, 2017, was Rs. 1.53 Lakhs out of which a sum of Rs.0.92 Lakhs represents three accounts of Fixed/Non Cumulative Deposits and Rs. 0.61 Lakhs represents two accounts of Cumulative Deposits.

(a) Accepted during the Year	NIL
(b) Remained unpaid or unclaimed as at the end of the year (Including interest thereon)	Principal - Rs. 1.53 Lakhs Interest - Rs. 0.15 Lakhs Total -Rs. 1.68 Lakhs
(c) Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved: i. As at 1st April, 2016 ii. During April, 2016 to March, 2017 iii. As at 31st March, 2017	No deposits have been accepted by the Company during the year and there did not arise any default during the year. NIL NIL NIL
(d) Details of deposits which are not in compliance with the requirements of Chapter V of the Act	NIL

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Particulars of investments covered under Section 186 forms part of the notes on financial statements provided in this Annual Report.

BOARD’S APPRECIATION TO MR. K.S.THANARAJAN, ERSTWHILE JOINT MANAGING DIRECTOR OF THE COMPANY.

Your Board wish to record its appreciation in this report for the outstanding services rendered by Mr. K.S.Thanarajan, JMD during his tenure as Joint Managing Director who resigned from his said position with effect from 31st December 2016.

Mr. K.S.Thanarajan had served the Board as Joint Managing Director of the Company for more than two decades and was largely responsible for the success of Dairy Division of the Company. The dedicated effort and management of Dairy Division in all aspects by Mr. K.S.Thanarajan has steered the growth and brought greater economies of scale in the operations which benefited the Company in its long run.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointments and Resignations

During the year under review, Mr. K.S.Thanarajan resigned from his position as Joint Managing Director of the Company with effect from 31st December 2016. Subsequent to his resignation, the Board of Directors at their meeting held on 18th January 2017 inducted Mr. K S.Thanarajan as an Additional Director (Non-Executive and Non Independent) with effect from 18th January 2017. As an Additional Director, Mr. KS.Thanarajan shall hold office till the commencement of the 32nd Annual General Meeting

Details of appointments and resignations of Directors and Key Managerial Personnel during the year are tabled below:

NAME OK DIRECTOR/ KEY MANAGERIAL PERSONNEL	DESIGNATION	DATE OF APPOINTMENT	DATE OF RESIGNATION
Mr KS.Thanarajan	Joint Managing Director	Re-appointed as Joint Managing Director with effect from lstManh2014.	Resigned with effect from 31st December 2016.
	Additional Director (Non-Executive and Non Independent)	Appointed as an Additional Director with effect from 18th January 2017.	Not Applicable

RE-APPOINTMENTS

As per provisions of the Companies Act, 2013, Shri. C.Sathyan is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors recommends his re-appointment

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all its Independent Directors that they meet the criteria of Independence as laid down under section 149(6) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of the financial year ended March 31, 2017.

WINDMILL AND SOLAR PROJECTS

During the year, your Company has successfully commissioned twelve (12) windmills with 24 MW capacity in Tuticorin District, Tamil Nadu and Solar plant with 550 KW capacity during March 2017 in Dindigul District, Tamil Nadu. These green energy projects will meet about 75% of the power requirements of the Company which will result in substantial savings in energy costs in the long term for the Company apart from contributing for building a greener India.

UPDATE ON SETTLEMENT COMMISSION

During the year 2015-16, your Company had filed an Application for settlement of cases under Income Tax Act, 1961 with the Settlement Commission relating to the claim for deduction under Section 80-IB of Income Tax Act 1961 in respect of its two units on 22nd March 2016. The application is under consideration with the Settlement Commission.

BUSINESS RESPONSIBILITY REPORT

Your Company being among the top 500 entities based on market capitalisation has to present the Business Responsibility Report as required under Regulation 34 (2) (f) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Business Responsibility Report forming part of this Annual Report elaborates on principles as prescribed by SEBI vide its Circular CIR/CFD/CMD/10/2015 dated November 04, 2015.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year eight (8) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

BOARD COMMITTEES

The primary four committees of the Board are Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee and Corporate Social Responsibility Committee. Other than above said primary committees, the Board also has the following additional committees viz., Sub Committee, Share Transfer Committee, Risk Management Committee and Core Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of this Board’s Report. The Composition of the Primary Committees and their meeting dates are given below;

NAME OF THE COMMITTEE	COMPOSITION	DETAILS OF MEETINGS HELD DURING THE YEAR
Audit Committee ‘	The Committee which earlier had three Non-Executive Independent Directors was reconstituted on 16th March 2016 to comprise five Non-Executive Independent Directors. The Chairman of the Committee is an Independent Director.	Five meetings were held during the year on the following dates:-27th May, 2016, 15th July, 2016 19th August, 2016 18th October 2016 18th January, 2017
Nomination and Remuneration Committee	The Committee which earlier had five Non-Executive Independent Directors was reconstituted during the year on 18th January 2017 to comprise five Non-Executive Independent Directors and one Non-Executive and Non Independent Director. The Chairman of the Committee is an Independent Director	One meeting was held during the year on the following date:-18th January 2017
Stakeholders’ Relationship Committee	The Committee which earlier had five Non-Executive Independent Directors was reconstituted during the year on 18th January 2017 to comprise five Non-Executive Independent Directors and one Non-Executive and Non Independent Director. The Chairman of the Committee is an Independent Director	Four meetings were held during the year on the following dates:-27th May 2016 15th July, 2016 18th October 2016 18th January 2017
Corporate Social Responsibility Committee	The Committee which earlier had two Executive Directors and one Independent Director was reconstituted during the year on 18th January 2017 to comprise one Executive Director; one Non-Executive Independent Director and one Non-Executive and Non Independent Director: The Chairman of the Committee is an Independent Director	One meeting was held during the year on following date:-16th March 2017

Details of recommendations of Audit Committee which were not accepted by the Board along with reasons

The Audit Committee generally makes certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act 2013 and Securities and Exchange Board of India (listing Obligations and Disclosure Requirements) Regulations, 2015 from time to time. During the year the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried on the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations unaccepted by the Board of Directors of the Company during the year under review.

DETAILS OF POLICIES DEVELOPED BY THE COMPANY

(i) Nomination and Remuneration Policy

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. The objective of this policy is to ensure:

- The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;

- Relationship of remuneration to performance is dear and meets appropriate performance benchmarks; and

- Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance with short and long-term performance objectives appropriate to the working of the Company and its goals

This policy is being governed by the Nomination and Remuneration Committee comprising of members of the Board, as stated above, comprising of five Independent Directors and one Non-Executive and Non Independent Director. The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors and Key Management Personnel. The Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report.

Affirmation that the remuneration is as per the remuneration policy of the Company.

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Part D of Schedule II of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended from time to time. This policy governs the criteria for deciding the remuneration for Directors and Key Management Personnel. It is affirmed that the remuneration to Directors and Key Management Personnel is being fixed based on the criteria and parameters mentioned in above mentioned policy of the Company.

BOARD DIVERSITY

The Company recognises and values the importance of a diverse board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

(ii) Corporate Social Responsibility Policy (CSR)

Your Company recognises that its business activities haw; wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organisations.

Your Company endeavors to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Your Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of members of the Board, as stated above, and the Chairman of the Committee is Non-Executive and Independent Director. The said Committee has formulated and approved the CSR Policy for the Company with its major focus on:-

- Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring

- Make sustainable contributions to communities.

- Identify socio-economic opportunities to perform CSR activities.

- Focus on social welfare activities as envisaged in Schedule VII of Companies Act, 2013.

The Policy also focuses on the constitution of CSR Committee, roles and responsibilities of CSR Committee, CSR activities to be undertaken and allocation of funds for carrying out such CSR activities, implementation and monitoring the execution of CSR activities for the Company. The CSR Committee shall recommend to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of Companies Act, 2013. Annual Report on CSR activities as required under the provisions of Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

(iii) Risk Management Policy

The Board of Directors of your Company has adopted a Risk Management Policy which details the procedures to be followed by the Company with regard to risk management The Company has formed a Risk Management Committee comprising of three members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimising the risk and monitor the risk management for the Company

The policy broadly defines the scope of the Risk Management Committee which comprises of:-

- Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company

- Ensuring that the Company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

- Evaluating significant risk exposures of the Company and assess management’s actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as business continuity planning and disaster recovery planning & testing).

- Co-ordinating its activities with the Audit Committee in instances where there is any overlap with audit activities (e.g internal or external audit issue relating to risk management policy or practice).

- Reporting and making regular recommendations to the Board.

(iv) Whistle-Blower Policy - Vigil Mechanism

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle-Blower) mechanism provides a channel to the Employees and Directors to report to the management concerns about unethical behavior, actual or suspected fraud or violation of the Code of Conduct or Policy. The mechanism provides for adequate safeguards against victimisation of Employees and Directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle-Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place/suspected to have taken place, misuse or abuse of authority; fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy The Managing Director is also empowered to bring about necessary changes to this Policy if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances.

(v) Dividend Distribution Policy

According to the Regulation 43A of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended, your company felling under top 500 listed entities based on the market capitalisation (calculated as on March 31 of every financial year) has framed the Dividend Distribution Policy which is attached in this Annual Report marked as Annexure E

EVALUATION OF BOARD, COMMITTEES AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 of Securities and Exchange Board of India (listing Obligations and Disclosure Requirements) Regulations, 2015, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non-Executive and Independent Directors is being conducted through a survey which contains a questionnaire capturing each Board and Committee Member’s response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. Each Director who responded to the survey has graded their peers against each survey item from PI to P3 with PI marking the lower efficiency and P3 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and Committee as a whole.

The Independent Directors evaluation was done with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., active participation in strategic planning, fiduciary responsibilities, participation in Board and Committee meetings, etc.

Apart from the above, the performance of Non Independent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in bona fide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company was also carried out to evaluate their performance The performance evaluation of the Non Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of the Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any businesses of the Board during their Meetings and addressed them at the best interest of the Company

Training and familiarisation program for Independent Directors

Every Independent Director on being inducted into the Board attends an orientation program To familiarise the new directors with the strategy, operations and functions of our Company, the Executive Directors/ Senior Managerial Personnel make presentations to the inductees about the Company’s strategy, operations, product offering, organisation structure, human resources, technologies, facilities and risk management

Further; at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation program for Independent Directors is hosted on the website of the Company and the weblink for same is http: / / www.hap.in/investors-polides.html

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VEN TURES OR ASSOCIATE COMPANIES DURING THE YEAR.

Your Company has no subsidiaries, joint venture or associate companies and hence the disclosure does not arise.

AUDITORS

Statutory Auditors

The Statutory Auditors M/s. S.R Batliboi & Associates IJJJ Chartered Accountants will be completing their maximum permitted tenure of ten years as Statutory Auditors of the Company on conclusion of the 32nd Annual General Meeting of the Company to be held in the year 2017. As the term of the present Statutory Auditors expires by the conclusion of the ensuing Annual General Meeting in accordance with provisions of Companies Act, 2013, the Company is required to appoint new auditors in their place in the 32nd Annual General Meeting on the recommendation of the Board.

The Board of Directors at its meeting held on 27th April 2017 and with the recommendations of the Audit Committee, recommended to the Shareholders the appointment of M/s. Deloitte Haskin & Sells, LLP Chartered Accountants as Statutory Auditors from the conclusion of this 32nd Annual General Meeting till the conclusion of 37th Annual General Meeting of the Company subject to ratification of their appointment by the members at every intervening Annual General Meeting. In this regard, the Company has also received a certificate from the incumbent auditors confirming their eligibility and willingness to be so appointed and also that their appointment if approved by the shareholders, it would be in accordance with the provisions of Section 141.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. S Dhanapal, Senior Partner, Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2016-2017 is annexed herewith marked as Annexure C and forms part of this report

Cost Auditor

Pursuant to the provisions of clause (g) of sub-section (3) of sectionl41 read with sub section (3) of section 148 of the Companies Act, 2013, the Company had appointed M/s. STR & Associates, Cost Accountants (Firm Registration No.000029) as Cost Auditor of the Company to conduct the audit of the cost accounting records maintained by the Company relating to Milk Powder in respect of all the units of the Company for the financial year 2016-17. As M/s. STR & Associates, Cost Accountants had expressed their unwillingness to continue as Cost Auditors owing to their personal decision on limiting their audits to few Clients; the Board of Directors at its meeting held on 27th April 2017 with the recommendations of the Audit Committee has filled the casual vacancy in the office of the Cost Auditor with the appointment of M/s. Ramachandran & Associates, Cost Auditors (Firm Registration No.000799) to conduct the audit of the cost accounting records maintained by the Company relating to those products as mandated by the Companies Act, 2013 and the Companies (Cost records and audit) Rules, 2014 as amended in respect of all the units of the Company for the financial years 2016-17 and 2017-18.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Details as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) Details of top ten employees in terms of remuneration drawn:

Name of the Employee	Designation of the employee	Remuneration received (Amount in Rs. Per annum)	Nature of employment, whether contractual or otherwise	‘ Qualifications and experience of the employee	Dale of commencement of employment	Age of such employee	Last employment held by such employee before joining the company	Percentage of Equity Shares held by the Employee in the Company by himself or along with his spouse and dependent children, being not less than two percent of the Equity Shares of the Company	Whether any such employee is a relative of any Director or Manager of the Company and if so, name of such Director or Manager.
John Henry Neizent	SPECIALIST -DAIRY HERD DEVELOPMENT	68,84,454	Permanent	PHD in Agronomy/Parasitology/Nutrition	19.01.2015	56	Brownes Dairy	Nil	None
Ramachandran H.	CHIEF FINANCIAL OFFICER	52,34,538	Permanent	ICWA, ACS	11.02.2015	53	Bay Forge Ltd,	Nil	None
RatnakarP. Sundara Rajan	AVP-SOURCING & COMMERCIAL	48,02,694	Permanent	B.Com., PG.DR.M	04.06.2010	56	Nilgiris Dairy Farms Pvt Ltd.,	Nil	None
Anil Kumar P.A.	ASSOCIATE VICE PRESIDENT-QA	46,77,738	Permanent	M.SC., Dairy Microbiology	25.03.2009	58	Heritage Food India Ltd.,	Nil	None
Prasanna Venkatesh J.	AVP-MARKETIG & SALES	43,37,748	Permanent	B.SC., PG.D.B A	03.08.1998	52	Henkel SPIC	Nil	None
Ulhas Vasant Ambre	GENERAL MANAGER-PIANT	34,67,559	Permanent	IDD	02.06.2012	45	Delmote Food (UAE)Fze	Nil	None
JeromeJ	ASSOCIATE VICE PRESIDENT	30,25,542	Permanent	B.SC.,	05.08.2002	57	Rasna Pvt Ltd,	Nil	None
Boopathy A.	JOINT GENERAL MANAGER- ACCOUNTS	26,08,977	Permanent	CA	15.03.2001	44	Hunter Snacks Pvt Ltd.,	Nil	None
Sam Joseph A.	SENIOR GENERAL MANAGER-SOURCING	25,10,913	Permanent	B.E	18.11.2009	43	Srinivasa Fine Arts Pvt Ltd,	Nil	None
Shanmuga priyan J.	SENIOR GENERAL MANAGER-IA& PROCESS	23,94,675	Permanent	M.COM	07.03.2001	39	First Employement in HATSUN	Nil	None

(ii) Details of the employees employed throughout the year and drawing remuneration which in the aggregate is not less than Rupees One Crore and Two Lakhs per annum, during the financial year. - NIL.

(iii) Employees employed for a part of the financial year, was in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Eight Lakhs and Fifty Thousand per month, during the financial year.

Name of the Employee	Mr. K.S.Thanarajan
Designation of the Employee	Joint Managing Director
Remuneration received till 31st December 2016 (Amount in Rs. per annum).	3,60,01,331/-
Nature of employment, whether contractual or otherwise	Permanent
Qualifications and experience of the employee	Post Graduate in Economics and 22 years
Date of commencement of employment	18th July 1995
Age of such employee	68 years
Last employment held by such employee before joining the company	SPIC Limited
Percentage of equity shares held by the employee in the company by himself or along with his spouse and dependent children, being not less than two percent of the equity shares of the company	NIL
Whether any such employee is a relative of any director or manager of the company and if so, name of such director or manager	No

(iv) None of the employees except Managing Director and Executive Director employed throughout the financial year or part thereof, hold by himself/herself or along with his/her spouse and dependent children, more than two per cent of the equity shares of the Company.

Details required as per Section 197 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

NAME OF DIRECTOR/KMP	AMOUNT OF REMUNERATION PER ANNUM(IN RS.)	RATIO OF REMUNERATION TO MEDIAN REMUNERAHONOF EMPLOYEES FOR THE FY	% INCREASE IN REMUNERATION DURING THE FY
Mr. RG.Chandramogan, Managing Director	66,81,200	57.10 times	Nil
Mr. K.S.Thanarajan* Joint Managing Director.	3,60,01,331*	2481.49 times	Nil
Mr. C.Sathyan, Executive Director	60,81,200	53.09 times	Nil
Mr. H.Ramachandran Chief Financial Officer	52,34,538	36.88 times	7.50%
Mr. S.Narayan Company Secretary	14,91,096	10.51 times	7.50%

*Till 31st December 2016. The Life Term meritorious cash award of INR 3 Crore is also included during computation.

Percentage increase in the median remuneration of employees in the financial year

The median remuneration of Employees for the Financial Year 31st March, 2017 was arrived at Rs. 12,480/- per month and the median remuneration of Employees for the previous financial year 31st March, 2016 was arrived at Rs. 12,066/- per month and accordingly, there was an increase of 3.43% in the median remuneration of employees in the financial year.

Number of permanent employees on the rolls of the company as on 31.03.2017

The Number of permanent employees on the rolls of the Company as of 31st March 2017 stood at 4,962 employees.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration;

The average percentage increase was about 8.48 % for all employees who went through the compensation review cycle in the year R>r the managerial personnel, the compensation levels remained same as that of previous year as they are in receipt of a fixed remuneration determined by the Shareholders for a defined term as stipulated under the Companies Act, 2013.

The compensation decisions are taken after considering at various levels of the benchmark data and the compensation budget approved for the financial year. The Nomination and Remuneration Committee recommends to the Board of Directors any compensation revision of the managerial personnel which is further approved by the Shareholders.

Details of pecuniary relationship or transactions of the Non-Executive directors vis-a-vis the company

There are currently six Non-Executive Directors of whom five are Independent Directors and one is Non Independent Director of the Company They are entitled to only Sitting fees of Rs.20,000 for every board meeting they attend and Sitting fee of Rs.5000 for every committee meeting they attend as Members of respective committees.

Mr P.Vaidyanathan, Non-Executive and Independent Director holds 10,50,000 Equity shares as of 31st March 2017 in the name of P.Vaidyanathan (SHUF).

Mr. KS.Thanarajan, Non-Executive and Non Independent Director holds 6,06,200 Equity shares as of 31st March 2017.

Other than the Sitting fees, they do not have any pecuniary relationship or transactions with the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The term Internal Financial Controls has been defined as the policies and procedures adopted by the company to ensure orderly and efficient conduct of its business, including adherence to company’s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and the timely preparation of reliable financial information.

Your Company has adequate and robust Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board and to the Executive Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy lf Internal Control System in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. The Audit Committee also conducts discussions about Internal Control System with the Internal and Statutory Auditors and the Management of the Company and satisfy themselves on the integrity of financial information and ensure that financial controls and systems of risk management are robust and defensible

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The Company has not received any complaint on sexual harassment during the financial year ended 31.03.2017.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE

During the year there are no significant and/or material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations in future.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2017 TILL THE DATE OF THIS REPORT

There are no material changes and commitments affecting the financial position of the Company which has occurred since 31.03.2017 till the date of this report.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in form MGT-9 is annexed herewith marked as Annexure D and forms part of this report

RELATED PARTY TRANSACTIONS

As required under Regulation 23 of Securities and Exchange Board of India (listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the Company’s website. The weblink for same is http://www.hap.in/investors-p>olicies.html

There were no related party transactions entered into during the financial year by the Company with its Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large other than the remuneration paid to the Executive Directors and Dividend received by them from the Company in proportion to the shares held by them.

The details of Related Party Transactions are provided in the Notes to the Accounts.

CORPORATE GOVERNANCE REPORT

The Company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A report on Corporate Governance including Management Discussion and Analysis report under Regulation 34 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 along with a certificate from Mr. N. Ramanathan, Partner, Practising Company Secretaries, confirming the compliance is annexed herewith marked as Annexure E and forms part of this report.

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

The details on Conservation of energy, technology absorption, foreign exchange earnings and outgo is annexed herewith as marked as Annexure G and forms part of this report

DIRECTOR’S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the Directors would like to state that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and lair 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 the year under review

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

5. The Directors had laid down internal financial controls to be followed by the company and that such internal financial controls arc adequate and were operating effectively

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

DEPOSITORY SYSTEM

As the members are aware, your Company’s shares are tradeable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members arc requested to avail of the facility of dematerialisation of the Company’s shares.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, members, customers, bankers, farmers and channel partners for the continued support given by them to the Company and their confidence reposed in the management. The Directors appreciate and value the contributions made by every member of Hatsun.

For and On behalf of the Board of Directors

Sd/-

R.G. Chandramogan

Chairman & Managing Director

Place: Chennai

Date: May 25, 2017

---

Mar 31, 2015

Dear Members,

The Directors have great pleasure in presenting their 30th Report along with the audited financial statement for the financial year ended March 31, 2015.

FINANCIAL RESULTS

The financial results of the Company for the year ended 31st March, 2015 are summarised below:

(Rs. in lakhs)

PARTICULARS CURRENT YEAR PREVIOUS YEAR ENDED ENDED 31ST MARCH, 31ST MARCH, 2015 2014

Revenue from operations (net) 2,93,308.57 2,49,354.18

Other Income 601.25 848.81

Total Income 2,93,909.82 2,50,202.99

Operating Expenditure 2,73,476.95 2,31,578.33

Profit before Interest, Depreciation 20,432.87 18,624.66 and Amortisation and Tax Finance Costs (net) 6,293.85 3,983.13

Depreciation and Amortisation 9,403.42 6,497.04

Profit before Taxes 4,735.60 8,144.49

Tax Expenses 819.93 (24.08)

Net Profit for the Year 3,915.67 8,168.57

Balancx Brmght; F°rward 7,316.99 3,115.12 from Previous Year

Amount Available for Appropriation 11,232.66 11,283.69

APPROPRIATIONS

Interim Dividends on Equity Shares 1,956.46 2,692.29

Tax on Dividends 395.91 457.55

Transfer to General Reserve - 816.86

Balance carried to Balance Sheet 8,880.29 7,316.99

PERFORMANCE OF THE COMPANY

During the year, your Company registered a total income of Rs. 2,93,909.82 lakhs representing an increase of 17.47 % over that of the previous year. The PBDIT has also increased from Rs. 18,624.66 lakhs (FY2013-2014) to Rs. 20,432.87 lakhs (FY 2014-2015). The net profit during the year was Rs. 3,915.67 lakhs in comparison with previous year which stood at Rs. 8,168.57 lakhs. The decrease in net profits during the year was mainly on account of increase in the finance cost and depreciation on commissioning of Tirunelveli plant. During the year the Company has also aligned its depreciation rates in line with the New Companies Act, 2013 which also contributed to the increase in depreciation during the year.

During the financial year under review, your Company registered a healthy growth in revenues from Milk, Ice creams, Curd and other Milk Products over that of the previous year.

DIVIDEND

During the year, your Company has declared and paid interim dividends totaling Rs. 1.80/- per equity share (180%) on equity share capital.

The total cash outflow on account of dividend excluding dividend tax for the year 2014-15, would aggregate to Rs. 1,956.46 lakhs resulting in a payout of 49.96% of the net profits of the Company.

During the financial year 2014-15, an amount of Rs. 92,712/-being unclaimed dividend pertaining to the financial year 2006-07 and an amount of Rs. 1,11,293/- being unclaimed interim dividend pertaining to the financial year 2007-08 were transferred to Investor Education & Protection Fund (IEPF).

SHARE CAPITAL

During the year, the Board of Directors of the Company at their meeting held on 18th November, 2014 had allotted 10,00,000 Equity Shares to select persons/entities belonging to Non-Promoter Group on a preferential basis in accordance with provisions specified under Chapter VII of SEBI (ICDR) Regulations, 2009. The Company has obtained the trading approval for 10,00,000 Equity Shares from both the Exchanges viz., BSE Limited and National Stock Exchange of India Limited on 24th December, 2014. Consequent to the listing approval, the Company share capital as of 31st March, 2015 stood at 10,86,91,648 Equity Shares of Re.1 each/- totaling to Rs. 10,86,91,648/-.

TRANSFER TO RESERVES

The Company retained the entire surplus in the Profit and Loss Account and hence no transfer to General Reserve was made during the Year.

FINANCE

Cash and cash equivalent as at March 31, 2015 amounted to Rs. 23.34 crores. During the year, there was an increase of 56% in the finance cost on account of term loans availed towards commissioning of Tirunelveli Plant. The Company continues to focus on judicious management of its working capital and has taken care to ensure that the Company borrowings are obtained at very competitive rates. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposits) from public outstanding and unclaimed as at 31st March, 2015, was Rs. 2.49 lakhs out of which a sum of Rs. 1.88 lakhs represents 7 accounts of Fixed/Non Cumulative Deposits and Rs. 0.61 lakhs represents 2 accounts of Cumulative Deposits.

(a) Accepted during the Year NIL

(b) Remained unpaid or unclaimed as at the Principal - Rs. 2.49 lakhs end of the year. (Including interest thereon) Interest - Rs. 0.15 lakhs

Total - Rs. 2.64 lakhs

(c) Whether there has been any default No deposits have been in repayment of deposits or payment accepted by the Company of interest thereon during the year during the during the and if so, number of such cases year and hence there does and the total amount involved: not arise any default during the year.

i. As at 1st April, 2014 NIL

ii. Maximum during April, 2014 to NIL March, 2015.

iii. As at 31st March, 2015 NIL

(d) Details of deposits which are not NIL in compliance with the requirements of Chapter V of the Act

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

There were no loans and guarantees given by the Company falling under Section 186 of the Companies Act, 2013. Particulars of investments covered under Section 186 forms part of the notes on financial statements provided in this Annual Report.

DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointments and Resignations

The Board has appointed Shri Balaji Tammineedi and Dr. Chalini Madhivanan as Additional Directors of the Company w.e.f 23rd September, 2014, under the category of Non-Executive and Independent Directors. The Board of Directors seek your support in confirming the appointment of Mr. Balaji Tammineedi and Dr. Chalini Madhivanan as Independent Directors of the Company for five consecutive years for a term up to 22nd September, 2019, not liable to retire by rotation.

Re-appointments

As per provisions of the Companies Act, 2013, Shri R.G. Chandramogan is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board of Directors recommends his re-appointment.

Declaration By Independent Directors

The Company has received declarations from all its Independent Directors that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement in respect of the financial year ended March 31, 2015.

BOARD MEETINGS HELD DURING THE FINANCIAL YEAR

During the year 9 (nine) Board Meetings and 6 (six) Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.

BOARD COMMITTEES

The primary four committees of the Board are Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee and Stakeholders' Relationship Committee. Other than above said primary committees the Board also has the following additional committees viz., Sub Committee, Share Transfer Committee, Risk Management Committee and Core Committee. A detailed note on the committees is provided under the Corporate Governance Report forming part of this Board's Report. The Composition of the Primary Committees and their meeting dates are given below:

Name of the Composition Details of Meetings Committee held during the year

Audit Committee Comprises of three Six meetings were Non-Executive held during the year Independent on the folkwing Directors. dates:- The Chairman of the 7th May, 2014, Committee is an 25th June, 2014 Independent Director. 31st July, 2014 27th August, 2014 31st October, 2014 24th January, 2015

Nomination and Comprises of three Two meetings were Remuneration Non-Executive held during Committee Independent the year on the Directors. following dates:- The Chairman of the 27th August, 2014 Committee is an 18th November, 2014 Independent Director.

Stakeholders' Comprises of three Four meetings Relationship Directors of were held during Committed whom two are the year on the Independent following dates:- Directors and 7th May, 2014 one is Executive 31st July, 2014 Director. The 31st October, 2014 Chairman of the 24th January, 2015 Committee is an Independent Director.

Corporate Social Comprises of three One meeting was Responsibility Directors of held during the Committee whom two are year on following Independent date:- 24th January, Directors and 2015 one is Executive Director. The Chairman of the Committee is an Independent Director.

Details of recommendations of Audit Committee which were not accepted by the Board along with reasons

The Audit Committee generally make certain recommendations to the Board of Directors of the Company during their meetings held to consider any financial results (Unaudited and Audited) and such other matters placed before the Audit Committee as per the Companies Act, 2013 and Listing Agreement from time to time. During the year the Board of Directors has considered all the recommendations made by the Audit Committee and has accepted and carried on the recommendations suggested by the Committee to its satisfaction. Hence there are no recommendations unaccepted by the Board of Directors of the Company during the year under review

DETAILS OF POLICIES DEVELOPED BY THE COMPANY

(i) Nomination and Remuneration Policy

The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Clause 49 of the Listing Agreement, as amended from time to time. The objective of this policy is to ensure:

* The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the company successfully;

* Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

* Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance with short- and long-term performance objectives appropriate to the working of the Company and its goals

This policy is being governed by the Nomination and Remuneration Committee comprising of three members of the Board, all of whom are Non-Executive and Independent Directors. The policy lays down the standards to be followed by the Nomination and Remuneration Committee with respect to the appointment, remuneration and evaluation of Directors and Key Management Personnel. The Nomination and Remuneration Policy is annexed herewith marked as Annexure A and forms part of this report.

Affirmation that the remuneration is as per the remuneration policy of the Company The Company has formulated the Nomination and Remuneration Policy in compliance with Section 178 of the Companies Act, 2013 read along with the applicable rules thereto and Clause 49 of the Listing Agreement, as amended from time to time. This policy governs the criteria for deciding the remuneration for Directors and Key Management Personnel. It is affirmed that the remuneration to Directors and Key Management Personnel is being fixed based on the criteria and parameters mentioned in above mentioned policy of the Company.

Board Diversity

The Company recognises and values the importance of a diverse Board as part of its corporate governance and success. The Company believes that a truly diverse Board will leverage differences in ideas, knowledge, thought, perspective, experience, skill sets, age, ethnicity, religion and gender which will go a long way in retaining its competitive advantage. The Board has on the recommendation of the Nomination and Remuneration Committee, adopted a Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

(ii) Corporate Social Responsibility (CSR) Policy

Your Company recognizes that its business activities have wide impact on the societies in which it operates, and therefore an effective practice is required giving due consideration to the interests of its stakeholders including shareholders, customers, employees, suppliers, business partners, local communities and other organisations.

Your Company endeavours to make CSR an important agenda and is committed to its stakeholders to conduct its business in an accountable manner that creates a sustained positive impact on society. Our Company satisfying the threshold as stipulated under Section 135 of the Companies Act, 2013 has established the CSR Committee comprising of three members of the Board and the Chairman of the Committee is Non-Executive and Independent Director. The said Committee has formulated and approved the CSR policy for the Company with its major focus on:- Devising meaningful and effective strategies for carrying out CSR activities and engaging with all stakeholders towards implementation and monitoring.

* Make sustainable contributions to communities.

* Identify socio-economic opportunities to perform CSR activities.

* Focus on social welfare activities as envisaged in Schedule VII of Companies Act, 2013.

The Policy also focuses on the constitution of CSR Committee, roles and responsibilities of CSR Committee, CSR activities to be undertaken and allocation of funds for carrying out such CSR activities, implementation and monitoring the execution of CSR activities for the Company. The CSR Committee shall recommend to the Board of Directors to implement the CSR activities covering any of the areas as detailed under Schedule VII of Companies Act, 2013. Annual Report on CSR activities as required under the provisions of Companies Act, 2013 is annexed herewith marked as Annexure B and forms part of this report.

(iii) Risk Management Policy

The Board of Directors of your Company has adopted a Risk Management Policy which details on the procedures to be followed by the Company with regard to risk management. The Company has formed a Risk Management Committee comprising of three members of the Board who shall evaluate and review the risk factors associated with the operations of the Company and recommend to the Board the methods to mitigate the risk and advise from time to time various measures to minimising the risk and monitor the risk management for the Company.

The policy broadly defines the scope of the Risk Management Committee which comprises of- Review and approve the Risk Management Policy and associated frameworks, processes and practices of the Company.

* Ensuring that the Company is taking the appropriate measures to achieve prudent balance between risk and reward in both ongoing and new business activities.

* Evaluating significant risk exposures of the Company and assess management's actions to mitigate the exposures in a timely manner (including one-off initiatives, and ongoing activities such as business continuity planning and disaster recovery planning & testing).

* Co-ordinating its activities with the Audit Committee in instances where there is any overlap with audit activities (e.g internal or external audit issue relating to risk management policy or practice).

* Reporting and making regular recommendations to the Board.

(iv) Whistle Blower Policy — Vigil Mechanism

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations. To maintain these standards, the Company encourages its employees who have concerns about suspected misconduct to come forward and express these concerns without fear of punishment or unfair treatment. A Vigil (Whistle Blower) mechanism provides a channel to the Employees and Directors to report to the management concerns about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct or Policy. The mechanism provides for adequate safeguards against victimisation of employees and Directors to avail of the mechanism and also provide for direct access to the Chairman of the Board/Chairman of the Audit Committee in exceptional cases.

In line with the statutory requirements, the Company has formulated a Whistle Blower Policy/Vigil Mechanism, which covers malpractices and events which have taken place/suspected to have taken place, misuse or abuse of authority, fraud or suspected fraud, violation of company rules, manipulations, negligence causing danger to public health and safety, misappropriation of monies, and other matters or activity on account of which the interest of the Company is or is likely to be affected and formally reported by whistle blowers concerning its employees.

The Managing Director is responsible for the administration, interpretation, application and review of this policy. The Managing Director is also empowered to bring about necessary changes to this Policy, if required at any stage with the concurrence of the Audit Committee. The mechanism also provides for access to the Chairman of the Audit Committee in required circumstances.

EVALUATION OF BOARD, COMMITTEE AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, an annual performance evaluation of the performance of the Board, the Directors individually as well as the evaluation of the working of the Board Committees was carried out based on the criteria and framework adopted by the Board.

The evaluation process for measuring the performance of Executive/Non-Executive and Independent Directors is being conducted through a survey which contains a format of a questionnaire capturing each Board and Committee Member's response to the survey which provides a comprehensive feedback to evaluate the effectiveness of the Board and its Committees as a whole and also their independent performance. The methodology adopted by each Director who responded to the survey has graded their peers against each survey item from P1 to P3 with P1 marking the lower efficiency and P3 the highest efficiency which revealed more realistic data on measuring the effectiveness of the Board dynamics, flow of information, decision making of Directors and performance of Board and Committee as a whole.

The Independent Directors evaluation was done with main focus on their adherence to the Corporate Governance practices and their efficiency in monitoring the same. They are also being evaluated on various parameters viz., active participation in strategic planning, fiduciary responsibilities, participation in Board and Committee meetings, etc.

Apart from the above, the performance of Non Independent Directors and the Board as a whole in terms of prudent business practices adopted by them towards governance of the operations of the Company, adherence to the highest standards of integrity and business ethics, exercising their responsibilities in bona fide manner in the best interest of the Company and not allowing any extraneous consideration that shall impede their decision making authority in the best interest of the Company was also carried out to evaluate their performance

The performance evaluation of the Non Independent Directors was carried out by the entire Board of Directors (excluding the Director being evaluated) and they have expressed their satisfaction with the evaluation process which considered their commitment and the exercise of their responsibilities in the best interest of the Company.

The performance of the Chairman of the Company was reviewed by the Independent Directors who ensured during their review, that the Chairman conducted the Board proceedings in unbiased manner without any conflict with his personal interest at any point of time. It was further ascertained by the Independent Directors that the Chairman allowed the Board Members to raise any concerns on any businesses of the Board during their Meetings and addressed them at the best interest of the Company.

Training and familiarisation programme for Independent Directors

Every Independent Director on being inducted into the Board attends an orientation programme. To familiarise the new Directors with the strategy, operations and functions of our Company, the Executive Directors/Senior Managerial Personnel make presentations to the inductees about the Company's strategy, operations, product offerings, organisation structure, human resources, technologies, facilities and risk management.

Further, at the time of appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a Director. The detailed familiarisation programme for Independent Directors is hosted on the website of the Company and the web link for same is http://wwwhatsun.com/investors-policies.html

NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR.

Your Company has no subsidiaries, joint ventures or associate companies and hence the disclosure does not arise.

AUDITORS

Statutory Auditors

At the Annual General Meeting held on 31st July, 2014, M/s. S.RBatliboi & Associates LLP Chartered Accountants, were appointed as Statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the matter of appointment of the Auditors shall be placed for ratification at every Annual General Meeting of the Company. Accordingly, the appointment of M/s. S.RBatliboi & Associates LLP, Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the Auditors to the effect that their appointment is ratified by the shareholders, it would be in accordance with the provisions of Section 141. As regard the delay in remittance to IEPF as mentioned in the Auditor's Report the same has occurred inadvertently and was regularised immediately.

Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. S Dhanapal & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year 2014-2015 is annexed herewith as marked as Annexure C and forms part of this report. As regard the delay in remittance to IEPF as mentioned in the Secretarial Auditor's Report the same has occurred inadvertently and was regularised immediately.

Cost Auditor

Pursuant to the provisions of clause (g) of sub-section (3) of Section 141 read with sub section (3) of Section 148 of the Companies Act, 2013, the Company has appointed M/s. STR & Associates, Cost Accountants (Firm Registration No.000029) as Cost Auditor of the Company to conduct the audit of the cost accounting records maintained by the Company relating to Milk Powder in respect of all the units of the Company for the financial year 2015-16. As per the notification published by the Ministry of Corporate Affairs on 31st December, 2014 to amend the Companies (Cost Records and Audit) Rules 2014, the aggregate turnover from Milk Powder was less than the prescribed threshold notified under the above said notification during the financial year 2014-2015 and hence the cost audit was not mandatory applicable to our Company for the financial year 2014-2015.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Details as required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

(i) Details of the employees employed throughout the year and drawing remuneration which in the aggregate exceeds Rupees Sixty lakhs or more per annum, during the financial year.

Name of the Employee Mr. Simon O Shea Mr. R.G. Chandramogan Head - Plant Managing Director Operation

Remuneration received 74,73,548/- 66,76,700/- (Amount in Rs. per annum)

Nature of employment, Permanent Permanent whether contractual or otherwise

Qualifications and Dairy Technology Entrepreneur experience of the employee

Date of commencement 09.01.2013 04.03.1986 of employment

Age of such employee 45 years 66 years

last employment held Fonterra NIl by such employee Co-operative before joining the Company

Percentage of NIL 58.76 equity shares held by the employee in the Company by himself or along with his spouse and dependent children, being not less than two percent of the equity shares of the Company

Whether any such employee No Mr. C. Sathyan is a relative of any Director or Manager of the Company and if so, name of such Director or Manager

Name of the Employee Mr. K.S. Thanarajan Mr. C. Sathyan Joint Managing Executive Director Director

Remuneration received 79,91,600/- 60,76,100/- (Amount in Rs. per annum)

Nature of employment, Permanent Permanent whether contractual or otherwise

Qualifications and Post Graduate in Graduate in Business experience of the Economics Management employee

Date of commencement 18.07.1995 14.06.2001 of employment

Age of such employee 66 years 36 years

last employment held NIl NIl by such employee before joining the Company

Percentage of 1.31 11.32 equity shares held by the employee in the Company by himself or along with his spouse and dependent children, being not less than two percent of the equity shares of the Company

Whether any such employee No Mr. R.G. is a relative of any Chandramogan Director or Manager of the Company and if so, name of such Director or Manager

(ii) None of the employees employed for a part of the financial year, was in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Five lakhs per month, during the financial year.

(iii) None of the employees except Managing Director and Executive Director employed throughout the financial year or part thereof, hold by himself/herself or along with his/her spouse and dependent children, more than two per cent of the equity shares of the Company.

Details required as per Section 197 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

Name of Director/KMP Amount of Ratio of remuneration Remuneration to median Per Annum(in Rs.) remuneration of employees for the FY

Mr. R.G. Chandramogan 66,76,700 64.26 times

Mr. K.S. Thanarajan 79,91,600 76.92 times

Mr. C. Sathyan 60,76,100 58.48 times

Mr. S. Subramanian* 45,33,523 -

Mr. S. Chandrasekar** 6,59,780 -

Mr. H. Ramachandran*** 5,86,412 41.23 times

Mr. S. Narayan**** 4,89,975 11.87 times

Name of Director/KMP % increase in Comparison of remuneration remuneration to during the FY performance of company

Mr. R.G. Chandramogan 23.00% 0.15%

Mr. K.S. Thanarajan 26.00% 0.18%

Mr. C. Sathyan 21.00% 0.14%

Mr. S. Subramanian* Since resigned during the - year the percentage increase cannot be quantified.

Mr. S. Chandrasekar** Since resigned during the - year the percentage increase calculation cannot be quantified.

Mr. H. Ramachandran*** Since appointed in the 0.01% current financial year, the percentage increase calculation does not apply this year;

Mr. S. Narayan**** Since appointed in the current 0.01% financial year; the percentage increase calculation does not apply this year.

* Resigned from services of Chief Financial Officer on 10th February, 2015

** Resigned from services of Company Secretary on 3rd September, 2014

*** Appointed as Chief Financial Officer w.c.f 11th February 2015

**** Appointed as Company Secretary we.f 7th November, 2014

Percentage increase in the median remuneration of employees in the financial year

The median remuneration of Employees for the Financial Year 31st March, 2015 was arrived at Rs. 8,658/- per month and the median remuneration of Employees for the previous financial year 31st March, 2014 was arrived at Rs. 9,500/- per month and accordingly, there was no increase in the median remuneration of employees in the financial year.

Number of permanent employees on the rolls of the company as on 31.03.2015

The number of permanent employees on the rolls of the Company as of 31st March, 2015 stood at 4004 employees.

Explanation on relationship between average increase in remuneration and company performance

The Company's revenue is being taken as one of the performance criteria while evaluating its performance. During the Financial Year 2014-2015 the revenue of the Company has increased by 17.63% when compared with Financial Year 2013-2014 and the average increase in remuneration of employees for Financial Year 2014-2015 was 8.70%. The Company while considering the average increase in the remuneration not only confines itself to the relative performance in its business but also takes into consideration other influencing factors viz., market benchmark data, the peer companies metrics and overall earmarked budget within the Company.

Comparison of the remuneration of the Key Managerial Personnel against the performance of the Company

The remuneration of the Key Managerial Personnel was 0.02 % of revenue.

Variations in Market Capitalisation of the Company

Your Company's scrip is presently listed in both National Stock Exchange of India Limited and BSE Limited. However while considering the closing rate of the scrip as on the last available date of the respective financial years to depict the variations in the market capitalisation of the Company, the data from BSE Limited for last two years are being considered since the company has obtained the listing from National Stock Exchange of India Limited with effect from 20th June, 2014 and the last year data from the said Exchange is not available for comparison.

The market capitalisation of the Company as of 31st March, 2014 was:-

Number of Shares Closing price as of Market Capitalization as on 31st March, 2014 31st March, 2014 at in crores 2014 BSE

10.76.91.648 Rs. 272.65 Rs. 2936.21

The market capitalisation of the Company as of 31st March 2015 was:-

Number of Shares Closing price as of Market Capitalization as on 31st March 31st March 2015 at in crores 2015 BSE

10.86.91.648 Rs. 314.85 Rs. 3422.16

The variation in the market capitalization is Rs. 485.94 crores. The increase in the number of shares is on account of preferential allotment of 10,00,000 equity shares of Re.1/- each made by the Company on 18th November, 2014 to persons or groups belonging to Non-Promoter group.

Price earnings ratio

Price earnings ratio As on 31.03.2015 As on 31.03.2014

At BSE Limited 83.07 35.92

Percentage increase over decrease in the market quotations of the shares of the company in comparison to the rate at which the company came out with the last public oiler

The rate at which the Company came out with IPO on 27th February, 1996 was Rs. 45/- per share.

The market quotation of the shares of the Company is Rs. 314.85 per share at BSE as on 31st March, 2015.

Percentage increase in market quotation of shares is 600% in comparison with the IPO price.

Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration

The average percentage increase was 8.70 % for all employees who went through the compensation review cycle in the year. For the managerial personnel, the average percentage increase was 23% on the fixed components

The compensation decisions are taken after considering at various levels the benchmark data and the compensation budget approved for the financial year. The compensation revision of the managerial personnel is being considered and approved by the Nomination and Remuneration Committee.

Key parameters for any variable component of remuneration availed by the Directors

Our Executive Directors are entitled to receive fixed remuneration as approved by the Shareholders at the time of their appointment re-appointment. There are no variable components attached to their remuneration and their remuneration is fixed during their tenure.

The ratio of the remuneration of the highest paid director to that of the employees who are not directors but receive remuneration in excess of the highest paid director during the year

There are no employees who receive remuneration in excess of the highest paid Director during the year.

Details of pecuniary relationship or transactions of the Non-Executive Directors vis-a-vis the company

There are currently five Non-Executive Directors who are also Independent Directors of the Company. They are entitled to only Sitting fees of Rs. 20,000 for every board meeting they attend and Sitting fee of Rs. 5000 for every committee meeting they attend as Members of respective committees.

Mr P Vaidyanathan, Non-Executive and Independent Director holds 4,00,000 Equity shares as of 31st March, 2015 in the name of P Vaidyanathan (SHUF) by virtue of preferential allotment made by the Company.

Mr Balaji Tammineedi, Non-Executive and Independent Director holds 81,730 Equity Shares as of 31st March, 2015.

Other than the Sitting fees, they do not have any pecuniary relationship or transactions with the Company.

ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board and to the Joint Managing Director The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

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

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.

Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy

The Company has not received any complaint on sexual harassment during the financial period ended 31st March, 2015.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the year there are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company' s operations in future

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAS OCCURRED SINCE 31.03.2015 TILL THE DATE OF THIS REPORT

There are no material changes and commitments affecting the financial position of the company which has occurred since 31.03.2015 till the date of this report.

EXTRACT OF ANNUAL RETURN

An extract of the Annual Return in form MGT-9 is annexed herewith as marked as Annexure D and forms part of this report.

RELATED PARTY TRANSACTIONS

As required under clause 49 of the Listing Agreement, the company has developed a policy on dealing with Related Party Transactions and such policy is disclosed on the company's website. The web link for same is http://www.hatsun.com/investors-policies.html

There were no related party transactions entered into during the financial year by the company with its Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large other than the remuneration paid to the Executive Directors and Dividend received by them from the Company in proportion to the shares held by them.

The details of Related Party Transactions are provided in the Notes to the Accounts.

CORPORATE GOVERNANCE REPORT

The Company has complied with the corporate governance requirements under the Companies Act, 2013 and as stipulated under the listing agreement with the Stock Exchanges. A report on Corporate Governance including Management Discussion and Analysis report under the Listing Agreement along with a certificate from M/s. S Dhanapal & Associates, a firm of Practising Company Secretaries, confirming the compliance is annexed herewith marked as Annexure E and forms part of this report.

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

The details on conservation of energy, technology absorption, foreign exchange earnings and outgo is annexed herewith as marked as Annexure F and forms part of this report.

DIRECTOR'S RESPONSIBILITY STATEMENT

In terms of Section 134 (5) of the Companies Act, 2013, the Directors would like to state that:

1. In the preparation of the annual accounts, the applicable accounting standards have been followed.

2. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 the year under review

3. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

4. The Directors have prepared the annual accounts on a going concern basis.

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

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

DEPOSITORY SYSTEM

As the members are aware, your Company's shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company's shares.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

ACKNOWLEDGMENTS

The Directors wish to convey their appreciation to business associates for their support and contribution during the year: The Directors would also like to thank the employees, members, customers, bankers, farmers and channel partners for the continued support given by them to the Company and their confidence reposed in the management. The Directors appreciate and value the contributions made by every member of Hatsun.

For and On behalf of the Board of Directors

Sd/-

R.G. Chandramogan Chairman & Managing Director

Place: Chennai Date: 17th Tune, 2015

RESEARCH AND DEVELOPMENT

1. Specific Areas in which R & D is being carried out by the Company

a) Process Development

(i) Conducting of Somatic Cell Counter Test to detect animal udder health.

(ii) ATP Bioluminescence testing to improve product safety and shelf life.

(iii) Installation of Eco Milk Analyzers at various chilling/ collection centres to ensure accurate and reliable testing of Fat/SNF content in the milk supplied.

(iv) Installation of Hardening Tunnel for quick hardening of Ice creams to improve Ice cream quality.

(v) Developed world class fruit preparations, fruit toppings, chocolate toppings and in-house chocolate coatings recipes for ice cream stick bars and Ice cream cakes.

(vi) In the process of developing new international standard recipes for ice creams, sorbets, yoghurt ice creams and extruded ice cream products.

(vii) Process Improvement is underway for mix preparations and processing for enhancing product quality, stability and food safety.

b) Product Diversification

c) Quality enhancement to achieve International Standards.

d) Assurance on Food Safety: Installation of new instruments like

1) ICP-OES Cost (Inductively Coupled Plasma Optical Emission Spectroscopy) used for detection of trace metals with focus on heavy metals, the control of which will go long way in assuring safety of milk & milk products

2) Gas Chromatography used for detection of traces of major Pesticides & other harmful volatile chemicals in milk, milk products, water etc.

3) UV Carry-60 Spectrophotometer for detection of metals, amino-acids, vitamins etc., which can help in improving the nutritive value of milk & milk products.

As mentioned in the note below under Expenditure on R&D, expenditures incurred on R&D are merged with appropriate expenditure/capital accounts.

2. Benefits derived

Continuous upgradation of the quality of products has resulted in better acceptance of the products by all classes of consumers.

3. Future plan of action

More importance will be given on product / process development / innovation, to bring down cost without compromising on product quality and to achieve international standards in quality and taste.

4. Expenditure on R & D*

(a) Capital : Nil

(b) Recurring : Nil

(c) Total : Nil

(d) Total R & D Expenditure as a percentage of Total Turnover : Nil

* The expenditures incurred on R&D are merged with the appropriate expenditure/capital accounts.

TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION

1. Efforts Made

The Company has undertaken efforts to absorb the best available technology for processing of milk and manufacturing milk related products like replacement of existing reciprocating compressor with scroll compressor in the refrigeration unit of our Bulk Coolers, VFD installation for scroll compressor and also energy purchase from Windmill.

Benefits

Absorption of the best technology reflects in the Company's products, which are clearly differentiated from its competitors and its processes that consistently deliver more with less expenditure. Due to the measures taken above, there were considerable improvement in compressor efficiency coupled with reduction in power consumption and power cost.

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Mar 31, 2013

TO THE MEMBERS,

The Directors have great pleasure in presenting their 28th Directors7 Report along with the audited statement of accounts for the financial year ended March 31,2013,

1. FINANCIAL RESULTS

The financial results of the Company for the year ended 31st March, 2013 is summarised below:

(in Lakhs) Current Year Ended Previous Year Ended Particlars 31st March, 2013 31st March, 2012

Revenue from Operation (net) 2,16,501,90 1,60,353,67

Ohter Income 330.19 247.27

Toatl Income 2,16,832.09 1,60,600.94

Operating Expenditure 2,01,723,61 1,49,441,46

Profit before Interest, Depreciation and Amortisation & Tax 15,108.48 11,159.48

Finance Costs (net) 4,397,81 3,757,78

Depreciation and Amortisation Costs 5,031.87 4,184,12

Profit before Tax 5,678,80 3,217,58

Tax Expenses 1,211,91 557.39

Net Profit for the Year 4,466,89 2,660.19

Balance Brought Forward from Previous Year 1,226,00 2,914,43

Amount Available for Appropiation 5,692,89 5,574.62

APPROPIATIONS

Internal Dividend on Equity Shares 1,830.76 739.74

Final Dividend on Equity Shares - 215.38

Tax on Dividends 300.32 163.05

Transfer of General Reserve 446,69 3,180.45

Balance carried to Balance Sheet 3,115.12 1,226.00

2. PERFORMANCE OF THE COMPANY

During the year, your Company earned revenue from operations (net) of Rs,2r16,501.90 Lakhs representing an increase of 35% over that of the previous year. Your Company registered a net profit of Rs.4P466.89 Lakhs, as compared to previous year net profit of Rs.2,660,19 Lakhs, an increase of 67.92%.

The net revenue from "Milk and Milk product amounts to Rs.1,96,041.39 Lakhs representing an increase of 34.44% over that of the previous year. The net revenue from "Ice Cream products" a mounts to Rs, 13,596.01 Lakhs representing an increase of 17.42% over that of the previous year. The increase in the profitability is due to the availability of milk and the effective cost control measures taken by the Company.

There was a fire accident at our 5alem Plant on 1 st May, 2013, for which there is adequate insurance cover. However, there is no loss of life or human injury due to the fire accident and no loss in revenue or production arising therefrom. The Company (s confident of recovering the same from the Insurance Company.

3. DIVIDEND

During the year, your Company has declared and paid 3 interim dividends totaling Rs.1.70/- per equity share (170%) on equity share capital.

The total cash outflow on account of dividend excluding dividend tax for the year 2012-13, would aggregate to Rs, 1,830.76 Lakhs resulting in a payout of 41 % of the profits of the Company.

4. TRANSFER TO RESERVES

The Company proposes to transfer Rs.446.69 Lakhs to General Reserve out of the amount avaitabte for appropriations and an amount of Rs_3,1 15.12 Lakhs is proposed to be retained in the Profit and Loss Account

5. EXPORTS

The value of exports during the year was Rs.19,583.08 Lakhs representing 9.04% of net revenue from operation. Your Company is a Net Foreign Exchange Earner

6. FUTURE PLAN

The major thrust areas in the current financial year would be in Curd and IBACO in the domestic market. This will help your Company to strengthen its presence and enable it to maintain its leadership position.

7. DIRECTORS

During the year, Mr. Kirt3 P Shah, Non-Executive Director resigned from the Board with effect from 23rd October, 2012 due to health reasons.

In accordance with the provisions of the Articles of Association of the Company, two of your Directors, Mr. C Sathyan and Mr. B.S. Mani are Habfe to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment

The profile of Directors seeking appointment/re-appointment is furnished in the Notice of the ensuing Annual General Meeting.

8. DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217(2AA) of the Companies Act 1956 TAcT), and based on the representations received from the operating management, the Directors hereby confirm that:

i) in the preparation of the Annual Accounts for the year 2012-13, the applicable Accounting Standards have been followed and there are no material departures;

ii) 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 and of the profit of the Company for the financial year;

iii) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the Annuat Accounts on a going concern basis.

9. CORPORATE GOVERNANCE REPORT & MANAGEMENT

DISCUSSION & ANALYSIS REPORT

Your Company has complied with all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of Bombay Stock Exchange Limited with which the shares of the Company are listed,

Corporate Governance Report and Management Discussion and Analysts Report form part of this Report,

10. FIXED DEPOSITS

The total amount of fixed deposits (excluding interest on Cumulative Deposrts) from public outstanding and unclaimed as at 31st March, 2013, was Rs.3.32 Lakhs out of which a sum of Rs,2.49 Lakhs represents 9 accounts of Fixed/Non Cumulative Deposits and Rs.0,83 Lakhs represents 3 accounts of Cumulative Deposits. Out of the above, Rs.0.40 Lakhs representing 1 account of Fixed/Non Cumulative Deposits was since claimed and paid.

During the financial year 2012-13, an amount of Rs.29,870A (including interest on Cumulative Deposits) being matured and unclaimed deposit was transferred to Investor Education and Protection Fund (IE&PF).

11. DEPOSITORY SYSTEM

As the members are aware, your Company''s shares are tradable in electronic form and the Company has established connectivity wrth both the Depositories Le„ National Securities Depository Limited (NSDL) and Centra) Depository Services (India) Limited (CDSL)h In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company''s shares.

12. FINANCE

During the year, your Company had to maintain Its borrowings to run the operations. However, your Company has taken care to ensure that such of the Company borrowings are obtained at very competitive rates.

13. AUDITORS & AUDITORS''REPORT

M/s. SR.Batliboi & Associates LLP, Chartered Accountants, the statutory auditors of the Company, hold office in accordance with the provisions of the Companies Act, 1956 upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from them confirming that this appointment, if made, will be within the limits laid down under Section 224(1 B) of the Companies Act, 1956. Your Directors recommend the appointment of M/s, S.R.Batliboi & Associates LLR Chartered Accountants, Chennai as Statutory Auditors of the Company at the ensuing Annual General Meeting.

EXPLANATION TO AUDITORS'' REMARKS

a) Basis for Qualified Opinion on Auditors''Report

As more fully described in Note 27 to the financial statements, certain income tax matters in respect of the financial year ended March 31, 1996 (financial estimate by the management ofRs. 150 Lakhs) are being contested by the Company and the matter is pending with the High Court of Judicature, Madras* Pending a final resolution of the uncertainties in this connection, no provision towards tax and other consequential adjustment relating to this matter, if any, have been considered in the financial statements. Audit report issued on the financial statements for the year ended March 31,2012 was also qualified in respect of this matter.

The Management has consulted and obtained expert legal advice on this issue and based on the same, believes that Et has a strong case and hence no provision and consequential adjustments, if any, for such disputed amount have been considered in the financial statements. Nevertheless, the Management reviews and monitors the matter.

b) Point No. (xvii) of Annexure to the Auditors'' Report

Having regard to the Company''s explanation as regards the operation of a centralized treasury function and more fully described in Note 4Q of the finanaal statements, we report that the Company has used Funds raised on short term basis from banks and others to purchase certain fixed assets aggregating Rs. 1,789.48Lakh.

The Company has a centralised treasury function where all the term loans and other borrowings in addition to the cash generated from operations are pooled through com in on bank accounts to optimally use funds and reduce the interest cost to the Company.The Company obtains loans from banks, which Inherently permit the loans to be used interchangeably for long-term and short-term purposes*

Your Company has raised long term bans during the year under review from banks to narrow down the short term and long term mismatch. Most of the short term loans with interest advantage have been in the nature of being rolled over long term- As the Company generates better profits, the long term - short term mismatch will come down substantially.

14. INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

15. PARTICULARS OF EMPLOYEES

Pursuant to provisions of Section 217(2A) of the Companies Act, 1956 read With the Companies (Particulars of Employees) Rules, 1975.

(i) None of the employees draw remuneration which in the aggregate exceeds Rupees Sixty Lakh or more per annum, during the financial year.

(ii) Details of the employees employed for a part of the financial year, was in receipt of remuneration for any part of that year, which, in the aggregate exceeds Rupees Five Lakh per month, during the financial year.

NAME Mr, Simon O Shea

AGE 44

DESIGNATION/ NATURE OF DUTIES Head-Plant Operation

REMUNERATION (Gross in Rs.) 550467/-per month

QUALIFICATION & EXPERIENCE Dairy Technology

DATE OF COMMENCEMENT 09.01.2013 OF EMPLOYMENT

NAME OF THE Fonterra Co-operative ORGANISATION

DESIGNATION Site Manager

NO OF YEARS 1.5 years

iii) None of the employees hold by himself or along with his/her spouse and dependant children, more than two per cent of the equity shares of the Company.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS & OUTGO

The particulars as prescribed under section 217(1 )(e) of the Act read with the Companies (Disclosure of Particulars In the Report of Board of Directors) Rutes, 198B, are set out in an Annexure to this Report,

17. CORPORATE SOCIAL RESPONSIBILITY

Your Company has been extending help to villages where our plants are tocated, as part of our Corporate Social Responsibility. Financial assistance was extended for creating and developing basic infrastructure like laying of roads, water pipe connection, dust bin for Panchayat etc. Your Company has also donated a school uniforms to the students of school in Desur.

18. ACKNOWLEDGEMENTS

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, members, customers, bankers, farmers and channel partners for the continued support given by them to the Company and their confidence reposed in the management The Directors appreciate and value the contributions made by every member of Hatsun.

For and On behalf of the Board of Directors

Sd/-

R.G Chandramogan

Chairman & Managing Director.

Place: Chennai

Date: 22ndJuly, 2013

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Mar 31, 2012

The Directors have great pleasure in presenting their 27th Directors Report along with the audited statement of accounts for the financial year ended 31st March, 2012.

1. Financial Results

The financial results of the Company for the year ended 31st March, 2012 are summarised below:

(Rs. In lakhs) Current Year Previous Year Sl. No. Particulars ended ended 31st March, 2012 31st March, 2011

(i) Revenue from operations (net) 1,60,353.67 1,35,573.20

(ii) Other Income (net) 334.22 150.70

(iii) Total Income 1,60,687.89 1,35,723.90

(iv) Operating Expenditure 1,49,441.46 1,26,115.68

(v) Profit before Finance Costs, Depreciation and Amortisation and Tax 11,246.43 9,608.22

(vi) Finance Costs 3,844.73 3,585.90

(vii) Depreciation and Amortisation 4,184.12 3,706.02

(viii) Profit before Taxes 3,217.58 2,316.30

(ix) Tax Expenses 557.39 441.75

(x) Net Profit for the Year 2,660.19 1,874.55

(xi) Balance Brought Forward from Previous Year 2,914.43 1,674.13

(xii) Amount Available for Appropriation 5,574.62 3,548.68

Appropriations

(a) Interim Dividend on Equity Shares 789.74 383.15

(b) Proposed Final Dividend on Equity Shares 215.38 --

(d) Tax on Dividends 163.05 63.64

(e) Transfer to General Reserve 3,180.45 187.46

(f) Balance carried to Balance Sheet 1,226.00 2,914.43

2. Performance of the Company

During the year, your Company earned revenue from operations (net) of Rs.1,60,353.67 Lakhs representing an increase of 18.27% over that of the previous year. Your Company registered a net profit of Rs.2,660.19 Lakhs, as compared to previous year's net profit of Rs.1,874.55 Lakhs.

The net revenue from "Milk and Milk products" amounts to Rs.1,45,818.61 Lakhs representing an increase of 19.01% over that of the previous year. The net revenue from "Ice Cream products" amounts to Rs.11,578.68 Lakhs representing an increase of 26.54% over that of the previous year.

The increase in the profitability is due to economies of scale, leveraging on a pan India presence of milk products leading to increased turnover and better margins, rationalisation of logistics costs, elimination of wastages and effective cost control measures.

3. Dividend

During the year, the Company had declared and paid an interim dividend (normal & special) of Rs.1.10 per equity share (110%) on equity share capital. The payment of interim dividend includes a normal interim dividend of 60% and a special dividend of 50% to celebrate the completion of Silver Jubilee year of the Company.

The Board of Directors has proposed and recommended a final dividend of Rs.0.20 per equity share (20%) on equity share capital. The final dividend will be paid, subject to the approval of the members at the ensuing Annual General Meeting, to those members whose name appears on the register of members as on 10th August, 2012.

The total cash outflow on account of dividends excluding dividend tax for the year 2011-12, would aggregate to Rs.1,005.12 Lakhs resulting in a payout of 37.78% of the net profits of the Company.

4. Transfer to Reserves

The Company proposes to transfer Rs.3,180.45 Lakhs to General Reserve out of the amount available for appropriations and an amount of Rs.1,226.00 Lakhs is proposed to be retained in the Profit and Loss Account.

5. Exports

The value of exports during the year was Rs.526.10 Lakhs.

6. Future Plan

The major thrust areas in the current financial year would be in Long Life Milk Products/Dairy Ingredients and Curd in the domestic market. This will help your Company to strengthen its presence and enable it to maintain its leadership position.

7. Directors

In accordance with the provisions of the Articles of Association of the Company, two of your Directors, viz., Mr. P.Vaidyanathan and Mr. Kirti P Shah are liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

The profile of Directors seeking re-appointment is furnished in the Notice of the Annual General Meeting.

8. Directors' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 ("Act"), and based on the representations received from the operating management, the Directors hereby confirm that:

(i) in the preparation of the Annual Accounts for the year 2011-12, the applicable Accounting Standards have been followed and there are no material departures;

(ii) 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 and of the profit of the Company for the financial year;

(iii) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the Annual Accounts on a going concern basis.

9. Corporate Governance Report and Management Discussion and Analysis Report

Your Company has complied with all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of Bombay Stock Exchange Limited with which the shares of the Company are listed.

Corporate Governance Report and Management Discussion and Analysis Report form part of this Report.

10. Fixed Deposits

The total amount of fixed deposits from public and shareholders of the Company outstanding as on 31st March, 2012, was Rs.107.91 Lakhs, out of which a sum of Rs. 79.35 Lakhs represents 133 accounts of Fixed/Non Cumulative Deposits and Rs.28.56 Lakhs represents 75 accounts of Cumulative Deposits. A sum of Rs.14.10 Lakhs under 31 accounts was unclaimed as on that date. Out of the above, Rs.9.50 Lakhs representing 14 accounts were since claimed and paid.

11. Depository System

As the members are aware, your Company's shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the members are requested to avail of the facility of dematerialisation of the Company's shares.

12. Finance

During the year, the Company had to maintain its borrowings to run the operations. However, your Company has taken care to ensure that such borrowings are obtained at very competitive rates.

13. Auditors & Auditors' Report

M/s. S.R.Batliboi & Associates, Chartered Accountants, the Statutory Auditors of the Company, hold office in accordance with the provisions of the Companies Act, 1956 upto the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from them confirming that this appointment, if made, will be within the limits laid down under Section 224(1B) of the Companies Act, 1956. Your Directors recommend the re-appointment of M/s. S.R.Batliboi & Associates, Chartered Accountants, Chennai as Statutory Auditors of the Company at the ensuing Annual General Meeting

Explanation to Auditors' Remarks

a) Point No.4 of the Auditors' Report

As more fully described in Note 25(a) to the Financial Statements, certain income tax matters in respect of the financial year ended March 31, 1996 (financial estimate by the management of Rs. 150 Lakhs) are being contested by the Company and the matter is pending with the High Court of Judicature, Madras. Pending a final resolution of the uncertainties in this connection, no provision towards tax and other consequential adjustment relating to this matter, if any have been considered in the financial statements. Audit report issued on the financial statements for the year ended March 31, 2011 was also qualified in respect of this matter.

The Management has consulted and obtained expert legal advice on this issue and based on the same, believes that it has a strong case and hence no provision and consequential adjustments, if any, for such disputed amount have been considered in the financial statements.

b) Point No. (ix) (a) of Annexure to the Auditors' Report

Undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax, customs duty, excise duty, cess and other material statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases in remittances relating to provident fund.

The Company is regular in remittance of provident fund dues. However, in few cases there were some technical delays in remittances where even though cheques relating to remittance were made before the due date, it got delayed due to the time taken for clearance of the cheques owing to continuous intervening holidays. We will ensure that in future such payments are cleared and credited to the provident fund accounts well within the due date.

c) Point No. (xvii) of Annexure to the Auditors' Report

Having regard to the Company's explanation as regards the operation of a centralized treasury function and more fully described in note 25(k) of the financial statements, we report that the Company has used funds raised on short term basis from banks and others to purchase certain fixed assets aggregating Rs. 6,230.24 Lakhs.

The Company has a centralised treasury function where all the term loans and other borrowings in addition to the cash generated from operations are pooled through common bank accounts to optimally use funds and reduce the interest cost to the Company. The Company obtains loans from banks, which inherently permit the loans to be used interchangeably for long term and short term purposes.

During the year, the Company has raised long term loan for Rs.7,900 Lakhs from ICICI Bank Ltd. to narrow down the short term and long term mismatch. Most of the short term loans with interest advantage have been in the nature of being rolled over long term. As the Company generates better profits, the long term - short term mismatch will come down substantially.

14. Industrial Relations

Industrial relations in all the locations of your Company remained cordial and peaceful throughout the year.

15. Particulars of employees

Pursuant to provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975.

(i) None of the employees drew remuneration which in the aggregate exceeds Rupees Sixty Lakhs per annum or Rupees Five Lakhs per month, as the case may be, during the financial year.

(ii) Details of employees employed throughout the financial year or part thereof, were in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which in the aggregate, is in excess of that drawn by the Managing Director or Whole-time Director or Manager.

S. Name Age Designation/ Rumuneration Qualification No Nature of (Gross) and Duties (in Rs.) Experience

1. Mr. Brian Colman 62 SGM-Dairy 4,90,858/- p.m. Higher Mullally* Operation National Diploma in Food Technology

Name Date of Previous employment commencement Name of the Designation (No. of of employment organisation years)

Mr Brian 28.02.2010 Consultancy- Consultant & 1 Year Mullally* Dairy Recruiter Company - Libya

* Resigned on 22.08.2011.

(iii) None of the employees hold by himself or along with his/her spouse and dependent children, more than two per cent of the equity shares of the Company.

16. Conservation of energy, technology absorption and foreign exchange earnings and outgo

The particulars as prescribed under Section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in an Annexure to this Report.

17. Corporate Social Responsibility

Your Company has been extending help to villages where our plants are located, as part of our Corporate Social Responsibility. Financial assistance was extended for creating and developing basic infrastructure like roads, electricity and lake development. Your Company had organised free eye camps at Attur, Edapppadi, Thiruchengodu, Pappireddipatti, Palacode, Harur, Rasipuram and Namakkal and free health camp at Karipatti.

18. Acknowledgements

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, members, customers, bankers, farmers and channel partners for the continued support given by them to the Company and their confidence reposed in the management. The Directors appreciate and value the contributions made by every stakeholder of the Company.

for and On behalf of the Board of Directors

Sd/-

Place : Chennai R.G. Chandramogan

Date : 25th June, 2012 Chairman & Managing Director

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Mar 31, 2011

The Members

The Directors submit the Annual Report of the Company along with the audited statement of accounts for the financial year ended March 31, 2011.

1. Financial Results (Rs. in Lakhs)

Particulars 2010 - 2011 2009 - 2010

(i) Income from Sales 1,35,572.22 114,060.31

(ii) Other Income (net) 157.96 292.98

(iii) Total Income 1,35,730.18 114,353.29

(iv) Operating Expenditure 1,26,160.63 107,735.54

(v) Profit before Interest, Depreciation and Tax 9,569.55 6,617.75

(vi) Interest 3,547.23 2,783.02

(vii) Depreciation and Amortisation 3,706.02 2,681.17

(viii) Profit before Taxes 2,316.30 1,153.56

(ix) Provision for Taxes 441.75 884.63

(xj Net Profit for the Year 1,874.55 268.93

(xi) Balance Brought Forward from Previous Year 1,674.13 2,062.60

(xii) Amount Available for Appropriation 3,548.68 2,331.53 Appropriations

(a) Interim Dividends on Equity Shares 383.15 —

(b) Interim Dividends on Preference Shares — 14.70

(c) Proposed Final Dividend on Equity Shares — 101.83

(d) Tax on Dividends 63.64 19.42

(e) General Reserve 187.46 13.45

(f) Capital Redemption Reserve — 508.00

(g) Balance carried to Balance Sheet 2,914.43 1,674.13

2. Dividend

During the reporting period 2010-11, the Company paid 2 interim dividends for 30% and 25% respectively. The total cash outflow on account of dividends excluding dividend tax for the year 2010-11, would aggregate to Rs. 3.83 Crores resulting in a payout of 20.30% of the profits of the Company.

3. Transfer to Reserves

The Company proposes to transfer Rs.1.87 Crores to the General Reserve out of the amount available for appropriations and an amount of Rs.29.14 Crores is proposed to be retained in the Profit and Loss Account.

4. Company's Performance

Financial Year 2010-11 marked a strong resurgence in volume and demand growth post the global financial crisis. During the reporting year 2010-11, revenues at Rs.1355.72 Crores were higher by 18.86% over the previous year's revenues of Rs. 1140.60 Crores. Net profit for the year at Rs. 18.75 Crores was 7 times higher than the previous year's net profit of Rs. 2.69 Crores.

5. Corporate Governance Report and Management Discussion and Analysis Statement

Corporate Governance Report and Management Discussion and Analysis Statement are attached to this Report.

6. Directors' Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 ("Act"), and based on the representations received from the operating management, the Directors hereby confirm that:

(i) in the preparation of the Annual Accounts for the year 2010-11, the applicable Accounting Standards have been followed and there are no material departures;

(ii) they have 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 of the Company for the financial year;

(iii) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956. They confirm that there are adequate systems and controls for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) they have prepared the Annual Accounts on a going concern basis.

7. Fixed Deposits

The total amount of Fixed Deposits from the Public and Shareholders of the Company outstanding as at 31st March, 2011, was Rs. 742.58 Lakhs out of which a sum of Rs. 504.63 Lakhs represents 975 accounts of Fixed/ Non Cumulative Deposits and Rs. 237.95 Lakhs represents 597 accounts of Cumulative Deposits.

8. Directors

In accordance with the provisions of the Articles of Association of the Company, two of your Directors, Mr. K S Thanarajan and Mr. N Chandrasekaran are liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offers themselves for re-appointment.

The tenure of Mr C Sathyan, Executive Director ended on 31st May 2011 on completion of five years period and he was re-appointed as Executive Director for a further period of 5 years in the Board Meeting held on 25th May 2011. Approval of the shareholders is required for the same.

The profile of Directors seeking appointment/re-appointment is furnished in the Notice of the ensuing Annual General Meeting.

9. Auditors

M/s. S.R.Batliboi & Associates, Chartered Accountants, who are the statutory auditors of the Company, hold office in accordance with the provisions of the Act upto the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment.

10. Particulars of employees

None of the employees draw remuneration which in the aggregate exceeds Rupees Sixty Lakhs per annum or Rupees Five Lakhs per month during the financial year as per the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975.

None of the employees draw remuneration which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager. None of the employees holds by himself or along with his spouse and dependent children, not less than two per cent, of the equity shares of the company

11. Conservation of energy, technology absorption, foreign exchange earnings and outgo

The particulars as prescribed under section 217(1)(e) of the Act, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, are set out in an Annexure to this Report.

12. Corporate Social Responsibility

Your Company has been extending help to villages where our plants are located, as part of our Corporate Social Responsibility. Financial assistance was extended for creating and developing basic infrastructures like roads, electricity and water tanks. Your Company has also contributed towards enhancement of facilities in schools, by providing benches, table chairs and other related items. Your Company donated materials like computer tables, water tanks, chairs and the like, to schools in Timma Samudram Ooratchi and Chetteri Medu.

13. Acknowledgements

The Directors wish to convey their appreciation to business associates for their support and contribution during the year. The Directors would also like to thank the employees, shareholders, customers, bankers, farmers and channel partners for the continued support given by them to the Company and their confidence reposed in the management. The Directors appreciate and value the contributions made by every member of Hatsun.

For and On behalf of the Board of Directors

Sd/- Place : Chennai R.G.CHANDRAMOGAN Date : 1st August, 2011 Chairman & Managing Director

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Mar 31, 2010

The Directors are delighted to present their 25th Annual Report along with the Audited Accounts of the Company for the year ended March 31, 2010.

FINANCIAL RESULTS

The financial performance of your Company for the year ended March 31, 2010 is summarised below:

Current Year ended Previous Year ended

Particulars st st 31 March, 2010 31 March, 2009

Income

Net Sales 114060.31 101305.01

Other Income 292.98 181.51

Total 114353.29 101486.52

Profit

a) Profit before Depreciation 3834.73 4160.06

b) Less: Depreciation 2681.17 2167.87

c) Profit after Depreciation but before Tax 1153.56 1992.19

d) Less: Income-tax - Current Period - 588.35

Deferred Tax - Current Period 854.06 124.47

Tax/(Reversal) of Prior Period tax 30.57 (25.30)

Fringe Benefit Tax - 107.88

e) Profit after Tax 268.93 1196.79

f) Add: Balance brought forward from previous year 2062.60 1271.31

g) Balance available for appropriation 2331.53 2468.10 Appropriation

a) Dividend

- Interim Dividend on Preference Shares 14.70 40.64

- Interim Dividend on Equity Shares - 203.66

- Proposed Final Dividend on Preference Shares - -

- Proposed Final Dividend on Equity Shares 101.83 -

b) Corporate Dividend Tax

- Equity 16.92 34.61

- Preference 2.50 6.91

c) Transfer to General Reserve from current year profits 13.45 119.68

d) Transfer to Capital Redemption Reserve 508.00 -

e) Balance carried to Balance Sheet 1674.13 2062.60

Total 2331.53 2468.10

PERFORMANCE OF THE COMPANY

OPERATING RESULTS

During the year, your Company registered a turnover (Net Sales) of Rs.114060.31 Lakhs representing an increase of 12.59% over that of the previous year. Your Company registered a gross profit of Rs.1153.56 Lakhs, as compared to previous year profit of Rs.1992.19 Lakhs.

The revenue in "Milk and milk products" amounts to Rs.103053.32 Lakhs representing an increase of 9.06% over that of the previous year. The revenue in "Ice Cream products" amounts to Rs.7517.29 Lakhs representing an increase of 35.23% over that of the previous year.

The decrease in the profitability is due to bad monsoon, non-availability of milk, increase in milk procurement price, increase in Depreciation and Interest due to commissioning of new plant at Palacode and the impact of Deferred Tax Liability.

There was a fire accident at our Kanchipuram Plant at around 10 P.M. on 30.04.2010. However, there is no loss of life or human injury as a result of the fire accident. The total estimated loss/damage is around Rs.2.50 Crore for which there is adequate insurance cover and that there is no loss in revenue or production arising therefrom.

EXPORTS

The value of exports during the year under review was Rs.4651.40 Lakhs representing 4.08% of Net Sales. Your Company is a Net Foreign Exchange Earner.

SUBSIDIARY COMPANY

Your Company has closed the operations in its 100% Wholly-owned Subsidiary Company namely, M/s. Hatsun Ingredients FZE in Ras Al Khaimah, UAE with effect from 13th November, 2009.

FUTURE PLAN

The major thrust areas in the current financial year would be in the domestic Dairy Ingredients, variety of milk products like curd, cream, butter, ghee, milk powders, panneer etc. and Ice Cream apart from Milk. This will help your Company to diversify its product profile and enable it to maintain its leadership position.

DIVIDEND EQUITY SHARES

Your Directors propose a Final Dividend of Rs.0.30/- per Equity Share (15%) on Equity Share Capital, for those shareholders whose names appear on the Register of Members as at 04th August, 2010 (Record Date), absorbing Rs.1,18,74,661/- (Dividend - Rs. 1,01,83,227/-; Corporate Dividend Tax - Rs. 16,91,434/-).

In terms of the provisions of Investor Education and Protection Fund Rules 2001, Rs.69,698/- of unclaimed dividend pertaining to the financial year 2002-03 was transferred to Investor Education and Protection Fund during the year.

PREFERENCE SHARES

As per the terms of the issue of 8% Non-convertible Cumulative Redeemable Preference Shares of Rs.100/- each, your Directors declared and paid a pro rata Interim Dividend for the year 2009-10 to the Preference shareholders whose name appear on the Register of Members as at 10th August, 2009 (Record Date) absorbing Rs.17,19,425/- (Dividend - Rs. 14,69,720/-; Corporate Dividend Tax - Rs. 2,49,705/-).

8% Non-convertible Cumulative Redeemable Preference Shares of Rs.100/- each aggregating to Rs.508 Lakhs was redeemed by the Company during the year.

6% UNSECURED COMPULSORILY CONVERTIBLE DEBENTURES

During the year, the Company has issued and allotted 250 Nos. of 6% Unsecured Compulsorily Convertible Debentures of Rs.10 Lakhs each aggregating to Rs.25 Crores under Section 81(1A) of the Companies Act, 1956 to be converted into equity shares of the Company after October 1, 2010, but before December 31, 2010 at a price to be mutually agreed by the Board of Directors of the Company and the debenture holders subject to the SEBI Guidelines.

COMMUNITY DEVELOPMENT AND CHARITABLE WORK

Your Company has co-ordinated various Community Development activities during the year. Your Company has organized free eye camps at Dharamangalam, Attur, Palacode, Edappady and Thiruchengode. Your Company has also distributed stationery, uniforms and school bags to school students.

DIRECTORS

In accordance with the provisions of the Articles of Association of the Company, two of your Directors, Mr. B.S.Mani and Mr. S.Thiagarajan are liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment.

The profile of Directors seeking appointment/re-appointment is furnished in the Notice of the ensuing Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm

i) that in the preparation of the annual accounts for the financial year ended 31st March, 2010, the applicable accounting standards have been followed and that there are no material departures;

ii) that your Directors have 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 of the Company for the period;

iii) that your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) that your Directors have prepared the annual accounts on a going concern basis.

FINANCE

During the year under review the Company had to maintain its borrowings to run the operations. However, your Company has taken care to ensure that such of the Company borrowings are obtained at very competitive rates.

DEPOSITORY SYSTEM

As the Shareholders are aware, your Companys Shares are tradable in electronic form and the Company has established connectivity with both the Depositories i.e., National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the advantages of the Depository System, the shareholders are requested to avail of the facility of dematerialisation of the Companys shares.

FIXED DEPOSITS

The total amount of Fixed Deposits from the Public and Shareholders of the Company outstanding as at 31st March, 2010, was Rs.1242.43 Lakhs out of which a sum of Rs. 793.05 Lakhs represents 1579 accounts of Fixed/Non Cumulative Deposits and Rs.449.38 Lakhs represents 1134 accounts of Cumulative Deposits. A sum of Rs.10.78 Lakhs under 38 accounts was unclaimed as on that date. Out of the above, Rs.5.99 Lakhs representing 18 accounts were since claimed and paid.

AUDITORS & AUDITORS REPORT

M/s. S.R. Batliboi & Associates, Chartered Accountants, Chennai, Statutory Auditors of the Company retire at the ensuing Annual General Meeting and are eligible for reappointment. The Company has received a certificate from them confirming that this appointment, if made, will be within the limits laid down under Section 224(1B) of the Companies Act, 1956. Your Directors recommend the appointment of M/s. S.R. Batliboi & Associates, Chartered Accountants, Chennai as Statutory Auditors of the Company at the ensuing Annual General Meeting

EXPLANATION TO AUDITORS REMARKS Point No. 4 of the Auditors Report

As more fully described in Note 2 (a)(iii) of Schedule 19 to the financial statements, certain income tax matters in respect of the financial year ended 31st March 1996(financial estimate by the management of Rs.15 million) are being contested by the Company and the matter pending with the High Court of Judicature, Chennai. Pending a final resolution of uncertainties in this connection, no provision towards tax and other consequential adjustment relating to this matter, if any have been considered in the financial statements. Audit report issued on the financial statements for the year ended March, 31, 2009 was also qualified in respect of this matter.

The Management believes based on the expert advice that the Company has a strong case and hence no provision and consequential adjustments, if any, for such disputed amount have been considered in the financial statements.

Point No. (ix) (a) of Annexure to the Auditors Report

Undisputed statutory dues including provident fund, investor education and protection fund, or employees state insurance, income-tax, wealth-tax, service-tax, customs duty, excise duty, cess have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases relating to remittance of provident fund and employees state insurance dues.

The Company is regular in remittance of provident fund and employees state insurance dues. However, in a few cases there was some technical delay in remittances where even though cheques relating to remittance were made before the due date, it got delayed due to the time taken for clearance of the cheques. We will ensure that in future such payments are cleared and credited to the provident fund and employees state insurance accounts well within the due date.

Point No. (xvii) of Annexure to the Auditors Report

According to the information and explanations given to us and on overall examination of the balance sheet of the Company, we report that the Company has used funds raised on short-term basis for long-term investment. The Company has purchased certain fixed assets aggregating Rs. 117.1million out of short term loans from banks and others.

As informed in the earlier years Annual Reports, the Company has a centralised treasury function where all the term loans and other borrowings in addition to the cash generated from operations are pooled through common bank accounts to optimally use funds and reduce the interest cost to the Company. It is also to be mentioned here that the Company obtains loans from banks, which inherently permit it, to be used interchangeably for long term and short term purposes.

INDUSTRIAL RELATIONS

Industrial relations in all the units and branches of your Company remained cordial and peaceful throughout the year.

2. Gross remuneration includes salary & allowances, contribution to PF & other Funds and other benefits.

3. None of the employees whose remuneration is stated above is a relative of any Director of the Company.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

The information required to be given under these heads in accordance with the provisions of Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, has been set out in the Annexure to this Report.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The Foreign Exchange Earnings from Exports during the year 2009-10 amounted to Rs.4651.40 Lakhs. Total outgo of Foreign Exchange during the year amounted to Rs.874.76 Lakhs.

CORPORATE GOVERNANCE

Your Company has complied with all mandatory provisions of Corporate Governance as prescribed under the Listing Agreement of Bombay Stock Exchange Limited with which the Company is listed.

The Management Discussion and Analysis Report and Corporate Governance Report form part of this Annual Report.

ACKNOWLEDGEMENT

Your Directors thank the Companys Bankers and the Financial Institutions for their help and co-operation extended throughout the year. Your Directors place on record their appreciation for the support and co-operation that the Company received from its stakeholders and in specific its channel partners. Your Directors also record their appreciation for the excellent operational performance of the staff of the Company that contributed to the achievements of the Company. The Directors also acknowledge with much gratitude, the continued trust and confidence reposed by the shareholders of the Company.

For and On behalf of the Board of Directors Sd/- R.G. CHANDRAMOGAN Chairman & Managing Director

Place : Chennai Date : 28th June, 2010