Home  »  Company  »  Hatsun Agro Prod  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Hatsun Agro Products Ltd.

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.


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


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


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


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

Find IFSC