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Directors Report of Kerala Ayurveda Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting the 23rd Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2015.

FINANCIAL RESULTS

The Company's financial performance during the year 2014-15 as compared to the previous year 2013-14 is summarized below:

Particulars Standalone

2014-15 2013-14

Product Revenues 2399.72 2231.05

Service Revenues & Other Income 670.68 538.62

Gross Income 3070.40 2769.67

Less: VAT & Excise Duty 241.71 214.61

Net Income from Sales/Services 2832.37 2555.05

Profit before Interest, Depreciation & 329.54 285.72 Tax (EBITDA)

Profit /Loss before extraordinary items 157.44 127.90

Extraordinary Items — 20.93

Profit Before Tax 157.44 148.83

Net Profit/(Loss) after Tax 110.58 102.82

Minority Interest in Profit — —

Net Consolidated Profit/(Loss) 110.58 102.82

Loss brought forward from previous year (906.36) (1009.17)

Loss Carried to the Balance Sheet 869.09 (906.36)

Particulars Consolidated

2014-15 2013-14

Product Revenues 2427.22 2251.39

Service Revenues & Other Income 1720.96 1448.87

Gross Income 4148.18 3700.26

Less: VAT & Excise Duty 241.71 214.62

Net Income from Sales/Services 3906.47 3485.64

Profit before Interest, Depreciation & 607.71 388.32 Tax (EBITDA)

Profit /Loss before extraordinary items 317.43 153.74

Extraordinary Items — 20.93

Profit Before Tax 317.43 174.66

Net Profit/(Loss) after Tax 251.50 91.87

Minority Interest in Profit 15.94 17.47

Net Consolidated Profit/(Loss) 235.56 74.40

Loss brought forward from previous year (3291.90) (3366.30)

Loss Carried to the Balance Sheet (3056.34) (3291.90)

REVIEW OF OPERATIONS

During the financial year under review, the operational results ended with a Profit before Extraordinary items at Rs. 111 Lacs as against Rs. 82 Lacs in the previous year. The Net revenue of the company stands at Rs. 2832 Lacs as against Rs. 2555 Lacs in the previous financial year reporting an 11% growth. The consolidated net revenue including its subsidiaries for the year is Rs. 3906 Lacs against Rs. 3486 Lacs during previous year.

During the financial year under review, distribution of Ayurveda Formulation has shown a growth of 13%. Your company was able to improve the market share in Kerala and made a big progress outside Kerala.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

Your company has seven subsidiaries including one step down subsidiary as on 31st March, 2015 and the details are as under:

SL Name Location % of holding

1 Ayurvedagram Heritage Wellness Centre Pvt. Ltd. India 74%

2 Ayu Natural Medicine Clinic, P.S. USA 100%

3 Ayurvedic Academy Inc. USA 100%

4 Nutraveda Inc. (Formerly known as Ayu Inc.) USA 100%

5 CMS Katra Holdings LLC USA 81.67%

6 CMS Katra Nursing LLC USA 100%*

7 Nutraveda Pte Ltd. Singapore 100%

* CMS Katra Holdings LLC holds 51% shareholding in CMS Katra Nursing LLC and Ayu Inc holds the balance 49% shareholding; hence it is a fully owned step down subsidiary of your company.

PERFORMANCE OF SUBSIDIARIES Indian Subsidiary

During the year under review, M/s. Ayurveda Gram Heritage Wellness Centre Pvt. Ltd. has achieved a turnover of Rs. 637 Lacs against a turnover of Rs. 564 Lacs in the previous financial year clocking a sound growth of 13%. The Net profit of the company, after providing for tax is Rs. 61 Lacs against Rs. 66 Lacs in the previous year.

Overseas Subsidiaries

The combined turnover of overseas subsidiaries was Rs. 530 Lacs as compared to Rs. 454 Lacs in the previous year. Kerala Ayurveda Academy under Ayurvedic Academy Inc is currently offering certified courses in the state of Washington and California and also offers a distant learning course across USA.

CONSOLIDATED FINANCIAL STATEMENTS

A report on performance and financial position of each of the subsidiaries, associates and joint venture companies is attached as Annexure 1. Accordingly, this annual report does not contain the reports and other statements, of the subsidiary companies. Any member intented to have a copy of Balance sheet and other financial statement of these Companies may write to Company Secretary. It shall also be kept for inspection during business hours by any shareholder in the registered office of the Company and the respective offices of its subsidiary companies.

It shall also be made available on the website of the Company www.keralaayurveda.biz under the "Investors" section. COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES DURING THE YEAR

During the financial year ended 31st March, 2015, no entity became or ceased to be the subsidiary, joint venture or associate of the Company.

DIVIDEND

In view of the accumulated losses of the past, your Directors are not in a position to recommend any dividend for the current year.

RESERVES

During the year the total reserves and surplus of the company has improved to Rs. 325 Lacs from Rs. 288 Lacs. Based on the Companies Act, 2013 Rs.73 Lacs of reserves was adjusted towards depreciation of the assets whose useful life as on 1st April, 2014 was nil. During the year company earned a net surplus of Rs. 110 Lacs.

MATERIAL CHANGES AND COMMITMENTS

With a view to broad base the reach of the company & to propagate Ayurveda, your company has revamped its website by adding useful articles, blogs, videos related to Ayurveda and companies products. Your company is providing access to people who are currently not served by our centers or our distribution network by providing Ecommerce option to pay online or by making offline payments at any of the ICICI bank branches across India and receive products at their doorsteps.

Company believes that this will help building knowledge, communication and will increase Purchase of Company' products. CHANGE IN THE NATURE OF BUSINESS, IF ANY

There was no change in the nature of business of the Company during the financial year ended 31st March, 2015.

BOARD OF DIRECTORS

Appointment / Reappointment / Resignation of Directors

Mr. A T Jacob, Director of the company retire by rotation at ensuing Annual General Meeting and being eligible, offer himself for re-appointment.

During the year, Dr. K Rajagopalan, Mr. M C Mohan, Mr. Ronald George Pearce and Mr. S Krishnamurthy have been appointed as an Independent Directors for a term of 5 years. Dr. K Rajagopalan Independent Director of the company had passed away on 10th January, 2015. Dr. K Rajagopalan had contributed immensely for the growth of the company. The Board placed on record its appreciation for the valuable services rendered and the wholehearted support and advice given by him to the board during his tenure. Mr. M S Seetharaman was appointed as Additional Independent Director with effect from 10th February, 2015. He offers himself as Non Executive Independent Director in this Annual General Meeting.

Also, Mr. Arvind Agarwal has been appointed as Chief Financial Officer of the company with effect from 24th May 2014. Mr. K Raghunadan, Company Secretary has resigned from the post of Company Secretary on 10th February, 2015. Pursuant to his resignation, Ms. Anusha Rajeswaran was appointed as Company Secretary from 10th February, 2015.

MEETINGS OF THE BOARD OF DIRECTORS

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year five Board Meetings and four 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 and the listing agreement with the Bombay Stock Exchange.

During the financial year 2014-2015, the Board of Directors of the Company, met 5 (five) times on 24th May, 2014, 6th August 2014, 29th September, 2014, 14th November, 2014 and 10th February, 2015.

Further, a separate Meeting of the Independent Directors of the Company was also held on 14th November, 2014, whereat the prescribed items enumerated under Schedule IV to the Companies Act, 2013 and clause 49 of the Listing Agreement were discussed.

DECLARATION BY AN INDEPENDENT DIRECTOR(S) AND RE- APPOINTMENT

All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under section 149 (6) of the Companies Act, 2013.

DETAILS PURSUANT TO SECTION 197(12) OF THE COMPANIES ACT, 2013

Details pursuant to section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 form part of this Report and are annexed herewith as Annexure 2.

FORMAL ANNUAL EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

NOMINATION AND REMUNERATION POLICY OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

In adherence of section 178(1) of the Companies Act, 2013, the Board of Directors of the Company approved a policy on directors' appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided u/s 178(3), based on the recommendations of the Nomination and Remuneration Committee.

The broad parameters covered under the Policy are - Company Philosophy, Guiding Principles, Nomination of Directors, Remuneration of Directors, Nomination and Remuneration of the Key Managerial Personnel (other than Managing/ Whole-time Directors), Key-Executives and Senior Management and the Remuneration of Other Employees. The Company's Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 is furnished in Annexure 3 and forms part of this Report.

AUDITORS:

1. Statutory Auditors

M/s.Biju George & Co, Chartered Accountants, Vellaringattu Towers, Thodupuzha 685584 were appointed as Statutory Auditors of the company upto the conclusion of Annual General Meeting in 2019 subject to ratification at every Annual General Meetng. Company has received a letter, pursuant to Section 139 of the Companies Act, 2013, from M/s.Biju George & Co., Chartered Accountants, Vellaringattu Towers, Thodupuzha 685584 confirming consent and their eligibility for acting as Statutory Auditors of the Company, if the appointment is ratified at the ensuing Annual General Meeting. The Board also recommends their appointment as Statutory Auditors for the ensuing financial year.

Statutory Auditors' Report

The Auditors' Report does not contain any qualification. Notes to Accounts and Auditors remarks in their report are selfexplanatory and do not call for any further comments.

2. Secretarial Auditor

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with corresponding Rules framed there under, M/s. SVJS & Associates were appointed as the Secretarial Auditors of the Company to carry out the secretarial audit for the year ending 31st March, 2015.

Secretarial Audit Report

A Secretarial Audit Report given by the Secretarial Auditors in Form No. MR-3 is annexed with this Report as Annexure 4. There are few qualifications, reservations or adverse remarks made by Secretarial Auditors in their Report and the company has taken steps to ensure that it complies in future and corrective action has been taken to rectify the observation made in the report.

3. Internal Audit & Controls

The Company appointed Mr.Mathew Joseph, Chartered Accountant, as its Internal Auditor. During the year, the Company continued to implement their suggestions and recommendations to improve the control environment. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions taken as per the directions of Audit Committee on an ongoing basis to improve efficiency in operations.

4. Cost Auditors

In terms of the Cost Audit Order dated 31st December, 2014 notified by the Ministry of Corporate Affairs which exempted certain industries from the purview of Cost Audit, your Company is not required to get the cost audit done for financial year 2014-15. VIGIL MECHANISM :

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established. The Vigil Mechanism Policy has been uploaded on the website of the Company at www.keralaayurveda.biz under "Investors" Section.

RISK MANAGEMENT POLICY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company.

The Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory as well as Internal Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There was no significant and material order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

CORPORATE SOCIAL RESPONSIBILITY

Your company always had a deep sense of responsibility towards the community. Company conducted medical camps and free medical check ups at various places. Diabetic Awareness campaign was held on world Diabetic Awareness day to create awareness.

DEPOSITS

In terms of the provisions of Section 73 of the Companies Act, 2013, the company has not accepted any deposits from the public during the financial year under review and there are no outstanding fixed deposits from the pubic as on 31st March, 2015.

CORPORATE GOVERNANCE

Your company has complied with corporate governance norms as stipulated by Listing Agreement entered into with the Bombay Stock Exchange. A detailed report on Corporate Governance in line with requirements of the Companies Act, 2013 and clause 49 of the Listing Agreement entered into with stock exchange is attached to this report. A certificate from statutory auditors confirming the compliance of Corporate Governance is also attached to this report.

AUDIT COMMITTEE

The Audit Committee of the Board of Directors of the Company, comprises 4 (Four) Members, namely Mr. S Krishnamurthy, Mr. M C Mohan, Ms. Katarzyna Zimpel and Dr. K Rajagopalan, majority of them being Independent Directors except Ms. Katarzyna Zimpel who is a Non-Independent Non-Executive Director. Dr. K Rajagopalan expired on 10th January, 2015 and subsequently Mr. M S Seetharaman was appointed in his place. The Board accepted the recommendations of the Audit Committee whenever made by the Committee during the year.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of operations, performance and future outlook of your company and its businesses is given in the Management Discussion and Analysis, which forms part of this report.

EXTRACT OF ANNUAL RETURN

As required pursuant to Section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in MGT 9 as a part of this Annual Report as Annexure 5.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has provided following loans and guarantees and made following investments pursuant to Section 186 of the Companies Act, 2013:

Name of the Amt in entity Relation Rupees Lacs

Nutraveda Inc., 100% USA subsidiary 1,105.25

Ayurvedic 100 Academy Inc., subsidiary 1,162.26 USA

CMS-Katra 81.67% Holdings LLC, subsidiary 828.67 USA

Nutraveda PTE 100% Ltd, Singapore subsidiary 0.44

Name of the Particulars of loans, Purpose for which the entity guarantees and loan, guarantee and investments investment are proposed to be utilised

Nutraveda Inc., Interest free Working To meet the working USA Capital Loan given by capital requirement KAL to subsidiary

Ayurvedic Interest free Working To meet the working Academy Inc., Capital Loan given capital requirement USA by KAL to subsidiary

CMS-Katra In terest free Working To meet the working Holdings LLC, Capital Loan given by capitalrequirement USA KAL to subsidiary

Nutraveda PTE Interest free Working To meet the working Ltd, Singapore Capital Loan given by capital requirement KAL to subsidiary

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of every contract or arrangements entered into by the Company with related parties referred to in subsection (1) of Section 188 of the Companies Act, 2013 including certain arm's length transactions under third proviso is attached as Annexure 6.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors' Responsibility Statement referred to in clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, shall state that—

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 and loss of the company for that period;

(c) the directors had 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;

(d) the directors had prepared the annual accounts on a going concern basis;

(e) 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, and

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

OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORK PLACE

Company has adopted a policy for prevention of Sexual Harassment of Women at workplace (prevention, prohibition and redressal Act, 2013) and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment.

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

The information pertaining to conservation of energy, technology absorption, foreign exchange earnings and outgo as required under Section 134(3) (m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure 7 and forms part of this Report.

HUMAN RESOURCES

Your Company treats its "human resources" as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF).

LISTING WITH STOCK EXCHANGES:

The Company confirms that it has paid the Annual Listing Fees for the year 2015-2016 to Bombay Stock Exchange where the Company's Shares are listed.

ACKNOWLEDGEMENTS

The Board places on record its appreciation for the continued patronage, support, co-operation extended to the Company by its shareholder, customers, bankers and all the Government and statutory agencies with whose help, cooperation and hard work the Company is able to achieve the results. Your directors would further like to record appreciation to the efforts of every employees for their valuable contribution to the Company.

By order of the Board of Directors For Kerala Ayurveda Limited

Ramesh Vangal Place: Bengaluru Chairman Date :29th May, 2015 DIN 00064018


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 22nd Annual Report on the business & operations ol the company together with the Audited accounts for the financial year ended 31 st March. 2014.

FINANCIAL RESULTS

The Annual results of the company tor the financial year ended 31 st March. 2014 as compared with the previous years are summarized below:

(Rs. In Lacs)

Standalone

PARTICULARS 2013-14 2012-13

Product Revenues 2231.05 1858.11

Service Revenues & Other Income 538.62 551.37

Gross Income 2769.67 2409.48

Less: VAT & Excise Duty 214.61 160.93

Not Income from Salos/Services 2555.05 2248.55

Profit before Interest, Depreciation & Tax (EBITDA) 285.72 260.60

Profit/Loss before extraordinary items 127.90 116.07

Extraordinary Items 20.93 19.70

Profit Before Tax 148.83 135.77

Not ProfiV(Loss) after Tax 102.82 90.40

Minority Interest in Profit — —

Net Consolidated ProflV(Loss) 102.82 90.40

Loss brought forward from previous year 1009.17) (1099.58)

Loss Carried to the Balance Sheet (906.36) (1009.17)

Consolidated

PARTICULARS 2013-14 2012-13

Product Revenues 2251.39 1878.15

Service Revenues & Other Income 1448.87 1407.01

Gross Income 3700.26 3285.16

Less: VAT & Excise Duty 214.62 160.93

Not Income from Salos/Services 3485.64 3124.23

Profit before Interest, Depreciation & Tax (EBITDA) 388.32 304.20

Profit/Loss before extraordinary items 153.74 (3.27)

Extraordinary Items 20.93 19.69

Profit Before Tax 174.66 16.43

Not ProfiV(Loss) after Tax 91.87 (49.37)

Minority Interest in Profit 17.47 11.38

Net Consolidated ProflV(Loss) 74.40 (60.75)

Loss brought forward from previous year (3366.30) (3305.55)

Loss Carried to the Balance Sheet (3291.90) (3366.30)

PERFORMANCE ANALYSIS

During the financial year under review, the operational results ended with a Profit before Extraordinary items at Rs..128 Lacs as against Rs. .116 Lacs in the previous year. The total revenue of the company stands at Rs.2555 Lacs as against Rs. 2249 Lacs in the previous financial year. The consolidated revenue including its subsidiaries for the year is 7 3486 Lacs against Rs. 3124 Lacs during previous year.

DIVIDEND

In view of the accumulated losses in the past, your Directors are not in a position to recommend any dividend for the current year.

BUSINESS REVIEW

During the financial year under review, distribution of Ayurveda Formulation has shown a growth of 25%. Your company was ablo to increase the market share in Kerala and made a big progress outside Kerala also.

PERFORMANCE OF SUBSIDIARIES Indian Subsidiary

During Ihe year under review, M/s. Ayurvedagram Heritage Wellness Centre Pvt. Ltd. has achieved a turnover of 7.564 Lacs against a turnover of 7. 443 Lacs in the previous financial year clocking a sound growth of 27.31%. The Net profit of the company, after providing for tax has Increased to Rs. 66 Lacs from 7.44 Lacs in the previous year.

Overseas Subsidiaries

The combined turnover of overseas subsidiaries was 7 454 Lacs as compared to Rs. 492 Lacs in the previous year. Kerala Ayurveda Academy is currently offering certified courses in the state of Washington and California and also offer a distant learning course across USA.

CORPORATE SOCIAL RESPONSIBILITY

Your company always had a deep sense of responsibility towards the community. Company conducted medical camps and free medical check ups at various places. Diabetic Awareness campaign was held on world Diabetic Awareness day to create awareness

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 134(5) of the Companies Act, 2013, the Directors do hereby confirm that:

a) In Ihe preparation of the Annual Accounts for the year ended 31" March 2014, the applicable accounting standards had been followed along with proper explanations and there were no material departures.

b) The Directors had 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 as on 31r March 2014 and of the profit of the company for the year ended 31st March 2014.

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013. for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) The Annual accounts have been prepared on a going concern basis.

DEPOSITS

In terms of Ihe provisions of Section 73 of the Companies Act, 2013, the company has not accepted any deposits from the public during the financial year under review and there are no outstanding fixed deposits from the pubic as on 31st March 2014.

HUMAN RESOURCE MANAGEMENT/1NDUSTRIAL RELATIONS

Employee relations in the company continued to be positive though out the year. We are building a global company positioned and poised to reach out for ever greater achievements Our culture speaks of inclusiveness, empowerment, innovation and a thrust on continuous improvement.

ENERGY CONSERVATION. RESEARCH & DEVELOPMENT. TECHNOLOGY ABSORPTION. FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescnbed under Section 134 of the Companies Act, 2013. read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are set out in the annexure to this report.

PARTICULARS OF EMPLOYEES

There are no employees coming under the purview of Sec 134 of the Companies Act 2013 read with the rules made there under.

CORPORATE GOVERNANCE

Your company has complied with corporate governance norms as stipulated by Listing Agreement entered Into with Stock Exchanges. A detailed report on Corporate Governance In line with requirements of Companies Act 2013 and clause 49 of the Listing Agreement is attached to this report. A certificate from statutory auditors confirming the compliance of Corporate Governance is also attached to this report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of operations, performance and future outlook of your company and Its businesses is

given in the Management Discussion and Analysis, which forms part of this report

DIRECTORS

Mr. Ramesh Vangal, Dr. K Rajagopalan, Mr. M C Mohan, Mr. Ronald George Pearce and Mr S Krishnamurthy, Directors of the company retire by rotation at ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared In accordance with the Accounting Standard AS-21 on consolidated financial statements read with Accounting Standard AS-23 on Accounting for Investments In Associates. These financial statements are based on the audited financial statements of the respective subsidiaries.

SUBSIDIARIES

Your company has seven subsidiaries including one step down subsidiary as on 31" March 2014 and the details are as under:

SL No Name Location % of holding

1 Ayurvodagram Herilago Wellness Centre Pvt. Ltd. Bangalore. India 74%

2 Ayu Natural Medicine Clinic. P.S. USA 100%

3 Ayurvedic Academy Inc. USA 100%

4 Ayu Inc. USA 100%

5 Nutraveda Pte Ltd. Singapore 100%

6 CMS Katra Holdings LLC USA 81.67%

7 CMS Katra Nursing LLC USA 100%*

* CMS Katra Holdings LLC holds 51% shareholding in CMS Katra Nursing LLC and Ayu Inc holds the balance 49% shareholding; hence it is a fully owned step down subsidiary of your company.

Summarized financial statement of all subsidiaries in accordance with said government approval, forms part of this annual report. Copy of annual accounts of the subsidiary companies and other related Information shall be made available to the members who seek such information, at any point of time. The annual accounts of subsidiary companies are kept at the registered office of the company and at the subsidiaries concerned, for Inspection of the members

AUDITORS

The term of Auditors, M/s. Maharaj Rajan & Mathew. Chartered Accountants. Kochi, expires at ensuing Annual General Meeting and they have expressed their inability to continue as Auditors of the company due to shortage of manpower. M/s. Blju George & Company. Chartered Accountants. Vellaringattu Towers. Thodupuzha-685584 has shown their willingness to be appointed as Statutory Auditors of the company. Company has received a letter, pursuant to Section 139 of the Companies Act. 2013, from M/s. Biju George & Company expressing their consent and eligibility for acting as Statutory Auditors of the Company. The Board recommends their appointment as Statutory Auditors for the ensuing Financial year.

ACKNOWLEDGMENTS

The Board of Directors place on record its gratitude to shareholders, customers, bankers and all Government and statutory agencies, which had extended unstinted support and co-operation to the company during the year. Your Directors would further like to record appreciation of the efforts of every employee for their valuable contribution to the company.

For and On behalf of the Board of Directors Kerala Ayurveda Ltd.

Place: Bangalore Ramesh Vangal Date : 24th May, 2014 Chairman




Mar 31, 2013

The Directors have pleasure in presenting the 21st Annual Report on the business and operations of the company together with the Audited accounts forthe financial year ended 31st March, 2013.

FINANCIAL RESULTS

The Annual results of the company for the financial year ended 31st March 2013 as compared with the previous years are summarized below:



(Rs. in Lacs)

standalone Consolidated

2012-13 2011-12 2012-13 2011-12

Gross Income 2409.48 2833.06 3285.16 3570.51

Less: VAT & Excise Duty 160.93 142.70 160.93 142.70

Net Income from Sales/ Services 2248.55 2690.36 3124.23 3427.81

Profit before Interest, Depreciation & Tax (EBITDA) 260.60 177.88 310.74 84.85

Profit/(Loss) before extraordinary items 116.07 13.77 (3.27) (190.35)

Extraordinary Items 19.69 - 19.69 -

Profit/(Loss) Before Tax 135.76 13.77 16.43 (190.35)

Net Profit/(Loss) after Tax 90.40 7.86 (49.37) (208.01)

Minority Interest in Profit - - 11.38 6.17

Net Consolidated Profit/(Loss)'' 90.40 141.20 (60.75) (214.19)

Loss brought forward from previous year (1099.58) (1107.44) (3305.55) (3091.36)

Loss Carried forward to the Balance Sheet (1009.17) (1099.58) (3366.30) (3305.55)



PERFORMANCE ANALYSIS

During the financial year under review, the operational results ended with a Profit before Extraordinary items at Rs. 116 Lacs as against Rs. 14 Lacs in the previous year, showing a marked improvement. The total revenue of the company stands at Rs. 2,249 Lacs as against Rs. 2,690 Lacs in the previous financial year. The consolidated revenues including its subsidiaries for the year stands at Rs. 3,124 Lacs against Rs. 3,428 Lacs during previous year.

DIVIDEND

In view of the accumulated losses in the past, your Directors are not in a position to recommend any dividend for the current year.

BUSINESS REVIEW

During the financial year under review, your company started a wellness resort by the side of river periyar at Aluva under the name "Kerala Ayurveda River Retreat" with a view to provide authentic ayurveda treatments in the natural and soothing environment of a river bank. Company also established a new Treatment center at Mangalore in order to improve the presence in Karnataka. During the year Aluva Hospital was awarded "Green Leaf" certification by the Kerala Tourism Department and also won award for "Innovative introductions in clinical practice" by AHMA (Ayurveda Hospital Managements Association).

Proprietary Ayurvedic formulations after being put through the rigors of modern scientific validation were shortlisted and patents have been filed to protect the significant intellectual property that we have built through our efforts and Clinical studies have been initiated with Banaras Hindu University on two promising compositions in the areas of Diabetes and Inflammation. We expect these studies to be successfully concluded during the current fiscal.

PERFORMANCE OF SUBSIDIARIES

Indian Subsidiary

During the year under review, M/s. AyurvedaGram Heritage Wellness Centre Pvt. Ltd. has achieved a turnover of Rs.443 Lacs against a turnover of Rs. 365 Lacs in the previous financial year clocking a growth of 21 %. The Net profit of the company, after providing for tax has increased to Rs. 44 Lacs from Rs. 24 Lacs in the previous year. Ayurvedagram has been awarded the "Dun & Bradstreet - Axis Bank Business Gaurav Awards 2012" as the best Micro Enterprise underthe Hospitality Sector.

Overseas Subsidiaries

The combined turnover of overseas subsidiaries was Rs. 492 Lacs as compared to Rs. 426 Lacs in the previous year. During the year a new Kerala Ayurveda Academy and Wellness Center was started at Fremont in California which is the most Pro-ayurveda state in USA. A state of art ayurveda teaching facility and treatment center has been established to propagate ayurveda in USA.

CORPORATE SOCIAL RESPONSIBILITY

Your company always have a deep sense of responsibility towards the community. Company conducted medical camps and free medical check ups at various places.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors do hereby confirm that:

a) In the preparation of the Annual Accounts for the year ended 31s" March 2013, the applicable accounting standards had been followed along with proper explanations and there were no material departures.

b) The Directors had 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 as on 31sl March 2013 and of the profit of the company for the year ended 31s'' March 2013.

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) The Annual accounts have been prepared on a going concern basis.

DEPOSITS

In terms of the provisions of Section 58A of the Companies Act, 1956, the company has not accepted any deposits from the public during the financial year under review and there are no outstanding fixed deposits from the pubic as on 31s''March 2013. HUMAN RESOURCE MANAGEMENT/INDUSTRIAL RELATIONS

Employee relations in the company continued to be positive though out the year. We are building a global company positioned and poised to reach out for ever greater achievements. Our culture speaks of inclusiveness, empowerment, innovation and a thrust on continuous improvement.

ENERGY CONSERVATION, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (1) (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are set out in the annexure to this report.

PARTICULARS OF EMPLOYEES

There are no employees coming under the purview of Sec 217(2A) of the Companies Act 1956 read with the rules made there under.

CORPORATE GOVERNANCE

Your company has complied with corporate governance norms as stipulated by Listing Agreement entered into with Stock Exchanges. A detailed report on Corporate Governance in line with requirements of clause 49 of the Listing Agreement and a certificate of statutory auditors confirming the compliance of Corporate Governance are attached to this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of operations, performance and future outlook of your company and its businesses is given in the Management Discussion and Analysis, which forms part of this report.

DIRECTORS

Mr. A T Jacob, Mr. S. Krishnamurthy and Ms. Katherin Zimpel Vangal, Directors of the company retire by rotation at ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with the Accounting Standard (AS-21) on consolidated financial statements read with Accounting Standard (AS-23) on Accounting for Investments in Associates. These financial statements are based on the audited financial statements of the respective subsidiaries.



SL No Name Location % of holding 1 Ayurvedagram Heritage Wellness Centre Pvt. Ltd. Bangalore, India 74%

2 Ayu Natural Medicine Clinic, P.S. USA 100%

3 Ayurvedic Academy Inc. USA 100%

4 Ayu Inc. USA 100%

5 Nutraveda Pte Ltd. Singapore 100%

6 CMS Katra Holdings LLC USA 81.67%

7 CMS Katra Nursing LLC USA 100%*

* CMS Katra Holdings LLC holds 51% shareholding in CMS Katra Nursing LLC and Ayu Inc holds the balance 49% shareholding; hence it is a fully owned step down subsidiary of your company.

The Annual Reports of the subsidiary companies are not annexed pursuant to the general exemption under sec. 212(8) of Companies Act, 1956, granted by the Central Government. However, summarized financial statement of all subsidiaries in accordance with said government approval, forms part of this annual report. Copy of annual accounts of the subsidiary companies and other related information shall be made available to the members who seek such information, at any point of time. The annual accounts of subsidiary companies are kept at the registered office of the company and at the subsidiaries concerned, for inspection of the members.

AUDITORS

The term of Auditors, M/s. Maharaj Rajan & Mathew, Chartered Accountants, Kochi, expires at ensuing Annual General Meeting and they are eligible for re-appointment. The Audit Committee has recommended their reappointment. The requisite certificate from Auditors, pursuant to Section 224(1 B) of the Companies Act, 1956 has been received. Your directors recommend their re-appointment for the ensuing financial year.

ACKNOWLEDGEMENTS

The Board of Directors place on record its gratitude to shareholders, customers, bankers and all Government and statutory agencies, which had extended unstinted support and co-operation to the company during the year. Your Directors would further like to record appreciation of the efforts of every employee for their valuable contribution to the company.



For and On behalf of the Board of Directors

Kerala Ayurveda Ltd.



Place : Bangalore Ramesh Vangal

Date : 29th May, 2013 Chairman


Mar 31, 2011

The Directors have pleasure in presenting the 19th Annual Report on the business and operations of the company together with the Audited accounts for the financial year ended 31th March, 2011.

FINANCIAL RESULTS

The Annual results of the company for the financial year ended 31st March 2011 as compared with the previous years are summarized below;

(Rs in Laks)

GROSS INCOME Standalone Consolidated

2010-11 2009-10 2010-11 2009-10

Gross Income 2068.49 2106.35 2705.66 3364.69

Loss: VAT & Excise Duty 96.73 81.06 96.73 81.05

Net Income from Sales/ Services 1971.76 2025.30 2609.13 3283.84

Other Operational Ionone 22.17 23.16 44.57 46.13

TOTAL Income 1983.93 2048.46 2653.70 3329.97

Profit before Interest, Depredation 4 Tax (EBITDA) 59.81 83.67 (121.02) 90.32

Other Income 1.40 1.07 1.40 1.07

Finance Charges 74.69 148.58 115.81 232.60

Depreciation & Amortisation 221.63 255.04 330.40 367.60

Profit/(Loss) before exceptional items (235.11 ) (31B.98) (565.83) (508.81)

Exceptional Items 435.16 103 33 435.16 103 33

Profit/ (Loss) Before Tax 200.05 (215.65) 111.37 (405.46)

Provision for Deferred Tax Asset 58.85 52.46 (130.67) 32 28

Provision for MAT 0 0 0.19 (3.61)

Not Profit(Loss) 141.20 (163 19) (193.93) (369 59)

Minority Interest In Profit 2.37 10.80

Net Consolidated Profit/(Loss) 141.20 (163.19) (196.30) (380.38)

Balance brought forward from previous year (1248.64) (1065.44) (2965.71) (2630.36)

For ex Fluctuations (29.34) 145.02

Appropriations NIL NIL NIL NIL

Balance Carried to The Balance Sheet (1107.44) (1248.63) (3091.36) (2865.71)

PERFORMANCE ANALYSIS

During the financial year under review, the total revenue of the company decreased marginally to Rs 1994 Lacs from Rs 2048 Lacs in the corresponding previous financial year. The total revenue including its subsidiaries on a consolidated basis for the year is Rs 2654 Lacs against Rs 3330 Lacs, and the drop is mainly on account of restructuring of operations of KAL US entities m order to slam the losses

The operational results for the financial year ended with a net profit of Rs. 141.20 Lacs as against a net loss of Rs.163.19 Lacs in the previous year, with a marked Improvement in EBITDA.

DIVIDEND

In view of the accumulated losses in the past, your Directors are not in a position to recommend any dividend for the current year.

BUSINESS REVIEW

your company entered into a Memorandum of Understanding with Tata Global Beverages Limited, with the intention of exploring the formation of a joint venture tor focusing on development of a range of Beverages and Food Products based on proven Ayurvedic recipes, actives and formulations for the Global market where there is worldwide recognition of the benefits of Ayurveda for good health and wellness.

Your company entered into a memorandum of Understanding with Banaras Hindu University (BHU), a reputed university. Under the proposed arrangement, faculty of Ayurveda, Institute of Medical Sciences, BHU will collaborate with KAL to undertake research and development in areas like geriatric care, cancer, anaemia, metabolic diseases, Including diabetes and epidemic prevention under a PPP model.

During the year. In order to channelize funds as required for the business, the company has disposed of certain idle and non-productive assets located at Poolani, Kerala and Thatly and also the rights of part of the software projects.

The above steps taken by the company are expected to Improve the growth of the company in future years.

your company has launched new products like Gtymln Drink, K M Lepam, Liposem Arlshtam and received manufacturing licenses for 14 new PRD Products from the Drug Control Authority, Modem packaging was adopted for a few of the products with an aim to Improve product visibility and retain medicine potency.

In order to enhace the research skills of Phd students, your company invited thesis paper from Phd students across India and evaluated the same with eminent panel of Ayurveda exports and awarded the Best Thesis award Gaveshak Ratna' to the student and Acharya Ratna" to the guide, along with cash prize of Rs. 2,00,000 and Rs. 50,000 respectively. Your company had actively participated In the 4th World Ayurveda Congress held at Bangalore as one of the sponsors and had a stall at the event to exhibit the range of products and services offered by your company which was wed received by the public. Papers were also presented during the congress by our research scholars.

PERFORMANCE OFSUBSIDIARIES

Indian Subsidiary

During the year under review, M/s. Ayurveda GrBm Heritage Wellness Centre Pvt. Ltd has achieved a turnover of Rs. 345 Lacs against a turnover of Rs 365 Lacs in the previous financial year. The Net profit of the company, after providing for tax has decreased to Rs,9.13 Lacs from 7.33.17 I In the previous year, mainly due to increased costs. Ayurvedagram has won the prestigious Frost & Sullivian award "Integrated Wellness Service Provider Company for the year2010 as a recognition for our commitment to wellness.

overseas Subsidiaries

The combined turnover of overseas subsidiaries was Rs 382.38 Lacs as compared to Rs 964.85 Lacs In the previous year Operations of the US Ayu subsidiaries namely Ayurvedic Academy Inc, Ayu Natural Medicine Clinic PS and Ayu inc. have stabilized after restructuring and has led to reduction in losses considerably Web presence of Kerala ayurveda academy in USA has tremendously grown due to Initiatives taken to build likeminded community on the web around Face book and Twitter. The company has Integrated Model e-tearing platform with our website And thereby Improved the reach and scalability of the academy

The nursing business under CMS Katra Nursing LLC continues to be Impacted due to visa retrogression and consequently nurse domestic staffing business remained temporarily suspended.

CORPORATE SOCIAL RESPONSIBILITY

"four company always had a deep sense of responsibility towards the community. Company conducted medical camps and free medical check ups at various places.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to section 217(2 AA) of the Companies Act, 1958. the Directors do hereby confirm that

a) In the preparation of the Annual Accounts for the year ended 31 * March 2011, the applicable accounting standards had been followed along with proper explanations and there were no malarial departures.

b) The Directors had 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 as on 31st March 2011 and of the profit or loss of the company for the year ended 31st March 2011.

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and tor preventing and defecting fraud and other irregularities.

d) The Annual accounts have been prepared on a going concern basis

DEPOSITS

In terms of the provisions of Sec.SSA, the company has not accepted any deposits from the public during the financial year under review and there are no outstanding fixed deposits from the pubic as on 31* March 2011.

HUMAN RESOURCE MANAGEMENT/INDUSTRIAL RELATIONS

KAL continued Its effort to strengthen the human resource system, realizing the fact that human resource is the Key facto* of future growth strategy. Company focuses to upgrade skills of human resources and boost their motivation levels so as to achieve organization excellence and to enhance their contributions to meet company's goals. We remain dedicated to maintain a workplace that respect and values people from diverse backgrounds and facilitates all employees to do their very best. During the year your company concluded 3 yea; long term wage settlement with its employees.

ENERGY CONSERVATION, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (1) (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988. are set out in the annexure to the report*

PARTICULARS OF EMPLOYEES

There am no employees coming under the purview of Sec 217(2A) of the Companies Act 1956 read with the rules made there under.

CORPORATE GOVERNANCE

Your company has complied with corporate governance norms as stipulated by Listing Agreement entered Into with Stock Exchanges. A detailed report on Corporate Governance In line with requirements of clause 49 of the Listing Agreement and a certificate of statutory auditors confirming the compliance of Corporate Governance are attached to this report*

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of operations, performance and future outlook of your company and Its businesses Is given m the Management Discussion and Analysis, which forms part of this report

DIRECTORS

Mr. A T Jacob, Mr. S Krishnamurthy and Mr. M C Mohan, Directors of the company retire by rotation at ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance will the Accounting Standard AS-21 on consolidated financial statements read with Accounting Standard AS 23 on Accounting tor Investments in Associates These financial statements are based on the audited financial statements of the respective subsidiaries.

SUBSIDIARIES Your company has seven subsidiaries including one step down subsidiary as on 31* March 2011 and the details of which are as under:

SL No Name Location % of holding

1 Ayurvedagram Heritage Wellness Central Pvt. Ltd. Bangalore, India 74%

2 Ayu Natural Med-dne Clinic,P.S USA 100%

3 Ayurvedic Academy Inc. USA 100%

4 Ayu Inc. USA 100%

5 Nutraveda Pte Ltd. Singapore 100%

6 CMS Katrn Holdings LLC USA 81.67%

7 CMS Katra Nursing LLC USA 51%*

* CMS Katra Holdings LLC holds 51 % shareholding in CMS Katra Nursing LLC, hence it is a step down subsidiary of your company.

The company through Its WOS. Ayu Inc has entered into an agreement will Jo Management LLC to acquire 48% stake in CMS Katra Nursing LLC and the same is expected to be completed in the current financial year The Annual Reports of the subsidiary companies are not annexed pursuant to the general exemption under sec. 212(8) of Companies Act, 1956, granted by the Central Government However, summarized financial statement of all subsidiaries In accordance with said government approval, forms pan of this annual report Copy of annual accounts of the subsidiary companies and other related Information shall be made available to the members who seek such Information, at any point of time. The annual accounts of subsidiary companies are kept at the registered office of the company and at the subsidiaries concerned, tor Inspection of the members.

AUDITORS

The term of Auditors, M/s. Maharaj Rajan & Mathew, Chartered Accountants, Kochi, expires at ensuing Annual General Meeting and they are edge for re-appointment The Audit Committee has recommended their reappointment. The requisite certificate from Auditor, pursuant to Section 224(1B) of the Companies Act 1956 has been received. Your directors recommend their re-appointment for the ensuing financial year.

ACKNOWLEDGEMENTS

The Board of Directors place on record its gratitude to shareholders, customers bankers and all governmental and statutory agencies, which had extended unstinted support and co-operation to the company during t he year your Directors would further like to record appreciation of the efforts of every employee for their valuable contribution to the company.

On behalf of the Board of Directors

Place: Bangalore

Data : 12/06/2011 Ramesh Vangai

Chairman


Mar 31, 2010

The Directors have pleasure in presenting the 18th Annual Report on the business and operations of the company together with the Audited accounts for the financial year ended March 31, 2010.

FINANCIAL RESULTS

The Annual results of the company for the financial year ended 31st March 2010 as compared with the previous years are summarized below:

(Rupees in Lacs)

Particulars Standalone Consolidated 2009-10 2008-09 2009-10 2008-09

Gross Income 2106.35 1,898.83 3364.89 4552.06

Less: VAT & Excise Duty 81.05 100.36 81.05 100.36

Net Income from Sales/Services 2025.30 1798.47 3283.84 4451.70

Other Operational Income 23.16 30.00 46.13 46.02

TOTAL Income 2048.46 1828.47 3329.97 4497.72

Profit before Interest, Depreciation & Tax (EBITDA) 83.57 (172.95) 90.32 (754.27)

Other Income 1.07 0.79 1.07 0.79

Finance Charges 148.58 210.69 232.60 356.37

Depreciation & Amortisation 255.04 261.69 367.60 374.87

Profit/(Loss) before exceptional items (318.98) (644.54) (508.81) (1484.72)

Exceptional Items 103.33 140.55 103.33 169.06

Profit/Loss Before Tax (215.65) (503.99) (405.48) (1315.66)

Provision for Deferred Tax Asset 52.46 115.07 32.28 111.38

Provision for FBT & MAT 0 (5.74) 3.61 (8.22)

Net Profit/(Loss) (163.19) (394.66) (369.58) (1212.50)

Minority Interest in Profit 10.80 1.64

Net Consolidated Profit/(Loss) (163.19) (394.66) (380.38) (1214.14)

Balance brought forward from previous year (1085.44) (690.78) (2630.35) (1266.36)

Forex Fluctuations 145.02 (149.85)

Appropriations NIL NIL NIL NIL

Balance Carried to the Balance Sheet (1248.64) (1085.44) (2865.71) (2630.35)

PERFORMANCE ANALYSS

During the financial year under review, the total revenue of the company increased to Rs. 2048 Lacs from Rs. 1828 Lacs in the corresponding previous financial year, registering a growth rate of 12%. The total revenue including its subsidiaries on a consolidated basis for the year is Rs. 3330 Lacs againstRs. 4498, and the drop is mainly on account of restructuring of operations of KAL US entities in order to stem the losses.

The operational results for the financial year ended with a net loss of Rs. 163.19 lacs as against a net loss of Rs. 394.66 lacs in the previous year, with a marked improvement in EBITDA. The results on standalone basis and consolidated basis have become EBITDA positive during the year. EBITDA on standalone basis registered an improvement of Rs. 257 lacs as compared to previous year, which in the current year stands at Rs. 84 lacs profit and on consolidated basis registered improvement of f 844.59 Lacs as compared to previous year and now stands at Rs. 90 lacs profit.

DIVIDEND

In the absence of profits for the period under review, your Directors are not in a position to recommend any dividend to the members of the company.

BUSINESS REVIEW

The financial year under review was a remarkable year for your company in terms of business development as it has opened new franchise wellness centers at Goa, Bangalore (R T Nagar) & Jammu and restructured its business model by creating partnership with Doctors in India and USA.

Your Company has also rationalized organization system to improve productivity and reduce the overheads and these efforts contributed significant reduction of 24% in overheads during the year.

The companys non-productive assets located at Poolani, Kerala and Puttaparthy were disposed off in order to channelise the funds required for the business and the term loans were fully repaid during the year and thus substantial savings in interest cost was achieved.

Your Company has invested behind establishing purity of the ingredient supply chain, which ensures standardization, product integrity and consistency. KAL has invested during the year aggressively on research, aimed at establishing scientific validation for proprietary Ayurvedic formulations and plan to continue the investments on research in FY 2010-11. The research consultancy income has improved from Rs. 122 lacs to Rs. 458 lacs, showing an increase of Rs. 336 lacs.

PERFORMANCE OF SUBSIDIARIES Indian Subsidiary

During the year under review, M/s. AyurvedaGram Heritage Wellness Centre Pvt. Ltd. has achieved a turnover of Rs. 366 Lacs against a turnover of Rs. 345 Lacs in the previous financial year. The Net profit of the company, after providing for tax has increased substantially to Rs. 46.27 Lacs from Rs. 6.30 Lacs in the previous year, mainly due to cost control measures, despite the global meltdown and travel advisory warnings issued by western countries including USA.

Overseas Subsidiaries

The combined turnover of overseas subsidiaries was Rs. 984.85 Lacs as compared to Rs. 2426.67 Lacs in the previous year, registering a downslide of 59% during the year. Operations of the US Ayu subsidiaries namely Ayurvedic Academy Inc, Ayu Natural Medicine Clinic PS and Ayu Inc, have stabilized after restructuring and has shown improvement by reducing the losses considerably. The nursing business under CMS Katra Nursing LLC was severely impacted due to visa retrogression and consequently nurse domestic staffing business was temporarily suspended since unviable.

CORPORATE SOCIAL RESPONSIBILITY

Your company always had a deep sense of responsibility towards the community. A summary of some of the programs conducted by the company during the year is given under:

- Conducted free Ayurveda Health Check-up Camps in Kerala at Eloor, Nedumbassery and Palarivattom.

- Free medicines supplied to Old Age Home and other charitable institutions in Kerala.

- Company in participation with Union of Residents Association of Aluva propagated the concept of AYURAROGYAM to general public at Aluva.

- Conducted free Medical campaigns at Aluva on Climate Disease Management and Swine Flu Awareness.

- Conducted diabetic camp at our Aluva Hospital and conducted medical camps in association with DYFI at Chendamangalam and with KCYM at Njarackal.

- Free Yoga Training sessions conducted at Nedumbassery and Kakkanad.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors do hereby confirm that:

a) In the preparation of the Annual Accounts for the year ended 31st March 2010, the applicable accounting standards had been followed along with proper explanations and there were no material departures.

b) The Directors had 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 as on 31st March 2010 and of the profit or loss of the company for the year ended 31st March 2010.

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities.

d) The Annual accounts have been prepared on a going concern basis.

DEPOSITS

In terms of the provisions of Sec.58A, the company has not accepted any deposits from the public during the financial year under review.

HUMAN RESOURCE MANAGEMENT/INDUSTRIAL RELATIONS

Your company had always been committed to maintain healthy, cordial and harmonious industrial relations at all levels. The work environment of the company is constantly being upgraded and training has been conducted for employees, focusing on individual growth. Labor relations continued to be cordial throughout the year and industrial relations were excellent and harmonious.

ENERGY CONSERVATION, RESEARCH & DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as prescribed under sub-section (1) (e) of Section 217 of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are set out in the annexure to this report.

PARTICULARS OF EMPLOYEES

The particulars of employees as stipulated under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, are set out in the annexure to this report.

CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Your company has complied with corporate governance norms as stipulated under Listing Agreement entered with Stock Exchanges. A detailed report on Corporate Governance in line with requirements of clause 49 of the Listing Agreement and also the Management Discussion and Analysis report are attached to this report. A certificate from statutory auditors confirming the compliance of governance is attached to corporate governance report.

DIRECTORS

Mr. Ronald George Pearce, Dr. K Rajagopalan and Ms. Katharin Zimpel Vangal, Directors of the company retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment.

Mr. Tarun N Sheth, Independent Director, vacated the office on 18/07/2010 due to his demise. He has contributed immensely for the growth of the company. The Board places on record its appreciation for the valuable services rendered by him and for the wholehearted support & advice given to the company during his tenure.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with the Accounting Standard AS-21 on consolidated financial statements read with Accounting Standard AS-23 Accounting for Investments in Associates. These financial statements are based on the audited financial statements of the respective subsidiaries.

SUBSIDIARIES

Your company has seven subsidiaries including one step down subsidiary as on 31s March 2010 and the details of which are as under:

SL No Name Location % of holding

1 Ayurvedagram Heritage Wellness Centre Pvt. Ltd. Bangalore, India 74%

2 Ayu Natural Medicine Clinic, PS USA 100%

3 Ayurvedic Academy Inc. USA 100%

4 Ayu Inc. USA 100%

5 Nutraveda Pte Ltd. Sngapore 100%

6 CMS Katra Holdings LLC USA 81.67%

7 CMS Katra Nursing LLC* USA 51%

* CMS Katra Holdings LLC holds 51% shareholding in CMS Katra Nursing LLC, hence it is a step down subsidiary of your company.

The Annual Reports of the subsidiary companies are not annexed pursuant to the exemption order under sec. 212(8) of Companies Act, 1956, granted by the Central Government. However, summarized financial statement of all subsidiaries in accordance with said Government approval, forms part of this annual report. Copy of annual accounts of the subsidiary companies and other related information shall be made available to the members who seek such information, at any point of time. The annual accounts of subsidiary companies are kept at the registered office of the company and at the subsidiaries concerned, for inspection of the members.

AUDITORS

The term of Auditors, M/s. Maharaj Rajan & Mathew, Chartered Accountants, Cochin, expires at the end of the ensuing Annual General Meeting and they are eligible for re-appointment. The audit committee has recommended their reappointment and annual audit fees. The requisite certificate from Auditors, pursuant to Section 224(1B) of the Companies Act, 1956 has been received.

ACKNOWLEDGEMENTS

The Board of Directors places on record its gratitude to shareholders, customers, bankers and all governmental and statutory agencies, which had extended unstinted support and co-operation to the company during the year. Your Directors would further like to record appreciation of the efforts of every employee for their valuable contribution to the company.

For and on behalf of the Board of Directors

Place: Bangalore

Date : 21/08/2010 Ramesh Vangal

Chairman



 
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