DIRECTORS' REPORT

To,

The Members,

HEXAGON NUTRITION PRIVATE LIMITED

Your Directors have pleasure in presenting before you the Annual Report on the operations of the Company together with the Audited Accounts for the financial year ended March 31, 2019.

1.            FINANCIAL RESULTS

The Financial Results of the Company for the year ended March 31, 2019 are summarized below:

                                                                                                            Amount in Rs. Lakhs

2.            OPERATIONS AND FUTURE OUTLOOK OF THE COMPANY

Hexagon Nutrition is a 26 years old company specialized in the formulation, research, production and supply of Micronutrient Premixes for fortification of variety of food products. Over the years, the company has also developed itself in complementing areas like Clinical Nutrition and Therapeutic Foods. Hexagon is not merely a premix provider but also a technical facilitator to the food industry when it comes to fortification. Our ability to support the food industry in the fortification process and also our competency to test the fortified products is what makes us a unique partner.

In our journey of 26 years, we have worked closely with the Flour, Dairy, Oil, Rice and Sugar Industry in more than 76 countries in Asia, Europe, USA, Africa and Latin America. The Clinical Nutrition products which are disease specific have earned recognition and appreciation in more than 25 countries. The company continues to focus on R&D for developing new and value added products, while continuously upgrading and expanding its manufacturing base to meet the growing demand. Hexagon continues to acquire and nurture the talent pool through its interventions initiated by the Human Resource Department.

During the year under review your company has achieved a turnover of Rs. 118.98 Lakhs on standalone basis as compared to Rs. 91.90 Lakhs in previous year, registering a growth of 29.46% on YOY basis. The turnover on consolidated basis is Rs. 235.80 Lakhs as compared to Rs. 211.17 Lakhs in previous financial year registering a growth of 11.66%.

On consolidated basis, the Company has achieved a growth in profit after tax (PAT) 436% which stands at Rs. 1,539.60 Lakhs as compared to Rs. 286.71 Lakhs. We are optimistic in continuing this growth momentum in the future.

Going forward we seek global partnerships and strategic collaborations with reputed organizations.

3.            DIVIDEND & TRANSFER TO RESERVESDividend on Preference Shares:

In terms of the provisions of the Articles of Association and CCPS issue, the Company is required to pay a Dividend on CCPS for every Financial Year of 0.0001% to CCPS Shareholders. Accordingly, the Board recommends 0.0001% Dividend on CCPS amounting to Rs. 122/- (Rupees One Hundred and Twenty Two only) to CCPS Shareholders for FY 18-19. The same shall be subject to shareholders’ approval at the 26th AGM. Dividend on Equity Shares:

The Board has recommended a Final Dividend of Rs. 0.10 per Equity Share of Rs.1/- each out of the profits of the company. Further, in terms of the Shareholders Agreement, the CCPS holders are entitled to a proportionate amount of equity dividend for the CCPS shares held by them. Accordingly, an additional dividend of Rs. 0.10/- per CCPS Share of Rs. 10/- each shall be payable to the CCPS holders, on declaration of dividend on equity shares.

The Dividend, if approved by the members at the 26th AGM shall be payable to the members holding shares as on the record date i.e. 31st July, 2019.

The total cash outflow towards the Dividend payment for the Company (including Dividend Distribution tax) shall be Rs.  147.62 Lakhs.

There is no transfer to the reserves undertaken by the Company during the current Financial Year.

Further, there is no unpaid Dividend requiring any transfer to Investor Education & Protection Fund (IEPF) as at 31st March 2019.

4.            SHARE CAPITAL STRUCTURE OF THE COMPANY:

The Authorized Share capital of the Company as on 31st March 2019 is Rs, 25,00,00,000 (Rupees Twenty Five Crores Only).

The Paid-up Capital of the Company as on 31st March 2019 is Rs. 23,23,24,524 (Rupees Twenty Three Crores Twenty Three Lakhs Twenty Four Thousand Five Hundred and Twenty Four only).

The Company has introduced the Employee Stock Option Scheme 2018 and issued 3,57,500 Equity Shares to eligible employees under the Scheme. The details as required under Section 62 r/w 134 in respect of ESOP are attached as Annexure I to this Report. There are no shares issued as Sweat Equity during the financial year.

5.           IMPORTANT EVENTS DURING THE YEAR UP TO THE DATE OF THIS REPORT:

1.      Incorporation of Hexagon Nutrition Healthcare Private Limited:

The Company has incorporated a wholly owned subsidiary company in the name of Hexagon Nutrition Healthcare Private Limited on 19th June, 2019. The main business of the company is marketing, branding, trading and dealing in all types of healthcare, food and related products of all kinds.

2.      Demerger of Healthcare Business:

The Board of Directors has approved to undertake demerger of the healthcare business of HNPL into Hexagon Nutrition Healthcare Private Limited and is seeking approval from Hon’ble NCLT, Mumbai for the same. The process for the same is currently underway.

3.      Incorporation of a Joint Venture in Hong Kong

The Company has initiated a process for incorporation of a Joint Venture Company with our existing Strategic Supplier, registered in Hong Kong. The Joint Venture has been proposed for expanding the international presence of the company in the SEA Region. Company will be able to reduce the Raw material cost with this joint venture which in result will improve the profit margin of the company.

6.            BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

During the year under review, the Board of Directors consisted of 7 (Seven) Directors. All Directors continued to hold their position on the Board of the Company.

The composition of the Board of Directors as on 31st March 2019 is as follows:

The changes in the composition of the Board of Directors, between the last AGM and till the date of this Report are as follows:

The Board places on record its appreciation for the services of Dr. Vijay Ramteke and Mr. Vinay Deshmukh during their tenure with the Company.

Further, the approval of the members is sought for the change in designation of Mr. Arun Kelkar to Chairman and of Mr. Vikram Kelkar to Managing Director at the 26th AGM. The Board would like to greatly appreciate the services, guidance and efforts of Mr. Arun Kelkar during his tenure as Chairman & Managing Director and seeks his guidance and direction in his position as the Chairman of the Company.

Further, the Board has approved the re-appointment of Mrs. Anuradha Kelkar and Mr. Subhash Kelkar as Whole-time Directors U/s 196(2) of the Companies Act, 2013 for a period of 5 (five) years with effect from 1st April, 2019.

The details of the remuneration paid and changes in shareholding of the Directors are mentioned in Form MGT-9 attached as an Annexure to this Report.

Ms. Surabhi Dubey, Company Secretary and Key Managerial Personnel, has resigned from her position with effect from 17th June 2019. The Board places on record its appreciation for the services of Ms. Surabhi Dubey during her tenure.

7.            DETAILS OF BOARD MEETINGS

During the year under review, (Six) 6 Board Meetings were held, details of which are summarized below:

Apart from the above, the Board also approved various resolutions by circulation during the year.

The Board of Directors meet at regular intervals as per the provisions of the Companies Act and not more than 120 days has lapsed between two consecutive Board Meetings of the Company. The Meetings have been conducted in accordance with the Secretarial Standards as issued by the Institute of Company Secretaries of India.

8.            COMMITTEES OF THE BOARDCORPORATE SOCIAL RESPONSIBILITY COMMITTEE:

As a part of corporate social responsibility, we at Hexagon Nutrition always focus to contribute towards sustainable development of the society and to create a better world. For the Financial Year 2018-19 there are no CSR Liabilities for the Company. However, in keeping up with our CSR Policy, our company has contributed towards CSR activities in various fields to repay the unspent amount pertaining to CSR liabilities of the previous years. Various camps and distribution of nutritional food and products was also undertaken for the needy people.

The Company was not required or mandated to undertake any CSR activities since it has not met with the provisions of Section 135(1) of the Companies Act, 2013 for more than three continuous financial years.

Further, on account of the resignation of Dr. Vijay Ramteke, the CSR Committee was reconstituted.

The composition of the CSR Committee as on 31st March 2019 is as follows:Mrs. Anuradha Kelkar – Chairperson Mr. Vikram Kelkar Dr. Nikhil Kelkar

The Annexure required to be attached in terms of Section 135(2) is attached as Annexure II to this Report.ESOP ALLOTMENT COMMITTEE:

The Board of Directors had constituted an ESOP Allotment Committee in terms of ESOP Scheme 2018 for issue and allotment of Equity Shares under the said Scheme. The constitution of the ESOP Allotment Committee is as follows:Mr. Arun Kelkar – Chairman Mrs. Anuradha Kelkar Dr. Nikhil Kelkar Mr. Vikram Kelkar

The Committee met once on 1st March 2018 to determine the list of all the eligible employees who had exercised their vested options in the 1st tranche of the scheme. The Committee meeting was attended by all the members.

9.            INVESTMENTS IN SUBSIDIARY AND ASSOCIATE COMPANIES:

During the period under review, the Company continues to have the following subsidiaries:

Statement under Sub – Section (3) of Section 129 of the Companies Act, 2013 read with rule 5 of Companies (Accounts) Rules, 2014 is annexed as Form AOC – 1 to the Financial Statements.

Further, the company currently is in the process of incorporation of a Joint Venture in Hong Kong.

10.         DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm 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 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; and

(e)                    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.

11.         PARTICULARS OF EMPLOYEES:

During the year under review, no employee of the Company was in receipt of remuneration in excess of limits as prescribed under sub-rule (2) of rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

12.         AUDITORS

(a) Statutory Auditors

The members had appointed M/s Bhuwania & Agrawal Associates, Chartered Accountants as the Statutory Auditors of the Company for a term of 5 years from FY 2014-15 till the conclusion of the AGM in 2019. It is now proposed to re-appoint M/s Bhuwania & Agrawal Associates, Chartered Accountants as the Statutory Auditors for a period of 5 years, from the conclusion of the 26th AGM till the conclusion of 31st AGM to be held in the year 2024 on such terms and remuneration as may be determined by the Board of Directors from time to time.

(b)  Cost Auditors

The Company has appointed M/s Mayuresh Shinde & Associates, Cost Accountants under Section 148 of the Companies Act, 2013 and Companies (Cost Record and Audit) Rules, 2014 for FY 2018-19 and FY 2019-20. The remuneration of Cost Auditors is required to be approved at the 26th AGM.

13.         COMMENTS ON AUDITORS’ REPORT AND REPLY OF THE MANAGEMENT

The observations made by the Statutory Auditors in their Report read with relevant notes given in the Notes to Accounts are self-explanatory and therefore, do not require any comments from your Directors pursuant to Section 134(3)(f) of the Companies Act, 2013.

There are no comments, remarks or observations in the report of the Cost Auditors.

14.         EXTRACT OF ANNUAL RETURN

An extract of Annual Return for the Financial Year ended March 31, 2019, is annexed as Annexure-III, in form MGT-9 to this report.

15.         RELATED PARTY TRANSACTIONS

The details of transactions entered into with the Related Parties referred to in sub-section (1) of section 188 are annexed as Annexure-IV (Form AOC-2) to this report.

16.         PUBLIC DEPOSITS

Your Company has neither invited nor accepted/renewed any "Deposit" from public within the meaning of the term "Deposits" under the Companies (Acceptance of Deposits) Rules, 2014 made under Chapter V read with Section 73 and 76 of the Companies Act, 2013 as amended from time to time.

17.         PARTICULARS REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

(A)         Conservation of energy-

The Company is undertaking all the necessary steps in energy conservation. The Company is also planning to utilize other sources of energy conservation in near future.

(B)         Technology absorption-

The Company is undertaking adequate steps in technology up gradation and to enhance the usage of advanced technology for its products and activities.

(C) Foreign exchange earnings and Outgo-

Foreign Exchange Inflows: Rs.  4,892.08 Lakhs

Foreign Exchange Outflows: Rs.  659.78 Lakhs

18.         RISK MANAGEMENT POLICY

The Company has a Risk Management Policy with an objective to formalize the process of identification of potential risk and adopt appropriate risk mitigation measures through a risk management structure. The Risk Policy is a step taken by the Company towards strengthening the existing internal controls and updating the same as may be required from time to time.

19.         COMPLIANCE OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION, REDRESSAL) ACT, 2011

During the year under review, Board of Directors has approved policy as per the said Act and an Internal Complaints Committee was re-constituted, with following members:

(i)                 Ms. Anuradha Kelkar (Presiding Officer)

(ii)               Ms. Pooja Shanbhag (Member)

(iii)             Ms. Surabhi Dubey (Member- till 17th June, 2019)

(iv)              Ms. Deepa Nair (Member)

(v)                Mr. Guman Mal Jain (Member)

(vi)              Dr. Manjula Gada (External Member)

Report on the committee meeting is attached as Annexure V to this report. There are no unresolved complaints pending at the closure of the Financial Year.

20.         INTERNAL FINANCIAL CONTROLS

The Board of Directors have reviewed the internal policies and procedures of the Company in respect to financial statements on a regular basis to ensure that there is an orderly and efficient conduct of business and prevention of detection of frauds and errors.

21.         PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the Financial Statements, forming part of the Annual Report.

22.         ACKNOWLEDGEMENT

The Board of Directors places on record its gratitude to the Board, Shareholders, Investors, Bankers and all other stakeholders for their support. The Board also places on record its sincere gratitude to employees and officers for their support and co-operation.

For and on behalf of the Board of Directors

Place: Mumbai

Date: 28th June, 2019

Arun Kelkar

Chairman

(DIN: 00171276)                  

Annexure I

Employee Stock Option Scheme 2018

Disclosures as per Rule 12 of companies (Share Capital and Debentures) Rules, 2014

Pursuant to the decision of the shareholders, at their meeting held on 22nd December 2017, the Company has introduced an ‘Employee Stock Option Scheme 2018’ (‘the Scheme’) to be administered by the “ESOP Core Committee” of the Board of Directors. Such number of options would be available for grant to the eligible employees of the Company and eligible employees of the Subsidiary Company (ies) under HNPL ESOP 2018, in one or more tranches exercisable into not exceeding more than 10,98,852 (Ten Lakhs, Ninety Eight Thousands, Eight Hundred and Fifty Two) Equity Shares in the Company of face value of INR 1/- each fully paid-up.

Options granted under ESOP 2018 would vest subject to a period of 2 (Two) years from the date of grant of such options. The Board or its Committee may change the vesting period, in terms of the provisions of the Scheme. The vesting shall be undertaken in 2 parts.

The Exercise Price shall be equal to Rs. 7/- (Rupees Seven) per option. Further, the employees will be eligible for 1 equity share against 1 option of the Company.

Annexure II

REPORT ON CSR ACTIVITIES/ INITIATIVES

[Pursuant to Section 135 of the Act & Rules made there under]

1.            A brief outline of the company’s CSR policy, including overview of the projects or programmes proposed to be undertaken and reference to the web-link to the CSR Policy and projects or programmes

Your Company recognizes the importance of good corporate governance and corporate social responsibility in promoting and strengthening the trust of its shareholders and other stakeholders. The CSR Policy is guided by the Company’s corporate vision and the aspiration to be the Trustee of Choice for Customers, Investors, Employees and Community.

Your Company supports programs and activities in the following areas.

Improving Health and well – being

Promotion of Education & Preventive healthcare

Eradicating Malnutrition Children

Any other activities, which may be permitted under Companies Act, 2013.

Web link: www.hexagonnutrition.com

2.            The composition of the CSR Committee as at 31st March 2019:

1)                  Mrs. Anuradha Kelkar Chairperson of CSR Committee

2)                  Mr. Vikram Kelkar                  Jt. Managing Director

3)                  Dr. Nikhil Kelkar                      Jt. Managing Director

3.            Net Profit of the company for last 3 financial year:

Considering that the Company has incurred losses in last three years therefore Section 135(1) of the Companies Act, 2013 is not applicable on company for three continuous financial years in 15-16, 16-17 and 17-18, the Company was not mandated to undertake any CSR spend in 2018-19.

4.            Details of CSR activities/projects undertaken during the year:

a)                  Total amount to be spent for the financial year-  N.A

b)                  Total amount spent during the year- Rs. 0.93 Lakhs

c)                  Amount un-spent and carry forward to next – NIL

d)                  Manner in which the amount spent during financial year is detailed below:

Amount in Lakhs

5.            In case the company has failed to spend the 2% of the average net profit of the last 3 financial years or any part thereof, reasons for not spending the amount in its Board Report:

Not Applicable

6.            CSR Committee Responsibility Statement:

The CSR Committee confirms that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and CSR Policy of the Company.

                                    Anuradha  Kelkar                                  Arun Kelkar

                      Chairman of CSR Committee                  Chairman of the Board

Place: Mumbai

Date: 28th June, 2019

ANNEXURE-III

Form No. MGT - 9

Extract of Annual Return as on the financial year ended on 31st March 2019

[Pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014]

I.             REGISTRATION AND OTHER DETAILS:

i) CIN: U24110MH1993PTC072189

ii) Registration Date: 27/05/1993

iii) Name of the Company: Hexagon Nutrition Private Limited

iv) Category / Sub-Category of the Company: Company having Share Capital

v) Address of the Registered Office and contact details: 404 Global Chambers, Adarsh Nagar, Link Road, Andheri (West), Mumbai - 400053

vi)  Whether listed company: No

vii) Name, Address and Contact details of Registrar and Transfer Agent, if any: Not Applicable

II.           PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10 % or more of the total turnover of the company shall be stated:-

III.          PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

IV.          SHARE HOLDING PATTERN

i)                    (Equity Share Capital Breakup as percentage of Total Equity) -Category-wise Share Holding

ii)           (Preference Share Capital Breakup as percentage of Total Preference) -Category-wise Share Holding

(iii)Shareholding of Promoters

(iv)Change in Promoters’ Shareholding (please specify, if there is no change)

(v) Shareholding Pattern of top ten Shareholders: (other than Directors, Promoters and Holders of GDRs and ADRs): NIL

(vi)Shareholding of Directors and Key Managerial Personnel:

*Ms. Surabhi Dubey has ceased to be a KMP as on the date of this Report.

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/accrued but not due for payment

VI.      REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors and/or Manager:

Note:*No Remuneration is paid to Mr. Vikram Kelkar, Mr. Subhash Kelkar, Mr. Aditya Kelkar and Mr. Mayur Sirdesai from the Company.

B.                 Remuneration to other directors:

** Mr. Vinay Deshmukh and Dr. Vijay Ramteke ceased to be Directors as at 31st March 2019.

C.           Remuneration to Key Managerial Personnel Other Than MD/Manager/WTD

(Amounts in Rs.)

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

                            For and on behalf of the Board of Directors

                        Hexagon Nutrition Private Limited

                                                                                                          Arun Kelkar

                                                                                             Chairman

                                                                                                                  (DIN: 00171276)

Place: Mumbai

Date: 28th June, 2019

ANNEXURE-IV

RELATED PARTY TRANSACTIONS

Form AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arm’s length basis

There were no contracts or arrangements or transactions entered into during the year ended 31st March 2019which were not at Arm Length basis.

2. Details of material contracts or arrangement or transactions at arm’s length basis

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arm’s length transactions under third proviso thereto.

                                                                                                          Arun Kelkar

                                                                                                          Chairman

                                                                                                            (DIN: 00171276)

Place: Mumbai

Date: 28th June, 2019

Annexure V

Report of the Committee in respect of complaints received during the year under  the prevention of Sexual Harassment at the workplace Act 2013 and rules framed thereunder as per section 21 of the Act

Against Sexual harassment carried out: NOT APPLICABLE

                                                                                                                                    Arun Kelkar

                                                                                                                    Chairman           

                                                                                                 (DIN: 00171276)

Place: Mumbai

Date: 28th June, 2019

1.            FINANCIAL RESULTS   The Financial Results of the Company for the year ended March 31, 2019 are summarized below:                                                                                                               Amount in Rs. Lakhs Particulars Standalone Financial Consolidated Financial For the Year Ended 31.03.2019 For the year Ended 31.03.2018 For the year Ended 31.03.2019 For the year Ended 31.03.2018 Total Income 12,162.16 9,336.80 23,618.95 21,282.01 Total Expenses (including exceptional items) 11,305.08 10,212.35 21,652.95 20,926.92 Profit/ Loss before Tax 857.08 (875.55) 1,966.00 355.09 Less: Tax expenses Current Tax Deferred Tax (Asset) MAT Credit Entitlement Tax for earlier years   176.00 184.61 (136.61) 0.00   0.00 (197.21) 0.00 0.75   474.16 143.49 (196.38) 5.13   377.00 (249.81) (57.17) (1.63) Profit after Tax 633.08 (679.09) 1,539.60 286.71    

(A)         Conservation of energy-   The Company is undertaking all the necessary steps in energy conservation. The Company is also planning to utilize other sources of energy conservation in near future.      

(A)         Technology absorption-   The Company is undertaking adequate steps in technology up gradation and to enhance the usage of advanced technology for its products and activities.    

Foreign exchange earnings and Outgo-   Foreign Exchange Inflows: Rs.  4,892.08 Lakhs   Foreign Exchange Outflows: Rs.  659.78 Lakhs   

  1.            DIRECTORS' RESPONSIBILITY STATEMENT   Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm 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 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; and   (e)                    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.