Directors' Report

Your Directors are pleased to present the Thirty First Annual Report and the Audited Financial Statements for the financial year ended on 31 March 2018.

FINANCIAL RESULTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements for the Financial Year ended on 31 March 2018 are the Companys' first Ind AS compliant annual financial statements with comparative figures for the year ended on 31 March 2017 also under Ind AS. The transition date of Ind AS is 1 April 2016.

The disclosure and effects of first time adoption of Ind AS are provided in the Notes of the Standalone Financial Statements and Notes of the Consolidated Financial Statements.

The standalone financial performance of the Company, for the financial year ended on 31 March 2018 is summarised below:

Figures for Financial Year 2016-17 have been restated as per Ind AS and therefore may not be comparable with financials for Financial Year 2016-17 approved by the Directors and disclosed in the Financial Statements of previous year.

RESULTS OF OPERATIONS

Sales

Your Company posted a turnover of Rs. 1,352.53 million in the financial year ended on 31 March 2018, as compared to Rs. 1,255.79 million in the previous year.

Profitability

Your Companys' profit before tax for the year ended 31 March 2018 was recorded at Rs. 437.07 million, as compared to Rs. 330.87 million in the previous year.

Earnings Per Share

EPS was at Rs. 35.92 as on 31 March 2018 as against Rs. 29.32 as on 31 March 2017.

Transfer to Reserves

Rs. 50 million is proposed to be transferred to the General Rs Reserve and Rs. 798.95 million is proposed to be retained in the surplus.

Net Worth

The Companys' net worth as on 31 March 2018 was at Rs. 1,460.78 million as compared to Rs. 1,220.92 million as on 31 March 2017.

DIVIDEND

During the year, your Directors declared and paid interim dividend of Rs. 4.00 per equity share for the financial year 2017-18. The resolution to pay interim dividend was passed in the meeting held on 9 November 2017. Further, your Directors have recommended a final dividend payment of Rs. 6.00 per equity share for the financial year 2017-18, making a total of Rs. 10.00 per equity share for the financial year as compared to Rs. 5.30 per equity share for the last year. This final dividend is subject to approval by the shareholders at the ensuing AGM. The total pay-out of dividend is 27.84% of the stand-alone profit, and is in line with the dividend policy adopted by the Company.

The total dividend appropriation (excluding dividend tax) for the current year is Rs. 53,593,249.50 as against Rs. 34,878,146.50 in the earlier year.

During the year, the unclaimed dividend pertaining to the dividend for the year ended 31 March 2010 was transferred to Investors Education and Protection Fund.

SHARE CAPITAL

The paid-up equity share capital as on 31 March 2018 stood at Rs. 85.07 million.

REVIEW OF OPERATIONS

The financial year saw an increase in sales by 8% and an increase in bottom line by 23%.

The growth in sales was less than forecasted while we achieved the targeted growth in the bottom line.

We added the vertical of Diagnostics to the already existing verticals of Poultry Vaccines, Poultry Health Products, Large Animal Vaccines and Large Animal Health Products.

The poultry vaccine division witnessed a growth of 3.57%, an increase in sales to Rs. 1,082.57 million from Rs. 1,045.22 million in the previous year. The lesser than forecasted growth was mainly due to capacity constraints. The new created capacity is now functional to address the normal demand for poultry vaccines. The poultry health products division witnessed a

growth of 57.57%, an increase in sales to Rs. 57.98 million as compared to sales of Rs. 36.80 million in the previous year. Over all poultry divisions combined grew at 5.41%

The large animal vaccine division witnessed a growth of 12.09%, an increase in sales to Rs. 77.41 million as against Rs. 69.06 million in the previous year. Tender business which was expected in the last quarter, did not materialise. These orders would now come up in the first two quarters of the financial year, thus would make up for the lesser sales. The large animal health products division saw a growth of 20.73%, an increase in sales to Rs. 101.17 million from Rs. 83.80 million. Over all large animal divisions combined grew at 16.83%

Exports sales were far below forecasts. Product registrations, which were expected in various countries did not come through. Besides, a lot of resources had to be used up in rationalising the distribution network. FAO international tenders for PPR were far below their projections. Exports therefore dipped by 11.99% to Rs. 126.99 million from Rs. 144.31 million in the previous year.

While no sales was reported in the diagnostics division, we got the licenses for 3 diagnostics kits in the month of March. Sales are expected to start from the second quarter of this financial year.

While over-all sales were below forecasts, the trend in this financial year surely indicates a good growth in the top line as well as a further improvement in the bottom line.

Our CARE credit rating was reaffirmed as:

• Long-term rating 'A- ("A" Minus)'

• Short-term rating 'A2'

We continue to hold the following certifications:

1. WHO-GMP

2. GLP (Good Laboratory Practices)

3. ISO 9001:2008

4. IS014001:2004

5. OHSAS 180001:2007

6. DSIR approved R&D Centre

CONSOLIDATED FINANCIAL STATEMENTS

The Groups' consolidated total income from operations is  Rs. 1,389.59 million and total comprehensive income attributable  to owners' equity after non-controlling interest is Rs. 229.61 million for the financial year 2017-18 as compared to the  Groups' consolidated total income from operations of  Rs. 1,258.23 million and total comprehensive income attributable to owners' equity after non-controlling interest of Rs. 225.52  million for the previous financial year 2016-17. Consolidated  financial results include the financial results of following entities:

1. Hester Biosciences Nepal Private Limited - Foreign Subsidiary

2. Texas Lifesciences Private Limited - Subsidiary

3. Hester Biosciences Africa Limited - Foreign Wholly-owned Subsidiary

In accordance with the Indian Accounting Standard (Ind AS)-110 Consolidated Financial Statements and as provided under the provisions of the Companies Act, 2013 (hereinafter referred to as "Act") read with Schedule III to the Act and Rules made thereunder and the SEBI ( Listing Obligations and Disclosure Requirements) Regulations, 2015, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, incomes, profits and other details of the Company, its subsidiary Companies after elimination of minority interest, as a single entity.

SUBSIDIARY, JOINT-VENTURE & ASSOCIATE COMPANIES

As on 31 March 2018, your Company has one wholly-owned subsidiary Company namely, Hester Biosciences Africa Limited and two subsidiary Companies namely, Hester Biosciences Nepal Private Limited and Texas Lifesciences Private Limited.

Further, there has been no material change in the nature of business of the subsidiary.

During the year, Hester Biosciences Limited acquired and invested about 54.80% in the capital of Texas Laboratories, a firm having a business place at Mehsana district of Gujarat. In June 2017, Texas Laboratories converted into private limited company under the Companies Act, 2013 namely, Texas Lifesciences Private Limited. Further, Hester Biosciences Limited incorporated 100% wholly-owned subsidiary Hester Biosciences Africa Limited in Tanzania.

The audited financial accounts of the Subsidiary Companies will be available for inspection during business hours at our registered office. Further, the financial highlights of Subsidiaries are part of this Annual Report as Annexure-2 as prescribed in Form AOC-1.

As provided under section 129(3) of the Companies Act, 2013 and Rules made thereunder a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries as approved by the Board may be accessed on the Companys' website at the link: https://www.hester.in/s/Policy-for-Determining-Material-Subsidiaries-gcgn.pdf

The performances of the Subsidiary Companies as under:

Hester Biosciences Nepal Private Limited (HBNPL)

HBNPL is a subsidiary of Hester Biosciences Limited. Hester India holds 65% stake in HBNPL, hence becoming a subsidiary of Hester Biosciences Limited. HBNPL is in the business of manufacturing veterinary vaccines in Nepal.

Texas Lifesciences Private Limited (Texas Lifesciences)

During the year, Hester Biosciences Limited acquired and invested in capital of Texas Laboratories, a firm having a business place at Mehsana district of Gujarat. In June 2017, Texas Laboratories converted into private limited company under the Companies Act, 2013 namely, Texas Lifesciences Private Limited. Hester India holds 54.80% stake in Texas Lifesciences, hence becoming a subsidiary of Hester Biosciences Limited. Texas Lifesciences is in the business of manufacturing and supplying pharma formulations, tablets, capsules, powder, and oral liquid for human and veterinary markets.

Hester Biosciences Africa Limited (HBAL)

During the year, Hester Biosciences Limited incorporated a 100% wholly-owned subsidiary in the name of Hester Biosciences Africa Limited (HBAL) in Tanzania. HBAL will be in the business of manufacturing veterinary vaccines and animal health product in Tanzania.

The board has approved the setting up of an animal vaccine manufacturing unit in Tanzania.

Hester sees a big potential in Africa for animal vaccines. More than 80% of the vaccines required in Africa are imported. Besides the common diseases, there are Africa-specific diseases, which currently remain unaddressed, thereby causing economical losses to poultry and livestock farmers.

The objective of the project is to bridge the quantitative and qualitative gap between demand and supply of animal vaccines among small holder farmers as well as amongst the commercial farmers in the African continent. The project would mainly manufacture vaccines against Africa-specific diseases, besides having the capability as well as the capacity to manufacture a bigger range of vaccines against other commonly occurring animal diseases.

*Other Cost include preliminary & preoperative expenses, Technology adaption, Market survey and product Registration Costs

Source of Finance (In USD):

** Total Sanctioned Secured loan is USD 12,000,000. Disbursement of both the loan and the grant are pending the execution of definitive loan agreements and the Companys' satisfaction of relevant closing conditions.

In coming years, Africa is poised to become one of the major markets for animal vaccines. Tanzania, having the third largest herd of domestic livestock, will be the biggest market for animal vaccines in Africa.

Hester is also in the process of creating a strong distribution network in Africa. This network will service the backyard farmers, which constitute a big percentage of the animal population in Africa, as well as the organised poultry & livestock farmers.

BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL

Appointment and Resignation of Directors

During the year, there is no appointment and resignation was done under review.

None of the Directors of the Company is disqualified for being appointed as Director as specified in Section 164 (2) of the Companies Act, 2013.

Retirement by Rotations

In accordance with the provisions of section 152 (6) of the Act and in terms of the Articles of Association of the Company, Mr. Ravin Gandhi, Director (DIN - 00438361) will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

Profile of Directors Seeking Appointment / Re-appointment

As required under Regulation 36 (3) of the SEBI (LODR) Regulations, 2015, particulars of Directors seeking appointment / re-appointment at the ensuing Annual General Meeting are annexed to the notice convening 31st Annual General Meeting.

Declaration by Independent Directors

The Company has received necessary declaration from each Independent Director under Section 149 (7) of the Companies Act, 2013, that they meet the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013. The terms and conditions of the Independent Directors are incorporated on the website of the Company as per Regulation 46(2) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 at: https://www.hester.in/s/Terms-and-Conditions-lndependent-Director.pdf

Training of Independent Directors

To familiarise the new inductees with the strategy, operations and functions of our Company, the executive directors / senior managerial personnel make presentations to the inductees about the Companys' strategy, operations, product and service offerings, organisation structure, finance, human resources, technology, quality and facilities. Further, the Company has devised a Familiarisation Program for Independent Directors as per Regulation 46 (2) of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 and the same has been placed on the website of the Company at: https://www.hester.in/s/Familairisation-Programs-Details-of-lndependent-Director-2017-18.pdf

Key Managerial Personnel

Mr. Vinod Mali appointed as Company Secretary and Compliance Officer in place of Ms. Amala Parikh, who has resigned from the post of Company Secretary of the Company with effect from 14 May 2018. Mr. Rajiv Gandhi, CEO & Managing Director, Mr. Jigar Shah, Chief Financial Officer and Mr. Vinod Mali, Company Secretary of the Company are the Key Managerial Personnel as per the provisions of the Companies Act, 2013.

Evaluation of Performance of the Board, its Committees and Individual Directors

During the year, the evaluation of the annual performance of individual directors including the Chairman of the Company and Independent Directors, Board and Committees of the Board was carried out under the provisions of the Act and relevant Rules and the Corporate Governance requirements as prescribed under Regulation 17 of Listing Regulations, 2015 and the circular issued by SEBI dated 5 January 2017 with respect to Guidance Note on Board Evaluation. The Nomination and Remuneration Committee had approved the indicative criteria for the evaluation based on the SEBI Guidance Note on Board Evaluation.

The evaluation for the performance of the Board as a whole and of the Committees were conducted by questionnaires.

In a separate meeting of Independent Directors held on 23 January 2018, performance of Non-independent Directors and performance of the Board as a whole was evaluated. Further, they also evaluated the performance of the Chairman of the Company, taking into account the views of the Executive Directors and Non-Executive Directors.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of various criteria such as structure and diversity of the Board, experience of Directors, strategy and performance evaluation, secretarial support, evaluation of risk, evaluation of performance of the management and feedback, independence of the management from the Board and other indicators. The Nomination and Remuneration Committee reviewed the performance of the individual Directors on the basis of the criteria such as knowledge and competency, fulfillment of functions, availability and attendance, initiative integrity contribution and commitment, independence, independent views and judgment among other components.

Nomination and Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy on selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report, which is a part of this Annual Report.

Board of Director Meetings

The Board consists of eight members as on 31 March 2018, four of whom are Promoters and Non-independent Directors and the remaining four are Independent Directors.

Regular meetings of the Board are held at least once in a quarter, inter-alia, to review the quarterly, half yearly and annual financial results of the Company. Additional Board meetings are convened to discuss and decide on various business policies, strategies and other businesses.

During the year under review, the Board of Directors of the Company met four times: 8 May 2017, 28 July 2017, 9 November 2017 and 23 January 2018.

Committees of Board of Directors

Your Company has several Committees which have been established as part of best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes.

The Company has following Committees of the Board:

• Audit Committee

• Nomination and Remuneration Committee

• Stakeholders' Grievances and Relationship Committee

• Corporate Social Responsibility Committee

• Management Committee

• Share Transfer Committee

A detailed note on the committees with respect to composition, meetings, powers, and terms of reference is provided under the Corporate Governance Report section in this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE ("CSR")

The CSR Committee is responsible for indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the Corporate Social Responsibility Policy and recommending the amount to be spent on CSR activities. The details of membership of the Committee & the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The contents of the CSR Policy of the Company as approved by the Board on the recommendation of the CSR Committee is available on the website of the Company and can be accessed through the web link: https://www.hester.in/s/Corporate-Social-Responsibility-Policy-6f83.pdf

Corporate Social Responsibility (CSR) Committee and Statutory Disclosures with respect to CSR Committee and an Annual Report on CSR Activities form part of this Directors' Report as Annexure-1.

PUBLIC DEPOSITS

During the period under review, the Company has not accepted deposits from shareholders and public falling within the ambit of Section 73 of the Companies Act, 2013 and rules made thereunder.

FINANCE

The working capital requirement and all capital expenditures were funded through internal accruals. During the year, the Company has raised the finance through Working Capital Demand Loan (unsecured) facility from Yes Bank Limited.

INSURANCE

Assets of your Company are adequately insured against various perils.

VIGIL MECHANISM

The Company has established a vigil mechanism and framed a Whistle Blower Policy for Directors and employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Companys' Code of Conduct or Ethics Policy. The functioning of vigil mechanism is reviewed by the Audit Committee from time to time. No whistle blower has been denied access to the Audit Committee of the Board. The Whistle Blower Policy of the Company is available on the Companys' website.

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

Your Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company. Its continuous endeavor of the Management of the Company to create and provide an environment to all its employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder.

During the year, under review there were no incidences of sexual harassment reported and received, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

CORPORATE GOVERNANCE

The Company has complied with the Corporate Governance requirements under the Companies Act, 2013 and Regulations 17 to 27 and 46 of the SEBI (LODR) Regulations, 2015. A separate section on detailed report on Corporate Governance practice followed by the Company under SEBI (LODR) Regulations, 2015 along with a certificate from Practicing Company Secretary, confirming the compliance forms a part of this report. The Board of Directors supports the basic principles of corporate governance and lays strong emphasis on transparency, accountability and integrity.

SECRETARIAL STANDARDS

Secretarial Standards for the Board of Directors and General Meetings (SS-1 & SS-2) are applicable to the Company. The Company has complied with the provisions of both Secretarial Standards.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Your attention is drawn to the perception and business outlook of the management for your company for the current year and for the industry in which it operates including its position and perceived trends in near future. The Management Discussion and Analysis Report, as required under Regulations 34 of the SEBI (LODR) Regulations, 2015 is attached and forms part of this Directors' Report.

AUDITORS

Statutory Auditor and Their Report

Apaji Amin & Co. LLP, Chartered Accountants, Ahmedabad (Firm Registration No. 100513W/W100062), was appointed as a statutory auditor of your Company, and will hold Office until the conclusion of the 32nd AGM to be held in the year 2019. Apaji Amin & Co. LLP has submitted their resignation and shown their unwillingness to ratify their appointment due to their pre-occupation in other assignments.

The Board of Directors of the Company has filled this casual vacancy by recommending Shah Karia & Associates, Chartered Accountants, Ahmedabad, as statutory auditor of the Company in their Board meeting held on 14 May 2018, subject to approval of the members in the ensuing Annual General Meeting. Shah Karia & Associates (Firm Registration No. 131546W), Chartered Accountants, Ahmedabad, have expressed their willingness to be appointed as the statutory auditor of the Company. The Audit Committee has considered the qualifications and experiences of the proposed statutory auditor and has recommended their appointment. The Board of Directors has also considered and recommends appointment of Shah Karia & Associates, Chartered Accountants, as statutory auditor in place of the Apaji Amain & Co. LLP subject to approval of shareholder of the Company in ensuing Annual General Meeting of the Company. Written consent of the proposed auditor together with a certificate that the appointment, if made, shall be in accordance with the conditions specified in Rule 4 of the Companies (Audit and Auditors) Rules, 2014 has been received.

The Board has duly reviewed the Statutory Auditors' Report for the year ended on 31 March 2018 and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Companies Act, 2013.

Internal Auditor and Their Report

Naresh J. Patel & Co., Chartered Accountants, Ahmedabad, has been the internal auditor of the Company for the FY 2017-18. The Internal Auditor is appointed by the Board of Directors of the Company on a yearly basis, based on the recommendation of the Audit Committee. The Internal Auditor reports its findings on the internal audit of the Company to the Audit Committee on a quarterly basis. The scope of internal audit is approved by the Audit Committee.

The Board has appointed Naresh J. Patel & Co., Chartered Accountants, Ahmedabad for the FY 2018-19 as an Internal Auditor of the Company in the Board meeting held on 14 May 2018, after obtaining its willingness and eligibility letter for appointment as Internal Auditor of the Company.

Cost Auditor and Their Report

Pursuant to provisions of Section 148 read with Companies (Audit & Auditors) Rules, 2014 and other applicable provisions, if any, of the Companies Act, 2013, the Board of Directors had, on recommendation of the Audit Committee, re-appointed Kiran J. Mehta & Co., Cost Accountants, Ahmedabad, as the Cost Auditor of the Company for the financial year 2017-18, on the remuneration terms as approved by the members at the last Annual General Meeting held on 28 July 2017.

The Cost Audit report for the financial year 2016-17 was filed within the due date. The due date for submission of the Cost Audit Report for the year 2017-18 is within 180 days from 31 March 2018.

The Board has appointed Kiran J. Mehta & Co., Cost Accountants, Ahmedabad for the FY 2018-19 as a Cost Auditor of the Company in the Board meeting held on 14 May 2018, after obtaining its willingness and eligibility letter for appointment as Cost Auditor of the Company. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditor is required to be placed before the Members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Kiran J. Mehta & Co. is included in the Notice convening 31st Annual General Meeting of the Company.

Secretarial Auditor and Their Report

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed Mr. Tapan Shah, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the FY 2017-18. The Secretarial Audit Report for the FY 2017-18 is annexed to this Directors' Report as Annexure-6. The Board of Directors has duly reviewed the Secretarial Auditors' Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation/clarification by the Board of Directors as provided under section 134 of the Act.

The Board of Directors has appointed Mr. Tapan Shah, Practicing Company Secretary to undertake the Secretarial Audit of the Company for the FY 2018-19 in the Board Meeting held on 14 May 2018.

PARTICULARS OF LOANS, GUARANTEES & INVESTMENTS

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

EXTRACT OF ANNUAL RETURN

Pursuant to Sub-section 3(a) of Section 134 and Sub-section (3) of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014, the extract of the Annual Return as at 31 March 2018 in Form MGT-9 forms part of this Annual Report as Annexure-3.

RELATED PARTY TRANSACTIONS

The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link: https://www.hester.in/s/ Related-Party-Transaction-Policy-jsdr.pdf

All contracts/arrangements/transactions entered by the Company during the previous financial year with the related parties were in the ordinary course of business and on arms' length basis. There were no materially significant related party transactions entered by the Company with its Promoters,

Directors, Key Managerial Personnels or other persons which may have potential conflict with the interest of the Company.

All Related Party transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval for normal business transactions is also obtained from the Audit Committee for the related party transactions which are of repetitive nature and accordingly, the required disclosures are made to the Committee on a quarterly basis in terms of the approval of the Committee.

The disclosure of Related Party Transactions as required under Section 134(3)(h) of the Act in Form AOC - 2 is not applicable for the current year.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014 forms part of this directors' report as Annexure-4.

PARTICULAR OF EMPLOYEES

The information required under section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in this Annual Report as Annexure-5.

MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company which has occurred between the end of financial year and the date of Directors' Report.

RISK MANAGEMENT POLICY & FRAMEWORK

Risk management is embedded in your Companys' operating framework. Your Company believes that managing risks helps in maximising returns. The Companys' approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee.

INTERNAL FINANCIAL CONTROL SYSTEMS & ITS ADEQUACY

The Company has its internal audit function which endeavours to make meaningful contributions to the organisations' overall governance, risk management and internal controls. The function reviews and ensures sustained effectiveness of Internal Financial Control by adopting a systematic approach to its work.

The Company has designed and implemented a process driven framework for Internal Financial Controls (IFC) within the meaning of the explanation to section 134 (5) (e) of the Act. For the year ended on 31 March 2018, the Board having opinion that the Company has sound Internal Financial Control commensurate with the size, scale and complexity of its business operations. The Internal Financial Control operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved controls whenever the effect of such gaps would have a material effect on the Companys' operations.

CREDIT RATING

CARE Ratings Limited has reaffirmed the credit rating of "CARE A- /Stable" for long-term bank facilities and "CARE A2" for short term bank facilities of the Company.

UNCLAIMED EQUITY SHARES

The Company has transferred 41,996 Equity Shares to Investor Education & Protection Fund pursuant to the provisions of Section 124(6) of Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), where the dividends for the last seven consecutive years have not been claimed by the concerned shareholders.

DIRECTORS' RESPONSIBILITY STATEMENT

As stipulated in Section 134(3) (c) read with 134(5) of the Companies Act, 2013, Directors' subscribe to the "Directors' Responsibility Statement" and confirm that:

a) In preparation of annual accounts for the year ended 31 March 2018, the applicable accounting standards have been followed and no material departures have been made from the same;

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 or loss of the Company for that year;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts for the year ended 31 March 2018 on going concern basis;

e) The Directors had laid down the 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.

GENERAL

Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134 (3) of the Act and Rule 8 of the Companies (Accounts) Rules, 2014, to the extent the transactions took place on these items during the year and no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and ESOS.

3. The Managing Director of the Company has not received any remuneration or commission from any of its subsidiaries.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys' operations in future.

ACKNOWLEDGEMENT

Your Directors wish to thank all stakeholders, employees, Companys' bankers, various government authorities, members and business associates for their continued support and valuable co-operation.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff and workers of the Company.